-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BnnRIdSv3Mwelt/vizQGIZFIU1G9Fr+5F4PJQKtNmR08PyOCKTMBEl6/aLu7eD+d OCqQh5meebdavo+M1gdDGw== 0000949377-05-000351.txt : 20050425 0000949377-05-000351.hdr.sgml : 20050425 20050422183942 ACCESSION NUMBER: 0000949377-05-000351 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 15 FILED AS OF DATE: 20050425 DATE AS OF CHANGE: 20050422 EFFECTIVENESS DATE: 20050501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT CENTRAL INDEX KEY: 0000796154 IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-23251 FILM NUMBER: 05768526 BUSINESS ADDRESS: STREET 1: ONE AMERICAN ROW CITY: HARTFORD STATE: CT ZIP: 06115 BUSINESS PHONE: 8004474312 MAIL ADDRESS: STREET 1: ONE AMERICAN ROW STREET 2: PO BOX 5056 CITY: HARTFORD STATE: CT ZIP: 06102-5056 FORMER COMPANY: FORMER CONFORMED NAME: PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT /CT/ DATE OF NAME CHANGE: 19950501 FORMER COMPANY: FORMER CONFORMED NAME: PHOENIX MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT CENTRAL INDEX KEY: 0000796154 IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-04721 FILM NUMBER: 05768527 BUSINESS ADDRESS: STREET 1: ONE AMERICAN ROW CITY: HARTFORD STATE: CT ZIP: 06115 BUSINESS PHONE: 8004474312 MAIL ADDRESS: STREET 1: ONE AMERICAN ROW STREET 2: PO BOX 5056 CITY: HARTFORD STATE: CT ZIP: 06102-5056 FORMER COMPANY: FORMER CONFORMED NAME: PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT /CT/ DATE OF NAME CHANGE: 19950501 FORMER COMPANY: FORMER CONFORMED NAME: PHOENIX MUTUAL VARIABLE UNIVERSAL LIFE ACCOUNT DATE OF NAME CHANGE: 19920703 485BPOS 1 fe_71146-485b.txt REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on April 22, 2005 File No. 033-23251 811-04721 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- FORM N-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. [ ] Post-Effective Amendment No. 29 |X| ---- and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 18 |X| ---- (Check appropriate box or boxes.) -------------------- Phoenix Life Variable Universal Life Account (Exact Name of Registrant) -------------------- Phoenix Life Insurance Company (Name of Depositor) -------------------- One American Row, Hartford, Connecticut 06102-5056 (Address of Depositor's Principal Executive Offices) (Zip Code) (800) 447-4312 (Depositor's Telephone Number, including Area Code) -------------------- John R. Flores, Esq. Phoenix Life Insurance Company One American Row Hartford, CT 06102-5056 (Name and Address of Agent for Service) Approximate Date of Proposed Public Offering: as soon as practicable after the effective date of the Registration Statement. It is proposed that this filing will become effective (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b) of Rule 485 |X| on May 1, 2005 pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485 [ ] on pursuant to paragraph (a)(1) of Rule 485 If appropriate, check the following box: [ ] this Post-Effective Amendment designates a new effective date for a previously filed Post-Effective Amendment. -------------------- ================================================================================ PART A [VERSION A] FLEX EDGE PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT ISSUED BY: PHOENIX LIFE INSURANCE COMPANY PROSPECTUS MAY 1, 2005 This prospectus describes a flexible premium fixed and variable universal life insurance policy. The policy provides lifetime insurance protection for as long as it remains in force. You may allocate premiums and policy value to the Guaranteed Interest Account and/or one or more of the subaccounts of the Phoenix Life Variable Universal Life Account ("Separate Account"). The subaccounts purchase, at net asset value, shares of the following funds: THE PHOENIX EDGE SERIES FUND - ---------------------------- [diamond] Phoenix-Aberdeen International Series [diamond] Phoenix-AIM Growth Series (fka, Phoenix-MFS Investors Growth Stock Series) [diamond] Phoenix-Alger Small-Cap Growth Series (fka, Phoenix-State Street Research Small-Cap Growth Series) [diamond] Phoenix-Alliance/Bernstein Enhanced Index Series [diamond] Phoenix-Duff & Phelps Real Estate Securities Series [diamond] Phoenix-Engemann Capital Growth Series [diamond] Phoenix-Engemann Growth and Income Series (fka, Phoenix-Oakhurst Growth and Income Series) [diamond] Phoenix-Engemann Small-Cap Growth Series (fka, Phoenix-Engemann Small & Mid-Cap Growth Series) [diamond] Phoenix-Engemann Strategic Allocation Series (fka, Phoenix-Oakhurst Strategic Allocation Series) [diamond] Phoenix-Engemann Value Equity Series (fka, Phoenix-Oakhurst Value Equity Series) [diamond] Phoenix-Goodwin Money Market Series [diamond] Phoenix-Goodwin Multi-Sector Fixed Income Series [diamond] Phoenix-Goodwin Multi-Sector Short Term Bond Series [diamond] Phoenix-Kayne Rising Dividends Series [diamond] Phoenix-Kayne Small-Cap Quality Value Series [diamond] Phoenix-Lazard International Equity Select Series [diamond] Phoenix-Northern Dow 30 Series [diamond] Phoenix-Northern Nasdaq-100 Index(R) Series [diamond] Phoenix-Sanford Bernstein Mid-Cap Value Series [diamond] Phoenix-Sanford Bernstein Small-Cap Value Series [diamond] Phoenix-Seneca Mid-Cap Growth Series [diamond] Phoenix-Seneca Strategic Theme Series AIM VARIABLE INSURANCE FUNDS - SERIES I SHARES - ---------------------------------------------- [diamond] AIM V.I. Capital Appreciation Fund [diamond] AIM V.I. Mid Cap Core Equity Fund [diamond] AIM V.I. Premier Equity Fund THE ALGER AMERICAN FUND - CLASS O SHARES - ---------------------------------------- [diamond] Alger American Leveraged AllCap Portfolio FEDERATED INSURANCE SERIES - -------------------------- [diamond] Federated Fund for U.S. Government Securities II [diamond] Federated High Income Bond Fund II - Primary Shares FIDELITY(R) VARIABLE INSURANCE PRODUCTS - SERVICE CLASS - ------------------------------------------------------- [diamond] VIP Contrafund(R) Portfolio [diamond] VIP Growth Opportunities Portfolio [diamond] VIP Growth Portfolio FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - CLASS 2 - -------------------------------------------------------------- [diamond] Mutual Shares Securities Fund [diamond] Templeton Developing Markets Securities Fund * [diamond] Templeton Foreign Securities Fund [diamond] Templeton Global Asset Allocation Fund * [diamond] Templeton Growth Securities Fund LAZARD RETIREMENT SERIES - ------------------------ [diamond] Lazard Retirement Small Cap Portfolio LORD ABBETT SERIES FUND, INC. - CLASS VC - ---------------------------------------- [diamond] Bond-Debenture Portfolio [diamond] Growth and Income Portfolio [diamond] Mid-Cap Value Portfolio THE RYDEX VARIABLE TRUST - ------------------------ [diamond] Rydex Variable Trust Juno Fund [diamond] Rydex Variable Trust Nova Fund [diamond] Rydex Variable Trust Sector Rotation Fund SCUDDER INVESTMENTS VIT FUNDS - CLASS A - --------------------------------------- [diamond] Scudder VIT EAFE(R) Equity Index Fund [diamond] Scudder VIT Equity 500 Index Fund THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - CLASS I SHARES - -------------------------------------------------------- [diamond] Technology Portfolio WANGER ADVISORS TRUST - --------------------- [diamond] Wanger International Select [diamond] Wanger International Small Cap [diamond] Wanger Select [diamond] Wanger U.S. Smaller Companies * Not available for new investors It may not be in your best interest to purchase a policy to replace an existing life insurance policy or annuity contract. You must understand the basic features of the proposed policy and your existing coverage before you decide to replace your present coverage. You must also know if the replacement will result in any income taxes. The policy is neither a deposit nor an obligation of, underwritten or guaranteed by, any financial institution or credit union. It is not federally insured or endorsed by the Federal Deposit Insurance Corporation or any other state or federal agency. Policy investments are subject to risk, including the fluctuation of policy values and possible loss of principal invested or premiums paid. The Securities and Exchange Commission (SEC) has neither approved nor disapproved these securities, nor have they passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. This prospectus provides important information that you should know before investing. Read and keep this prospectus for future reference. IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT US AT: [envelope] PHOENIX VARIABLE PRODUCTS MAIL OPERATIONS ("VPMO") PO Box 8027 Boston, MA 02266-8027 [telephone] VARIABLE AND UNIVERSAL LIFE ADMINISTRATION ("VULA") 800/541-017
1 TABLE OF CONTENTS Heading Page - ------------------------------------------------------------ RISK/BENEFIT SUMMARY ................................. 3 Policy Benefits ................................... 3 Policy Risks ...................................... 3 FEE TABLES ........................................... 4 Transaction Fees .................................. 4 Periodic Charges Other than Fund Operating Expenses.......................................... 5 Minimum and Maximum Fund Operating Expenses........ 6 Annual Fund Expenses............................... 7 PHOENIX LIFE INSURANCE COMPANY ....................... 9 PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT.......... 9 Valuation Date..................................... 9 Performance History ............................... 9 VOTING RIGHTS ........................................ 9 THE GUARANTEED INTEREST ACCOUNT ...................... 10 CHARGES AND DEDUCTIONS................................ 10 General ........................................... 10 Charges Deducted from Premium Payments ............ 10 Periodic Charges .................................. 10 Daily Charges...................................... 11 Conditional Charges ............................... 12 Other Tax Charges ................................. 13 Fund Charges....................................... 13 THE POLICY ........................................... 13 Contract Rights: Owner, Insured, Beneficiary ...... 13 Contract Limitations............................... 13 Purchasing a Policy................................ 13 GENERAL .............................................. 14 Postponement of Payments .......................... 14 Optional Insurance Benefits ....................... 15 Death Benefit...................................... 15 PAYMENT OF PROCEEDS .................................. 16 Surrender and Death Benefit Proceeds .............. 16 Payment Options ................................... 16 Surrenders......................................... 17 Transfer of Policy Value........................... 18 Disruptive Trading and Market Timing............... 18 Loans.............................................. 20 Lapse.............................................. 21 FEDERAL INCOME TAX CONSIDERATIONS .................... 21 Introduction....................................... 21 Income Tax Status.................................. 21 Policy Benefits.................................... 21 Business-Owned Policies............................ 22 Modified Endowment Contracts ...................... 22 Limitations on Unreasonable Mortality and Expense Charges.................................. 23 Qualified Plans.................................... 23 Diversification Standards.......................... 23 Change of Ownership or Insured or Assignment....... 24 Other Taxes........................................ 24 Withholding........................................ 24 FINANCIAL STATEMENTS.................................. 24 APPENDIX A - INVESTMENT OPTIONS....................... A-1 2 RISK/BENEFIT SUMMARY - -------------------------------------------------------------------------------- This summary does not contain all of the detailed information that may be important to you. Please read the entire prospectus carefully before you decide to purchase a policy. This prospectus is a disclosure document which summarizes your rights under the insurance product that you are purchasing. As with any summary it may differ in certain instances from the underlying insurance policy. You should read your insurance policy carefully. POLICY BENEFITS DEATH BENEFITS The policy is first and foremost, a life insurance policy. While the policy remains in force we will pay a death benefit to your named beneficiary upon the death of the person insured under the policy. You will choose a death benefit when you apply for a policy: [diamond] Death Benefit Option 1 is equal to the greater of the policy's face amount, or the minimum death benefit [diamond] Death Benefit Option 2 equals the greater of the face amount plus the policy value, or the minimum death benefit You may change your Death Benefit Option at any time. Death Benefit Option 1 applies if you do not choose an option. Generally, the minimum face amount is $25,000. The minimum death benefit is equal to the policy value increased by a percentage taken from a table in the policy based on the policy year and the insured person's age. Also available, is the Guaranteed Death Benefit Rider, an additional insurance option that you may purchase by paying specified premiums. LOANS AND SURRENDERS Generally, you may take loans against 90% of the policy's cash surrender value subject to certain conditions. You may partially surrender any part of the policy anytime. A partial surrender fee will apply and a separate surrender charge may also be imposed. You may fully surrender this policy anytime for its cash surrender value. A surrender charge may be imposed. TEMPORARY INSURANCE COVERAGE We will issue you a Temporary Insurance Receipt when you submit the complete, signed application and issue premium. This will provide you with immediate insurance protection under the terms set forth in the policy and in the Receipt. FLEXIBLE PREMIUMS The only premiums you must pay are the issue premium and any payments that may be required to prevent policy lapse. OPTIONAL INSURANCE BENEFITS The following benefits may be available to you by rider: [diamond] Disability Waiver of Specified Premium [diamond] Accidental Death Benefit [diamond] Death Benefit Protection [diamond] Face Amount of Insurance Increase [diamond] Whole Life Exchange Option (not available after January 27, 2003) [diamond] Purchase Protection Plan [diamond] Living Benefits Availability of these riders depends upon state approval and may involve extra cost. YOUR RIGHT TO CANCEL THE POLICY You have the right to review the policy and cancel it if you are not satisfied. Simply return the policy to us within ten days after you receive it, or within 45 days of signing the application. Your state may require a longer period. POLICY RISKS VARIATIONS The policy is subject to laws and regulations in every state where the policy is sold and the terms of the policy may vary from state to state. SUITABILITY RISK Variable life insurance is designed for long term financial planning, and the policy is not suitable as a short-term investment. Surrender charges apply during the first ten years; therefore, it may not be appropriate for you to purchase a policy if you foresee the need to withdraw all or part of the policy value during the first several policy years. TAX EFFECTS Generally, under current federal income tax law, death benefits are not subject to income taxes. Earnings on the premiums invested in the Separate Account or the Guaranteed Interest Account are not subject to income taxes until there is a distribution from the policy. Taking a loan or a full or partial surrender from the policy could result in recognition of income for tax purposes. RISK OF LAPSE Your policy will remain in force as long as the cash surrender value is enough to pay the monthly charges incurred under the policy. If the cash surrender value is no longer enough to pay the monthly charges, the policy will lapse, or end. We will alert you to an impending lapse situation and give you an opportunity to keep the policy in force by paying a specified amount. Withdrawals, loans and associated loan interest can negatively affect policy value, and increase the risk of policy lapse. INVESTMENT RISK A comprehensive discussion of the risks of each fund purchased by a subaccount of the Phoenix Life Variable Universal Life Account may be found in the funds' prospectuses. Each series is subject to market fluctuations and the risks inherent with ownership of securities. There is no assurance that any series will achieve its stated investment objective. 3 THE FOLLOWING TABLES DESCRIBE THE FEES, AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND SURRENDERING THE POLICY. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE POLICY, SURRENDER THE POLICY, OR TRANSFER CASH VALUE BETWEEN INVESTMENT OPTIONS. FEE TABLES - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ TRANSACTION FEES - ------------------------------------- --------------------------------- ----------------------------------------------------------
CHARGE WHEN DEDUCTED AMOUNT DEDUCTED - ------------------------------------- --------------------------------- ---------------------------------------------------------- PREMIUM TAX CHARGE Upon Payment. 2.25 % of each premium. - ------------------------------------- --------------------------------- ---------------------------------------------------------- ISSUE EXPENSE CHARGE 1/12th of the fee is deducted $150(1) on each of the first 12 monthly calculation days. - ------------------------------------- --------------------------------- ---------------------------------------------------------- SURRENDER CHARGE Upon full surrender or lapse. Maximum is 0.5% of policy face amount plus 30% of premiums paid.(2) - ------------------------------------- --------------------------------- ---------------------------------------------------------- PARTIAL SURRENDER CHARGE Upon Partial Surrender or a For a partial surrender: decrease in the policy face ------------------------ amount. The charge that would apply upon a full surrender multiplied by the partial surrender amount divided by the result of subtracting the full surrender charge from the policy value. For a decrease in face amount: ------------------------------ The charge that would apply upon a full surrender multiplied by the decrease in face amount divided by the face amount prior to the decrease. - ------------------------------------- --------------------------------- ---------------------------------------------------------- PARTIAL SURRENDER FEE Upon Partial Surrender. 2% of surrender amount(3). - ------------------------------------- --------------------------------- ---------------------------------------------------------- TRANSFER CHARGE Upon Transfer. At present, we do not charge for transfers between investment options, but we reserve the right to charge up to $10 per transfer after the first two transfers in any given policy year. - ------------------------------------------------------------------------------------------------------------------------------------
(1) The Issue Charge is $12.50 per month for the first 12 policy months. (2) The surrender charge begins to decrease after five policy years, and becomes zero after ten policy years. We will provide your surrender charges before we issue your policy. We describe this charge in more detail in the "Charges and Deductions" section. (3) We limit this fee to $25 for each partial surrender. 4 PERIODIC CHARGES OTHER THAN FUND OPERATING EXPENSES --------------------------------------------------------------------------------------------------------------------------------
CHARGE WHEN DEDUCTED AMOUNT DEDUCTED ------------------------------- ----------------------------- ------------------------------------------------------------------ COST OF INSURANCE(1) On each Monthly Calculation Day. ------------------------------- ----------------------------- ------------------------------------------------------------------ Minimum and Maximum Charges We currently charge $0.06 - $83.33 per $1,000 of amount at risk(2) each month. ------------------------------- ----------------------------- ------------------------------------------------------------------ Example for a male age 35 We would charge $0.14 per $1,000 of amount at risk(2) per month. in the nonsmoker premium We will increase this charge as he ages. class. ------------------------------- ----------------------------- ------------------------------------------------------------------ ADMINISTRATIVE CHARGE On each Monthly Calculation $10 per month.(3) Day. ------------------------------- ----------------------------- ------------------------------------------------------------------ MORTALITY AND EXPENSE RISK On each Monthly Calculation 0.80% of average daily net assets, on an annual basis, of CHARGE(4) Day. investments in the subaccounts. ------------------------------- ----------------------------- ------------------------------------------------------------------ OTHER TAX CHARGES When we become liable for We currently do not charge for taxes, however we reserve the taxes. right to impose a charge should we become liable for taxes in the future. Possible taxes would include state or federal income taxes on investment gains of the Separate Account and would be included in our calculation of subaccount values. ------------------------------- ----------------------------- ------------------------------------------------------------------ LOAN INTEREST RATE CHARGED(5) Interest accrues daily and is due on each policy The maximum net cost to the policy value is 2% of the loan anniversary. If not paid on balance on an annual basis. that date, we will treat the accrued interest as another loan against the policy. -------------------------------------------------------------------------------------------------------------------------------- OPTIONAL INSURANCE BENEFITS ------------------------------- ----------------------------- ------------------------------------------------------------------ DEATH BENEFIT PROTECTION RIDER On each Monthly Calculation $0.01 per $1,000 of face amount per month. Day. ------------------------------- ----------------------------- ------------------------------------------------------------------ PURCHASE PROTECTION PLAN On Rider Date, and on each RIDER(6) Monthly Calculation Day. ------------------------------- ----------------------------- ------------------------------------------------------------------ Minimum and Maximum $0.05 - $0.17 per unit8 purchased per month. ------------------------------- ----------------------------- ------------------------------------------------------------------ Example for a male age 35 $0.10 per unit(8) purchased per month. in the nonsmoker premium class. ------------------------------- ----------------------------- ------------------------------------------------------------------ DISABILITY WAIVER OF On each Monthly Calculation SPECIFIED PREMIUM RIDER(6) Day. ------------------------------- ----------------------------- ------------------------------------------------------------------ Minimum and Maximum $0.20 -$0.82 per $100 of premium waived per month. ------------------------------- ----------------------------- ------------------------------------------------------------------ Example for a male age 35 $0.24 per $100 of premium waived per month. in the nonsmoker premium class. ------------------------------- ----------------------------- ------------------------------------------------------------------ ACCIDENTAL DEATH BENEFIT On each Monthly Calculation RIDER(6) Day. ------------------------------- ----------------------------- ------------------------------------------------------------------ Minimum and Maximum $0.07 -$0.13 per $1,000 of rider amount per month. ------------------------------- ----------------------------- ------------------------------------------------------------------ Example for a male age 35 $0.07 per $1,000 of rider amount per month. in the nonsmoker premium class. ------------------------------- ----------------------------- ------------------------------------------------------------------ FACE AMOUNT OF INSURANCE On Rider Date. $3.00 per $1,000 of face amount.(7) INCREASE RIDER ------------------------------- ----------------------------- ------------------------------------------------------------------ LIVING BENEFITS RIDER We do not charge for this We describe this rider later under "Optional Insurance Benefits." rider. --------------------------------------------------------------------------------------------------------------------------------
5 --------------------------------------------------------------------------------------------------------------------------------
CHARGE WHEN DEDUCTED AMOUNT DEDUCTED ------------------------------- ----------------------------- ------------------------------------------------------------------ WHOLE LIFE EXCHANGE OPTION We do not charge for this We describe this rider later under "Optional Insurance Benefits." RIDER rider. ------------------------------- ----------------------------- ------------------------------------------------------------------
(1) Cost of insurance charges will vary according to age, gender, premium class, policy year, net amount at risk, and face amount. The cost of insurance charges shown in the table may not be typical of the charges you will pay. Your policy's specifications page will indicate the guaranteed cost of insurance applicable to your policy. More detailed information concerning your cost of insurance is available upon request. Before you purchase the policy, we will provide you personalized illustrations of your future benefits under the policy based upon the age and premium class of the person you wish to insure, the death benefit option, face amount, planned periodic premiums, and riders requested. (2) The amount at risk at any given time is the difference between the total death benefit we would pay and the policy value. (3) As of the date of this prospectus, we limit this charge to $5 per month. (4) We do not deduct this charge from investments in the Guaranteed Interest Account. (5) The maximum net cost to the policy is the difference between the rate we charge for the outstanding loan, and the rate we credit the loaned portion of the Guaranteed Interest Account, where we allocate policy value equal to the amount of the loan, as collateral. The net cost to the policy can be as low as 1.00% on an annual basis. For more information see "Charges and Deductions" and "Loans." (6) This charge for this rider depends on age at issue, but will not increase with age. (7) This charge is limited to a maximum of $150. (8) Each unit allows you to purchase $1,000 face amount of insurance on each of the first two option dates defined in the rider, and $667 in face amount of insurance on each subsequent option date defined in the rider. THE NEXT TABLE SHOWS THE MINIMUM AND MAXIMUM FEES AND EXPENSES CHARGED BY THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE POLICY. MORE DETAIL CONCERNING EACH OF THE FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. MINIMUM AND MAXIMUM FUND OPERATING EXPENSES
Minimum Maximum Total Annual Fund Operating Expenses (1) 0.29% - 2.68% (expenses that are deducted from a fund's assets, including management fees, distribution and/or 12b-1 fees, and other expenses)
(1) The total and net fund operating expenses for each available investment portfolio are given in the following tables. 6 ANNUAL FUND EXPENSES (as a percentage of fund average net assets for the year ended 12/31/04) - -----------------------------------------------------------------------------------------------------------------------------------
Rule Investment 12b-1 Other Operating Total Annual Fund Series Management Fee Fees Expenses Expenses - ----------------------------------------------------------------------------------------------------------------------------------- THE PHOENIX EDGE SERIES FUND - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International 0.75% N/A 0.30% 1.05% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth 0.75% N/A 0.47% (3) 1.22% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth 0.85% N/A 0.89% (1) 1.74% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index 0.45% N/A 0.27% (2) 0.72% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities 0.75% N/A 0.29% 1.04% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth 0.66% N/A 0.21% 0.87% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income 0.70% N/A 0.28% (3) 0.98% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth 0.90% N/A 0.67% (4) 1.57% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation 0.58% N/A 0.20% 0.78% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity 0.70% N/A 0.28% (3) 0.98% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market 0.40% N/A 0.24% 0.64% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income 0.50% N/A 0.23% 0.73% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond 0.50% (5) N/A 0.58% (2) 1.08% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends 0.70% N/A 0.75% (1) 1.45% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value 0.90% N/A 1.78% (1) 2.68% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select 0.90% N/A 0.40% (1) 1.30% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 0.35% N/A 0.56% (3) 0.91% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) 0.35% N/A 0.74% (3) 1.09% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value 1.05% N/A 0.29% (3) 1.34% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value 1.05% N/A 0.38% (3) 1.43% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth 0.80% N/A 0.38% (4) 1.18% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme 0.75% N/A 0.33% 1.08% - -----------------------------------------------------------------------------------------------------------------------------------
(1) The advisor voluntarily agrees to reimburse this series for other operating expenses that exceed 0.15% of the series' average net assets. (2) The advisor voluntarily agrees to reimburse this series for other operating expenses that exceed 0.20% of the series' average net assets. (3) The advisor voluntarily agrees to reimburse this series for other operating expenses that exceed 0.25% of the series' average net assets. (4) The advisor voluntarily agrees to reimburse this series for other operating expenses that exceed 0.35% of the series' average net assets. (5) The advisor voluntarily waived the management fee for the period through May 31, 2004, giving an annual management fee of less than 0.50% of the series' average net assets for 2004. Without the waiver, the annual management fee rate is 0.50%. The chart below, showing net annual fund expenses, assumes the 0.50% rate for this series. (6) The chart below shows net annual fund expenses after voluntary reimbursements by the advisor.
Net Annual Fund Net Annual Fund --------------- --------------- Series Reimbursements Expenses Series Reimbursements Expenses ------ -------------- -------- ------ -------------- -------- Phoenix-AIM Growth (0.22%) 1.00% Phoenix-Kayne Small-Cap Quality Value (1.63%) 1.05% Phoenix-Alger Small-Cap Growth (0.74%) 1.00% Phoenix-Lazard International Equity Phoenix-Alliance/Bernstein Enhanced Select (0.25%) 1.05% Index (0.07%) 0.65% Phoenix-Northern Dow 30 (0.31%) 0.60% Phoenix-Engemann Growth and Income (0.03%) 0.95% Phoenix-Northern Nasdaq-100 Index(R) (0.49%) 0.60% Phoenix-Engemann Small-Cap Growth (0.32%) 1.25% Phoenix-Sanford Bernstein Mid-Cap Phoenix-Engemann Value Equity (0.03%) 0.95% Value (0.04%) 1.30% Phoenix-Goodwin Multi-Sector Short Phoenix-Sanford Bernstein Term Bond (0.38%) 0.70% Small-Cap Value (0.13%) 1.30% Phoenix-Kayne Rising Dividends (0.60%) 0.85% Phoenix-Seneca Mid-Cap Growth (0.03%) 1.15%
(NOTE: Each or all of the voluntary expense reimbursements noted in the chart above may be changed or eliminated at anytime without notice.) - -----------------------------------------------------------------------------------------------------------------------------------
Net Annual Rule Fund Expenses Investment 12b-1 or Other Contractual After Management Service Operating Total Annual Reimbursements Reimbursements Series Fee Fees Expenses Fund Expenses & Waivers & Waivers - ----------------------------------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS - SERIES I SHARES - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund 0.61% N/A 0.30% 0.91% (0.00%) 0.91% - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund 0.73% N/A 0.31% 1.04% (0.00%) 1.04% - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund 0.61% N/A 0.30% 0.91% (0.00%) 0.91% - ----------------------------------------------------------------------------------------------------------------------------------- THE ALGER AMERICAN FUND - CLASS O SHARES - ----------------------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio 0.85% N/A 0.12% 0.97% (0.00%) 0.97% - -----------------------------------------------------------------------------------------------------------------------------------
7 - -----------------------------------------------------------------------------------------------------------------------------------
Net Annual Rule Fund Expenses Investment 12b-1 or Other Contractual After Management Service Operating Total Annual Reimbursements Reimbursements Series Fee Fees Expenses Fund Expenses & Waivers & Waivers - ----------------------------------------------------------------------------------------------------------------------------------- FEDERATED INSURANCE SERIES - ----------------------------------------------------------------------------------------------------------------------------------- Federated Fund for U.S. Government Securities II 0.60% 0.25% (1) 0.13% 0.98% --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II - Primary 0.60% 0.25% (1) 0.14% 0.99% --- ---(11) Shares - ----------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VARIABLE INSURANCE PRODUCTS - SERVICE CLASS - ----------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio 0.57% 0.10% 0.11% (2) 0.78% --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio 0.58% 0.10% 0.14% (2) 0.82% --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio 0.58% 0.10% 0.10% (2) 0.78% --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - CLASS 2 - ----------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund 0.60% 0.25% (4) 0.15% 1.00% (0.00%) 1.00% - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund 1.25% 0.25% 0.29% 1.79% (0.00%) 1.79% - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund 0.68% 0.25% 0.19% 1.12% (0.05%) (5) 1.07% - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund 0.61% 0.25% 0.24% 1.10% (0.01%) (5) 1.09% - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund 0.79% (3) 0.25% (4) 0.07% 1.11% (0.00%) 1.11% - ----------------------------------------------------------------------------------------------------------------------------------- LAZARD RETIREMENT SERIES - ----------------------------------------------------------------------------------------------------------------------------------- Lazard Retirement Small Cap Portfolio 0.75% 0.25% 0.37% 1.37% (0.12%) (6) 1.25% - ----------------------------------------------------------------------------------------------------------------------------------- LORD ABBETT SERIES FUND, INC. - CLASS VC - ----------------------------------------------------------------------------------------------------------------------------------- Bond-Debenture Portfolio 0.50% N/A 0.48% 0.98% (0.08%) (7) 0.90% - ----------------------------------------------------------------------------------------------------------------------------------- Growth and Income Portfolio 0.50% N/A 0.39% 0.89% (0.00%) 0.89% - ----------------------------------------------------------------------------------------------------------------------------------- Mid-Cap Value Portfolio 0.75% N/A 0.42% 1.17% (0.00%) 1.17% - ----------------------------------------------------------------------------------------------------------------------------------- THE RYDEX VARIABLE TRUST - ----------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Juno Fund 0.90% N/A 0.73% 1.63% (0.00%) 1.63% - ----------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Nova Fund 0.75% N/A 0.71% 1.46% (0.00%) 1.46% - ----------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund 0.90% N/A 0.73% 1.63% (0.00%) 1.63% - ----------------------------------------------------------------------------------------------------------------------------------- SCUDDER INVESTMENTS VIT FUNDS - CLASS A - ----------------------------------------------------------------------------------------------------------------------------------- Scudder VIT EAFE(R) Equity Index Fund 0.45% N/A 0.37% 0.82% (0.17%) (8) 0.65% - ----------------------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund 0.20% N/A 0.09% 0.29% (0.00%) 0.29% - ----------------------------------------------------------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - CLASS I SHARES - ----------------------------------------------------------------------------------------------------------------------------------- Technology Portfolio 0.80% N/A 0.49% 1.29% (9) --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- WANGER ADVISORS TRUST - ----------------------------------------------------------------------------------------------------------------------------------- Wanger International Select 1.00% N/A 0.43% 1.43% (0.01%) (10) 1.42% - ----------------------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap 1.17% N/A 0.19% 1.36% (0.16%) (10) 1.20% - ----------------------------------------------------------------------------------------------------------------------------------- Wanger Select 0.95% N/A 0.15% 1.10% (0.10%) (10) 1.00% - ----------------------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies 0.92% N/A 0.08% 1.00% (0.01%) (10) 0.99% - -----------------------------------------------------------------------------------------------------------------------------------
(1) The fund has voluntarily agreed to waive this service fee. (2) A portion of the brokerage commissions that the fund paid was used to reduce the fund's expenses. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances are used to reduce a portion of the fund's custodian expenses. These offsets may be discontinued at anytime. (3) The fund administration fee is paid indirectly through the management fee. (4) While the maximum amount payable under the fund's Rule 12b-1 plan is 0.35% per year of the fund's average annual net assets, the fund's Board of Trustees has set the current rate at 0.25% per year. (5) The advisor has contractually agreed to reduce its investment management fee to reflect reduced services resulting from the fund's investment in a Franklin Templeton Money Market Fund (the Sweep Fund). This reduction is required by the fund's Board of Trustees and an order by the SEC. After such reductions, the management fees are 0.63% for the Templeton Foreign Securities Fund and 0.60% for the Templeton Global Asset Allocation Fund. (6) Reflects a contractual obligation by the Investment Manager to waive its fee and, if necessary, reimburse the Portfolio through December 31, 2005, to the extent Total Annual Portfolio Operating Expenses exceed 1.25% of the Portfolio's average daily net assets. (7) For the year ending December 31, 2004, Lord, Abbett & Co. LLC has contractually agreed to reimburse a portion of the Fund's expenses to the extent necessary to maintain its "Other Expenses" at an aggregate rate of 0.40% of its average daily net assets. (8) The advisor has contractually agreed, for the one-year period beginning May 1, 2005, to waive its fees and/or reimburse expenses of the fund in excess of 0.65% of the average daily net assets. (9) The advisor has voluntarily agreed to waive a portion or all of its management fee and/or reimburse expenses to the extent necessary so that total annual operating expenses, excluding certain investment related expenses such as foreign country tax expense and interest expense on borrowing, do not exceed the operating expense limitation of 1.15%. (10) Management fees have been restated to reflect contractual changes to the management fee for the fund as of February 10, 2005. The fee waiver was effective as of February 10, 2005 but applied as if it had gone into effect on December 1, 2004. (11) The chart below shows net annual fund expenses after voluntary reimbursements or waivers by the advisor.
Net Annual Fund Net Annual Fund --------------- --------------- Series Reimbursements Expenses Series Reimbursements Expenses ------ -------------- -------- ------ -------------- -------- Federated Fund for U.S. Government VIP Growth Opportunities Portfolio (0.02%) 0.80% Securities II (0.26%) 0.72% VIP Growth Portfolio (0.03%) 0.75% Federated High Income Bond Fund Technology Portfolio (0.14%) 1.15% II - Primary Shares (0.25%) 0.74% VIP Contrafund(R) Portfolio (0.02%) 0.76%
(NOTE: Each or all of the voluntary expense reimbursements and waivers noted in the chart above may be changed or eliminated at anytime without notice.) 8 PHOENIX LIFE INSURANCE COMPANY - -------------------------------------------------------------------------------- On June 25, 2001, Phoenix Home Life Mutual Insurance Company (a New York mutual life insurance company, originally chartered in Connecticut in 1851 and redomiciled to New York in 1992) converted to a stock life insurance company by "demutualizing" pursuant to a plan of reorganization approved by the New York Superintendent of Insurance and changed its name to Phoenix Life Insurance Company ("Phoenix"). As part of the demutualization, Phoenix became a wholly-owned subsidiary of The Phoenix Companies, Inc., a newly-formed, publicly-traded Delaware corporation. Our executive and administrative office is at One American Row, Hartford, Connecticut, 06115. Our New York principal office is at 10 Krey Boulevard, East Greenbush, New York 12144. We sell life insurance policies and annuity contracts through producers of affiliated distribution companies and through brokers. PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT - -------------------------------------------------------------------------------- Phoenix Life Insurance Company established the Separate Account as a separate account under New York insurance law on June 17, 1985. The Separate Account is registered with the Securities and Exchange Commission (the "SEC") as a unit investment trust under the Investment Company Act of 1940. The SEC does not supervise the management, investment practices or policies of the Separate Account or of Phoenix. All income, gains or losses, whether or not realized, of the Separate Account are credited to or charged against amounts placed in the Separate Account without regard to the other income, gains and losses of Phoenix. The assets of the Separate Account may not be charged with liabilities arising out of any other business we conduct. Phoenix is responsible for all obligations under the policies. The Separate Account is divided into subaccounts, each of which is available for allocation of policy value. We determine the value of each subaccount's shares at the end of every valuation day that the New York Stock Exchange ("NYSE") is open. Each subaccount will invest solely in a single investment portfolio of a fund. The fund names and the portfolio names are listed on page one of this prospectus. Each portfolio's investment type is given in Appendix A. Phoenix does not guarantee the investment performance of the Separate Account or any of its subaccounts. The policy value allocated to the Separate Account depends on the investment performance of the underlying funds. As policy owner, you bear the full investment risk for all monies invested in the Separate Account. We reserve the right to add, remove, modify, or substitute portfolios in which the Separate Account invests. Copies of the fund prospectuses may be obtained by writing to us or calling us at the address or telephone number provided on the front page of this prospectus. VALUATION DATE A valuation date is every day the New York Stock Exchange ("NYSE") is open for trading and Phoenix is open for business. However, transaction processing may be postponed for the following reasons 1. the NYSE is closed or may have closed early; 2. the SEC has determined that a state of emergency exists; or 3. on days when a certain market is closed (e.g., the U.S. Government bond market is closed on Columbus Day and Veteran's Day). The NYSE Board of Directors reserves the right to change the NYSE schedule as conditions warrant. On each valuation date, the value of the Separate Account is determined at the close of the NYSE (currently 4:00 p.m. Eastern Time). The NYSE is scheduled to be closed on the following days: - --------------------------------------------------------- New Year's Day Independence Day - --------------------------------------------------------- Martin Luther King, Jr. Day Labor Day - --------------------------------------------------------- Presidents Day Thanksgiving Day - --------------------------------------------------------- Good Friday Christmas Day - --------------------------------------------------------- Memorial Day - --------------------------------------------------------- PERFORMANCE HISTORY We may choose to include performance history of the subaccounts or the underlying portfolios in advertisements, sales literature or reports. Performance information about each subaccount is based on past performance and is not an indication of future performance. VOTING RIGHTS - -------------------------------------------------------------------------------- We legally own all fund shares held by the subaccounts; however we vote those shares at shareholder meetings according to voting instructions we receive from policy owners with an interest in the subaccounts. We may decide to vote the shares in our own right should the law change to permit us to do so. While your policy is in effect, you may provide us with voting instructions for each subaccount in which you have an interest. We determine the number of votes you may cast by applying your percentage interest in a subaccount to the total number of votes attributable to the subaccount. We will send you proxy material, reports and other materials relevant to the subaccounts in which you have a voting interest. In order to vote you must complete the proxy form and return it with your voting instructions. You may also be able to vote your interest by telephone or over the Internet if such instructions are included in the proxy material. We will vote all of the shares we own on your behalf, in accordance with your instructions. We will vote the shares for which we do not receive instructions, and any other shares we own, in the same proportion as the shares for which we do receive instructions. 9 We may ask you to provide voting instructions for such items as: 1) the election of the fund's Trustees; 2) the ratification of the independent accountants for the fund; 3) approval or amendment of investment advisory agreements; 4) a change in fundamental policies or restrictions of the series; and 5) any other matters requiring a shareholder vote. You may obtain an available fund's prospectus by contacting us at the address and telephone number given on page one. THE GUARANTEED INTEREST ACCOUNT - -------------------------------------------------------------------------------- In addition to the Separate Account, you may allocate premiums or transfer values to the Guaranteed Interest Account. Amounts you allocate to the Guaranteed Interest Account are deposited in our general account. You do not share in the investment experience of our general account. Rather, we guarantee a minimum rate of return on the allocated amounts. Although we are not obligated to credit interest at a higher rate than the minimum, we will credit any excess interest as determined by us based on expected investment yield information. We reserve the right to limit total deposits and transfers to the Guaranteed Interest Account to no more than $250,000 during any one-week period per policy. You may make transfers into the Guaranteed Interest Account at any time. In general, you may make only one transfer per year from the Guaranteed Interest Account. The amount that can be transferred out is limited to the greatest of $1,000 or 25% of the policy value in the Guaranteed Interest Account as of the date of the transfer. You may transfer the total value out of the Guaranteed Interest Account to one or more of the subaccounts over a consecutive 4-year period according to the following schedule: [diamond] First Year: 25% of the total value [diamond] Second Year: 33% of remaining value [diamond] Third Year: 50% of remaining value [diamond] Fourth Year: 100% of remaining value Transfers from the Guaranteed Interest Account may also be subject to other rules as described in this prospectus. Because of exemptive and exclusionary provisions, we have not registered interests in our general account under the Securities Act of 1933. Also, we have not registered our general account as an investment company under the Investment Company Act of 1940, as amended. Therefore, neither the general account nor any of its interests are subject to these Acts, and the U.S. Securities and Exchange Commission ("SEC") has not reviewed the general account disclosures. These disclosures may, however, be subject to certain provisions of the federal securities law regarding accuracy and completeness of statements made in this prospectus. CHARGES AND DEDUCTIONS - -------------------------------------------------------------------------------- GENERAL Charges are deducted in connection with the policy to compensate us for: [diamond] our expenses in selling the policy; [diamond] underwriting and issuing the policy; [diamond] premium and federal taxes incurred on premiums received; [diamond] providing the insurance benefits set forth in the policy; and [diamond] assuming certain risks in connection with the policy. The nature and amount of these charges are more fully described in sections below. When we issue policies under group or sponsored arrangements, we may reduce or eliminate the: [diamond] issue expense charge; and/or [diamond] surrender charge. Sales to a group or through sponsored arrangement often result in lower per policy costs and often involve a greater stability of premiums paid into the policies. Under such circumstances, Phoenix tries to pass these savings onto the purchasers. The amount of reduction will be determined on a case-by-case basis and will reflect the cost reduction we expect as a result of these group or sponsored sales. Certain charges are deducted only once, others are deducted periodically, while certain others are deducted only if certain events occur. CHARGES DEDUCTED FROM PREMIUM PAYMENTS [diamond] PREMIUM TAX CHARGE Various states (and counties and cities) impose a tax on premiums received by insurance companies. Premium taxes vary from state to state. Currently, these taxes range from 0.62% to 4% of premiums paid. Moreover, certain municipalities in Louisiana, Kentucky, Alabama and South Carolina also impose taxes on premiums paid, in addition to the state taxes imposed. The premium tax charge represents an amount we consider necessary to pay all premium taxes imposed by these taxing authorities, and we do not expect to derive a profit from this charge. Policies will be assessed a tax charge equal to 2.25% of the premiums paid. These charges are deducted from each premium payment. PERIODIC CHARGES MONTHLY CHARGES We make monthly deductions on each monthly calculation day. The amount we deduct is allocated among subaccounts and the nonloaned portion of the Guaranteed Interest Account based on your specified allocation schedule. 10 You will select this schedule in your application, and you can change it later. If the amount allocated to a subaccount or the nonloaned portion of the Guaranteed Interest Account is less than the amount to be deducted, we will proportionally increase the deduction from the other subaccounts or Guaranteed Interest Account. [diamond] ISSUE EXPENSE CHARGE. This charge helps us pay the underwriting and start-up expenses we incur when we issue a policy. We charge $150. We deduct this charge in twelve equal installments for the year following policy issue or a face amount increase. Any unpaid balance of the issue expense charge will be paid to Phoenix upon policy lapse or termination. [diamond] ADMINISTRATIVE CHARGE. We currently charge $5 to cover the cost of daily administration, monthly processing, updating daily values and for annual/quarterly statements. We guarantee this charge will never exceed $10 per month. [diamond] COST OF INSURANCE. We determine this charge by multiplying the appropriate cost of insurance rate by the amount at risk. The amount at risk is the difference between your policy's death benefit and your policy value. We generally base our rates on the insured person's gender, attained age, and risk class. We also consider the duration, or how long the policy has been in force. We are not permitted to consider gender as a factor in some states and under certain qualified plans. We base the current monthly cost of insurance charge on what we expect our future mortality experiences will be. Charges will not exceed the guaranteed cost of insurance rates set forth in your policy. The guaranteed maximum rates are equal to 100% of the 1980 Commissioners' Standard Ordinary Mortality Table, adjusted for risk classifications. We will apply any change in our cost of insurance rates uniformly to all persons of the same gender, insurance age and risk class whose policies have been in force for the same length of time. We currently insure each life as either a standard risk class or a risk class involving a higher mortality risk. We determine your risk class based on your health and the medical information you provide. A life in the standard risk classes will have a lower cost of insurance for an otherwise identical policy, than a life in a higher mortality risk class. A nonsmoker will generally incur a lower cost of insurance than a similarly situated smoker. [diamond] COST OF OPTIONAL INSURANCE BENEFITS. Certain policy riders require the payment of additional premiums to pay for the benefit provided by the rider. These options are available if approved in your state. Two riders are available at no charge with every Flex Edge policy: o LIVING BENEFITS RIDER. This rider allows, in the event of terminal illness of the insured, an accelerated payment of up to 75% of the policy's death benefit, to a maximum of $250,000, with the provision that a minimum of $10,000 face amount remain on the policy thereafter. o WHOLE LIFE EXCHANGE OPTION RIDER. This rider permits you to exchange Policy for a fixed benefit whole life policy at the later of age 65 Policy year 15. This rider is no longer available. We charge for providing benefits under the following riders: o DISABILITY WAIVER OF SPECIFIED PREMIUM RIDER. Charges will depend on the age and gender of the person we insure, and the amount of premium waived. We also offer this rider with substandard ratings of 150% and 200%. We insure people from age five through 60 under this rider and terminate the rider when the insured person reaches age 65. o ACCIDENTAL DEATH BENEFIT RIDER. Charges vary based on age, sex, and amount of additional death benefit. o DEATH BENEFIT PROTECTION RIDER. Charge is based upon the face amount. o PURCHASE PROTECTION PLAN RIDER. Charges vary based on age. The maximum number of PPP units allowed varies with issue age and cannot be more than twice the initial base face amount in thousands. This rider is available to those we insure up to age 37. o FACE AMOUNT OF INSURANCE INCREASE RIDER. Charge is based upon the face amount. DAILY CHARGES We deduct a percentage each business day from every subaccount. This deduction is reflected in each subaccount's daily value. [diamond] MORTALITY AND EXPENSE RISK CHARGE We assume a mortality risk that, as a whole, the lives we insure may be shorter than we expected. We would then pay greater total death benefits than we had expected. We assume an expense risk that expenses we incur in issuing and maintaining the policies may exceed the administrative charges expected for the policies. We also assume other risks associated with issuing the policies, such as incurring greater than expected costs due to policy loans. If our expenses do not exceed the charges, or if our mortality projections prove to be accurate, we may profit from this charge. We may use profits from this charge for any proper purpose, including the payment of sales expenses or any other expenses that may exceed income in a given year. We will deduct this charge only from your investments in the Separate Account. We do not make any deduction for this charge from policy value allocated to the Guaranteed Interest Account. We charge a maximum mortality and expense charge of .80% of your policy value allocated to the subaccounts, on an annualized basis. 11 [diamond] LOAN INTEREST CHARGED We charge your policy for outstanding loans at the rates shown below. The rate we charge your policy is higher than the rate we credit the loaned portion of the Guaranteed Interest Account. We credit your policy 65 in all years. The difference is to compensate us for costs associated with administering the loans. Loan Interest rate Charged: Policy Years 1-10 (or insured's age 65 if earlier): 8% Policy Years 11+: 7% Loans can reduce the policy's death benefit. We deduct the amount of any outstanding loans plus any accrued loan interest from your policy value before we calculate the death benefit. CONDITIONAL CHARGES These are other charges that are imposed only if certain events occur. [diamond] SURRENDER CHARGE. During the first ten policy years, there is a difference between the amount of policy value and the amount of cash surrender value of the policy. This difference is the surrender charge, which is a contingent deferred sales charge. The surrender charge is designed to recover the expense of distributing policies that are terminated before distribution expenses have been recouped from revenue generated by these policies. These are contingent charges because they are paid only if the policy is surrendered (or the face amount is reduced or the policy lapses) during this period. They are deferred charges because they are not deducted from premiums. In policy years one through ten, the full surrender charge as described below will apply if you either surrender the policy for its cash surrender value or permit the policy to lapse. The applicable surrender charge in any policy month is the full surrender charge Minus any surrender charges previously paid. There is no surrender charge after the 10th policy year. During the first ten policy years, the maximum surrender charge that you can pay while you own the policy is equal to either A + B (defined below) or the amount shown in the table. A is equal to: 1) 30% of all premiums paid (up to and including the amount stated on the schedule page of your policy, which is calculated according to a formula contained in an SEC rule); plus 2) 10% of all premiums paid in excess of this amount but not greater than twice this amount: plus 3) 9% of all premiums paid in excess of twice this amount. B is equal to $5 per $1000 of initial face amount. The surrender charge table that appears in the policy is reproduced below: ---------------------------------------------------------- MAXIMUM SURRENDER CHARGE TABLE ---------------------------------------------------------- POLICY SURRENDER POLICY SURRENDER MONTH CHARGE MONTH CHARGE 1-60 $1029.22 90 $688.35 61 1018.93 91 672.70 62 1008.64 92 657.06 63 998.35 93 641.41 64 988.06 94 625.77 65 977.76 95 610.12 66 967.47 96 594.48 67 957.18 97 578.84 68 946.89 98 563.19 69 936.59 99 547.55 70 926.30 100 531.90 71 916.01 101 516.26 72 905.72 102 500.61 73 895.43 103 484.97 74 885.13 104 469.33 75 874.84 105 453.68 76 864.55 106 438.04 77 854.26 107 422.39 78 843.96 108 406.75 79 833.67 109 372.85 80 823.38 110 338.96 81 813.09 111 305.06 82 802.80 112 271.17 83 792.50 113 237.27 84 782.21 114 203.37 85 766.57 115 169.48 86 750.92 116 135.58 87 735.28 117 101.69 88 719.63 118 67.79 89 703.99 119 33.90 120 .00 We may reduce the surrender charge for policies issued under group or sponsored arrangements. The amounts of reductions will be considered on a case-by-case basis and will reflect the reduced costs to Phoenix expected as a result of sales to a particular group or sponsored arrangements. [diamond] PARTIAL SURRENDER FEE. In the case of a partial surrender, an additional fee is imposed. This fee is equal to 2% of the amount withdrawn but not more than $25. It is intended to recover the actual costs of processing the partial surrender request and will be deducted from each subaccount and Guaranteed Interest Account in the same proportion as the withdrawal is allocated. If no allocation is made at the time of the request for the partial surrender, withdrawal allocation will be made in the same manner as are monthly deductions. [diamond] PARTIAL SURRENDER CHARGE. If less than all of the policy is surrendered, the amount withdrawn is a "partial surrender." A charge is deducted from the policy value upon a partial surrender of the policy. This charge is equal to the charge that would apply upon a full surrender multiplied by the partial surrender amount divided by the result of subtracting the full surrender charge from the policy value. We withdraw this amount from the subaccounts and the Guaranteed Interest Account in the same proportion as for the withdrawal. 12 A partial surrender charge also is deducted from policy value upon a decrease in face amount. The charge is equal to the applicable surrender charge multiplied by a fraction equal to the decrease in face amount divided by the face amount of the policy prior to the decrease. [diamond] TRANSFER CHARGE. Currently we do not charge for transfers between subaccounts, however we reserve the right to charge up to $10 for each transfer in excess of two each calendar year. OTHER TAX CHARGES Currently no charge is made to the Separate Account for federal income taxes that may be attributable to the Separate Account. We may, however, make such a charge in the future for these or any other taxes attributable to the Separate Account. FUND CHARGES As compensation for investment management services to the funds, the advisors are entitled to fees, payable monthly and based on an annual percentage of the average aggregate daily net asset values of each series. We provide a table of these charges in Appendix A. These fund charges and other expenses are described more fully in the respective fund prospectuses. THE POLICY - -------------------------------------------------------------------------------- CONTRACT RIGHTS: OWNER, INSURED, BENEFICIARY OWNER The owner is the person who applies for the policy and who will generally make the choices that determine how the policy operates while it is in force. When we use the terms "you" or "your", in this prospectus, we are referring to the owner. INSURED The insured is the person on whose life the policy is issued. You name the insured in the application for the policy. We will not issue a policy for an insured that is more than 75 years old. Before issuing a policy, we will require evidence that the insured is, in fact, insurable. This will usually require a medical examination. BENEFICIARY The beneficiary is the person you name in the application to receive any death benefit. You may name different classes of beneficiaries, such as primary and secondary. These classes will set the order of payment. Unless an irrevocable beneficiary has been named, you can change the beneficiary at any time before the insured dies by sending a written request to us. Generally, the change will take effect as of the date your request is signed. If no beneficiary is living when the insured dies, unless you have given us different instructions, we will pay you the death benefit. If you are deceased, it will be paid to your estate. CONTRACT LIMITATIONS ASSIGNMENT The policy may be assigned. We will not be bound by the assignment until a written copy has been received and we will not be liable with respect to any payment made prior to receipt. We assume no responsibility for determining whether an assignment is valid. PURCHASING A POLICY UNDERWRITING PROCEDURES We base our rates on the insured person's gender, attained age, and risk class. We may require certain medical information in order to determine the risk class of the person to be insured. We are not permitted to consider gender as a factor in some states and under certain qualified plans. We will accept payment with your application and allocate the premium as described below. We may refuse to issue your policy within five business days, in which case we will provide a policy refund, as outlined below. ELIGIBLE PURCHASERS Any person up to the age of 75 is eligible to be insured under a newly purchased policy after providing suitable evidence of insurability. You can purchase a policy to insure the life of another person provided that you have an insurable interest in that life and the prospective insured consents. PREMIUM PAYMENTS The Flex Edge policy is a flexible premium variable universal life insurance policy. It has a death benefit, cash surrender value and a loan privilege as does a traditional fixed benefit whole life policy. The policy differs from a fixed benefit whole life policy, however, because you may allocate your premium into one or more of several subaccounts of the Separate Account or the Guaranteed Interest Account. Each subaccount of the Separate Account, in turn, invests its assets exclusively in a portfolio of the funds. The policy value varies according to the investment performance of the series to which premiums have been allocated. The minimum issue premium for a policy is generally 1/6 of the planned annual premium (an amount determined at the time of application) and is due on the policy date. The insured must be alive when the issue premium is paid. Thereafter, the amount and payment frequency of planned premiums are as shown on the schedule page of the policy. The issue premium payment should be delivered to your registered representative for forwarding to our Underwriting Department. Additional payments should be sent to VPMO. A number of factors concerning the person you insure and the policy features you desire will affect our required issue premium. The person's age, gender and risk class can affect the issue premium, as can policy features such as face amount and 13 added benefits. We will generally allocate the issue premium, less applicable charges, according to your instructions when we receive your completed application. We may issue some policies with a Temporary Money Market Allocation Amendment. Under this amendment we allocate the net issue premium and the net of other premiums paid during your right to cancel period to the Phoenix-Goodwin Money Market Subaccount. When your right to cancel expires we allocate the policy value among the subaccounts and/or the Guaranteed Interest Account according to your instructions. We may use the Temporary Money Market Allocation Amendment depending on the state of issue and under certain other circumstances. We reduce premium payments by the premium expense charge before we apply them to your policy. We will apply this net premium among your chosen investment options. We will buy any subaccount units at the subaccount unit values next calculated after we receive the premium. We establish maximum premium limits and may change them from time to time. You may make additional premium payments at any time. The minimum premium payment during a grace period is the amount needed to prevent policy lapse. At all other times the minimum acceptable payment is $25. The policy contains a total premium limit as shown on the schedule page. This limit is applied to the sum of all premiums paid under the policy. If the total premium limit is exceeded, the policy owner will receive the excess, with interest at an annual rate of not less than 4%, not later than 60 days after the end of the policy year in which the limit was exceeded. The policy value will then be adjusted to reflect the refund. To pay such refund, amounts taken from each subaccount or the Guaranteed Interest Account will be done in the same manner as for monthly deductions. You may write to us and give us different instructions. The total premium limit may be exceeded if additional premium is needed to prevent lapse or if we subsequently determine that additional premium would be permitted by federal laws or regulations. PAYMENT BY CHECK We may wait to credit your policy if you pay by check until your check has cleared your bank. AUTOMATED PAYMENTS You may elect to have us deduct periodic premium payments directly from your bank account. The minimum we will withdraw under such a plan is $25 per month. ALLOCATION OF PREMIUM We will generally allocate the issue premium less applicable charges to the Separate Account or to the Guaranteed Interest Account upon receipt of a completed application, in accordance with the allocation instructions in the application for a policy. However, policies issued in certain states and policies issued in certain states pursuant to applications which state the policy is intended to replace existing insurance, are issued with a Temporary Money Market Allocation Amendment. Under this Amendment, we temporarily allocate the entire issue premium paid less applicable charges (along with any other premiums paid during your right to cancel period) to the Phoenix-Goodwin Money Market Subaccount of the Separate Account and, at the expiration of the right to cancel period, the policy value of the Phoenix-Goodwin Money Market Subaccount is allocated among the subaccounts of the Separate Account or to the Guaranteed Interest Account in accordance with the applicant's allocation instructions in the application for insurance. Premium payments received by us will be reduced by applicable state premium tax and by 1.50% for federal tax charge. The issue premium also will be reduced by the issue expense charge deducted in equal monthly installments over a 12-month period. Any unpaid balance of the issue expense charge will be paid to Phoenix upon policy lapse or termination. Premium payments received during a grace period, after deduction of state and any sales charge, will first be used to cover any monthly deductions during the grace period. Any balance will be applied on the payment date to the various subaccounts of the Separate Account or to the Guaranteed Interest Account, based on the premium allocation schedule elected in the application for the policy or by your most recent instructions. See "Transfer of Policy Value--Nonsystematic Transfers." POLICY REFUND Should you elect to return your policy under your right to cancel we will treat your policy as if we had never issued it. For policies other than those issued with a Temporary Money Market Allocation Amendment, we will return the sum of the following as of the date we receive the returned policy: 1) the current policy value less any unpaid loans and loan interest; plus 2) any monthly deductions, partial surrender fees and other charges made under the policy. For policies issued with the Temporary Money Market Amendment, the amount returned will equal any premiums paid less any unpaid loans and loan interest and less any partial surrender amounts paid. We retain the right to decline to process an application within seven days of our receipt of the completed application for insurance. If we decline to process the application, we will return the premium paid. Even if we have approved the application for processing, we retain the right to decline to issue the policy. If we decline to issue the policy, we will refund to you the same amount as would have been refunded under the policy had it been issued but returned for refund while you have your right to cancel. GENERAL - -------------------------------------------------------------------------------- POSTPONEMENT OF PAYMENTS GENERAL Payment of any amount upon complete or partial surrender, policy loan or benefits payable at death (in excess of the initial face amount) or maturity may be postponed: [diamond] for up to six months from the date of the request, for any transactions dependent upon the value of the Guaranteed Interest Account; [diamond] We may postpone payment whenever the NYSE is closed other than for customary weekend and holiday closings, 14 trading on the NYSE is restricted, on days when a certain market is closed (e.g., the U.S. Government bond market is closed on Columbus Day and Veteran's Day); or [diamond] whenever an emergency exists, as decided by the SEC as a result of which disposal of securities is not reasonably practicable or it is not reasonably practicable to determine the value of the Separate Account's net assets. Transfers also may be postponed under these circumstances. OPTIONAL INSURANCE BENEFITS You may elect additional benefits under a policy, and you may cancel these benefits at anytime. A charge will be deducted monthly from the policy value for each additional rider benefit chosen except where noted below. More details will be included in the form of a rider to the policy if any of these benefits is chosen. The following benefits are currently available and additional riders may be available as described in the policy (if approved in your state). [diamond] DISABILITY WAIVER OF SPECIFIED PREMIUM RIDER. We waive the specified premium if the insured becomes totally disabled and the disability continues for at least six months. Premiums will be waived to the policy anniversary nearest the insured's 65th birthday (provided that the disability continues). If premiums have been waived continuously during the entire five years prior to such date, the waiver will continue beyond that date. The premium will be waived upon our receipt of notice that the Insured is totally disabled and that the disability occurred while the rider was in force. [diamond] ACCIDENTAL DEATH BENEFIT RIDER. An additional death benefit will be paid before the policy anniversary nearest the insured's 75th birthday, if: o the insured dies from bodily injury that results from an accident; and o the insured dies no later than 90 days after injury. [diamond] DEATH BENEFIT PROTECTION RIDER. The purchase of this rider provides that the death benefit will be guaranteed. The amount of the guaranteed death benefit is equal to the initial face amount, or the face amount that you may increase or decrease, provided that certain minimum premiums are paid. Unless we agree otherwise, the initial face amount and the face amount remaining after any decrease must at least equal $50,000 and the minimum issue age of the insured must be 20. Three death benefit guarantee periods are available. The minimum premium required to maintain the guaranteed death benefit is based on the length of the guarantee period as elected on the application. The three available guarantee periods are: 1 death benefit guaranteed until the later of the policy anniversary nearest the insured's 70th birthday or policy year 7; 2 death benefit guaranteed until the later of the policy anniversary nearest the insured's 80th birthday or policy year 10; 3 death benefit guaranteed until the later of the policy anniversary nearest the insured's 95th birthday. Death benefit guarantee periods 1 or 2 may be extended provided that the policy's cash surrender value is sufficient and you pay the new minimum required premium. [diamond] FACE AMOUNT OF INSURANCE INCREASE RIDER. Under the terms of this rider, any time after the first policy anniversary, you may request an increase in the face amount of insurance provided under the policy. Requests for face amount increases must be made in writing, and Phoenix requires additional evidence of insurability. The effective date of the increase will generally be the policy anniversary following approval of the increase. The increase may not be less than $25,000 and no increase will be permitted after the insured's age 75. The charge for the increase requested subject to a maximum of $150. No additional monthly administration charge will be assessed for face amount increases. Phoenix will deduct any charges associated with the increase (the increases in cost of insurance charges), from the policy value, whether or not the policyowner pays an additional premium in connection with the increase. At the time of the increase, the cash surrender value must be sufficient to pay the monthly deduction on that date, or additional premiums will be required to be paid on or before the effective date. Also, a new right to cancel period (see "Summary--Right to Cancel") will be established for the amount of the increase. There is no charge for this rider. [diamond] PURCHASE PROTECTION PLAN RIDER. Under this rider you may, at predetermined future dates, purchase additional insurance protection without evidence of insurability. [diamond] LIVING BENEFITS RIDER. Under certain conditions, in the event of the terminal illness of the insured, an accelerated payment of up to 75% of the policy's death benefit (up to a maximum of $250,000) is available. The minimum face amount of the policy after any such accelerated benefit payment is $10,000. There is no charge for this rider. [diamond] WHOLE LIFE EXCHANGE OPTION RIDER. This rider permits you to exchange the policy for a fixed benefit whole life policy at the later of age 65 or policy year 15. There is no charge for this option. This option is no longer available. DEATH BENEFIT GENERAL The death benefit under Option 1 equals the policy's face amount on the date of the death of the insured or, if greater, the minimum death benefit on the date of death. Under Option 2, the death benefit equals the policy's face amount on the date of the death of the insured, plus the policy value or, if greater, the minimum death benefit on that date. Under either option, the minimum death benefit is the policy value on the date of death of the insured increased by a percentage determined from a table contained in the policy. This percentage will be based on the insured's attained age at 15 the beginning of the policy year in which the death occurs. If no option is elected, Option 1 will apply. Loans can reduce the policy's death benefit. We deduct the amount of any outstanding loans plus any accrued loan interest from your policy value before we calculate the death benefit. REQUESTS FOR INCREASE IN FACE AMOUNT Any time after the first policy anniversary, you may request an increase in the face amount of insurance provided under the policy. Requests for face amount increases must be made in writing, and we require additional evidence of insurability. The effective date of the increase generally will be the policy anniversary following approval of the increase. The increase may not be less than $25,000 and no increase will be permitted after the insured's age 75. The charge for the increase is $3.00 per $1,000 of face amount increase requested subject to a maximum of $150. No additional monthly administration charge will be assessed for face amount increase. We will deduct any charges associated with the increase (the increases in cost of insurance charges), from the policy value, whether or not you pay an additional premium in connection with the increase. The surrender charge applicable to the policy also will increase. At the time of the increase, the cash value must be sufficient to pay the monthly deduction on that date, or additional premiums will be paid on or before the effective date. Also, a new right to cancel period (see "Summary--Right to Cancel") will be established for the amount of the increase. PARTIAL SURRENDER AND DECREASES IN FACE AMOUNT: EFFECT ON DEATH BENEFIT A partial surrender or a decrease in face amount generally decreases the death benefit. Upon a decrease in face amount or partial surrender, a partial surrender charge will be deducted from policy value based on the amount of the decrease or partial surrender. If the charge is a decrease in face amount, the death benefit under a policy would be reduced on the next monthly calculation day. If the charge is a partial surrender, the death benefit under a policy would be reduced immediately. A decreased in the death benefit may have certain income tax consequences. See "Federal Income Tax Considerations." REQUESTS FOR DECREASE IN FACE AMOUNT You may request a decrease in face amount at any time after the first policy year. Unless we agree otherwise, the decrease must be at least equal to $10,000 and face amount remaining after the decrease must be at least $25,000. All face amount decrease requests must be in writing and will be effective on the first monthly calculation day following the date we approve the request. A partial surrender charge will be deducted from the policy value based on the amount of the decrease. The charge will equal the applicable surrender charge that would apply to a full surrender multiplied by a fraction (which is equal to the decrease in face amount divided by the face amount of the policy before the decrease). PAYMENT OF PROCEEDS - -------------------------------------------------------------------------------- SURRENDER AND DEATH BENEFIT PROCEEDS Death benefit proceeds and the proceeds of full or partial surrenders will be processed at unit values next computed after we receive the request for surrender or due proof of death, provided such request is complete and in good order. Payment of surrender or death proceeds usually will be made in one lump sum within seven days, unless another payment option has been elected. Payment of the death proceeds, however, may be delayed if the claim for payment of the death proceeds needs to be investigated, e.g., to ensure payment of the proper amount to the proper payee. Any such delay will not be beyond that reasonably necessary to investigate such claims consistent with insurance practices customary in the life insurance industry. Under certain conditions, in the event of the terminal illness of the insured, an accelerated payment of up to 75% of the policy's death benefit (up to maximum of $250,000), is available under the Living Benefits Rider. The minimum face amount remaining after any such accelerated benefit payment is $10,000. While the insured is living, you may elect a payment option for payment of the death proceeds to the beneficiary. You may revoke or change a prior election, unless such right has been waived. The beneficiary may make or change an election before payment of the death proceeds, unless you have made an election that does not permit such further election or changes by the beneficiary. A written request in a form satisfactory to us is required to elect, change or revoke a payment option. The minimum amount of surrender or death benefit proceeds that may be applied under any payment option is $1,000. If the policy is assigned as collateral security, we will pay any amount due the assignee in one lump sum. Any remaining proceeds will remain under the option elected. PAYMENT OPTIONS All or part of the surrender or death proceeds of a policy may be applied under one or more of the following payment options or such other payment options or alternative versions of the options listed as we may choose to make available in the future. OPTION 1--LUMP SUM Payment in one lump sum. OPTION 2--LEFT TO EARN INTEREST A payment of interest during the payee's lifetime on the amount payable as a principal sum. Interest rates are guaranteed to be at least 3% per year. OPTION 3--PAYMENT FOR A SPECIFIC PERIOD Equal installments are paid for a specified period of years whether the payee lives or dies. The first payment will be on the date of settlement. The assumed interest rate on the unpaid balance is guaranteed not to be less than 3% per year. 16 OPTION 4--LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN Equal installments are paid until the later of: [diamond] the death of the payee; or [diamond] the end of the period certain. The first payment will be on the date of settlement. The period certain must be chosen at the time this option is elected. The periods certain that you may choose from are as follows: [diamond] 10 years; [diamond] 20 years; or [diamond] until the installments paid refund the amount applied under this option. If the payee is not living when the final payment falls due, that payment will be limited to the amount which needs to be added to the payments already made to equal the amount applied under this option. If, for the age of the payee, a period certain is chosen that is shorter than another period certain paying the same installment amount, we will consider the longer period certain as having been elected. Any life annuity provided under Option 4 is computed using an interest rate guaranteed to be no less than 33/8% per year, but any life annuity providing a period certain of 20 years or more is computed using an interest rate guaranteed to be no less than 3 1/4% per year. OPTION 5--LIFE ANNUITY Equal installments are paid only during the lifetime of the payee. The first payment will be on the date of settlement. Any life annuity as may be provided under Option 5 is computed using an interest rate guaranteed to be no less than 3 1/2% per year. OPTION 6--PAYMENTS OF A SPECIFIED AMOUNT Equal installments of a specified amount, out of the principal sum and interest on that sum, are paid until the principal sum remaining is less than the amount of the installment. When that happens, the principal sum remaining with accrued interest will be paid as a final payment. The first payment will be on the date of settlement. The payments will include interest on the remaining principal at a guaranteed rate of at least 3% per year. This interest will be credited at the end of each year. If the amount of interest credited at the end of the year exceeds the income payments made in the last 12 months, that excess will be paid in one sum on the date credited. OPTION 7--JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN The first payment will be on the date of settlement. Equal installments are paid until the latest of: [diamond] the end of the 10-year period certain; [diamond] the death of the insured; or [diamond] the death of the other named annuitant. The other annuitant must have attained age 40, must be named at the time this option is elected and cannot later be changed. Any joint survivorship annuity that may be provided under this option is computed using a guaranteed interest rate to equal at least 33/8% per year. For additional information concerning the above payment options, see the policy. SURRENDERS GENERAL At any time during the lifetime of the insured and while the policy is in force, you may partially or fully surrender the policy by sending to VPMO a written release and surrender in a form satisfactory to us. We may also require you to send the policy to us. The amount available for surrender is the cash surrender value at the end of the valuation period during which the surrender request is received at VPMO. Upon partial or full surrender, we generally will pay to you the amount surrendered within seven days after we receive the written request for the surrender. Under certain circumstances, the surrender payment may be postponed. See "General--Postponement of Payments." For the federal tax effects of partial and full surrenders, see "Federal Income Tax Considerations." FULL SURRENDERS If the policy is being fully surrendered, the policy itself must be returned to VPMO, along with the written release and surrender of all claims in a form satisfactory to us. You may elect to have the amount paid in a lump sum or under a payment option. See "Conditional Charges--Surrender Charge" and "Payment Options." PARTIAL SURRENDERS You may obtain a partial surrender of the policy by requesting payment of the policy's cash surrender value. It is possible to do this at any time during the lifetime of the insured, while the policy is in force, with a written request to VPMO. We may require the return of the policy before payment is made. A partial surrender will be effective on the date the written request is received or, if required, the date the policy is received by us. Surrender proceeds may be applied under any of the payment options described under "Payment of Proceeds--Payment Options." We reserve the right not to allow partial surrenders of less than $500. In addition, if the share of the policy value in any subaccount or in the Guaranteed Interest Account is reduced as a result of a partial surrender and is less than $500, we reserve the right to require surrender of the entire remaining balance in that subaccount or the Guaranteed Interest Account. Upon a partial surrender, the policy value will be reduced by the sum of the following: [diamond] The partial surrender amount paid--this amount comes from a reduction in the policy's share in the value of each subaccount or the Guaranteed Interest Account based on the allocation requested at the time of the partial surrender. If no allocation request is made, the withdrawals from each 17 subaccount will be made in the same manner as that provided for monthly deductions. [diamond] The partial surrender fee--this fee is the lesser of $25 or 2% of the partial surrender amount paid. The assessment to each subaccount or the Guaranteed Interest Account will be made in the same manner as provided for the partial surrender amount paid. [diamond] A partial surrender charge--this charge is equal to a pro rata portion of the applicable surrender charge that would apply to a full surrender, determined by multiplying the applicable surrender charge by a fraction (equal to the partial surrender amount payable divided by the result of subtracting the applicable surrender charge from the policy value). This amount is assessed against the subaccount or the Guaranteed Interest Account in the same manner as provided for the partial surrender amount paid. The cash surrender value will be reduced by the partial surrender amount paid plus the partial surrender fee. The face amount of the policy will be reduced by the same amount as the policy value is reduced as described above. TRANSFER OF POLICY VALUE INTERNET, INTERACTIVE VOICE RESPONSE AND TELEPHONE TRANSFERS You may transfer your policy value among the available investment options and make changes to your premium payment allocations by Internet, Interactive Voice Response or Telephone. You may write to VPMO or call VULA between the hours of 8:30 AM and 4:00 PM, Eastern Time. (The appropriate address and telephone number are on page 1.) We will execute a written request the day we receive it at VPMO. We will execute transfers on the day you make the request except as noted below. We do not charge for transfers at this time. However, we reserve the right to charge a fee of $10 for each transfer after your first two transfers in a policy year. Should we begin imposing this charge, we would not count transfers made under a Systematic Transfer Program toward the two-transfer limit. You may permit your registered representative to submit transfer requests on your behalf. Phoenix and Phoenix Equity Planning Corporation ("PEPCO"), our national distributor, will use reasonable procedures to confirm that transfer instructions are genuine. We require verification of account information and will record telephone instructions on tape. You will receive written confirmation of all transfers. Phoenix and PEPCO may be liable for following unauthorized instructions if we fail to follow our established security procedures. However, you will bear the risk of a loss resulting from instructions entered by an unauthorized third party that Phoenix and PEPCO reasonably believe to be genuine. We may modify or terminate your transfer and allocation privileges at any time. You may find it difficult to exercise these privileges during times of extreme market volatility. In such a case, you should submit your request in writing. We will not accept batches of transfer instructions from registered representatives acting under powers of attorney for multiple policy owners, unless the registered representative's broker-dealer firm and Phoenix have entered into a third-party service agreement. If we reject a transfer request for any of these reasons, we will notify you of our decision in writing. TRANSFER RESTRICTIONS We do not permit transfers of less than $500 unless either: [diamond] the entire balance in the subaccount or the Guaranteed Interest Account is being transferred; or [diamond] the transfer is part of a Systematic Transfer Program. We reserve the right to prohibit a transfer to any subaccount if the value of your investment in that subaccount immediately after the transfer would be less than $500. We further reserve the right to require that the entire balance of a subaccount or the Guaranteed Interest Account be transferred if the value of your investment in that subaccount immediately after the transfer, would be less than $500. You may make only one transfer per policy year from the non-loaned portion of the Guaranteed Interest Account unless the transfers are made as part of a Systematic Transfer Program or unless we agree to make an exception to this rule. The amount you may transfer is limited to the greatest of $1,000 or 25% of the value of the non-loaned portion of the Guaranteed Interest Account. You may transfer policy value into the Guaranteed Interest Account at anytime. DISRUPTIVE TRADING AND MARKET TIMING Your ability to make transfers among subaccounts under the policy is subject to modification if we determine, in our sole opinion, that your exercise of the transfer privilege may disadvantage or potentially harm the rights or interests of other policy owners. Frequent purchases, redemptions and transfers, programmed transfers, transfers into and then out of a subaccount in a short period of time, and transfers of large amounts at one time ("Disruptive Trading") can have harmful effects for other policy owners. These risks and harmful effects include: [diamond] dilution of the interests of long-term investors in a subaccount, if market timers or others transfer into the subaccount at prices that are below the true value or transfer out of the subaccount at prices that are higher than the true value; [diamond] an adverse affect on portfolio management, as determined by portfolio management in its sole discretion, such as causing the underlying fund to maintain a higher level of cash than would otherwise be the case, or causing the underlying fund to liquidate investments prematurely; and 18 [diamond] increased brokerage and administrative expenses. To protect our policy owners and the underlying funds from Disruptive Trading, we have adopted certain market timing policies and procedures. Under our market timing policy, we could modify your transfer privileges for some or all of the subaccounts. Modifications include, but are not limited to, not accepting a transfer request from you or from any person, asset allocation service, and/or market timing service made on your behalf. We may also limit the amount that may be transferred into or out of any subaccount at any one time. Unless prohibited by the terms of the policy, we may (but are not obligated to): [diamond] limit the dollar amount and frequency of transfers (e.g., prohibit more than one transfer a week, or more than two a month, etc.), [diamond] restrict the method of making a transfer (e.g., require that all transfers into a particular subaccount be sent to our Service Center by first class U.S. mail and rescind telephone or fax transfer privileges), [diamond] require a holding period for some subaccounts (e.g., prohibit transfers into a particular subaccount within a specified period of time after a transfer out of that subaccount), [diamond] impose redemption fees on short-term trading (or implement and administer redemption fees imposed by one or more of the underlying funds), or [diamond] impose other limitations or restrictions. Currently we attempt to detect Disruptive Trading by monitoring both the dollar amount of individual transfers and the frequency of a policy owner's transfers. With respect to both dollar amount and frequency, we may consider an individual transfer alone or when combined with transfers from other policies owned by or under the control or influence of the same individual or entity. We currently review transfer activity on a regular basis. We also consider any concerns brought to our attention by the managers of the underlying funds. We may change our monitoring procedures at any time without notice. Because we reserve discretion in applying these policies, they may not be applied uniformly. However, we will to the best of our ability apply these policies uniformly. Consequently, there is a risk that some policy owners could engage in market timing while others will bear the effects of their market timing. Currently we attempt to detect Disruptive Trading by monitoring activity for all policies. If a policy owner's transfer request exceeds the transfer parameters, we may send the owner a warning letter. Then, if at any time thereafter the owner's transfer activity exceeds the transfer parameters, we will revoke the policy owner's right to make Internet and Interactive Voice Response (IVR) transfers. We will notify policy owners in writing (by mail to their address of record on file with us) if we limit their trading. We have adopted these policies and procedures as a preventative measure to protect all policy owners from the potential affects of Disruptive Trading, while also abiding by any rights that policy owners may have to make transfers and providing reasonable and convenient methods of making transfers that do not have the potential to harm other policy owners. We currently do not make any exceptions to the policies and procedures discussed above to detect and deter Disruptive Trading. We may reinstate Internet, IVR, telephone and fax transfer privileges after they are revoked, but we will not reinstate these privileges if we have reason to believe that they might be used thereafter for Disruptive Trading. We cannot guarantee that our monitoring will be 100% successful in detecting all transfer activity that exceeds the parameters discussed above (and we do not guarantee that these are appropriate transfer parameters to prevent Disruptive Trading). Moreover, we cannot guarantee that revoking or limiting a policy owner's Internet, IVR, telephone and fax transfer privileges will successfully deter all Disruptive Trading. In addition, some of the underlying funds are available to insurance companies other than Phoenix and we do not know whether those other insurance companies have adopted any policies and procedures to detect and deter Disruptive Trading, or if so what those policies and procedures might be. Because we may not be able to detect or deter all Disruptive Trading and because some of these funds are available through other insurance companies, some policy owners may be treated differently than others, resulting in the risk that some policy owners could engage in market timing while others will bear the effects of their market timing. We may, without prior notice, take whatever action we deem appropriate to comply with or take advantage of any state or federal regulatory requirement. In addition, orders for the purchase of underlying fund shares are subject to acceptance by the relevant fund. We reserve the right to reject, without prior notice, any transfer request into any subaccount if the purchase of shares in the corresponding underlying fund is not accepted for any reason. We do not include transfers made pursuant to the Dollar Cost Averaging, Automatic Asset Rebalancing or other similar programs when applying our market timing policy. SYSTEMATIC TRANSFER PROGRAMS You may elect a systematic transfer program that we offer under the policy. We reserve the right to change, eliminate or add optional programs subject to applicable laws. We base transfers under a Systematic Transfer Program on the subaccount values on the first day of the month following our receipt of your transfer request. Should the first day of the month fall on a holiday or weekend, we will process the transfer on the next business day. You may have only one program in effect at a time. DOLLAR COST AVERAGING PROGRAM: Dollar Cost Averaging periodically transfers policy value from one of the subaccounts or from the Guaranteed Interest Account (a "source account") to one or several of the available subaccounts ("target subaccounts"). You choose to make these transfers monthly, 19 quarterly, semiannually or annually. The minimums you may transfer from the source account are: [diamond] $25 monthly [diamond] $150 semiannually [diamond] $75 quarterly [diamond] $300 annually You must have at least $1,000 in the source account to begin a Dollar Cost Averaging Program. Should the value in the source account fall below the transfer amount, we will transfer the remaining balance and end the Program. Transfers must be made in approximately equal amounts over a minimum of 18 months. The Dollar Cost Averaging Program is not available if you invest through a bank draft program. You may start or discontinue this program at any time by submitting a written request to VPMO or calling VULA (see page one). Dollar Cost Averaging does not ensure a profit nor guarantee against a loss in a declining market. The Dollar Cost Averaging Program is not available while the Asset Rebalancing Program is in effect. We do not charge for this program. ASSET REBALANCING PROGRAM: Under this program, we transfer policy value among the subaccounts to match your chosen allocation percentages. You can choose to have us make these transfers monthly, quarterly, semi-annually or annually. We do not permit transfers to or from the Guaranteed Interest Account. You may start or discontinue this program at any time by submitting a written request to VPMO or calling VULA (see page one). The Asset Rebalancing Program does not ensure a profit nor guarantee against a loss in a declining market. The Asset Rebalancing Program is not available while the Dollar Cost Averaging Program is in effect. We do not charge for this program. LOANS Generally, while the policy is in force, a loan may be taken against the policy up to the available loan value. The loan value on any day is 90% of the policy value reduced by an amount equal to the surrender charge. The available loan value is the loan value on the current day less any outstanding debt. The amount of any loan will be added to the loaned portion of the Guaranteed Interest Account and subtracted from the policy's share of the subaccounts or the nonloaned portion of the Guaranteed Interest Account, based on the allocation requested at the time of the loan. The total reduction will equal the amount added to the loaned portion of the Guaranteed Interest Account. Allocations generally must be expressed in terms of whole percentages. If no allocation request is made, the amount subtracted from the share of each subaccount or the nonloaned portion of the Guaranteed Interest Account will be determined in the same manner as provided for monthly deductions. Interest will be credited and the loaned portion of the Guaranteed Interest Account will increase at an effective annual rate of 6%, compounded daily and payable in arrears. At the end of each policy year and at the time of any debt repayment, interest credited to the loaned portion of the Guaranteed Interest Account will be transferred to the nonloaned portion of the Guaranteed Interest Account. Debt may be repaid at any time during the lifetime of the insured while the policy is in force. Any debt repayment received by us during a grace period will be reduced to pay any overdue monthly deductions and only the balance will be applied to reduce the debt. Such balance will first be used to pay any outstanding accrued loan interest, and then will be applied to reduce the loaned portion of the Guaranteed Interest Account. The nonloaned portion of the Guaranteed Interest Account will be increased by the same amount the loaned portion is decreased. If the amount of a loan repayment exceeds the remaining loan balance and accrued interest, the excess will be allocated among the subaccounts as you may request at the time of the repayment and, if no allocation request is made, according to the most recent premium allocation schedule on file. Payments received by us for the policy will be applied directly to reduce outstanding debt unless specified as a premium payment by you. Until the debt is fully repaid, additional debt repayments may be made at any time during the lifetime of the insured while the policy is in force. Failure to repay a policy loan or to pay loan interest will not terminate the policy unless the policy value becomes insufficient to maintain the policy in force. Policy value for loaned amounts increases at the rate we credit the loaned portion of the Guaranteed Interest Account, whereas non-loaned policy value varies with the investment performance of the chosen subaccounts or at the rate we credit the non-loaned portion of the Guaranteed Interest Account. Loans can also reduce your policy's death benefit. We deduct the amount of any outstanding loans plus any accrued loan interest from your policy value before we calculate the death benefit. The amount available for a full surrender is similarly reduced by the amount of any outstanding loans and loan interest. The proceeds of policy loans may be subject to federal income tax. See "Federal Income Tax Considerations." In the future, we may not allow policy loans of less than $500, unless such loan is used to pay a premium on another Phoenix policy. [diamond] You will pay interest on the loan at the noted effective annual rates, compounded daily and payable in arrears. The loan interest rate in effect are as follows: Policy Years 1-10 (or insured's age 65 if earlier): 8% Policy Years and thereafter: 7% At the end of each policy year, any interest due on the debt will be treated as a new loan and will be offset by a transfer from your subaccounts and the nonloaned portion of the Guaranteed Interest Account to the loaned portion of the Guaranteed Interest Account. A policy loan, whether or not repaid, has a permanent effect on the policy value because the investment results of the subaccounts or nonloaned portion of the Guaranteed Interest Account will apply only to the amount remaining in the 20 subaccounts or the nonloaned portion of the Guaranteed Interest Account. The longer a loan is outstanding, the greater the effect is likely to be. The effect could be favorable or unfavorable. If the subaccounts or the nonloaned portion of the Guaranteed Interest Account earn more than the annual interest rate for funds held in the loaned portion of the Guaranteed Interest Account, the policy value does not increase as rapidly as it would have had no loan been made. If the subaccounts or the Guaranteed Interest Account earn less than the annual interest rate for funds held in the loaned portion of the Guaranteed Interest Account, the policy value is greater than it would have been had no loan been made. A policy loan, whether or not repaid, also has a similar effect on the policy's death benefit due to any resulting differences in cash surrender value. LAPSE Unlike conventional life insurance policies, the payment of the issue premium, no matter how large, or the payment of additional premiums will not necessarily continue the policy in force to its maturity date. If on any monthly calculation day during the first five policy years, the policy value is insufficient to cover the monthly deduction, a grace period of 61 days will be allowed for the payment of an amount equal to three times the required monthly deduction. If on any monthly calculation day during any subsequent policy year, the cash surrender value (which should have become positive) is less than the required monthly deduction, a grace period of 61 days will be allowed for the payment of an amount equal to three times the required monthly deduction. During the grace period, the policy will continue in force but subaccount transfers, loans, partial or full surrenders will not be permitted. Failure to pay the additional amount within the grace period will result in lapse of the policy, but not until 30 days has passed after we have mailed a written notice to you. If a premium payment for the additional amount is received by us during the grace period, any amount of premium over what is required to prevent lapse will be allocated among the subaccounts or to the Guaranteed Interest Account according to the current premium allocation schedule. In determining the amount of "excess" premium to be applied to the subaccounts or the Guaranteed Interest Account, we will deduct the premium tax and the amount needed to cover any monthly deductions made during the grace period. If the insured dies during the grace period, the death benefit will equal the amount of the death benefit immediately prior to the commencement of the grace period. FEDERAL INCOME TAX CONSIDERATIONS - -------------------------------------------------------------------------------- INTRODUCTION This discussion is general in nature and is not intended as income tax advice. We make no attempt to consider any estate and inheritance taxes, or any state, local or other tax laws. Because this discussion is based upon our understanding of federal income tax laws as they are currently interpreted, we cannot guarantee the income tax status of any policy. The Internal Revenue Service ("IRS") makes no representation regarding the likelihood of continuation of current federal income tax laws, U.S. Treasury regulations or of the current interpretations. We reserve the right to make changes to the policy to assure that it will continue to qualify as a life insurance contract for federal income tax purposes. The ultimate effect of federal income taxes on values under the Separate Account and on the economic benefit to you or your beneficiary depends on our income tax status and upon the income tax status of the individual concerned. For complete information on federal and state income tax considerations, an income tax advisor should be consulted. The Internal Revenue Service ("IRS") makes no representation regarding the likelihood of continuation of current federal income tax laws, Treasury regulations or of the current interpretations. We reserve the right to make changes to the policy to assure that it will continue to qualify as a life insurance contract for federal income tax purposes. INCOME TAX STATUS We are taxed as a life insurance company under the Internal Revenue Code of 1986 (the "Code"), as amended. For federal income tax purposes, neither the Separate Account nor the Guaranteed Interest Account is a separate entity from Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company and their operations form a part of the companies. Investment income and realized capital gains on the assets of the Separate Account are reinvested and taken into account in determining the value of the Separate Account. Investment income of the Separate Account, including realized net capital gains, is not taxed to us. Due to our income tax status under current provisions of the Code, no charge currently will be made to the Separate Account for our federal income taxes which may be attributable to the Separate Account. We reserve the right to make a deduction for taxes if our federal income tax treatment is determined to be other than what we currently believe it to be, if changes are made affecting the income tax treatment to our variable life insurance contracts, or if changes occur in our income tax status. If imposed, such charge would be equal to the federal income taxes attributable to the investment results of the Separate Account. POLICY BENEFITS DEATH BENEFIT PROCEEDS The policy, whether or not it is a modified endowment contract (see "Modified Endowment Contracts"), should be treated as meeting the definition of a life insurance contract for federal income tax purposes under Section 7702 of the Code. As such, the death benefit proceeds thereunder should be excludable from the gross income of the beneficiary under Code Section 101(a)(1). Also, a policy owner should not be considered to be in constructive receipt of the cash value, including investment income. However, see the sections below on possible taxation of amounts received under the policy, via full surrender, partial surrender or loan. In addition, a benefit paid under a Living Benefits Rider may be taxable as income in the year of receipt. 21 Code Section 7702 imposes certain conditions with respect to premiums received under a policy. We monitor the premiums to assure compliance with such conditions. However, if the premium limitation is exceeded during the year, we may return the excess premium, with interest, to the policy owner within 60 days after the end of the policy year, and maintain the qualification of the policy as life insurance for federal income tax purposes. FULL SURRENDER Upon full surrender of a policy for its cash value, the excess, if any, of the cash value (unreduced by any outstanding indebtedness) over the premiums paid will be treated as ordinary income for federal income tax purposes. The full surrender of a policy that is a modified endowment contract may result in the imposition of an additional 10% tax on any income received. PARTIAL SURRENDER If the policy is a modified endowment contract, partial surrenders and other distributions are fully taxable to the extent of income in the policy and are possibly subject to an additional 10% tax. See the discussion on modified endowment contracts below. If the policy is not a modified endowment contract, partial surrenders still may be taxable, as follows. Code Section 7702(f)(7) provides that where a reduction in death benefits occurs during the first 15 years after a policy is issued and there is a cash distribution associated with that reduction, the policy owner may be taxed on all or a part of that amount distributed. A reduction in death benefits may result from a partial surrender. After 15 years, the proceeds will not be subject to tax, except to the extent such proceeds exceed the total amount of premiums paid but not previously recovered. We suggest you consult with your tax advisor in advance of a proposed decrease in death benefits or a partial surrender as to the portion, if any, which would be subject to tax, and in addition as to the impact such partial surrender might have under the new rules affecting modified endowment contracts. The benefit payment under the Living Benefits Rider is not considered a partial surrender. LOANS We believe that any loan received under a policy will be treated as your indebtedness. If the policy is a modified endowment contract, loans are fully taxable to the extent of income in the policy and are possibly subject to an additional 10% tax. See the discussion on modified endowment contracts. If the policy is not a modified endowment contract, we believe that no part of any loan under a policy will constitute income to you. The deductibility by a policy owner of loan interest under a policy may be limited under Code Section 264, depending on the circumstances. A policy owner intending to fund premium payments through borrowing should consult an income tax advisor with respect to the tax consequences. Under the "personal" interest limitation provisions of the Code, interest on policy loans used for personal purposes is not tax deductible. Other rules may apply to allow all or part of the interest expense as a deduction if the loan proceeds are used for "trade or business" or "investment" purposes. See your tax advisor for further guidance. BUSINESS-OWNED POLICIES If a business or a corporation owns the policy, the Code may impose additional restrictions. The Code limits the interest deduction on business-owned policy loans and may impose tax upon the inside build-up of corporate-owned life insurance policies through the corporate alternative minimum tax. MODIFIED ENDOWMENT CONTRACTS GENERAL Pursuant to Code Section 72(e), loans and other amounts received under modified endowment contracts will, in general, be taxed to the extent of accumulated income (generally, the excess of cash value over premiums paid). Life insurance policies can be modified endowment contracts if they fail to meet what is known as "the 7-pay test." This test compares your policy to a hypothetical life insurance policy of equal face amount which requires seven equal annual premiums to be "fully paid-up," continuing to provide a level death benefit with no further premiums. A policy becomes a modified endowment contract if, at any time during the first seven years, the cumulative premium paid on the policy exceeds the cumulative premium that would have been paid under the hypothetical policy. Premiums paid during a policy year but which are returned by us with interest within 60 days after the end of the policy year will be excluded from the 7-pay test. A life insurance policy received in exchange for a modified endowment contract will be treated as a modified endowment contract. REDUCTION IN BENEFITS DURING THE FIRST SEVEN YEARS If there is a reduction in death benefits or reduction or elimination of any Optional Insurance Benefits previously elected, during the first seven policy years, the premiums are redetermined for purposes of the 7-pay test as if the policy originally had been issued at the reduced death benefit level and the new limitation is applied to the cumulative amount paid for each of the first seven policy years. DISTRIBUTIONS AFFECTED If a policy fails to meet the 7-pay test, it is considered a modified endowment contract only as to distributions in the year in which the test is failed and all subsequent policy years. However, distributions made in anticipation of such failure (there is a presumption that distributions made within two years prior to such failure were "made in anticipation") also are considered distributions under a modified endowment contract. If the policy satisfies the 7-pay test for seven years, distributions and loans generally will not be subject to the modified endowment contract rules. PENALTY TAX Any amounts taxable under the modified endowment contract rule will be subject to an additional 10% excise tax, with certain exceptions. This additional tax will not apply in the case of distributions that are: [diamond] made on or after the taxpayer attains age 59 1/2; [diamond] attributable to the taxpayer's disability (within the meaning of Code Section 72(m)(7)); or 22 [diamond] part of a series of substantially equal periodic payments (not less often than annually) made for the life (or life expectancy) of the taxpayer or the joint lives (or life expectancies) of the taxpayer and his beneficiary. MATERIAL CHANGE RULES Any determination of whether the policy meets the 7-pay test will begin again any time the policy undergoes a "material change," which includes any increase in death benefits or any increase in or addition of a qualified additional benefit, or any increase in or addition of any rider benefit available as an Optional Insurance Benefit (described above), with the following two exceptions. [diamond] First, if an increase is attributable to premiums paid "necessary to fund" the lowest death benefit and qualified additional benefits payable in the first seven policy years or to the crediting of interest or dividends with respect to these premiums, the "increase" does not constitute a material change. [diamond] Second, to the extent provided in regulations, if the death benefit or qualified additional benefit increases as a result of a cost-of-living adjustment based on an established broad-based index specified in the policy, this does not constitute a material change if: o the cost-of-living determination period does not exceed the remaining premium payment period under the policy; and o the cost-of-living increase is funded ratably over the remaining premium payment period of the policy. A reduction in death benefits is not considered a material change unless accompanied by a reduction in premium payments. A material change may occur at any time during the life of the policy (within the first seven years or thereafter), and future taxation of distributions or loans would depend upon whether the policy satisfied the applicable 7-pay test from the time of the material change. An exchange of policies is considered to be a material change for all purposes. SERIAL PURCHASE OF MODIFIED ENDOWMENT CONTRACTS All modified endowment contracts issued by the same insurer (or affiliated companies of the insurer) to the same policy owner within the same calendar year will be treated as one modified endowment contract in determining the taxable portion of any loans or distributions made to the policy owner. The U.S. Treasury has been given specific legislative authority to issue regulations to prevent the avoidance of the new distribution rules for modified endowment contracts. A tax advisor should be consulted about the tax consequences of the purchase of more than one modified endowment contract within any calendar year. LIMITATIONS ON UNREASONABLE MORTALITY AND EXPENSE CHARGES The Code imposes limitations on unreasonable mortality and expense charges for purposes of ensuring that a policy qualifies as a life insurance contract for federal income tax purposes. The mortality charges taken into account to compute permissible premium levels may not exceed those charges required to be used in determining the federal income tax reserve for the policy, unless U.S. Treasury regulations prescribe a higher level of charge. In addition, the expense charges taken into account under the guideline premium test are required to be reasonable, as defined by the U.S. Treasury regulations. We will comply with the limitations for calculating the premium we are permitted to receive from you. QUALIFIED PLANS A policy may be used in conjunction with certain qualified plans. Since the rules governing such use are complex, you should not use the policy in conjunction with a qualified plan until you have consulted a pension consultant or income tax advisor. DIVERSIFICATION STANDARDS To comply with the Diversification Regulations under Code Section 817(h), ("Diversification Regulations") each series is required to diversify its investments. The Diversification Regulations generally require that on the last day of each calendar quarter the series' assets be invested in no more than: [diamond] 55% in any one investment [diamond] 70% in any two investments [diamond] 80% in any three investments [diamond] 90% in any four investments A "look-through" rule applies to treat a pro rata portion of each asset of a series as an asset of the Separate Account; therefore, each series will be tested for compliance with the percentage limitations. For purposes of these diversification rules, all securities of the same issuer are treated as a single investment, but each United States government agency or instrumentality is treated as a separate issuer. The general diversification requirements are modified if any of the assets of the Separate Account are direct obligations of the U.S. Treasury. In this case, there is no limit on the investment that may be made in U.S. Treasury securities, and for purposes of determining whether assets other than U.S. Treasury securities are adequately diversified, the generally applicable percentage limitations are increased based on the value of the Separate Account's investment in U.S. Treasury securities. Notwithstanding this modification of the general diversification requirements, the portfolios of the funds will be structured to comply with the general diversification standards because they serve as an investment vehicle for certain variable annuity contracts that must comply with these standards. In connection with the issuance of the Diversification Regulations, the U.S. Treasury announced that such regulations do not provide guidance concerning the extent to which you may direct your investments to particular divisions of a separate account. It is possible that a revenue ruling or other form of administrative pronouncement in this regard may be issued in the near future. It is not clear, at this time, what such a revenue ruling or other pronouncement will provide. It is 23 possible that the policy may need to be modified to comply with such future U.S. Treasury announcements. For these reasons, we reserve the right to modify the policy, as necessary, to prevent you from being considered the owner of the assets of the Separate Account. We intend to comply with the Diversification Regulations to assure that the policies continue to qualify as a life insurance contract, for federal income tax purposes. CHANGE OF OWNERSHIP OR INSURED OR ASSIGNMENT Changing the policy owner or the insured or an exchange or assignment of the policy may have tax consequences depending on the circumstances. Code Section 1035 provides that a life insurance contract can be exchanged for another life insurance contract, without recognition of gain or loss, assuming that no money or other property is received in the exchange, and that the policies relate to the same Insured. If the surrendered policy is subject to a policy loan, this may be treated as the receipt of money on the exchange. We recommend that any person contemplating such actions seek the advice of an income tax advisor. OTHER TAXES Federal estate tax, state and local estate, inheritance and other tax consequences of ownership or receipt of policy proceeds depend on the circumstances of each policy owner or beneficiary. We do not make any representations or guarantees regarding the tax consequences of any policy with respect to these types of taxes. WITHHOLDING We are required to withhold federal income taxes on the taxable portion of any amounts received under the policy unless you elect to not have any withholding or in certain other circumstances. You are not permitted to elect out of withholding if you do not provide a social security number or other taxpayer identification number. Special withholding rules apply to payments made to nonresident aliens. You are liable for payment of federal income taxes on the taxable portion of any amounts received under the policy. You may be subject to penalties if your withholding or estimated tax payments are insufficient. FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The financial statements of Phoenix Life Variable Universal Life Account (Flex Edge, Flex Edge Success(R), Joint Edge(R) and Individual Edge(R)) at December 31, 2004 and the results of its operations and the changes in its net assets for each of the periods indicated and the consolidated financial statements of Phoenix Life Insurance Company at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 are contained in the Statement of Additional Information (SAI), which you can get free of charge by calling the toll free number given on page one. The consolidated financial statements of Phoenix Life Insurance Company included herein should be considered only as bearing upon the ability of Phoenix Life Insurance Company to meet its obligations under the policies. You should not consider them as bearing on the investment performance of the assets held in the Separate Account or on Guaranteed Interest Account rates that we credit during a guarantee period. 24 APPENDIX A - INVESTMENT OPTIONS - -------------------------------------------------------------------------------- INVESTMENT TYPES - -------------------------------------------------------------------------------------------------------------------
Investment Type ------------------------------------------------------------------ Aggressive Growth & Subaccount Growth Conservative Growth Income Income Specialty - ------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series |X| - ------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund |X| - ------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund |X| - ------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund |X| - ------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Federated Fund for U.S. Government Securities II |X| - ------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II |X| - ------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund |X| - ------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund |X| - ------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund |X| - ------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund |X| - ------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund |X| - ------------------------------------------------------------------------------------------------------------------- Lazard Retirement Small Cap Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Bond-Debenture Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Growth and Income Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Mid-Cap Value Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Juno Fund |X| - ------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Nova Fund |X| - ------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund |X| - ------------------------------------------------------------------------------------------------------------------- Scudder VIT EAFE(R) Equity Index Fund |X| - ------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund |X| - ------------------------------------------------------------------------------------------------------------------- Technology Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Wanger International Select |X| - ------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap |X| - ------------------------------------------------------------------------------------------------------------------- Wanger Select |X| - ------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies |X| - -------------------------------------------------------------------------------------------------------------------
A-1 INVESTMENT ADVISORS - ----------------------------------------------------------------------------------------------------------------------------------
Advisors - ---------------------------------------------------------------------------------------------------------------------------------- Duff & Phoenix Phoenix Phelps Deutsche Federated Investment Variable Investment AIM Engemann Fred Alger Asset Investment Counsel, Advisors, Management Advisors, Asset Management Management Management Subaccounts Inc. Inc. Co. Inc. Management Inc. Inc. Company - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio |X| - ---------------------------------------------------------------------------------------------------------------------------------- Federated Fund for U.S. Government Securities II |X| - ---------------------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II |X| - ---------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund - ---------------------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund - ---------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund - ---------------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund - ---------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund - ---------------------------------------------------------------------------------------------------------------------------------- Lazard Retirement Small Cap Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Bond-Debenture Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Growth and Income Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Mid-Cap Value Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Juno Fund - ---------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Nova Fund - ---------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund - ---------------------------------------------------------------------------------------------------------------------------------- Scudder VIT EAFE(R) Equity Index Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- Technology Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Wanger International Select - ---------------------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap - ---------------------------------------------------------------------------------------------------------------------------------- Wanger Select - ---------------------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies - ---------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- Advisors - ----------------------------------------------------------------------------------------------------------------------------- Fidelity Morgan Management Franklin Lazard Lord Stanley Templeton Templeton and Mutual Asset Abbett Investment Rydex Asset Global Research Advisers, Management & Co. Management Global Management, Advisors Subaccounts Company LLC LLC LLC Inc. Advisors Ltd. Limited - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series - ----------------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund - ----------------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund - ----------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund - ----------------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio - ----------------------------------------------------------------------------------------------------------------------------- Federated Fund for U.S. Government Securities II - ----------------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II - ----------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund - ----------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund - ----------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Lazard Retirement Small Cap Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Bond-Debenture Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Growth and Income Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Mid-Cap Value Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Juno Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Nova Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Scudder VIT EAFE(R) Equity Index Fund - ----------------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund - ----------------------------------------------------------------------------------------------------------------------------- Technology Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Wanger International Select - ----------------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap - ----------------------------------------------------------------------------------------------------------------------------- Wanger Select - ----------------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies - ----------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------ Advisors - ------------------------------------------------------------------ Templeton Wanger Investment Asset Counsel, Management, Subaccounts LLC L.P. - ------------------------------------------------------------------ Phoenix-Aberdeen International Series - ------------------------------------------------------------------ Phoenix-AIM Growth Series - ------------------------------------------------------------------ Phoenix-Alger Small-Cap Growth Series - ------------------------------------------------------------------ Phoenix-Alliance/Bernstein Enhanced Index Series - ------------------------------------------------------------------ Phoenix-Duff & Phelps Real Estate Securities Series - ------------------------------------------------------------------ Phoenix-Engemann Capital Growth Series - ------------------------------------------------------------------ Phoenix-Engemann Growth and Income Series - ------------------------------------------------------------------ Phoenix-Engemann Small-Cap Growth Series - ------------------------------------------------------------------ Phoenix-Engemann Strategic Allocation Series - ------------------------------------------------------------------ Phoenix-Engemann Value Equity Series - ------------------------------------------------------------------ Phoenix-Goodwin Money Market Series - ------------------------------------------------------------------ Phoenix-Goodwin Multi-Sector Fixed Income Series - ------------------------------------------------------------------ Phoenix-Goodwin Multi-Sector Short Term Bond Series - ------------------------------------------------------------------ Phoenix-Kayne Rising Dividends Series - ------------------------------------------------------------------ Phoenix-Kayne Small-Cap Quality Value Series - ------------------------------------------------------------------ Phoenix-Lazard International Equity Select Series - ------------------------------------------------------------------ Phoenix-Northern Dow 30 Series - ------------------------------------------------------------------ Phoenix-Northern Nasdaq-100 Index(R) Series - ------------------------------------------------------------------ Phoenix-Sanford Bernstein Mid-Cap Value Series - ------------------------------------------------------------------ Phoenix-Sanford Bernstein Small-Cap Value Series - ------------------------------------------------------------------ Phoenix-Seneca Mid-Cap Growth Series - ------------------------------------------------------------------ Phoenix-Seneca Strategic Theme Series - ------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund - ------------------------------------------------------------------ AIM V.I. Mid Cap Core Equity Fund - ------------------------------------------------------------------ AIM V.I. Premier Equity Fund - ------------------------------------------------------------------ Alger American Leveraged AllCap Portfolio - ------------------------------------------------------------------ Federated Fund for U.S. Government Securities II - ------------------------------------------------------------------ Federated High Income Bond Fund II - ------------------------------------------------------------------ VIP Contrafund(R) Portfolio - ------------------------------------------------------------------ VIP Growth Opportunities Portfolio - ------------------------------------------------------------------ VIP Growth Portfolio - ------------------------------------------------------------------ Mutual Shares Securities Fund - ------------------------------------------------------------------ Templeton Developing Markets Securities Fund - ------------------------------------------------------------------ Templeton Foreign Securities Fund |X| - ------------------------------------------------------------------ Templeton Global Asset Allocation Fund |X| - ------------------------------------------------------------------ Templeton Growth Securities Fund - ------------------------------------------------------------------ Lazard Retirement Small Cap Portfolio - ------------------------------------------------------------------ Bond-Debenture Portfolio - ------------------------------------------------------------------ Growth and Income Portfolio - ------------------------------------------------------------------ Mid-Cap Value Portfolio - ------------------------------------------------------------------ Rydex Variable Trust Juno Fund - ------------------------------------------------------------------ Rydex Variable Trust Nova Fund - ------------------------------------------------------------------ Rydex Variable Trust Sector Rotation Fund - ------------------------------------------------------------------ Scudder VIT EAFE(R) Equity Index Fund - ------------------------------------------------------------------ Scudder VIT Equity 500 Index Fund - ------------------------------------------------------------------ Technology Portfolio - ------------------------------------------------------------------ Wanger International Select |X| - ------------------------------------------------------------------ Wanger International Small Cap |X| - ------------------------------------------------------------------ Wanger Select |X| - ------------------------------------------------------------------ Wanger U.S. Smaller Companies |X| - ------------------------------------------------------------------
A-2 INVESTMENT SUBADVISORS - ------------------------------------------------------------------------------------------------------------------------------------
Subadvisors -------------------------------------------------------------------------------------- Kayne Anderson Aberdeen AIM Alliance Rudnick Lazard Asset Capital Capital Engemann Fred Alger Investment Asset Management Management, Management, Asset Management, Management, Management Subaccounts Inc. Inc. L.P. Management Inc. LLC LLC - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Aberdeen International Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-AIM Growth Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Alger Small-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Alliance/Bernstein Enhanced Index Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Capital Growth Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Growth and Income Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Small-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Strategic Allocation Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Value Equity Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Kayne Rising Dividends Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Kayne Small-Cap Quality Value Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Lazard International Equity Select Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Northern Dow 30 Series - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Northern Nasdaq-100 Index(R) Series - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Sanford Bernstein Mid-Cap Value Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Sanford Bernstein Small-Cap Value Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Seneca Mid-Cap Growth Series - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Seneca Strategic Theme Series - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------- Subadvisors --------------------------- Northern Seneca Trust Capital Investments, Management, Subaccounts N.A. LLC - ------------------------------------------------------------------------- Phoenix-Aberdeen International Series - ------------------------------------------------------------------------- Phoenix-AIM Growth Series - ------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series - ------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series - ------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series - ------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series - ------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series - ------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series - ------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series - ------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series - ------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series - ------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series - ------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series |X| - ------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series |X| - ------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series - ------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series - ------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series |X| - ------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series |X| - -------------------------------------------------------------------------
A-3 PHOENIX LIFE INSURANCE COMPANY P.O. Box 22012 Albany, NY 12201-2012 Additional information about Flex Edge (the "Policy") and the Phoenix Life Variable Universal Life Account (the "Separate Account") is contained in the Policy's Statement of Additional Information ("SAI") dated May 1, 2005, which has been filed with the Securities and Exchange Commission ("SEC") and is incorporated by reference into this prospectus. The SAI, personalized illustrations of death benefits, cash surrender values and cash values are available, without charge, upon request. Inquiries and requests for the SAI and other requests should be directed in writing to Phoenix Variable Products Mail Operations, PO Box 8027, Boston, Massachusetts 02266-8027, or by telephone (800) 541-0171. Information about the Separate Account, including the SAI, can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room by calling the SEC at (202) 942-8090. Reports and other information about the Separate Account are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov. Copies of the information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC Public Reference Section, 450 Fifth Street, NW, Washington, D.C. 20549-0102. Phoenix Life Insurance Company A member of The Phoenix Companies, Inc. PhoenixWealthManagement.com 2667 Investment Company Act File No. 811-4721 [logo] PHOENIX WEALTH MANAGEMENT(R) L0141PR (C) 2005 The Phoenix Companies, Inc. [logo] Printed on recycled paper. 5-05
[VERSION B] FLEX EDGE SUCCESS(R) JOINT EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT ISSUED BY: PHOENIX LIFE INSURANCE COMPANY PROSPECTUS MAY 1, 2005 This prospectus describes a flexible premium fixed and variable universal life insurance policy. The policy provides lifetime insurance protection for as long as it remains in force. You may allocate premiums and policy value to the Guaranteed Interest Account, Long-term Guaranteed Interest Account, (collectively, "Guaranteed Interest Accounts") and/or one or more of the subaccounts of the Phoenix Life Variable Universal Life Account ("Separate Account"). The subaccounts purchase, at net asset value, shares of the following funds: THE PHOENIX EDGE SERIES FUND - ---------------------------- [diamond] Phoenix-Aberdeen International Series [diamond] Phoenix-AIM Growth Series (fka, Phoenix-MFS Investors Growth Stock Series) [diamond] Phoenix-Alger Small-Cap Growth Series (fka, Phoenix-State Street Research Small-Cap Growth Series) [diamond] Phoenix-Alliance/Bernstein Enhanced Index Series [diamond] Phoenix-Duff & Phelps Real Estate Securities Series [diamond] Phoenix-Engemann Capital Growth Series [diamond] Phoenix-Engemann Growth and Income Series (fka, Phoenix-Oakhurst Growth and Income Series) [diamond] Phoenix-Engemann Small-Cap Growth Series (fka, Phoenix-Engemann Small & Mid-Cap Growth Series) [diamond] Phoenix-Engemann Strategic Allocation Series (fka, Phoenix-Oakhurst Strategic Allocation Series) [diamond] Phoenix-Engemann Value Equity Series (fka, Phoenix-Oakhurst Value Equity Series) [diamond] Phoenix-Goodwin Money Market Series [diamond] Phoenix-Goodwin Multi-Sector Fixed Income Series [diamond] Phoenix-Goodwin Multi-Sector Short Term Bond Series [diamond] Phoenix-Kayne Rising Dividends Series [diamond] Phoenix-Kayne Small-Cap Quality Value Series [diamond] Phoenix-Lazard International Equity Select Series [diamond] Phoenix-Northern Dow 30 Series [diamond] Phoenix-Northern Nasdaq-100 Index(R) Series [diamond] Phoenix-Sanford Bernstein Mid-Cap Value Series [diamond] Phoenix-Sanford Bernstein Small-Cap Value Series [diamond] Phoenix-Seneca Mid-Cap Growth Series [diamond] Phoenix-Seneca Strategic Theme Series AIM VARIABLE INSURANCE FUNDS - SERIES I SHARES - ---------------------------------------------- [diamond] AIM V.I. Capital Appreciation Fund [diamond] AIM V.I. Mid Cap Core Equity Fund [diamond] AIM V.I. Premier Equity Fund THE ALGER AMERICAN FUND - CLASS O SHARES - ---------------------------------------- [diamond] Alger American Leveraged AllCap Portfolio FEDERATED INSURANCE SERIES - -------------------------- [diamond] Federated Fund for U.S. Government Securities II [diamond] Federated High Income Bond Fund II - Primary Shares FIDELITY(R) VARIABLE INSURANCE PRODUCTS - SERVICE CLASS - ------------------------------------------------------- [diamond] VIP Contrafund(R) Portfolio [diamond] VIP Growth Opportunities Portfolio [diamond] VIP Growth Portfolio FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - CLASS 2 - -------------------------------------------------------------- [diamond] Mutual Shares Securities Fund [diamond] Templeton Developing Markets Securities Fund * [diamond] Templeton Foreign Securities Fund [diamond] Templeton Global Asset Allocation Fund * [diamond] Templeton Growth Securities Fund LAZARD RETIREMENT SERIES - ------------------------ [diamond] Lazard Retirement Small Cap Portfolio LORD ABBETT SERIES FUND, INC. - CLASS VC - ---------------------------------------- [diamond] Bond-Debenture Portfolio [diamond] Growth and Income Portfolio [diamond] Mid-Cap Value Portfolio THE RYDEX VARIABLE TRUST - ------------------------ [diamond] Rydex Variable Trust Juno Fund [diamond] Rydex Variable Trust Nova Fund [diamond] Rydex Variable Trust Sector Rotation Fund SCUDDER INVESTMENTS VIT FUNDS - CLASS A - --------------------------------------- [diamond] Scudder VIT EAFE(R) Equity Index Fund [diamond] Scudder VIT Equity 500 Index Fund THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - CLASS I SHARES - -------------------------------------------------------- [diamond] Technology Portfolio WANGER ADVISORS TRUST - --------------------- [diamond] Wanger International Select [diamond] Wanger International Small Cap [diamond] Wanger Select [diamond] Wanger U.S. Smaller Companies * Not available for new investors It may not be in your best interest to purchase a policy to replace an existing life insurance policy or annuity contract. You must understand the basic features of the proposed policy and your existing coverage before you decide to replace your present coverage. You must also know if the replacement will result in any income taxes. The policy is neither a deposit nor an obligation of, underwritten or guaranteed by, any financial institution or credit union. It is not federally insured or endorsed by the Federal Deposit Insurance Corporation or any other state or federal agency. Policy investments are subject to risk, including the fluctuation of policy values and possible loss of principal invested or premiums paid. The Securities and Exchange Commission ("SEC") has neither approved nor disapproved these securities, nor passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. This prospectus provides important information that you should know before investing. Read and keep this prospectus for future reference.
IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT US AT: [envelope] PHOENIX VARIABLE PRODUCTS MAIL OPERATIONS ("VPMO") PO Box 8027 Boston, MA 02266-8027 [telephone] VARIABLE AND UNIVERSAL LIFE ADMINISTRATION ("VULA") 800/541-0171
1 TABLE OF CONTENTS Heading Page - -------------------------------------------------------------- GLOSSARY OF SPECIAL TERMS............................... 3 RISK/BENEFIT SUMMARY.................................... 4 Policy Benefits...................................... 4 Policy Risks......................................... 4 FEE TABLES.............................................. 6 Transaction Fees..................................... 6 Periodic Charges Other than Fund Operating Expenses.. 7 Minimum and Maximum Fund Operating Expenses.......... 9 Annual Fund Expenses................................. 10 PHOENIX LIFE INSURANCE COMPANY.......................... 12 PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT............ 12 Valuation Date....................................... 12 Performance History.................................. 12 VOTING RIGHTS........................................... 12 THE GUARANTEED INTEREST ACCOUNTS........................ 13 CHARGES AND DEDUCTIONS.................................. 13 General.............................................. 13 Charges Deducted from Premium Payments............... 14 Periodic Charges..................................... 14 Conditional Charges.................................. 15 Other Tax Charges.................................... 16 Fund Charges......................................... 16 THE POLICY.............................................. 16 Contract Rights: Owner, Insured, Beneficiary......... 16 Contract Limitations................................. 17 Purchasing a Policy.................................. 17 GENERAL ................................................ 18 Postponement of Payments............................. 18 Optional Insurance Benefits.......................... 18 Death Benefit........................................ 20 PAYMENT OF PROCEEDS..................................... 20 Surrender and Death Benefit Proceeds................. 20 Payment Options...................................... 20 Surrenders........................................... 21 Transfer of Policy Value............................. 22 Disruptive Trading and Market Timing................. 22 Loans................................................ 24 Lapse................................................ 25 FEDERAL INCOME TAX CONSIDERATIONS....................... 25 Introduction......................................... 25 Income Tax Status.................................... 25 Policy Benefits...................................... 26 Business-Owned Policies.............................. 26 Modified Endowment Contracts......................... 26 Limitations on Unreasonable Mortality and Expense Charges..................................... 27 Qualified Plans...................................... 27 Diversification Standards............................ 27 Change of Ownership or Insured or Assignment......... 28 Other Taxes.......................................... 28 Withholding.......................................... 28 FINANCIAL STATEMENTS.................................... 28 APPENDIX A - INVESTMENT OPTIONS......................... A-1 2 GLOSSARY OF SPECIAL TERMS - -------------------------------------------------------------------------------- The following is a list of terms and their meanings when used in this prospectus. ATTAINED AGE: The age of the insured on the birthday nearest the most recent policy anniversary. CASH SURRENDER VALUE: The cash surrender value is the policy value less any applicable surrender charge on the date of surrender and less any debt. DEATH BENEFIT OPTION: The type of death benefit described in effect. DEBT: Unpaid policy loans with accrued interest. DUE PROOF OF DEATH: A certified death certificate, or an order of a court of competent jurisdiction, or any other proof acceptable to us. GUARANTEED INTEREST ACCOUNT: The Guaranteed Interest Account is not part of the Separate Account; it is part of our general account. IN FORCE: The policy has not terminated or otherwise lapsed in accordance with the grace period and lapse provision. IN WRITING (WRITTEN NOTICE, WRITTEN REQUEST): Is a written form signed by you, satisfactory to us and received by us. INSURED: The person upon whose life the policy is issued. LONG-TERM GUARANTEED INTEREST ACCOUNT: The Long-term Guaranteed Interest Account is not part of the Separate Account; it is part of our general account. MONTHLY CALCULATION DATE: The first monthly calculation date is the same day as the policy date. Subsequent monthly calculation dates are the same days of each month thereafter or, if such day does not fall within a given month, the last day of that month will be the monthly calculation date. NET AMOUNT AT RISK: On a monthly calculation date it is the death benefit minus the policy value prior to the deduction of the cost of insurance charge. On any other day it is the death benefit minus the policy value. PAYMENT DATE: The valuation date on which a premium payment or loan repayment is received by us unless it is received after the close of the New York Stock Exchange in which case it will be the next valuation date. POLICY ANNIVERSARY: The anniversary of the policy date. POLICY DATE: The policy date shown on the schedule pages from which policy years and policy anniversaries are measured. POLICY MONTH: The period from one monthly calculation date up to, but not including, the next monthly calculation date. POLICY VALUE: The sum of your policy's share in the value of each subaccount plus the value of your policy allocated to the Guaranteed Interest Account. POLICY YEAR: The first policy year is the one-year period from the policy date up to, but not including, the first policy anniversary. Each succeeding policy year is the one-year period from the policy anniversary up to, but not including, the next policy anniversary. SEPARATE ACCOUNT: Phoenix Life Variable Universal Life Account. A separate investment account of Phoenix Life Insurance Company. SUBACCOUNTS: The accounts within our Separate Account to which nonloaned assets under the policy are allocated. UNIT: A standard of measurement used to determine the share of this policy in the value of each subaccount of the Separate Account. VALUATION PERIOD: The period in days from the end of one valuation date through the next valuation date. VULA: Variable Universal Life Administration. WE (OUR, US, COMPANY): Phoenix Life Insurance Company. YOU (YOUR): The owner of this policy at the time an owner's right is exercised. 3 RISK/BENEFIT SUMMARY - -------------------------------------------------------------------------------- This summary does not contain all of the detailed information that may be important to you. Please read the entire prospectus carefully before you decide to purchase a policy. This prospectus is a disclosure document which summarizes your rights under the insurance product that you are purchasing. As with any summary it may differ in certain instances from the underlying insurance policy. You should read your insurance policy carefully. Certain terms used throughout the prospectus have been defined and can be found in "Appendix B-Glossary of Special Terms." POLICY BENEFITS DEATH BENEFITS The policy is first and foremost, a life insurance policy. The policy can be purchased on one life (single life policies) or on two lives up to five lives (multiple life policies). While the policy remains in force we will pay a death benefit to your named beneficiary upon the death of the person insured under the policy. When more than one life is insured, we pay the death benefit when the first of the insureds dies. You will choose a death benefit when you apply for a policy. [diamond] Death Benefit Option 1 is equal to the greater of the policy's face amount, or the minimum death benefit. [diamond] Death Benefit Option 2 equals the greater of the face amount plus the policy value, or the minimum death benefit. You may change your Death Benefit Option at any time. Death Benefit Option 1 applies if you do not choose an option. Generally, the minimum face amount is $250,000. The minimum death benefit is equal to the policy value increased by a percentage taken from a table in the policy based on the policy year and the insured person's age. Also available for single life policies, is the Guaranteed Death Benefit Rider, an additional insurance option that you may purchase by paying specified premiums. LOANS AND SURRENDERS Generally, you may take loans against 90% of the policy's cash surrender value subject to certain conditions. The cash surrender value is the policy value reduced by outstanding loans and loan interest and any applicable surrender charge. You may partially surrender any part of the policy anytime. A partial surrender fee will apply and a separate surrender charge may also be imposed. You may fully surrender this policy anytime for its cash surrender value. A surrender charge may be imposed. TEMPORARY INSURANCE COVERAGE We will issue you a Temporary Insurance Receipt when you submit the complete, signed application and issue premium. This will provide you with immediate insurance protection under the terms set forth in the policy and in the Receipt. FLEXIBLE PREMIUMS The only premiums you must pay are the issue premium and any payments that may be required to prevent policy lapse. OPTIONAL INSURANCE BENEFITS The following benefits may be available to you by rider: [diamond] Single Life Policies o Disability Waiver of Specified Premium o Accidental Death Benefit o Death Benefit Protection o Whole Life Exchange Option (not available after January 27, 2003) o Purchase Protection Plan o Living Benefits o Cash Value Accumulation o Child Term o Family Term o Business Term [diamond] Multiple Life Policies o Disability Benefit o Survivor Purchase Option o Policy Exchange Option Availability of these riders depends upon state approval and may involve extra cost. YOUR RIGHT TO CANCEL THE POLICY You have the right to review the policy and cancel it if you are not satisfied. Simply return the policy to us within ten days after you receive it, or within 45 days of signing the application. Your state may require a longer period. POLICY RISKS VARIATIONS The policy is subject to laws and regulations in every state where the policy is sold and the terms of the policy may vary from state to state. SUITABILITY RISK Variable life insurance is designed for long term financial planning, and the policy is not suitable as a short-term investment. Surrender charges apply during the first ten years; therefore, it may not be appropriate for you to purchase a policy if you foresee the need to withdraw all or part of the policy value during the first several policy years. TAX EFFECTS Generally, under current federal income tax law, death benefits are not subject to income taxes. Earnings on the premiums invested in the Separate Account or the Guaranteed Interest Account are not subject to income taxes until there is a distribution from the policy. Taking a loan or a full or partial surrender from the policy could result in recognition of income for tax purposes. RISK OF LAPSE Your policy will remain in force as long as the cash surrender value is enough to pay the monthly charges incurred under the policy. If the cash surrender value is no longer enough to pay the 4 monthly charges, the policy will lapse, or end. We will alert you to an impending lapse situation and give you an opportunity to keep the policy in force by paying a specified amount. Withdrawals, loans and associated loan interest can negatively affect policy value, and increase the risk of policy lapse. INVESTMENT RISK A comprehensive discussion of the risks of each fund purchased by a subaccount of the Phoenix Life Variable Universal Life Account may be found in the funds' prospectuses. Each series is subject to market fluctuations and the risks inherent with ownership of securities. There is no assurance that any series will achieve its stated investment objective. THE FOLLOWING TABLES DESCRIBE THE FEES, AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND SURRENDERING THE POLICY. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE POLICY, SURRENDER THE POLICY, OR TRANSFER CASH VALUE BETWEEN INVESTMENT OPTIONS. 5 FEE TABLES - -------------------------------------------------------------------------------- TRANSACTION FEES
- ------------------------------------------------------------------------------------------------------------------------------------ CHARGE WHEN DEDUCTED AMOUNT DEDUCTED - --------------------------------------- -------------------------------- ----------------------------------------------------------- PREMIUM TAX CHARGE Upon Payment. 2.25% of each premium for single life policies. - --------------------------------------- -------------------------------- ----------------------------------------------------------- FEDERAL TAX CHARGE Upon Payment. 1.50% of each premium for single life policies. No charge applies to multiple life policies. - --------------------------------------- -------------------------------- ----------------------------------------------------------- ISSUE EXPENSE CHARGE 1/12th of the fee is deducted The maximum charge is $600 for single life policies and on each of the first 12 monthly $150(2) for multiple life policies. calculation days(1). - --------------------------------------- -------------------------------- ----------------------------------------------------------- SURRENDER CHARGE(3) Upon full surrender or lapse. Maximum is 0.5% of policy face amount plus 28.5% of premiums paid for single life policies. Maximum is 30% of premiums paid for multiple life policies. - --------------------------------------- -------------------------------- ----------------------------------------------------------- PARTIAL SURRENDER CHARGE Upon Partial Surrender or a For a partial surrender: decrease in the policy face ------------------------ amount. The charge that would apply upon a full surrender multiplied by the partial surrender amount divided by the result of subtracting the full surrender charge from the policy value. For a decrease in face amount: ------------------------------ The charge that would apply upon a full surrender multiplied by the decrease in face amount divided by the face amount prior to the decrease. - --------------------------------------- -------------------------------- ----------------------------------------------------------- PARTIAL SURRENDER FEE Upon Partial Surrender. 2% of surrender amount(4). - --------------------------------------- -------------------------------- ----------------------------------------------------------- TRANSFER CHARGE Upon Transfer. At present, we do not charge for transfers between investment options, but we reserve the right to charge up to $10 per transfer after the first two transfers in any given policy year. - ------------------------------------------------------------------------------------------------------------------------------------
(1) The monthly calculation day occurs on same day as the policy date (the date from which policy years and anniversaries are measured) or if that date does not fall in any given month, it will be the last day of the month. (2) The Issue Charge is $50 per month for the first 12 policy months for single life policies and $12.50 per month for the first 12 policy months for multiple life policies. (3) The surrender charge begins to decrease after five policy years, and becomes zero after ten policy years. We will provide your surrender charges before we issue your policy. We describe this charge in more detail in the "Charges and Deductions" section. (4) We limit this fee to $25 for each partial surrender. 6 PERIODIC CHARGES OTHER THAN FUND OPERATING EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------------ CHARGE WHEN DEDUCTED AMOUNT DEDUCTED - -------------------------------- ---------------------------- ---------------------------------------------------------------------- COST OF INSURANCE(1) On each Monthly Calculation Day. Minimum and Maximum Charges ............................ We charge $0.06 - $83.33 per $1,000 of amount at risk(2) each month. Example for a male age 45 in ............................ We would charge $0.14 per $1,000 of amount at risk(2) per month. We the nonsmoker premium class. will increase this charge as he ages. Example for five 35 year old males in the nonsmoker ............................ We would charge $0.98 per $1,000 of amount at risk(2) per month. We premium class would increase this charge as they age. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- ADMINISTRATIVE CHARGE On each Monthly $10 per month.(3) Calculation Day. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- MORTALITY AND EXPENSE RISK On each Monthly 0.80% of average daily net assets, on an annual basis, of CHARGE(4) Calculation Day. investments in the subaccounts. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- OTHER TAX CHARGES When we become liable for We currently do not charge for taxes, however we reserve the right taxes. to impose a charge should we become liable for taxes in the future. Possible taxes would include state or federal income taxes on investment gains of the Separate Account and would be included in our calculation of subaccount values. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- LOAN INTEREST RATE CHARGED(5) Interest accrues daily and The maximum net cost to the policy value is 2% of the loan balance is due on each policy on an annual basis. anniversary. If not paid on that date, we will treat the accrued interest as another loan against the policy. - ------------------------------------------------------------------------------------------------------------------------------------ OPTIONAL INSURANCE BENEFITS - SINGLE LIFE POLICIES - ------------------------------------------------------------------------------------------------------------------------------------ DEATH BENEFIT PROTECTION RIDER On each Monthly $0.01 per $1,000 of face amount per month. Calculation Day. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- PURCHASE PROTECTION PLAN On Rider Date, and on each RIDER(6) Monthly Calculation Day. Minimum and Maximum ............................ $0.05 - $0.17 per unit(7) purchased per month. Example for a male age 35 in ............................ $0.16 per unit(7) purchased per month. the nonsmoker premium class. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- DISABILITY WAIVER OF SPECIFIED On each Monthly PREMIUM RIDER(6) Calculation Day. Minimum and Maximum ............................ $0.22 - $0.82 per $100 of premium waived per month. Example for a male age 45 in ............................ $0.33 per $100 of premium waived per month. the nonsmoker premium class. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- ACCIDENTAL DEATH BENEFIT On each Monthly RIDER(6) Calculation Day. Minimum and Maximum ............................ $0.07 - $0.26 per $1,000 of rider amount per month. Example for a male age 45 in ............................ $0.79 per $1,000 of rider amount per month. the nonsmoker premium class. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- LIVING BENEFITS RIDER We do not charge for this We describe this rider later under "Optional Insurance Benefits." rider. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- WHOLE LIFE EXCHANGE OPTION We do not charge for this We describe this rider later under "Optional Insurance Benefits." RIDER rider. - ------------------------------------------------------------------------------------------------------------------------------------
7
- ------------------------------------------------------------------------------------------------------------------------------------ CHARGE WHEN DEDUCTED AMOUNT DEDUCTED - -------------------------------- ---------------------------- ---------------------------------------------------------------------- CHILD TERM RIDER(8) On Rider Date, and on each Monthly Calculation Day. Minimum and Maximum ............................ $0.06.-.$0.14 per $1,000 of rider face amount. Example for a male child age ............................ $0.11.per $1,000 of rider face amount. We would generally increase 15. this charge as he ages. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- FAMILY TERM RIDER(8) On Rider Date, and on each Monthly Calculation Day. Minimum and Maximum ............................ $0.08.-.$8.11 per $1,000 of rider face amount. Example for a male age 45 in ............................ $0.23.per $1,000 of rider face amount. We would generally increase the nonsmoker premium class. this charge as he ages. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- BUSINESS TERM RIDER(8) On Rider Date, and on each Monthly Calculation Day. Minimum and Maximum ............................ $0.07.-.$30.73 per $1,000 of rider face amount. Example for a male age 45 in ............................ $0.19.per $1,000 of rider face amount. We would generally increase the nonsmoker premium class. this charge as he ages. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- OPTIONAL INSURANCE BENEFITS - MULTIPLE LIFE POLICIES - ------------------------------------------------------------------------------------------------------------------------------------ SURVIVOR PURCHASE OPTION On Rider Date, and on each RIDER(6) Monthly Calculation Day. Minimum and Maximum ............................ We charge $0.02 - $0.87 per $1,000 of rider face amount per month. Example for two 45 year old ............................ We would.charge $0.04 per $1,000 of face amount per month. nonsmokers. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- DISABILITY BENEFIT AND WAIVER On Rider Date, and on each RIDER(6) Monthly Calculation Day. Minimum and Maximum ............................ We charge $0.0007 - $0.22 per $1,000 of net amount at risk per month. Example for a 35 year old ............................ We would.charge $0.004 per $1,000 of net amount at risk per month. male nonsmoker. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- TERM INSURANCE RIDER(8) On Rider Date, and on each Monthly Calculation Day. Minimum and Maximum ............................ We charge $0.0001 - $83.33 per $1,000 of rider face amount per month. Example for a 35 year old ............................ We would.charge $0.20 per $1,000 of face amount per month. male nonsmoker. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- POLICY EXCHANGE OPTION RIDER On Rider Date. $100 - ------------------------------------------------------------------------------------------------------------------------------------
(1) Cost of insurance charges will vary according to age, gender, premium class, policy year, net amount at risk, and face amount of the policy. The cost of insurance charges shown in the table may not be typical of the charges you will pay. Your policy's specifications page will indicate the guaranteed cost of insurance applicable to your policy. More detailed information concerning your cost of insurance is available upon request. Before you purchase the policy, we will provide you personalized illustrations of your future benefits under the policy based upon the age and premium class of the person you wish to insure, the death benefit option, face amount, planned periodic premiums, and riders requested. (2) The amount at risk at any given time is the difference between the total death benefit we would pay and the policy value. (3) As of the date of this prospectus, we limit this charge to $5 per month. (4) We do not deduct this charge from investments in the Guaranteed Interest Account. We currently reduce this charge to 0.25% in policy years 16+ for single life policies. (5) The maximum net cost to the policy is the difference between the rate we charge for the outstanding loan, and the rate we credit the loaned portion of the Guaranteed Interest Account, where we allocate policy value equal to the amount of the loan, as collateral. The net cost to the policy can be as low as 1.00% on an annual basis. For more information see "Charges and Deductions" and "Loans." (6) This charge for this rider depends on age, gender and risk classification at issue, but will not increase with age. (7) Each unit entitles you to purchase $1,000 face amount of insurance on each of the first two option dates defined in the rider, and $667 in face amount of insurance on each subsequent option date defined in the rider (8) This charge will vary according to age, gender and risk classification. Charges will generally increase with age. 8 THE NEXT TABLE SHOWS THE MINIMUM AND MAXIMUM FEES AND EXPENSES CHARGED BY THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE POLICY. MORE DETAIL CONCERNING EACH OF THE FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. MINIMUM AND MAXIMUM FUND OPERATING EXPENSES
Minimum Maximum Total Annual Fund Operating Expenses(1) 0.29% 2.68% (expenses that are deducted from a fund's assets, including management fees, distribution and/or 12b-1 fees, and other expenses)
(1) The total and net fund operating expenses for each available investment portfolio are given in the following tables. 9 ANNUAL FUND EXPENSES (as a percentage of fund average net assets for the year ended 12/31/04) - -----------------------------------------------------------------------------------------------------------------------------------
Rule Investment 12b-1 Other Operating Total Annual Fund Series Management Fee Fees Expenses Expenses - ----------------------------------------------------------------------------------------------------------------------------------- THE PHOENIX EDGE SERIES FUND - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International 0.75% N/A 0.30% 1.05% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth 0.75% N/A 0.47% (3) 1.22% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth 0.85% N/A 0.89% (1) 1.74% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index 0.45% N/A 0.27% (2) 0.72% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities 0.75% N/A 0.29% 1.04% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth 0.66% N/A 0.21% 0.87% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income 0.70% N/A 0.28% (3) 0.98% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth 0.90% N/A 0.67% (4) 1.57% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation 0.58% N/A 0.20% 0.78% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity 0.70% N/A 0.28% (3) 0.98% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market 0.40% N/A 0.24% 0.64% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income 0.50% N/A 0.23% 0.73% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond 0.50% (5) N/A 0.58% (2) 1.08% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends 0.70% N/A 0.75% (1) 1.45% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value 0.90% N/A 1.78% (1) 2.68% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select 0.90% N/A 0.40% (1) 1.30% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 0.35% N/A 0.56% (3) 0.91% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) 0.35% N/A 0.74% (3) 1.09% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value 1.05% N/A 0.29% (3) 1.34% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value 1.05% N/A 0.38% (3) 1.43% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth 0.80% N/A 0.38% (4) 1.18% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme 0.75% N/A 0.33% 1.08% - -----------------------------------------------------------------------------------------------------------------------------------
(1) The advisor voluntarily agrees to reimburse this series for other operating expenses that exceed 0.15% of the series' average net assets. (2) The advisor voluntarily agrees to reimburse this series for other operating expenses that exceed 0.20% of the series' average net assets. (3) The advisor voluntarily agrees to reimburse this series for other operating expenses that exceed 0.25% of the series' average net assets. (4) The advisor voluntarily agrees to reimburse this series for other operating expenses that exceed 0.35% of the series' average net assets. (5) The advisor voluntarily waived the management fee for the period through May 31, 2004, giving an annual management fee of less than 0.50% of the series' average net assets for 2004. Without the waiver, the annual management fee rate is 0.50%. The chart below, showing net annual fund expenses, assumes the 0.50% rate for this series. (6) The chart below shows net annual fund expenses after voluntary reimbursements by the advisor.
Net Annual Fund Net Annual Fund --------------- --------------- Series Reimbursements Expenses Series Reimbursements Expenses ------ -------------- -------- ------ -------------- -------- Phoenix-AIM Growth (0.22%) 1.00% Phoenix-Kayne Small-Cap Quality Value (1.63%) 1.05% Phoenix-Alger Small-Cap Growth (0.74%) 1.00% Phoenix-Lazard International Equity Phoenix-Alliance/Bernstein Enhanced Select (0.25%) 1.05% Index (0.07%) 0.65% Phoenix-Northern Dow 30 (0.31%) 0.60% Phoenix-Engemann Growth and Income (0.03%) 0.95% Phoenix-Northern Nasdaq-100 Index(R) (0.49%) 0.60% Phoenix-Engemann Small-Cap Growth (0.32%) 1.25% Phoenix-Sanford Bernstein Mid-Cap Phoenix-Engemann Value Equity (0.03%) 0.95% Value (0.04%) 1.30% Phoenix-Goodwin Multi-Sector Short Phoenix-Sanford Bernstein Term Bond (0.38%) 0.70% Small-Cap Value (0.13%) 1.30% Phoenix-Kayne Rising Dividends (0.60%) 0.85% Phoenix-Seneca Mid-Cap Growth (0.03%) 1.15%
(NOTE: Each or all of the voluntary expense reimbursements noted in the chart above may be changed or eliminated at anytime without notice.) - -----------------------------------------------------------------------------------------------------------------------------------
Net Annual Rule Fund Expenses Investment 12b-1 or Other Contractual After Management Service Operating Total Annual Reimbursements Reimbursements Series Fee Fees Expenses Fund Expenses & Waivers & Waivers - ----------------------------------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS - SERIES I SHARES - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund 0.61% N/A 0.30% 0.91% (0.00%) 0.91% - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund 0.73% N/A 0.31% 1.04% (0.00%) 1.04% - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund 0.61% N/A 0.30% 0.91% (0.00%) 0.91% - ----------------------------------------------------------------------------------------------------------------------------------- THE ALGER AMERICAN FUND - CLASS O SHARES - ----------------------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio 0.85% N/A 0.12% 0.97% (0.00%) 0.97% - -----------------------------------------------------------------------------------------------------------------------------------
10 - -----------------------------------------------------------------------------------------------------------------------------------
Net Annual Rule Fund Expenses Investment 12b-1 or Other Contractual After Management Service Operating Total Annual Reimbursements Reimbursements Series Fee Fees Expenses Fund Expenses & Waivers & Waivers - ----------------------------------------------------------------------------------------------------------------------------------- FEDERATED INSURANCE SERIES - ----------------------------------------------------------------------------------------------------------------------------------- Federated Fund for U.S. Government Securities II 0.60% 0.25% (1) 0.13% 0.98% --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II - Primary 0.60% 0.25% (1) 0.14% 0.99% --- ---(11) Shares - ----------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VARIABLE INSURANCE PRODUCTS - SERVICE CLASS - ----------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio 0.57% 0.10% 0.11% (2) 0.78% --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio 0.58% 0.10% 0.14% (2) 0.82% --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio 0.58% 0.10% 0.10% (2) 0.78% --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - CLASS 2 - ----------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund 0.60% 0.25% (4) 0.15% 1.00% (0.00%) 1.00% - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund 1.25% 0.25% 0.29% 1.79% (0.00%) 1.79% - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund 0.68% 0.25% 0.19% 1.12% (0.05%) (5) 1.07% - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund 0.61% 0.25% 0.24% 1.10% (0.01%) (5) 1.09% - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund 0.79% (3) 0.25% (4) 0.07% 1.11% (0.00%) 1.11% - ----------------------------------------------------------------------------------------------------------------------------------- LAZARD RETIREMENT SERIES - ----------------------------------------------------------------------------------------------------------------------------------- Lazard Retirement Small Cap Portfolio 0.75% 0.25% 0.37% 1.37% (0.12%) (6) 1.25% - ----------------------------------------------------------------------------------------------------------------------------------- LORD ABBETT SERIES FUND, INC. - CLASS VC - ----------------------------------------------------------------------------------------------------------------------------------- Bond-Debenture Portfolio 0.50% N/A 0.48% 0.98% (0.08%) (7) 0.90% - ----------------------------------------------------------------------------------------------------------------------------------- Growth and Income Portfolio 0.50% N/A 0.39% 0.89% (0.00%) 0.89% - ----------------------------------------------------------------------------------------------------------------------------------- Mid-Cap Value Portfolio 0.75% N/A 0.42% 1.17% (0.00%) 1.17% - ----------------------------------------------------------------------------------------------------------------------------------- THE RYDEX VARIABLE TRUST - ----------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Juno Fund 0.90% N/A 0.73% 1.63% (0.00%) 1.63% - ----------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Nova Fund 0.75% N/A 0.71% 1.46% (0.00%) 1.46% - ----------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund 0.90% N/A 0.73% 1.63% (0.00%) 1.63% - ----------------------------------------------------------------------------------------------------------------------------------- SCUDDER INVESTMENTS VIT FUNDS - CLASS A - ----------------------------------------------------------------------------------------------------------------------------------- Scudder VIT EAFE(R) Equity Index Fund 0.45% N/A 0.37% 0.82% (0.17%) (8) 0.65% - ----------------------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund 0.20% N/A 0.09% 0.29% (0.00%) 0.29% - ----------------------------------------------------------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - CLASS I SHARES - ----------------------------------------------------------------------------------------------------------------------------------- Technology Portfolio 0.80% N/A 0.49% 1.29% (9) --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- WANGER ADVISORS TRUST - ----------------------------------------------------------------------------------------------------------------------------------- Wanger International Select 1.00% N/A 0.43% 1.43% (0.01%) (10) 1.42% - ----------------------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap 1.17% N/A 0.19% 1.36% (0.16%) (10) 1.20% - ----------------------------------------------------------------------------------------------------------------------------------- Wanger Select 0.95% N/A 0.15% 1.10% (0.10%) (10) 1.00% - ----------------------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies 0.92% N/A 0.08% 1.00% (0.01%) (10) 0.99% - -----------------------------------------------------------------------------------------------------------------------------------
(1) The fund has voluntarily agreed to waive this service fee. (2) A portion of the brokerage commissions that the fund paid was used to reduce the fund's expenses. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances are used to reduce a portion of the fund's custodian expenses. These offsets may be discontinued at anytime. (3) The fund administration fee is paid indirectly through the management fee. (4) While the maximum amount payable under the fund's Rule 12b-1 plan is 0.35% per year of the fund's average annual net assets, the fund's Board of Trustees has set the current rate at 0.25% per year. (5) The advisor has contractually agreed to reduce its investment management fee to reflect reduced services resulting from the fund's investment in a Franklin Templeton Money Market Fund (the Sweep Fund). This reduction is required by the fund's Board of Trustees and an order by the SEC. After such reductions, the management fees are 0.63% for the Templeton Foreign Securities Fund and 0.60% for the Templeton Global Asset Allocation Fund. (6) Reflects a contractual obligation by the Investment Manager to waive its fee and, if necessary, reimburse the Portfolio through December 31, 2005, to the extent Total Annual Portfolio Operating Expenses exceed 1.25% of the Portfolio's average daily net assets. (7) For the year ending December 31, 2004, Lord, Abbett & Co. LLC has contractually agreed to reimburse a portion of the Fund's expenses to the extent necessary to maintain its "Other Expenses" at an aggregate rate of 0.40% of its average daily net assets. (8) The advisor has contractually agreed, for the one-year period beginning May 1, 2005, to waive its fees and/or reimburse expenses of the fund in excess of 0.65% of the average daily net assets. (9) The advisor has voluntarily agreed to waive a portion or all of its management fee and/or reimburse expenses to the extent necessary so that total annual operating expenses, excluding certain investment related expenses such as foreign country tax expense and interest expense on borrowing, do not exceed the operating expense limitation of 1.15%. (10) Management fees have been restated to reflect contractual changes to the management fee for the fund as of February 10, 2005. The fee waiver was effective as of February 10, 2005 but applied as if it had gone into effect on December 1, 2004. (11) The chart below shows net annual fund expenses after voluntary reimbursements or waivers by the advisor.
Net Annual Fund Net Annual Fund --------------- --------------- Series Reimbursements Expenses Series Reimbursements Expenses ------ -------------- -------- ------ -------------- -------- Federated Fund for U.S. Government VIP Growth Opportunities Portfolio (0.02%) 0.80% Securities II (0.26%) 0.72% VIP Growth Portfolio (0.03%) 0.75% Federated High Income Bond Fund Technology Portfolio (0.14%) 1.15% II - Primary Shares (0.25%) 0.74% VIP Contrafund(R) Portfolio (0.02%) 0.76%
(NOTE: Each or all of the voluntary expense reimbursements and waivers noted in the chart above may be changed or eliminated at anytime without notice.) 11 PHOENIX LIFE INSURANCE COMPANY - -------------------------------------------------------------------------------- On June 25, 2001, Phoenix Home Life Mutual Insurance Company (a New York mutual life insurance company, originally chartered in Connecticut in 1851 and redomiciled to New York in 1992) converted to a stock life insurance company by "demutualizing" pursuant to a plan of reorganization approved by the New York Superintendent of Insurance and changed its name to Phoenix Life Insurance Company ("Phoenix"). As part of the demutualization, Phoenix became a wholly owned subsidiary of The Phoenix Companies, Inc., a publicly traded Delaware corporation. Our executive and administrative office is at One American Row, Hartford, Connecticut, 06115. Our New York principal office is at 10 Krey Boulevard, East Greenbush, New York 12144. We sell life insurance policies and annuity contracts through producers of affiliated distribution companies and through brokers. PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT - -------------------------------------------------------------------------------- Phoenix Life Insurance Company established the Separate Account as a separate account under New York insurance law on June 17, 1985. The Separate Account is registered with the Securities and Exchange Commission (the "SEC") as a unit investment trust under the Investment Company Act of 1940. The SEC does not supervise the management, investment practices or policies of the Separate Account or of Phoenix. All income, gains or losses, whether or not realized, of the Separate Account are credited to or charged against amounts placed in the Separate Account without regard to the other income, gains and losses of Phoenix. The assets of the Separate Account may not be charged with liabilities arising out of any other business we conduct. Phoenix is responsible for all obligations under the policies. The Separate Account is divided into subaccounts, each of which is available for allocation of policy value. We determine the value of each subaccount's shares at the end of every valuation day that the New York Stock Exchange ("NYSE") is open. Each subaccount will invest solely in a single investment portfolio of a fund. The fund names and the portfolio names are listed on page one of this prospectus. Each portfolio's investment type is given in Appendix A. Phoenix does not guarantee the investment performance of the Separate Account or any of its subaccounts. The policy value allocated to the Separate Account depends on the investment performance of the underlying funds. As policy owner, you bear the full investment risk for all monies invested in the Separate Account. We reserve the right to add, remove, modify, or substitute portfolios in which the Separate Account invests. Copies of the fund prospectuses may be obtained by writing to us or calling us at the address or telephone number provided on the front page of this prospectus. VALUATION DATE A valuation date is every day the New York Stock Exchange ("NYSE") is open for trading and Phoenix is open for business. However, transaction processing may be postponed for the following reasons 1. the NYSE is closed or may have closed early; 2. the SEC has determined that a state of emergency exists; or 3. on days when a certain market is closed (e.g., the U.S. Government bond market is closed on Columbus Day and Veteran's Day). The NYSE Board of Directors reserves the right to change the NYSE schedule as conditions warrant. On each valuation date, the value of the Separate Account is determined at the close of the NYSE (currently 4:00 p.m. Eastern Time). The NYSE is scheduled to be closed on the following days: - --------------------------------------------------------- New Year's Day Independence Day - --------------------------------------------------------- Martin Luther King, Jr. Day Labor Day - --------------------------------------------------------- Presidents Day Thanksgiving Day - --------------------------------------------------------- Good Friday Christmas Day - --------------------------------------------------------- Memorial Day - --------------------------------------------------------- PERFORMANCE HISTORY We may choose to include performance history of the subaccounts or the underlying portfolios in advertisements, sales literature or reports. Performance information about each subaccount is based on past performance and is not an indication of future performance. VOTING RIGHTS - -------------------------------------------------------------------------------- We legally own all fund shares held by the subaccounts; however, we vote those shares at shareholder meetings according to voting instructions we receive from policy owners with an interest in the subaccounts. We may decide to vote the shares in our own right should the law change to permit us to do so. While your policy is in effect, you may provide us with voting instructions for each subaccount in which you have an interest. We determine the number of votes you may cast by applying your percentage interest in a subaccount to the total number of votes attributable to the subaccount. We will send you proxy material, reports and other materials relevant to the subaccounts in which you have a voting interest. In order to vote you must complete the proxy form and return it with your voting instructions. You may also be able to vote your interest by telephone or over the Internet if such instructions are included in the proxy material. We will vote all of the shares we own on your behalf, in accordance with your instructions. We will vote the shares for which we do not receive instructions, and any other shares we own, in the same proportion as the shares for which we do receive instructions. We may ask you to provide voting instructions for such items as: 1) the election of the fund's Trustees; 12 2) the ratification of the independent accountants for the fund; 3) approval or amendment of investment advisory agreements; 4) a change in fundamental policies or restrictions of the series; and 5) any other matters requiring a shareholder vote. You may obtain an available fund's prospectus by contacting us at the address and telephone number given on page one. THE GUARANTEED INTEREST ACCOUNTS - -------------------------------------------------------------------------------- In addition to the Separate Account, you may allocate premiums or transfer values to the Guaranteed Interest Account or Long-term Guaranteed Interest Accounts. Amounts you allocate to the Guaranteed Interest Accounts are deposited in our general account. You do not share in the investment experience of our general account. Rather, we guarantee a minimum rate of return on the allocated amounts. Although we are not obligated to credit interest at a higher rate than the minimum, we may credit any excess interest as determined by us based on expected investment yield information. The Long-term Guaranteed Interest Account has more restrictive transfer options out of the general account than the Guaranteed Interest Account so that longer term investments can be made. We reserve the right to limit total deposits to the Guaranteed Interest Accounts to no more than $250,000 during any one-week period per policy. You may make transfers into the Guaranteed Interest Accounts at any time. In general, you may make only one transfer per year from the Guaranteed Interest Accounts. Transfers from the Guaranteed Interest Accounts may also be subject to other rules as described in this prospectus. Because of exemptive and exclusionary provisions, we have not registered interests in our general account under the Securities Act of 1933. Also, we have not registered our general account as an investment company under the Investment Company Act of 1940, as amended. Therefore, neither the general account nor any of its interests are subject to these Acts, and the U.S. Securities and Exchange Commission ("SEC") has not reviewed the general account disclosures. These disclosures may, however, be subject to certain provisions of the federal securities law regarding accuracy and completeness of statements made in this prospectus. The features specific to each type of Guaranteed Interest Account are detailed below. GUARANTEED INTEREST ACCOUNT We reserve the right to limit transfers to the Guaranteed Interest Account to no more than $250,000 during any one-week period per policy. The amount that can be transferred out is limited to the greater of $1,000 or 25% of the policy value in the nonloaned portion of the Guaranteed Interest Account as of the date of the transfer. You may transfer the total policy value out of the Guaranteed Interest Account to one or more of the subaccounts over a consecutive 4-year period according to the following schedule: [diamond] First Year: 25% of the total value [diamond] Second Year: 33% of remaining value [diamond] Third Year: 50% of remaining value [diamond] Fourth Year: 100% of remaining value LONG-TERM GUARANTEED INTEREST ACCOUNT This investment option is only available to policies issued on or after September 27, 2004. The amount that can be transferred out is limited to the greatest of (a) $1,000, (b) 10% of the policy value in the Long-term Guaranteed Interest Account as of the date of the transfer, or (c) the amount of policy value transferred out of the Long-term Guaranteed Interest Account in the prior policy year. Transfers from the Long-term Guaranteed Interest Account are not permitted under the Systematic Transfer Programs. We reserve the right to limit transfers and cumulative premium payments to $1,000,000 over a 12-month period. CHARGES AND DEDUCTIONS - -------------------------------------------------------------------------------- GENERAL Charges are deducted in connection with the policy to compensate us for: [diamond] our expenses in selling the policy; [diamond] underwriting and issuing the policy; [diamond] premium and federal taxes incurred on premiums received; [diamond] providing the insurance benefits set forth in the policy; and [diamond] assuming certain risks in connection with the policy. The nature and amount of these charges are more fully described in sections below. When we issue policies under group or sponsored arrangements, we may reduce or eliminate the: [diamond] issue expense charge; and/or [diamond] surrender charge. Sales to a group or through sponsored arrangement often result in lower per policy costs and often involve a greater stability of premiums paid into the policies. Under such circumstances, Phoenix tries to pass these savings onto the purchasers. The amount of reduction will be determined on a case-by-case basis and will reflect the cost reduction we expect as a result of these group or sponsored sales. Certain charges are deducted only once, others are deducted periodically, while certain others are deducted only if certain events occur. 13 CHARGES DEDUCTED FROM PREMIUM PAYMENTS ISSUE EXPENSE CHARGE There is an issue expense charge of $1.50 per $1,000 of base face amount with a $600 maximum. One twelfth of the charge is deducted on each monthly calculation day, for the first policy year. For single life policies we charge $1.50 per $1,000 of initial face amount to a maximum of $600. For multiple life policies we charge $150. You will incur a new issue expense charge if you increase your policy's face amount. We will assess the new charge only on the amount of the increase. PREMIUM TAX CHARGE Various states (and counties and cities) impose a tax on premiums received by insurance companies. Premium taxes vary from state to state. Currently, these taxes range from 0.62% to 4% of premiums paid. Moreover, certain municipalities in Louisiana, Kentucky, Alabama and South Carolina also impose taxes on premiums paid, in addition to the state taxes imposed. The premium tax charge represents an amount we consider necessary to pay all premium taxes imposed by these taxing authorities, and we do not expect to derive a profit from this charge. Single life policies will be assessed a tax charge equal to 2.25% of the premiums paid. Multiple life policies will be assessed the actual premium tax incurred. These charges are deducted from each premium payment. FEDERAL TAX CHARGE A charge equal to 1.50% of each premium will be deducted from each premium payment on a single life policy to cover the estimated cost to us of the federal income tax treatment of deferred acquisition costs. There is no Federal Tax charge on multiple life policies. PERIODIC CHARGES MONTHLY CHARGES We make monthly deductions on each monthly calculation day. The amount we deduct is allocated among subaccounts and the nonloaned portion of the Guaranteed Interest Account and the Long-term Guaranteed Interest Account based on your specified allocation schedule. You will select this schedule in your application, and you can change it later. If the amount allocated to a subaccount or the nonloaned portion of the Guaranteed Interest Account is less than the amount to be deducted, we will proportionally increase the deduction from the other subaccounts or Guaranteed Interest Account. [diamond] ADMINISTRATIVE CHARGE. We currently charge $5 to cover the cost of daily administration, monthly processing, updating daily values and for annual/quarterly statements. We guarantee this charge will never exceed $10 per month. [diamond] COST OF INSURANCE. We determine this charge by multiplying the appropriate cost of insurance rate by the amount at risk. The amount at risk is the difference between your policy's death benefit and your policy value. We generally base our rates on the insured person's gender, attained age, and risk class. We also consider the duration, or how long the policy has been in force. We are not permitted to consider gender as a factor in some states and under certain qualified plans. We base the current monthly cost of insurance charge on what we expect our future mortality experiences will be. Charges will not exceed the guaranteed cost of insurance rates set forth in your policy. The guaranteed maximum rates are equal to 100% of the 1980 Commissioners' Standard Ordinary Mortality Table, adjusted for risk classifications. We will apply any change in our cost of insurance rates uniformly to all persons of the same gender, insurance age and risk class whose policies have been in force for the same length of time. We currently insure each life as either a standard risk class or a risk class involving a higher mortality risk. We determine your risk class based on your health and the medical information you provide. A life in the standard risk classes will have a lower cost of insurance for an otherwise identical policy, than a life in a higher mortality risk class. A nonsmoker will generally incur a lower cost of insurance than a similarly situated smoker. [diamond] COST OF OPTIONAL INSURANCE BENEFITS. Certain policy riders require the payment of additional premiums to pay for the benefit provided by the rider. These options are available if approved in your state. Certain riders are available at no charge: o LIVING BENEFITS RIDER (for single life policies). This rider allows, in the event of terminal illness of the insured, an accelerated payment of up to 75% of the policy's death benefit, to a maximum of $250,000, with the provision that a minimum of $10,000 face amount remain on the policy thereafter. o CASH VALUE ACCUMULATION RIDER (for single life policies). You must elect this rider before we issue your policy. The rider generally allows you to pay more premium than would otherwise be permitted. o WHOLE LIFE EXCHANGE OPTION RIDER (for single life policies). This rider permits you to exchange a Policy for a fixed benefit whole life policy at the later of age 65 Policy year 15. This rider is no longer available. o POLICY EXCHANGE OPTION RIDER (for multiple life policies). This rider provides for the exchange of the multiple life policy for single life policies. We charge for providing benefits under the following riders: o DISABILITY WAIVER OF SPECIFIED PREMIUM RIDER (for single life policies) charges will depend on the age and gender of the person we insure, and the amount of premium waived. We also offer this rider with substandard ratings of 150% and 200%. We insure people from age five through 60 under this rider and terminate the rider when the insured person reaches age 65. 14 o ACCIDENTAL DEATH BENEFIT RIDER (for single life policies) charges vary based on age, sex, and amount of additional death benefit. o PURCHASE PROTECTION PLAN RIDER (for single life policies) charges vary based on age. The maximum number of PPP units allowed varies with issue age and cannot be more than twice the initial base face amount in thousands. This rider is available to those we insure up to age 37. o CHILD TERM RIDER charges (for single life policies) depend on the child's age and gender, and the Rider's face amount. This rider is available for children up to age 17, and will terminate when the child reaches age 25. o FAMILY TERM RIDER (for single life policies) charges vary based on the age(s), gender(s), smoker classification(s) of the family members and with the Rider' face amount. This rider is available for family members of the person insured under the policy who are between the ages of 18 and 60, and will terminate when the family member reaches age 70. o BUSINESS TERM RIDER (for single life policies) charges vary based on age(s), gender(s), smoker classification(s), and table rating(s), and the Rider's face amount. o DEATH BENEFIT PROTECTION RIDER (for single life policies) charge is based upon the face amount. o DISABILITY BENEFIT RIDER (for multiple life policies) charge is based on the age(s), gender(s), smoker classification(s), specified amount and the number of insureds. o SURVIVOR PURCHASE OPTION RIDER (for multiple life policies) charge is based upon the face amount of the policy. o TERM INSURANCE RIDER (for multiple life policies) based on the age(s), gender(s), smoker classifications of the persons insureds. DAILY CHARGES We deduct a percentage each business day from every subaccount. This deduction is reflected in each subaccount's daily value. [diamond] MORTALITY AND EXPENSE RISK CHARGE. We assume a mortality risk that, as a whole, the lives we insure may be shorter than we expected. We would then pay greater total death benefits than we had expected. We assume an expense risk that expenses we incur in issuing and maintaining the policies may exceed the administrative charges expected for the policies. We also assume other risks associated with issuing the policies, such as incurring greater than expected costs due to policy loans. If our expenses do not exceed the charges, or if our mortality projections prove to be accurate, we may profit from this charge. We may use profits from this charge for any proper purpose, including the payment of sales expenses or any other expenses that may exceed income in a given year. We will deduct this charge only from your investments in the Separate Account. We do not make any deduction for this charge from policy value allocated to the Guaranteed Interest Account. Mortality and Expense Risk Charge: Single Life Policies: o Policy years one through 15: .80% annually; o Policy years 16 and after: .25% annually. Multiple Life Policies: o For all policy years: .80% annually. [diamond] LOAN INTEREST CHARGED. We charge your policy for outstanding loans at the rates illustrated in the tables below. As shown, the rate we charge your policy is higher than the rate we credit the loaned portion of the Guaranteed Interest Account. These rates apply until the person insured reaches age 65; the rates for years 16 and after apply after attained age 65. Single Life Policies o Policy years 1-10 (or insured's age 65 if earlier): 4% o Policy years 11-15: 3% o Policy years 16 and thereafter: 2 1/2% Single Life policies - New York and New Jersey only o Policy years 1-10 (for insured's age 65 if earlier): 6% o Policy years 11-15: 5% o Policy years 16 and thereafter: 4 1/2% Multiple Life Policies o Policy years 1-10: 8% o Policy years 11 and thereafter: 7% Loans can reduce the policy's death benefit. We deduct the amount of any outstanding loans plus any accrued loan interest from your policy value before we calculate the death benefit. CONDITIONAL CHARGES These are other charges that are imposed only if certain events occur. [diamond] SURRENDER CHARGE. During the first ten policy years, there is a difference between the amount of policy value and the amount of cash surrender value of the policy. This difference is the surrender charge, which is a contingent deferred sales charge. The surrender charge is designed to recover the expense of distributing policies that are terminated before distribution expenses have been recouped from revenue generated by these policies. These are contingent charges because they are paid only if the policy is surrendered (or the face amount is reduced or the policy lapses) during this period. They are deferred charges because they are not deducted from premiums. During the first ten policy years, the surrender charge described below will apply if you either surrender the policy 15 for its cash surrender value or allow the policy to lapse. There is no Surrender charge after the 10th policy year. During the first two policy years on single life policies and during the first ten policy years on multiple life policies, the maximum surrender charge that a policyowner could pay while he or she owns the policy is the amount shown in the policy's surrender charge schedule, or equal to either A plus B (as shown below), whichever is less. After the first two policy years on single life policies, the maximum surrender charge that a policyowner could pay is based on the amount shown in the policy's surrender charge schedule. A is equal to: 1) 28.5% of all premiums paid (up to and including the amount stated in the policy's surrender charge schedule, which is calculated according to a formula contained in a SEC rule); plus 2) 8.5% of all premiums paid in excess of this amount but not greater than twice this amount; plus 3) 7.5% of all premiums paid in excess of twice this amount. B is equal to $5 per $1,000 of initial face amount. The following is the surrender charge schedule for a male age 35 in the nonsmoker classification at a face amount of $100,000. ----------------------------------------------------------- SURRENDER CHARGE SCHEDULE ----------------------------------------------------------- POLICY MONTH SURRENDER POLICY SURRENDER CHARGE MONTH CHARGE 1-60 $1307.54 91 $933.20 61 1295.46 92 921.13 62 1283.39 93 909.05 63 1271.31 94 896.97 64 1259.24 95 884.90 65 1247.16 96 872.82 66 1235.08 97 836.39 67 1223.01 98 799.95 68 1210.93 99 763.52 69 1198.86 100 727.09 70 1186.78 101 690.65 71 1174.71 102 654.22 72 1162.63 103 617.78 73 1150.56 104 581.35 74 1138.48 105 544.91 75 1126.41 106 508.48 76 1114.33 107 472.05 77 1102.26 108 435.61 78 1090.18 109 399.18 79 1078.10 110 362.74 80 1066.03 111 326.31 81 1053.95 112 289.97 82 1041.88 113 253.44 83 1029.80 114 217.01 84 1017.73 115 180.57 85 1005.65 116 144.14 86 993.58 117 107.70 87 981.50 118 71.27 88 969.43 119 34.83 89 957.35 120 .00 90 945.28 [diamond] PARTIAL SURRENDER CHARGE (FACE AMOUNT DECREASE). If less than all of the policy is surrendered, the amount withdrawn is a "partial surrender." A charge as described below is deducted from the policy value upon a partial surrender of the policy. This is equal to the charge that would apply upon a full surrender multiplied by the partial surrender amount divided by the result of subtracting the full surrender charge from the policy value. We withdraw this amount from the subaccounts and the Guaranteed Interest Account in the same proportion as for the withdrawal. A partial surrender charge also is deducted from policy value upon a decrease in face amount. The charge is equal to the applicable surrender charge multiplied by a fraction equal to the decrease in face amount divided by the face amount of the policy prior to the decrease. [diamond] PARTIAL SURRENDER FEE. In the case of a partial surrender, an additional fee is imposed. This fee is equal to 2% of the amount withdrawn but not more than $25. It is intended to recover the actual costs of processing the partial surrender request and will be deducted from each subaccount and Guaranteed Interest Account in the same proportion as the withdrawal is allocated. If no allocation is made at the time of the request for the partial surrender, withdrawal allocation will be made in the same manner as are monthly deductions. [diamond] TRANSFER CHARGE. Currently we do not charge for transfers between subaccounts, however we reserve the right to charge up to $10 for each transfer in excess of two each calendar year. This charge, if we were to have a transfer charge would be intended to recoup for the cost of administering the transfer. OTHER TAX CHARGES Currently no charge is made to the Separate Account for federal income taxes that may be attributable to the Separate Account. We may, however, make such a charge in the future for these or any other taxes attributable to the Separate Account. FUND CHARGES As compensation for investment management services to the funds, the advisors are entitled to fees, payable monthly and based on an annual percentage of the average aggregate daily net asset values of each series. We provide a table of these charges in the section titled "Fee Tables--Minimum and Maximum Fund Operating Expenses." These fund charges and other expenses are described more fully in the respective fund prospectuses. THE POLICY - -------------------------------------------------------------------------------- CONTRACT RIGHTS: OWNER, INSURED, BENEFICIARY OWNER The owner is the person who applies for the policy and who will generally make the choices that determine how the policy operates while it is in force. When we use the terms "you" or "your," in this prospectus, we are referring to the owner. INSURED The insured is the person on whose life the policy is issued. You name the insured in the application for the policy. We will not 16 issue a policy for an insured that is more than 75 years old. Before issuing a policy, we will require evidence that the insured is, in fact, insurable. This will usually require a medical examination. BENEFICIARY The beneficiary is the person you name in the application to receive any death benefit. You may name different classes of beneficiaries, such as primary and secondary. These classes will set the order of payment. Unless an irrevocable beneficiary has been named, you can change the beneficiary at any time before the insured dies by sending a written request to us. Generally, the change will take effect as of the date your request is signed. If no beneficiary is living when the insured dies, unless you have given us different instructions, we will pay you the death benefit. If you are deceased, it will be paid to your estate. CONTRACT LIMITATIONS ASSIGNMENT The policy may be assigned. We will not be bound by the assignment until a written copy has been received and we will not be liable with respect to any payment made prior to receipt. We assume no responsibility for determining whether an assignment is valid. PURCHASING A POLICY UNDERWRITING PROCEDURES We base our rates on the insured person's gender, attained age, and risk class. We may require certain medical information in order to determine the risk class of the person to be insured. We are not permitted to consider gender as a factor in some states and under certain qualified plans. We will accept payment with your application and allocate the premium as described below. We may refuse to issue your policy within five business days, in which case we will provide a policy refund, as outlined below. ELIGIBLE PURCHASERS Any person up to the age of 75 is eligible to be insured under a newly purchased policy after providing suitable evidence of insurability. You can purchase a policy to insure the life of another person provided that you have an insurable interest in that life and the prospective insured consents. A policy also can be purchased to cover from two to five lives under one policy, for any person up to age of 80. Under such a multiple life policy, the death benefit is paid upon the first death under the policy; the policy then terminates. Such a policy could be purchased on the lives of spouses, family members, business partners or other related groups. PREMIUM PAYMENTS The policies are flexible premium variable universal life insurance policies. It has a death benefit, cash surrender value and a loan privilege as does a traditional fixed benefit whole life policy. The policy differs from a fixed benefit whole life policy, however, because you may allocate your premium into one or more of several subaccounts of the Separate Account or the Guaranteed Interest Account. Each subaccount of the Separate Account, in turn, invests its assets exclusively in a portfolio of the funds. The policy value varies according to the investment performance of the series to which premiums have been allocated. The minimum issue premium for a policy is generally 1/6 of the planned annual premium (an amount determined at the time of application) and is due on the policy date. The insured must be alive when the issue premium is paid. Thereafter, the amount and payment frequency of planned premiums are as shown on the schedule page of the policy. The issue premium payment should be delivered to your registered representative for forwarding to our Underwriting Department. Additional payments should be sent to VPMO. A number of factors concerning the person you insure and the policy features you desire will affect our required issue premium. The person's age, gender and risk class can affect the issue premium, as can policy features such as face amount and added benefits. We will generally allocate the issue premium, less applicable charges, according to your instructions when we receive your completed application. We may issue some policies with a Temporary Money Market Allocation Amendment. Under this amendment we allocate the net issue premium and the net of other premiums paid during your right to cancel period to the Phoenix-Goodwin Money Market subaccount. When your right to cancel expires we allocate the policy value among the subaccounts and/or the Guaranteed Interest Account according to your instructions. We may use the Temporary Money Market Allocation Amendment depending on the state of issue and under certain other circumstances. We reduce premium payments by the premium tax charge before we apply them to your policy. Single life policies will also be reduced by a federal tax charge of 1.50%. We will apply this net premium among your chosen investment options. We will buy any subaccount units at the subaccount unit values next calculated after we receive the premium. We establish maximum premium limits and may change them from time to time. You may make additional premium payments at any time. The minimum premium payment during a grace period is the amount needed to prevent policy lapse. At all other times the minimum acceptable payment is $25. The policy contains a total premium limit as shown on the schedule page. This limit is applied to the sum of all premiums paid under the policy. If the total premium limit is exceeded, the policy owner will receive the excess, with interest at an annual rate of not less than 4%, not later than 60 days after the end of the policy year in which the limit was exceeded. The policy value will then be adjusted to reflect the refund. To pay such refund, amounts taken from each subaccount or the Guaranteed Interest Account will be done in the same manner as for monthly deductions. You may write to us and give us different instructions. The total premium limit may be exceeded if additional premium is needed to prevent lapse or if we subsequently determine that additional premium would be permitted by federal laws or regulations. PAYMENT BY CHECK We may wait to credit your policy if you pay by check until your check has cleared your bank. 17 AUTOMATED PAYMENTS You may elect to have us deduct periodic premium payments directly from your bank account. The minimum we will withdraw under such a plan is $25 per month. ALLOCATION OF PREMIUM We will generally allocate the issue premium less applicable charges to the Separate Account or to the Guaranteed Interest Account upon receipt of a completed application, in accordance with the allocation instructions in the application for a policy. However, policies issued in certain states and policies issued in certain states pursuant to applications which state the policy is intended to replace existing insurance, are issued with a Temporary Money Market Allocation Amendment. Under this Amendment, we temporarily allocate the entire issue premium paid less applicable charges (along with any other premiums paid during your right to cancel period) to the Phoenix-Goodwin Money Market Subaccount of the Separate Account and, at the expiration of the right to cancel period, the policy value of the Phoenix-Goodwin Money Market Subaccount is allocated among the subaccounts of the Separate Account or to the Guaranteed Interest Account in accordance with the applicant's allocation instructions in the application for insurance. Premium payments received by us will be reduced by applicable state premium tax charge and, for the single policies, by 1.50% for federal tax charges (if applicable). The issue premium also will be reduced by the issue expense charge deducted in equal monthly installments over a 12-month period. Any unpaid balance of the issue expense charge will be paid to Phoenix upon policy lapse or termination. Premium payments received during a grace period, after deduction of state and federal tax charges and any sales charge, will first be used to cover any monthly deductions during the grace period. Any balance will be applied on the payment date to the various subaccounts of the Separate Account or to the Guaranteed Interest Account, based on the premium allocation schedule elected in the application for the policy or by your most recent instructions. See "Transfer of Policy Value--Nonsystematic Transfers." POLICY REFUND Should you elect to return your policy under your right to cancel we will treat your policy as if we had never issued it. For policies other than those issued with a Temporary Money Market Allocation Amendment, we will return the sum of the following as of the date we receive the returned policy: 1) the current policy value less any unpaid loans and loan interest; plus 2) any monthly deductions, partial surrender fees and other charges made under the policy. For policies issued with the Temporary Money Market Amendment, the amount returned will equal any premiums paid less any unpaid loans and loan interest and less any partial surrender amounts paid. We retain the right to decline to process an application within seven days of our receipt of the completed application for insurance. If we decline to process the application, we will return the premium paid. Even if we have approved the application for processing, we retain the right to decline to issue the policy. If we decline to issue the policy, we will refund to you the same amount as would have been refunded under the policy had it been issued but returned for refund while you have your right to cancel. GENERAL - -------------------------------------------------------------------------------- POSTPONEMENT OF PAYMENTS GENERAL Payment of any amount upon complete or partial surrender, policy loan or benefits payable at death (in excess of the initial face amount) or maturity may be postponed: [diamond] for up to six months from the date of the request, for any transactions dependent upon the value of the Guaranteed Interest Account; [diamond] we may postpone payment whenever the NYSE is closed other than for customary weekend and holiday closings, trading on the NYSE is restricted, on days when a certain market is closed (e.g., the U.S. Government bond market is closed on Columbus Day and Veteran's Day); or [diamond] whenever an emergency exists, as decided by the SEC as a result of which disposal of securities is not reasonably practicable or it is not reasonably practicable to determine the value of the Separate Account's net assets. Transfers also may be postponed under these circumstances. OPTIONAL INSURANCE BENEFITS You may elect additional benefits under a policy, and you may cancel these benefits at anytime. A charge will be deducted monthly from the policy value for each additional rider benefit chosen except where noted below. More details will be included in the form of a rider to the policy if any of these benefits is chosen. The following benefits are currently available and additional riders may be available as described in the policy (if approved in your state). SINGLE LIFE POLICIES [diamond] DISABILITY WAIVER OF SPECIFIED PREMIUM RIDER. We waive the specified premium if the insured becomes totally disabled and the disability continues for at least six months. Premiums will be waived to the policy anniversary nearest the insured's 65th birthday (provided that the disability continues). If premiums have been waived continuously during the entire five years prior to such date, the waiver will continue beyond that date. The premium will be waived upon our receipt of notice that the Insured is totally disabled and that the disability occurred while the rider was in force. This policy is elected at issue. [diamond] ACCIDENTAL DEATH BENEFIT RIDER. An additional death benefit will be paid before the policy anniversary nearest the insured's 75th birthday, if: 18 o the insured dies from bodily injury that results from an accident; and o the insured dies no later than 90 days after injury. We assess a monthly charge for this rider. This policy is elected at issue. [diamond] DEATH BENEFIT PROTECTION RIDER. The purchase of this rider provides that the death benefit will be guaranteed. The amount of the guaranteed death benefit is equal to the initial face amount, or the face amount that you may increase or decrease, provided that certain minimum premiums are paid. Unless we agree otherwise, the initial face amount and the face amount remaining after any decrease must at least equal $50,000 and the minimum issue age of the insured must be 20. Three death benefit guarantee periods are available. The minimum premium required to maintain the guaranteed death benefit is based on the length of the guarantee period as elected on the application. The three available guarantee periods are: 1 death benefit guaranteed until the later of the policy anniversary nearest the insured's 70th birthday or policy year 7; 2 death benefit guaranteed until the later of the policy anniversary nearest the insured's 80th birthday or policy year ten; 3 death benefit guaranteed until the later of the policy anniversary nearest the insured's 95th birthday. Death benefit guarantee periods 1 or 2 may be extended provided that the policy's cash surrender value is sufficient and you pay the new minimum required premium. For policies issued in New York, two guarantee periods are available: 1 The policy anniversary nearest the Insured's 75th birthday or the 10th policy year; or 2 The policy anniversary nearest the Insured's 95th birthday. [diamond] PURCHASE PROTECTION PLAN RIDER. Under this rider you may, at predetermined future dates, purchase additional insurance protection without evidence of insurability. [diamond] LIVING BENEFIT RIDER. Under certain conditions, in the event of the terminal illness of the insured, an accelerated payment of up to 75% of the policy's death benefit (up to a maximum of $250,000) is available. The minimum face amount of the policy after any such accelerated benefit payment is $10,000. There is no charge for this rider. This rider is automatically attached to the policy at issue. However, the rider is not available with qualified plans. [diamond] CASH VALUE ACCUMULATION RIDER. This rider generally permits you to pay more in premium than otherwise would be permitted. This rider must be elected before the policy is issued. There is no charge for this rider. [diamond] CHILD TERM RIDER. This rider provides annually renewable term coverage on children of the insured who are between 14 days old and age 18. The term insurance is renewable to age 25. Each child will be insured under a separate rider and the amount of insurance must be the same. Coverage may be converted to a new whole life or variable insurance policy at any time prior to the policy anniversary nearest insured child's 25th birthday. We assess a monthly charge for this rider. This rider is elected at issue, within 14 days of birth or at adoption. [diamond] FAMILY TERM RIDER. This rider provides annually renewable term insurance coverage to age 70 on the insured or members of the insured's immediate family who are at least 18 years of age. The rider is fully convertible through age 70 for each insured to either a fixed benefit or variable policy. This policy is elected at issue. [diamond] BUSINESS TERM RIDER. This rider provides annually renewable term insurance coverage to age 95 on the life of the insured under the base policy. The face amount of the term insurance may be level or increasing. The initial rider death benefit cannot exceed six times the initial base policy. This rider is available only for policies sold in the corporate-owned life insurance market, employer-sponsored life insurance market or other business-related life insurance market. [diamond] WHOLE LIFE EXCHANGE OPTION RIDER. This rider permits you to exchange the policy for a fixed benefit whole life policy at the later of age 65 or policy year 15. There is no charge for this option. This option is no longer available. MULTIPLE LIVES POLICIES [diamond] DISABILITY BENEFIT RIDER. In the case of disability of the insured, a specified monthly amount may be credited to the policy and the monthly deductions will be waived. A Disability Benefit rider may be provided on any or all eligible insureds. The specified amount selected must be the same for all who elect coverage. This policy is elected at issue. [diamond] SURVIVOR PURCHASE OPTION RIDER. The survivor(s) may purchase a new Multiple Life Policy for a face amount equal to that of the original policy upon the first death. The new policy will be based upon attained age rates. [diamond] TERM INSURANCE RIDER. The Term Insurance Rider enables the face amount of coverage on each life to be individually specified. A rider is available for each insured and the face amount of coverage under the rider may differ for each insured. Based upon the policyowner's election at issue, the rider will provide coverage for all insureds to either age 70 or maturity of the policy. The termination age specified must be the same for all insureds. This policy is elected at issue. [diamond] POLICY EXCHANGE OPTION RIDER. The Multiple Life Policy may be exchanged for single life policies where the total face amount under the policies is no greater than that under the original policy. There is no charge for this rider. 19 DEATH BENEFIT GENERAL The death benefit under Option 1 equals the policy's face amount on the date of the death of the insured or, if greater, the minimum death benefit on the date of death. Under Option 2, the death benefit equals the policy's face amount on the date of the death of the insured, plus the policy value or, if greater, the minimum death benefit on that date. Under either option, the minimum death benefit is the policy value on the date of death of the insured increased by a percentage determined from a table contained in the policy. This percentage will be based on the insured's attained age at the beginning of the policy year in which the death occurs. If no option is elected, Option 1 will apply. Loans can reduce the policy's death benefit. We deduct the amount of any outstanding loans plus any accrued loan interest from your policy value before we calculate the death benefit. REQUESTS FOR INCREASE IN FACE AMOUNT Any time after the first policy anniversary, you may request an increase in the face amount of insurance provided under the policy. Requests for face amount increases must be made in writing, and we require additional evidence of insurability. The effective date of the increase generally will be the policy anniversary following approval of the increase. The increase may not be less than $25,000 and no increase will be permitted after the insured's age 75. The charge for the increase is $1.50 per $1,000 of face amount increase requested subject to a maximum of $600. No additional monthly administration charge will be assessed for face amount increase. We will deduct any charges associated with the increase (the increases in cost of insurance charges), from the policy value, whether or not you pay an additional premium in connection with the increase. The surrender charge applicable to the policy also will increase. At the time of the increase, the cash value must be sufficient to pay the monthly deduction on that date, or additional premiums will be paid on or before the effective date. Also, a new Free Look Period (see "The Summary - Right to Cancel") will be established for the amount of the increase. PARTIAL SURRENDER AND DECREASES IN FACE AMOUNT: EFFECT ON DEATH BENEFIT A partial surrender or a decrease in face amount generally decreases the death benefit. Upon a decrease in face amount or partial surrender, a partial surrender charge will be deducted from policy value based on the amount of the decrease or partial surrender. If the charge is a decrease in face amount, the death benefit under a policy would be reduced on the next monthly calculation day. If the charge is a partial surrender, the death benefit under a policy would be reduced immediately. A decrease in the death benefit may have certain income tax consequences. See "Federal Income Tax Considerations." REQUESTS FOR DECREASE IN FACE AMOUNT You may request a decrease in face amount at any time after the first policy year. Unless we agree otherwise, the decrease must be at least equal to $10,000 and face amount remaining after the decrease must be at least $25,000. All face amount decrease requests must be in writing and will be effective on the first monthly calculation day following the date we approve the request. A partial surrender charge will be deducted from the policy value based on the amount of the decrease. The charge will equal the applicable surrender charge that would apply to a full surrender multiplied by a fraction (which is equal to the decrease in face amount divided by the face amount of the policy before the decrease). PAYMENT OF PROCEEDS - -------------------------------------------------------------------------------- SURRENDER AND DEATH BENEFIT PROCEEDS Death benefit proceeds and the proceeds of full or partial surrenders will be processed at unit values next computed after we receive the request for surrender or due proof of death, provided such request is complete and in good order. Payment of surrender or death proceeds usually will be made in one lump sum within seven days, unless another payment option has been elected. Payment of the death proceeds, however, may be delayed if the claim for payment of the death proceeds needs to be investigated, e.g., to ensure payment of the proper amount to the proper payee. Any such delay will not be beyond that reasonably necessary to investigate such claims consistent with insurance practices customary in the life insurance industry. Under a policy covering multiple lives, the death proceeds will be paid upon the first death under the policy. In addition, under certain conditions, in the event of the terminal illness of the insured, an accelerated payment of up to 75% of the policy's death benefit (up to maximum of $250,000), is available under the Living Benefits Rider. The minimum face amount remaining after any such accelerated benefit payment is $10,000. While the insured is living, you may elect a payment option for payment of the death proceeds to the beneficiary. You may revoke or change a prior election, unless such right has been waived. The beneficiary may make or change an election before payment of the death proceeds, unless you have made an election that does not permit such further election or changes by the beneficiary. A written request in a form satisfactory to us is required to elect, change or revoke a payment option. The minimum amount of surrender or death benefit proceeds that may be applied under any payment option is $1,000. If the policy is assigned as collateral security, we will pay any amount due the assignee in one lump sum. Any remaining proceeds will remain under the option elected. PAYMENT OPTIONS All or part of the surrender or death proceeds of a policy may be applied under one or more of the following payment options or such other payment options or alternative versions of the options listed as we may choose to make available in the future. OPTION 1--LUMP SUM Payment in one lump sum. 20 OPTION 2--LEFT TO EARN INTEREST A payment of interest during the payee's lifetime on the amount payable as a principal sum. Interest rates are guaranteed to be at least 3% per year. OPTION 3--PAYMENT FOR A SPECIFIC PERIOD Equal installments are paid for a specified period of years whether the payee lives or dies. The first payment will be on the date of settlement. The assumed interest rate on the unpaid balance is guaranteed not to be less than 3% per year. OPTION 4--LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN Equal installments are paid until the later of: [diamond] the death of the payee; or [diamond] the end of the period certain. The first payment will be on the date of settlement. The period certain must be chosen at the time this option is elected. The periods certain that you may choose from are as follows: [diamond] 10 years; [diamond] 20 years; or [diamond] until the installments paid refund the amount applied under this option. If the payee is not living when the final payment falls due, that payment will be limited to the amount which needs to be added to the payments already made to equal the amount applied under this option. If, for the age of the payee, a period certain is chosen that is shorter than another period certain paying the same installment amount, we will consider the longer period certain as having been elected. Any life annuity provided under Option 4 is computed using an interest rate guaranteed to be no less than 33/8% per year, but any life annuity providing a period certain of 20 years or more is computed using an interest rate guaranteed to be no less than 3 1/4% per year. OPTION 5--LIFE ANNUITY Equal installments are paid only during the lifetime of the payee. The first payment will be on the date of settlement. Any life annuity as may be provided under Option 5 is computed using an interest rate guaranteed to be no less than 3 1/2% per year. OPTION 6--PAYMENTS OF A SPECIFIED AMOUNT Equal installments of a specified amount, out of the principal sum and interest on that sum, are paid until the principal sum remaining is less than the amount of the installment. When that happens, the principal sum remaining with accrued interest will be paid as a final payment. The first payment will be on the date of settlement. The payments will include interest on the remaining principal at a guaranteed rate of at least 3% per year. This interest will be credited at the end of each year. If the amount of interest credited at the end of the year exceeds the income payments made in the last 12 months, that excess will be paid in one sum on the date credited. OPTION 7--JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN The first payment will be on the date of settlement. Equal installments are paid until the latest of: [diamond] the end of the 10-year period certain; [diamond] the death of the insured; or [diamond] the death of the other named annuitant. The other annuitant must have attained age 40, must be named at the time this option is elected and cannot later be changed. Any joint survivorship annuity that may be provided under this option is computed using a guaranteed interest rate to equal at least 33/8% per year. For additional information concerning the above payment options, see the policy. SURRENDERS GENERAL At any time during the lifetime of the insured(s) and while the policy is in force, you may partially or fully surrender the policy by sending to VPMO a written release and surrender in a form satisfactory to us. We may also require you to send the policy to us. The amount available for surrender is the cash surrender value at the end of the valuation period during which the surrender request is received at VPMO. Upon partial or full surrender, we generally will pay to you the amount surrendered within seven days after we receive the written request for the surrender. Under certain circumstances, the surrender payment may be postponed. See "General Postponement of Payments." For the federal tax effects of partial and full surrenders, see "Federal Income Tax Considerations." FULL SURRENDERS If the policy is being fully surrendered, the policy itself must be returned to VPMO, along with the written release and surrender of all claims in a form satisfactory to us. You may elect to have the amount paid in a lump sum or under a payment option. See "Conditional Charges--Surrender Charge" and "Payment Options." PARTIAL SURRENDERS You may obtain a partial surrender of the policy by requesting payment of the policy's cash surrender value. It is possible to do this at any time during the lifetime of the insured, while the policy is in force, with a written request to VPMO. We may require the return of the policy before payment is made. A partial surrender will be effective on the date the written request is received or, if required, the date the policy is received by us. Surrender proceeds may be applied under any of the payment options described under "Payment of Proceeds--Payment Options." We reserve the right not to allow partial surrenders of less than $500. In addition, if the share of the policy value in any subaccount or in the Guaranteed Interest Account is reduced as a result of a partial surrender and is less than $500, we reserve the 21 right to require surrender of the entire remaining balance in that subaccount or the Guaranteed Interest Account. Upon a partial surrender, the policy value will be reduced by the sum of the following: [diamond] The partial surrender amount paid--this amount comes from a reduction in the policy's share in the value of each subaccount or the Guaranteed Interest Account based on the allocation requested at the time of the partial surrender. If no allocation request is made, the withdrawals from each subaccount will be made in the same manner as that provided for monthly deductions. [diamond] The partial surrender fee--this fee is the lesser of $25 or 2% of the partial surrender amount paid. The assessment to each subaccount or the Guaranteed Interest Account will be made in the same manner as provided for the partial surrender amount paid. [diamond] A partial surrender charge--this charge is equal to a pro rata portion of the applicable surrender charge that would apply to a full surrender, determined by multiplying the applicable surrender charge by a fraction (equal to the partial surrender amount payable divided by the result of subtracting the applicable surrender charge from the policy value). This amount is assessed against the subaccount or the Guaranteed Interest Account in the same manner as provided for the partial surrender amount paid. The cash surrender value will be reduced by the partial surrender amount paid plus the partial surrender fee. The face amount of the policy will be reduced by the same amount as the policy value is reduced as described above. TRANSFER OF POLICY VALUE INTERNET, INTERACTIVE VOICE RESPONSE AND TELEPHONE TRANSFERS You may transfer your policy value among the available investment options and make changes to your premium payment allocations by Internet, Interactive Voice Response or Telephone. You may write to VPMO or call VULA between the hours of 8:30 AM and 4:00 PM, Eastern Time. (The appropriate address and telephone number are on page 1.) We will execute a written request the day we receive it at VPMO. We will execute transfers on the day you make the request except as noted below. We do not charge for transfers at this time. However, we reserve the right to charge a fee of $10 for each transfer after your first two transfers in a policy year. Should we begin imposing this charge, we would not count transfers made under a Systematic Transfer Program toward the two-transfer limit. You may permit your registered representative to submit transfer requests on your behalf. Phoenix and Phoenix Equity Planning Corporation ("PEPCO"), our national distributor, will use reasonable procedures to confirm that transfer instructions are genuine. We require verification of account information and will record telephone instructions on tape. You will receive written confirmation of all transfers. Phoenix and PEPCO may be liable for following unauthorized instructions if we fail to follow our established security procedures. However, you will bear the risk of a loss resulting from instructions entered by an unauthorized third party that Phoenix and PEPCO reasonably believe to be genuine. We may modify or terminate your transfer and allocation privileges at any time. You may find it difficult to exercise these privileges during times of extreme market volatility. In such a case, you should submit your request in writing. We will not accept batches of transfer instructions from registered representatives acting under powers of attorney for multiple policy owners, unless the registered representative's broker-dealer firm and Phoenix have entered into a third-party service agreement. If we reject a transfer request for any of these reasons, we will notify you of our decision in writing. TRANSFER RESTRICTIONS We do not permit transfers of less than $500 unless either: [diamond] the entire balance in the subaccount or the Guaranteed Interest Account is being transferred; or [diamond] the transfer is part of a Systematic Transfer Program. We reserve the right to prohibit a transfer to any subaccount if the value of your investment in that subaccount immediately after the transfer would be less than $500. We further reserve the right to require that the entire balance of a subaccount or the Guaranteed Interest Account be transferred if the value of your investment in that subaccount immediately after the transfer, would be less than $500. You may make only one transfer per policy year from the non-loaned portion of the Guaranteed Interest Account unless the transfers are made as part of a Systematic Transfer Program or unless we agree to make an exception to this rule. The amount you may transfer is limited to the greatest of $1,000 or 25% of the value of the non-loaned portion of the Guaranteed Interest Account. You may transfer policy value into the Guaranteed Interest Account at anytime. DISRUPTIVE TRADING AND MARKET TIMING Your ability to make transfers among subaccounts under the policy is subject to modification if we determine, in our sole opinion, that your exercise of the transfer privilege may disadvantage or potentially harm the rights or interests of other policy owners. Frequent purchases, redemptions and transfers, programmed transfers, transfers into and then out of a subaccount in a short period of time, and transfers of large amounts at one time ("Disruptive Trading") can have harmful effects for other policy owners. These risks and harmful effects include: [diamond] dilution of the interests of long-term investors in a subaccount, if market timers or others transfer into the subaccount at prices that are below the true value or transfer out of the subaccount at prices that are higher than the true value; 22 [diamond] an adverse affect on portfolio management, as determined by portfolio management in its sole discretion, such as causing the underlying fund to maintain a higher level of cash than would otherwise be the case, or causing the underlying fund to liquidate investments prematurely; and [diamond] increased brokerage and administrative expenses. To protect our policy owners and the underlying funds from Disruptive Trading, we have adopted certain market timing policies and procedures. Under our market timing policy, we could modify your transfer privileges for some or all of the subaccounts. Modifications include, but are not limited to, not accepting a transfer request from you or from any person, asset allocation service, and/or market timing service made on your behalf. We may also limit the amount that may be transferred into or out of any subaccount at any one time. Unless prohibited by the terms of the policy, we may (but are not obligated to): [diamond] limit the dollar amount and frequency of transfers (e.g., prohibit more than one transfer a week, or more than two a month, etc.), [diamond] restrict the method of making a transfer (e.g., require that all transfers into a particular subaccount be sent to our Service Center by first class U.S. mail and rescind telephone or fax transfer privileges), [diamond] require a holding period for some subaccounts (e.g., prohibit transfers into a particular subaccount within a specified period of time after a transfer out of that subaccount), [diamond] impose redemption fees on short-term trading (or implement and administer redemption fees imposed by one or more of the underlying funds), or [diamond] impose other limitations or restrictions. Currently we attempt to detect Disruptive Trading by monitoring both the dollar amount of individual transfers and the frequency of a policy owner's transfers. With respect to both dollar amount and frequency, we may consider an individual transfer alone or when combined with transfers from other policies owned by or under the control or influence of the same individual or entity. We currently review transfer activity on a regular basis. We also consider any concerns brought to our attention by the managers of the underlying funds. We may change our monitoring procedures at any time without notice. Because we reserve discretion in applying these policies, they may not be applied uniformly. However, we will to the best of our ability apply these policies uniformly. Consequently, there is a risk that some policy owners could engage in market timing while others will bear the effects of their market timing. Currently we attempt to detect Disruptive Trading by monitoring activity for all policies. If a policy owner's transfer request exceeds the transfer parameters, we may send the owner a warning letter. Then, if at any time thereafter the owner's transfer activity exceeds the transfer parameters, we will revoke the policy owner's right to make Internet and Interactive Voice Response (IVR) transfers. We will notify policy owners in writing (by mail to their address of record on file with us) if we limit their trading. We have adopted these policies and procedures as a preventative measure to protect all policy owners from the potential affects of Disruptive Trading, while also abiding by any rights that policy owners may have to make transfers and providing reasonable and convenient methods of making transfers that do not have the potential to harm other policy owners. We currently do not make any exceptions to the policies and procedures discussed above to detect and deter Disruptive Trading. We may reinstate Internet, IVR, telephone and fax transfer privileges after they are revoked, but we will not reinstate these privileges if we have reason to believe that they might be used thereafter for Disruptive Trading. We cannot guarantee that our monitoring will be 100% successful in detecting all transfer activity that exceeds the parameters discussed above (and we do not guarantee that these are appropriate transfer parameters to prevent Disruptive Trading). Moreover, we cannot guarantee that revoking or limiting a policy owner's Internet, IVR, telephone and fax transfer privileges will successfully deter all Disruptive Trading. In addition, some of the underlying funds are available to insurance companies other than Phoenix and we do not know whether those other insurance companies have adopted any policies and procedures to detect and deter Disruptive Trading, or if so what those policies and procedures might be. Because we may not be able to detect or deter all Disruptive Trading and because some of these funds are available through other insurance companies, some policy owners may be treated differently than others, resulting in the risk that some policy owners could engage in market timing while others will bear the effects of their market timing. We may, without prior notice, take whatever action we deem appropriate to comply with or take advantage of any state or federal regulatory requirement. In addition, orders for the purchase of underlying fund shares are subject to acceptance by the relevant fund. We reserve the right to reject, without prior notice, any transfer request into any subaccount if the purchase of shares in the corresponding underlying fund is not accepted for any reason. We do not include transfers made pursuant to the Dollar Cost Averaging, Automatic Asset Rebalancing or other similar programs when applying our market timing policy. SYSTEMATIC TRANSFER PROGRAMS You may elect a systematic transfer program that we offer under the policy. We reserve the right to change, eliminate or add optional programs subject to applicable laws. We base transfers under a Systematic Transfer Program on the subaccount values on the first day of the month following our receipt of your transfer request. Should the first day of the month fall on a holiday or weekend, we will process the transfer on the next business day. You may have only one program in effect at a time. We do not charge for these programs. 23 DOLLAR COST AVERAGING PROGRAM: Dollar Cost Averaging periodically transfers policy value from one of the subaccounts or from the Guaranteed Interest Account (a "source account") to one or several of the available subaccounts ("target subaccounts") and the Long-term Guaranteed Interest Account. You choose to make these transfers monthly, quarterly, semiannually or annually. The minimums you may transfer from the source account are: [diamond] $25 monthly [diamond] $150 semiannually [diamond] $75 quarterly [diamond] $300 annually You must have at least $1,000 in the source account to begin a Dollar Cost Averaging Program. Should the value in the source account fall below the transfer amount, we will transfer the remaining balance and end the Program. Transfers must be made in approximately equal amounts over a minimum of 18 months. The Dollar Cost Averaging Program is not available if you invest through a bank draft program. You may start or discontinue this program at any time by submitting a written request to VPMO or calling VULA (see page one). Dollar Cost Averaging does not ensure a profit nor guarantee against a loss in a declining market. The Dollar Cost Averaging Program is not available while the Asset Rebalancing Program is in effect. We do not charge for this program. ASSET REBALANCING PROGRAM: Under this program, we transfer policy value among the subaccounts to match your chosen allocation percentages. You can choose to have us make these transfers monthly, quarterly, semiannually or annually. We do not permit transfers to or from the Guaranteed Interest Account. You may start or discontinue this program at any time by submitting a written request to VPMO or calling VULA (see page one). The Asset Rebalancing Program does not ensure a profit nor guarantee against a loss in a declining market. The Asset Rebalancing Program is not available while the Dollar Cost Averaging Program is in effect. We do not charge for this program. LOANS Generally, while the policy is in force, a loan may be taken against the policy up to the available loan value. The loan value on any day is 90% of the policy value reduced by an amount equal to the surrender charge. The available loan value is the loan value on the current day less any outstanding debt. The amount of any loan will be added to the loaned portion of the Guaranteed Interest Account and subtracted from the policy's share of the subaccounts or the nonloaned portion of the Guaranteed Interest Account, based on the allocation requested at the time of the loan. The total reduction will equal the amount added to the loaned portion of the Guaranteed Interest Account. Allocations generally must be expressed in terms of whole percentages. If no allocation request is made, the amount subtracted from the share of each subaccount or the nonloaned portion of the Guaranteed Interest Account will be determined in the same manner as provided for monthly deductions. Interest will be credited and the loaned portion of the Guaranteed Interest Account will increase at an effective annual rate of 2% (4% in New York and New Jersey only) on single life policies and 6% on multiple life policies, compounded daily and payable in arrears. At the end of each policy year and at the time of any debt repayment, interest credited to the loaned portion of the Guaranteed Interest Account will be transferred to the nonloaned portion of the Guaranteed Interest Account. Debt may be repaid at any time during the lifetime of the insured while the policy is in force. Any debt repayment received by us during a grace period will be reduced to pay any overdue monthly deductions and only the balance will be applied to reduce the debt. Such balance will first be used to pay any outstanding accrued loan interest, and then will be applied to reduce the loaned portion of the Guaranteed Interest Account. The nonloaned portion of the Guaranteed Interest Account will be increased by the same amount the loaned portion is decreased. If the amount of a loan repayment exceeds the remaining loan balance and accrued interest, the excess will be allocated among the subaccounts as you may request at the time of the repayment and, if no allocation request is made, according to the most recent premium allocation schedule on file. Payments received by us for the policy will be applied directly to reduce outstanding debt unless specified as a premium payment by you. Until the debt is fully repaid, additional debt repayments may be made at any time during the lifetime of the insured while the policy is in force. Failure to repay a policy loan or to pay loan interest will not terminate the policy unless the policy value becomes insufficient to maintain the policy in force. Policy value for loaned amounts increases at the rate we credit the loaned portion of the Guaranteed Interest Account, whereas nonloaned policy value varies with the investment performance of the chosen subaccounts or at the rate we credit the nonloaned portion of the Guaranteed Interest Account and the Long-term Guaranteed Interest Account. Loans can also reduce your policy's death benefit. We deduct the amount of any outstanding loans plus any accrued loan interest from your policy value before we calculate the death benefit. The amount available for a full surrender is similarly reduced by the amount of any outstanding loans and loan interest. The proceeds of policy loans may be subject to federal income tax. See "Federal Income Tax Considerations." In the future, we may not allow policy loans of less than $500, unless such loan is used to pay a premium on another Phoenix policy. Loan interest rate are as follows: [diamond] Single Life Policies o Policy years 1-10: 4% o Policy years 11-15: 3% o Policy years 16 and thereafter*: 2 1/2% [diamond] Single Life policies - New York and New Jersey only o Policy years 1-10: 6% o Policy years 11-15: 5% o Policy years 16 and thereafter*: 4 1/2% 24 *These rates also apply after the insured attains age 65. [diamond] Multiple Life Policies o Policy years 1-10: 8% o Policy years 11 and thereafter: 7% You will pay interest on the loan at the noted effective annual rates, compounded daily and payable in arrears. At the end of each policy year, any interest due on the debt will be treated as a new loan and will be offset by a transfer from your subaccounts and the nonloaned portion of the Guaranteed Interest Account or the Long-term Guaranteed Interest Account to the loaned portion of the Guaranteed Interest Account. A policy loan, whether or not repaid, has a permanent effect on the policy value because the investment results of the subaccounts or nonloaned portion of the Guaranteed Interest Account will apply only to the amount remaining in the subaccounts or the nonloaned portion of the Guaranteed Interest Account and the Long-term Guaranteed Interest Account. The longer a loan is outstanding, the greater the effect is likely to be. The effect could be favorable or unfavorable. Under Death Benefit Option 1, outstanding policy loans do not reduce the policy's gross death benefit, because the policy value is inclusive of the gross death benefit amount. A policy loan can also have an effect on the policy's death benefit under Death Benefit Option 2 due to any resulting differences in policy value. If the subaccounts or the nonloaned portion of the Guaranteed Interest Account and the Long-term Guaranteed Interest Account earn more than the annual interest rate for funds held in the loaned portion of the Guaranteed Interest Account, the policy value does not increase as rapidly as it would have had no loan been made. If the subaccounts or the Guaranteed Interest Account earn less than the annual interest rate for funds held in the loaned portion of the Guaranteed Interest Account, the policy value is greater than it would have been had no loan been made. A policy loan, whether or not repaid, also has a similar effect on the policy's death benefit due to any resulting differences in cash surrender value. LAPSE Unlike conventional life insurance policies, the payment of the issue premium, no matter how large, or the payment of additional premiums will not necessarily continue the policy in force to its maturity date. If on any monthly calculation day during the first five policy years, the policy value is insufficient to cover the monthly deduction, a grace period of 61 days will be allowed for the payment of an amount equal to three times the required monthly deduction. If on any monthly calculation day during any subsequent policy year, the cash surrender value (which should have become positive) is less than the required monthly deduction, a grace period of 61 days will be allowed for the payment of an amount equal to three times the required monthly deduction. During the grace period, the policy will continue in force but subaccount transfers, loans, partial or full surrenders will not be permitted. Failure to pay the additional amount within the grace period will result in lapse of the policy, but not until 30 days has passed after we have mailed a written notice to you. If a premium payment for the additional amount is received by us during the grace period, any amount of premium over what is required to prevent lapse will be allocated among the subaccounts or to the Guaranteed Interest Account according to the current premium allocation schedule. In determining the amount of "excess" premium to be applied to the subaccounts or the Guaranteed Interest Account, we will deduct the premium tax and the amount needed to cover any monthly deductions made during the grace period. If the insured dies during the grace period, the death benefit will equal the amount of the death benefit immediately prior to the commencement of the grace period. FEDERAL INCOME TAX CONSIDERATIONS - -------------------------------------------------------------------------------- INTRODUCTION This discussion is general in nature and is not intended as income tax advice. We make no attempt to consider any estate and inheritance taxes, or any state, local or other tax laws. Because this discussion is based upon our understanding of federal income tax laws as they are currently interpreted, we cannot guarantee the income tax status of any policy. The Internal Revenue Service ("IRS") makes no representation regarding the likelihood of continuation of current federal income tax laws, U.S. Treasury regulations or of the current interpretations. We reserve the right to make changes to the policy to assure that it will continue to qualify as a life insurance contract for federal income tax purposes. The ultimate effect of federal income taxes on values under the Separate Account and on the economic benefit to you or your beneficiary depends on our income tax status and upon the income tax status of the individual concerned. For complete information on federal and state income tax considerations, an income tax advisor should be consulted. The Internal Revenue Service ("IRS") makes no representation regarding the likelihood of continuation of current federal income tax laws, Treasury regulations or of the current interpretations. We reserve the right to make changes to the policy to assure that it will continue to qualify as a life insurance contract for federal income tax purposes. INCOME TAX STATUS We are taxed as a life insurance company under the Internal Revenue Code of 1986 (the "Code"), as amended. For federal income tax purposes, neither the Separate Account nor the Guaranteed Interest Account is a separate entity from Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company and their operations form a part of the companies. Investment income and realized capital gains on the assets of the Separate Account are reinvested and taken into account in determining the value of the Separate Account. Investment income of the Separate Account, including realized net capital gains, is not taxed to us. Due to our income tax status under current provisions of the Code, no charge currently will be made to the Separate Account for our federal income taxes which may 25 be attributable to the Separate Account. We reserve the right to make a deduction for taxes if our federal income tax treatment is determined to be other than what we currently believe it to be, if changes are made affecting the income tax treatment to our variable life insurance contracts, or if changes occur in our income tax status. If imposed, such charge would be equal to the federal income taxes attributable to the investment results of the Separate Account. POLICY BENEFITS DEATH BENEFIT PROCEEDS The policy, whether or not it is a modified endowment contract (see "Modified Endowment Contracts"), should be treated as meeting the definition of a life insurance contract for federal income tax purposes under Section 7702 of the Code. As such, the death benefit proceeds thereunder should be excludable from the gross income of the beneficiary under Code Section 101(a)(1). Also, a policy owner should not be considered to be in constructive receipt of the cash value, including investment income. However, see the sections below on possible taxation of amounts received under the policy, via full surrender, partial surrender or loan. In addition, a benefit paid under a Living Benefits Rider may be taxable as income in the year of receipt. Code Section 7702 imposes certain conditions with respect to premiums received under a policy. We monitor the premiums to assure compliance with such conditions. However, if the premium limitation is exceeded during the year, we may return the excess premium, with interest, to the policy owner within 60 days after the end of the policy year, and maintain the qualification of the policy as life insurance for federal income tax purposes. FULL SURRENDER Upon full surrender of a policy for its cash value, the excess, if any, of the cash value (unreduced by any outstanding indebtedness) over the premiums paid will be treated as ordinary income for federal income tax purposes. The full surrender of a policy that is a modified endowment contract may result in the imposition of an additional 10% tax on any income received. PARTIAL SURRENDER If the policy is a modified endowment contract, partial surrenders and other distributions are fully taxable to the extent of income in the policy and are possibly subject to an additional 10% tax. See the discussion on modified endowment contracts below. If the policy is not a modified endowment contract, partial surrenders still may be taxable, as follows. Code Section 7702(f)(7) provides that where a reduction in death benefits occurs during the first 15 years after a policy is issued and there is a cash distribution associated with that reduction, the policy owner may be taxed on all or a part of that amount distributed. A reduction in death benefits may result from a partial surrender. After 15 years, the proceeds will not be subject to tax, except to the extent such proceeds exceed the total amount of premiums paid but not previously recovered. We suggest you consult with your tax advisor in advance of a proposed decrease in death benefits or a partial surrender as to the portion, if any, which would be subject to tax, and in addition as to the impact such partial surrender might have under the new rules affecting modified endowment contracts. The benefit payment under the Living Benefits Rider is not considered a partial surrender. LOANS We believe that any loan received under a policy will be treated as your indebtedness. If the policy is a modified endowment contract, loans are fully taxable to the extent of income in the policy and are possibly subject to an additional 10% tax. See the discussion on modified endowment contracts. If the policy is not a modified endowment contract, we believe that no part of any loan under a policy will constitute income to you. The deductibility by a policy owner of loan interest under a policy may be limited under Code Section 264, depending on the circumstances. A policy owner intending to fund premium payments through borrowing should consult an income tax advisor with respect to the tax consequences. Under the "personal" interest limitation provisions of the Code, interest on policy loans used for personal purposes is not tax deductible. Other rules may apply to allow all or part of the interest expense as a deduction if the loan proceeds are used for "trade or business" or "investment" purposes. See your tax advisor for further guidance. BUSINESS-OWNED POLICIES If a business or a corporation owns the policy, the Code may impose additional restrictions. The Code limits the interest deduction on business-owned policy loans and may impose tax upon the inside build-up of corporate-owned life insurance policies through the corporate alternative minimum tax. MODIFIED ENDOWMENT CONTRACTS GENERAL Pursuant to Code Section 72(e), loans and other amounts received under modified endowment contracts will, in general, be taxed to the extent of accumulated income (generally, the excess of cash value over premiums paid). Life insurance policies can be modified endowment contracts if they fail to meet what is known as "the 7-pay test." This test compares your policy to a hypothetical life insurance policy of equal face amount which requires seven equal annual premiums to be "fully paid-up," continuing to provide a level death benefit with no further premiums. A policy becomes a modified endowment contract if, at any time during the first seven years, the cumulative premium paid on the policy exceeds the cumulative premium that would have been paid under the hypothetical policy. Premiums paid during a policy year but which are returned by us with interest within 60 days after the end of the policy year will be excluded from the 7-pay test. A life insurance policy received in exchange for a modified endowment contract will be treated as a modified endowment contract. REDUCTION IN BENEFITS DURING THE FIRST SEVEN YEARS If there is a reduction in death benefits or reduction or elimination of any Optional Insurance Benefits previously elected, during the first seven policy years, the premiums are redetermined for purposes of the 7-pay test as if the policy originally had been issued at the reduced death benefit level and 26 the new limitation is applied to the cumulative amount paid for each of the first seven policy years. DISTRIBUTIONS AFFECTED If a policy fails to meet the 7-pay test, it is considered a modified endowment contract only as to distributions in the year in which the test is failed and all subsequent policy years. However, distributions made in anticipation of such failure (there is a presumption that distributions made within two years prior to such failure were "made in anticipation") also are considered distributions under a modified endowment contract. If the policy satisfies the 7-pay test for seven years, distributions and loans generally will not be subject to the modified endowment contract rules. PENALTY TAX Any amounts taxable under the modified endowment contract rule will be subject to an additional 10% excise tax, with certain exceptions. This additional tax will not apply in the case of distributions that are: [diamond] made on or after the taxpayer attains age 59 1/2; [diamond] attributable to the taxpayer's disability (within the meaning of Code Section 72(m)(7)); or [diamond] part of a series of substantially equal periodic payments (not less often than annually) made for the life (or life expectancy) of the taxpayer or the joint lives (or life expectancies) of the taxpayer and his beneficiary. MATERIAL CHANGE RULES Any determination of whether the policy meets the 7-pay test will begin again any time the policy undergoes a "material change," which includes any increase in death benefits or any increase in or addition of a qualified additional benefit, or any increase in or addition of any rider benefit available as an Optional Insurance Benefit (described above), with the following two exceptions. [diamond] First, if an increase is attributable to premiums paid "necessary to fund" the lowest death benefit and qualified additional benefits payable in the first seven policy years or to the crediting of interest or dividends with respect to these premiums, the "increase" does not constitute a material change. [diamond] Second, to the extent provided in regulations, if the death benefit or qualified additional benefit increases as a result of a cost-of-living adjustment based on an established broad-based index specified in the policy, this does not constitute a material change if: o the cost-of-living determination period does not exceed the remaining premium payment period under the policy; and o the cost-of-living increase is funded ratably over the remaining premium payment period of the policy. A reduction in death benefits is not considered a material change unless accompanied by a reduction in premium payments. A material change may occur at any time during the life of the policy (within the first seven years or thereafter), and future taxation of distributions or loans would depend upon whether the policy satisfied the applicable 7-pay test from the time of the material change. An exchange of policies is considered to be a material change for all purposes. SERIAL PURCHASE OF MODIFIED ENDOWMENT CONTRACTS All modified endowment contracts issued by the same insurer (or affiliated companies of the insurer) to the same policy owner within the same calendar year will be treated as one modified endowment contract in determining the taxable portion of any loans or distributions made to the policy owner. The U.S. Treasury has been given specific legislative authority to issue regulations to prevent the avoidance of the new distribution rules for modified endowment contracts. A tax advisor should be consulted about the tax consequences of the purchase of more than one modified endowment contract within any calendar year. LIMITATIONS ON UNREASONABLE MORTALITY AND EXPENSE CHARGES The Code imposes limitations on unreasonable mortality and expense charges for purposes of ensuring that a policy qualifies as a life insurance contract for federal income tax purposes. The mortality charges taken into account to compute permissible premium levels may not exceed those charges required to be used in determining the federal income tax reserve for the policy, unless U.S. Treasury regulations prescribe a higher level of charge. In addition, the expense charges taken into account under the guideline premium test are required to be reasonable, as defined by the U.S. Treasury regulations. We will comply with the limitations for calculating the premium we are permitted to receive from you. QUALIFIED PLANS A policy may be used in conjunction with certain qualified plans. Since the rules governing such use are complex, you should not use the policy in conjunction with a qualified plan until you have consulted a pension consultant or income tax advisor. DIVERSIFICATION STANDARDS To comply with the Diversification Regulations under Code Section 817(h), ("Diversification Regulations") each series is required to diversify its investments. The Diversification Regulations generally require that on the last day of each calendar quarter the series' assets be invested in no more than: [diamond] 55% in any one investment [diamond] 70% in any two investments [diamond] 80% in any three investments [diamond] 90% in any four investments A "look-through" rule applies to treat a pro rata portion of each asset of a series as an asset of the Separate Account; therefore, each series will be tested for compliance with the percentage limitations. For purposes of these diversification rules, all securities of the same issuer are treated as a single investment, but each United States government agency or instrumentality is treated as a separate issuer. 27 The general diversification requirements are modified if any of the assets of the Separate Account are direct obligations of the U.S. Treasury. In this case, there is no limit on the investment that may be made in U.S. Treasury securities, and for purposes of determining whether assets other than U.S. Treasury securities are adequately diversified, the generally applicable percentage limitations are increased based on the value of the Separate Account's investment in U.S. Treasury securities. Notwithstanding this modification of the general diversification requirements, the portfolios of the funds will be structured to comply with the general diversification standards because they serve as an investment vehicle for certain variable annuity contracts that must comply with these standards. In connection with the issuance of the Diversification Regulations, the U.S. Treasury announced that such regulations do not provide guidance concerning the extent to which you may direct your investments to particular divisions of a separate account. It is possible that a revenue ruling or other form of administrative pronouncement in this regard may be issued in the near future. It is not clear, at this time, what such a revenue ruling or other pronouncement will provide. It is possible that the policy may need to be modified to comply with such future U.S. Treasury announcements. For these reasons, we reserve the right to modify the policy, as necessary, to prevent you from being considered the owner of the assets of the Separate Account. We intend to comply with the Diversification Regulations to assure that the policies continue to qualify as a life insurance contract, for federal income tax purposes. CHANGE OF OWNERSHIP OR INSURED OR ASSIGNMENT Changing the policy owner or the insured or an exchange or assignment of the policy may have tax consequences depending on the circumstances. Code Section 1035 provides that a life insurance contract can be exchanged for another life insurance contract, without recognition of gain or loss, assuming that no money or other property is received in the exchange, and that the policies relate to the same insured. If the surrendered policy is subject to a policy loan, this may be treated as the receipt of money on the exchange. We recommend that any person contemplating such actions seek the advice of an income tax advisor. OTHER TAXES Federal estate tax, state and local estate, inheritance and other tax consequences of ownership or receipt of policy proceeds depend on the circumstances of each policy owner or beneficiary. We do not make any representations or guarantees regarding the tax consequences of any policy with respect to these types of taxes. WITHHOLDING We are required to withhold federal income taxes on the taxable portion of any amounts received under the policy unless you elect to not have any withholding or in certain other circumstances. You are not permitted to elect out of withholding if you do not provide a social security number or other taxpayer identification number. Special withholding rules apply to payments made to nonresident aliens. You are liable for payment of federal income taxes on the taxable portion of any amounts received under the policy. You may be subject to penalties if your withholding or estimated tax payments are insufficient. FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The financial statements of Phoenix Life Variable Universal Life Account (Flex Edge, Flex Edge Success(R), Joint Edge(R) and Individual Edge(R)) at December 31, 2004 and the results of its operations and the changes in its net assets for each of the periods indicated and the consolidated financial statements of Phoenix Life Insurance Company at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 are contained in the Statement of Additional Information (SAI), which you can get free of charge by calling the toll free number given on page one. The consolidated financial statements of Phoenix Life Insurance Company included herein should be considered only as bearing upon the ability of Phoenix Life Insurance Company to meet its obligations under the policies. You should not consider them as bearing on the investment performance of the assets held in the Separate Account or on Guaranteed Interest Account rates that we credit during a guarantee period. 28 APPENDIX A - INVESTMENT OPTIONS - -------------------------------------------------------------------------------- INVESTMENT TYPES - -------------------------------------------------------------------------------------------------------------------
Investment Type ------------------------------------------------------------------ Aggressive Growth & Subaccount Growth Conservative Growth Income Income Specialty - ------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series |X| - ------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund |X| - ------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund |X| - ------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund |X| - ------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Federated Fund for U.S. Government Securities II |X| - ------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II |X| - ------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund |X| - ------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund |X| - ------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund |X| - ------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund |X| - ------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund |X| - ------------------------------------------------------------------------------------------------------------------- Lazard Retirement Small Cap Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Bond-Debenture Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Growth and Income Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Mid-Cap Value Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Juno Fund |X| - ------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Nova Fund |X| - ------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund |X| - ------------------------------------------------------------------------------------------------------------------- Scudder VIT EAFE(R) Equity Index Fund |X| - ------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund |X| - ------------------------------------------------------------------------------------------------------------------- Technology Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Wanger International Select |X| - ------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap |X| - ------------------------------------------------------------------------------------------------------------------- Wanger Select |X| - ------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies |X| - -------------------------------------------------------------------------------------------------------------------
A-1 INVESTMENT ADVISORS - ----------------------------------------------------------------------------------------------------------------------------------
Advisors - ---------------------------------------------------------------------------------------------------------------------------------- Duff & Phoenix Phoenix Phelps Deutsche Federated Investment Variable Investment AIM Engemann Fred Alger Asset Investment Counsel, Advisors, Management Advisors, Asset Management, Management, Management Subaccounts Inc. Inc. Co. Inc. Management Inc. Inc. Company - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio |X| - ---------------------------------------------------------------------------------------------------------------------------------- Federated Fund for U.S. Government Securities II |X| - ---------------------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II |X| - ---------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund - ---------------------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund - ---------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund - ---------------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund - ---------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund - ---------------------------------------------------------------------------------------------------------------------------------- Lazard Retirement Small Cap Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Bond-Debenture Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Growth and Income Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Mid-Cap Value Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Juno Fund - ---------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Nova Fund - ---------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund - ---------------------------------------------------------------------------------------------------------------------------------- Scudder VIT EAFE(R) Equity Index Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- Technology Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Wanger International Select - ---------------------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap - ---------------------------------------------------------------------------------------------------------------------------------- Wanger Select - ---------------------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies - ---------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- Advisors - ----------------------------------------------------------------------------------------------------------------------------- Fidelity Morgan Management Franklin Lazard Lord, Stanley Templeton Templeton and Mutual Asset Abbett Investment Rydex Asset Global Research Advisers, Management & Co. Management Global Management, Advisors Subaccounts Company LLC LLC LLC Inc. Advisors Ltd. Limited - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series - ----------------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund - ----------------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund - ----------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund - ----------------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio - ----------------------------------------------------------------------------------------------------------------------------- Federated Fund for U.S. Government Securities II - ----------------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II - ----------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund - ----------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund - ----------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Lazard Retirement Small Cap Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Bond-Debenture Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Growth and Income Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Mid-Cap Value Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Juno Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Nova Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Scudder VIT EAFE(R) Equity Index Fund - ----------------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund - ----------------------------------------------------------------------------------------------------------------------------- Technology Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Wanger International Select - ----------------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap - ----------------------------------------------------------------------------------------------------------------------------- Wanger Select - ----------------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies - ----------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------ Advisors - ------------------------------------------------------------------ Templeton Wanger Investment Asset Counsel, Management, Subaccounts LLC L.P. - ------------------------------------------------------------------ Phoenix-Aberdeen International Series - ------------------------------------------------------------------ Phoenix-AIM Growth Series - ------------------------------------------------------------------ Phoenix-Alger Small-Cap Growth Series - ------------------------------------------------------------------ Phoenix-Alliance/Bernstein Enhanced Index Series - ------------------------------------------------------------------ Phoenix-Duff & Phelps Real Estate Securities Series - ------------------------------------------------------------------ Phoenix-Engemann Capital Growth Series - ------------------------------------------------------------------ Phoenix-Engemann Growth and Income Series - ------------------------------------------------------------------ Phoenix-Engemann Small-Cap Growth Series - ------------------------------------------------------------------ Phoenix-Engemann Strategic Allocation Series - ------------------------------------------------------------------ Phoenix-Engemann Value Equity Series - ------------------------------------------------------------------ Phoenix-Goodwin Money Market Series - ------------------------------------------------------------------ Phoenix-Goodwin Multi-Sector Fixed Income Series - ------------------------------------------------------------------ Phoenix-Goodwin Multi-Sector Short Term Bond Series - ------------------------------------------------------------------ Phoenix-Kayne Rising Dividends Series - ------------------------------------------------------------------ Phoenix-Kayne Small-Cap Quality Value Series - ------------------------------------------------------------------ Phoenix-Lazard International Equity Select Series - ------------------------------------------------------------------ Phoenix-Northern Dow 30 Series - ------------------------------------------------------------------ Phoenix-Northern Nasdaq-100 Index(R) Series - ------------------------------------------------------------------ Phoenix-Sanford Bernstein Mid-Cap Value Series - ------------------------------------------------------------------ Phoenix-Sanford Bernstein Small-Cap Value Series - ------------------------------------------------------------------ Phoenix-Seneca Mid-Cap Growth Series - ------------------------------------------------------------------ Phoenix-Seneca Strategic Theme Series - ------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund - ------------------------------------------------------------------ AIM V.I. Mid Cap Core Equity Fund - ------------------------------------------------------------------ AIM V.I. Premier Equity Fund - ------------------------------------------------------------------ Alger American Leveraged AllCap Portfolio - ------------------------------------------------------------------ Federated Fund for U.S. Government Securities II - ------------------------------------------------------------------ Federated High Income Bond Fund II - ------------------------------------------------------------------ VIP Contrafund(R) Portfolio - ------------------------------------------------------------------ VIP Growth Opportunities Portfolio - ------------------------------------------------------------------ VIP Growth Portfolio - ------------------------------------------------------------------ Mutual Shares Securities Fund - ------------------------------------------------------------------ Templeton Developing Markets Securities Fund - ------------------------------------------------------------------ Templeton Foreign Securities Fund |X| - ------------------------------------------------------------------ Templeton Global Asset Allocation Fund |X| - ------------------------------------------------------------------ Templeton Growth Securities Fund - ------------------------------------------------------------------ Lazard Retirement Small Cap Portfolio - ------------------------------------------------------------------ Bond-Debenture Portfolio - ------------------------------------------------------------------ Growth and Income Portfolio - ------------------------------------------------------------------ Mid-Cap Value Portfolio - ------------------------------------------------------------------ Rydex Variable Trust Juno Fund - ------------------------------------------------------------------ Rydex Variable Trust Nova Fund - ------------------------------------------------------------------ Rydex Variable Trust Sector Rotation Fund - ------------------------------------------------------------------ Scudder VIT EAFE(R) Equity Index Fund - ------------------------------------------------------------------ Scudder VIT Equity 500 Index Fund - ------------------------------------------------------------------ Technology Portfolio - ------------------------------------------------------------------ Wanger International Select |X| - ------------------------------------------------------------------ Wanger International Small Cap |X| - ------------------------------------------------------------------ Wanger Select |X| - ------------------------------------------------------------------ Wanger U.S. Smaller Companies |X| - ------------------------------------------------------------------
A-2 INVESTMENT SUBADVISORS - ------------------------------------------------------------------------------------------------------------------------------------
Subadvisors -------------------------------------------------------------------------------------- Kayne Anderson Aberdeen AIM Alliance Rudnick Lazard Asset Capital Capital Engemann Fred Alger Investment Asset Management Management, Management, Asset Management, Management, Management Subaccounts Inc. Inc. L.P. Management Inc. LLC LLC - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Aberdeen International Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-AIM Growth Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Alger Small-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Alliance/Bernstein Enhanced Index Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Capital Growth Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Growth and Income Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Small-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Strategic Allocation Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Value Equity Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Kayne Rising Dividends Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Kayne Small-Cap Quality Value Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Lazard International Equity Select Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Northern Dow 30 Series - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Northern Nasdaq-100 Index(R) Series - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Sanford Bernstein Mid-Cap Value Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Sanford Bernstein Small-Cap Value Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Seneca Mid-Cap Growth Series - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Seneca Strategic Theme Series - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------- Subadvisors --------------------------- Northern Seneca Trust Capital Investments, Management, Subaccounts N.A. LLC - ------------------------------------------------------------------------- Phoenix-Aberdeen International Series - ------------------------------------------------------------------------- Phoenix-AIM Growth Series - ------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series - ------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series - ------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series - ------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series - ------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series - ------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series - ------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series - ------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series - ------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series - ------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series - ------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series |X| - ------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series |X| - ------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series - ------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series - ------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series |X| - ------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series |X| - -------------------------------------------------------------------------
A-3 PHOENIX LIFE INSURANCE COMPANY P.O. Box 22012 Albany, NY 12201-2012 Additional information about the Flex Edge Success(R) and Joint Edge(R) Policies and the Phoenix Life Variable Universal Life Account (the "Separate Account") is contained in the Statement of Additional Information ("SAI") dated May 1, 2005, which has been filed with the Securities and Exchange Commission ("SEC") and is incorporated by reference into this prospectus. The SAI, personalized illustrations of death benefits, cash surrender values and cash values are available, without charge, upon request. Inquiries and requests for the SAI and other requests should be directed in writing to Phoenix Variable Products Mail Operations, PO Box 8027, Boston, Massachusetts 02266-8027, or by telephone (800) 541-0171. Information about the Separate Account, including the SAI, can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room by calling the SEC at (202) 942-8090. Reports and other information about the Separate Account are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov. Copies of the information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC Public Reference Section, 450 Fifth Street, NW, Washington, D.C. 20549-0102. Phoenix Life Insurance Company A member of The Phoenix Companies, Inc. PhoenixWealthManagement.com V603, V601 Investment Company Act File No. 811-04721 add value to wealth(SM)[logo] L0224PR (C)2005 The Phoenix Companies, Inc. 5-05 [VERSION C] INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT ISSUED BY: PHOENIX LIFE INSURANCE COMPANY PROSPECTUS MAY 1, 2005 This prospectus describes a flexible premium fixed and variable universal life insurance policy. The policy provides lifetime insurance protection for as long as it remains in force. You may allocate premiums and policy value to the Guaranteed Interest Account, Long-term Guaranteed Interest Account (collectively, "Guaranteed Interest Accounts") and/or one or more of the subaccounts of the Phoenix Life Variable Universal Life Account ("Separate Account"). The subaccounts purchase, at net asset value, shares of the following funds: THE PHOENIX EDGE SERIES FUND - ---------------------------- [diamond] Phoenix-Aberdeen International Series [diamond] Phoenix-AIM Growth Series (fka, Phoenix-MFS Investors Growth Stock Series) [diamond] Phoenix-Alger Small-Cap Growth Series (fka, Phoenix-State Street Research Small-Cap Growth Series) [diamond] Phoenix-Alliance/Bernstein Enhanced Index Series [diamond] Phoenix-Duff & Phelps Real Estate Securities Series [diamond] Phoenix-Engemann Capital Growth Series [diamond] Phoenix-Engemann Growth and Income Series (fka, Phoenix-Oakhurst Growth and Income Series) [diamond] Phoenix-Engemann Small-Cap Growth Series (fka, Phoenix-Engemann Small & Mid-Cap Growth Series) [diamond] Phoenix-Engemann Strategic Allocation Series (fka, Phoenix-Oakhurst Strategic Allocation Series) [diamond] Phoenix-Engemann Value Equity Series (fka, Phoenix-Oakhurst Value Equity Series) [diamond] Phoenix-Goodwin Money Market Series [diamond] Phoenix-Goodwin Multi-Sector Fixed Income Series [diamond] Phoenix-Goodwin Multi-Sector Short Term Bond Series [diamond] Phoenix-Kayne Rising Dividends Series [diamond] Phoenix-Kayne Small-Cap Quality Value Series [diamond] Phoenix-Lazard International Equity Select Series [diamond] Phoenix-Northern Dow 30 Series [diamond] Phoenix-Northern Nasdaq-100 Index(R) Series [diamond] Phoenix-Sanford Bernstein Mid-Cap Value Series [diamond] Phoenix-Sanford Bernstein Small-Cap Value Series [diamond] Phoenix-Seneca Mid-Cap Growth Series [diamond] Phoenix-Seneca Strategic Theme Series AIM VARIABLE INSURANCE FUNDS - SERIES I SHARES - ---------------------------------------------- [diamond] AIM V.I. Capital Appreciation Fund [diamond] AIM V.I. Mid Cap Core Equity Fund [diamond] AIM V.I. Premier Equity Fund THE ALGER AMERICAN FUND - CLASS O SHARES - ---------------------------------------- [diamond] Alger American Leveraged AllCap Portfolio FEDERATED INSURANCE SERIES - -------------------------- [diamond] Federated Fund for U.S. Government Securities II [diamond] Federated High Income Bond Fund II - Primary Shares FIDELITY(R) VARIABLE INSURANCE PRODUCTS - SERVICE CLASS - ------------------------------------------------------- [diamond] VIP Contrafund(R) Portfolio [diamond] VIP Growth Opportunities Portfolio [diamond] VIP Growth Portfolio FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - CLASS 2 - -------------------------------------------------------------- [diamond] Mutual Shares Securities Fund [diamond] Templeton Developing Markets Securities Fund * [diamond] Templeton Foreign Securities Fund [diamond] Templeton Global Asset Allocation Fund * [diamond] Templeton Growth Securities Fund LAZARD RETIREMENT SERIES - ------------------------ [diamond] Lazard Retirement Small Cap Portfolio LORD ABBETT SERIES FUND, INC. - CLASS VC - ---------------------------------------- [diamond] Bond-Debenture Portfolio [diamond] Growth and Income Portfolio [diamond] Mid-Cap Value Portfolio THE RYDEX VARIABLE TRUST - ------------------------ [diamond] Rydex Variable Trust Juno Fund [diamond] Rydex Variable Trust Nova Fund [diamond] Rydex Variable Trust Sector Rotation Fund SCUDDER INVESTMENTS VIT FUNDS - CLASS A - --------------------------------------- [diamond] Scudder VIT EAFE(R) Equity Index Fund [diamond] Scudder VIT Equity 500 Index Fund THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - CLASS I SHARES - -------------------------------------------------------- [diamond] Technology Portfolio WANGER ADVISORS TRUST - --------------------- [diamond] Wanger International Select [diamond] Wanger International Small Cap [diamond] Wanger Select [diamond] Wanger U.S. Smaller Companies * Not available for new investors It may not be in your best interest to purchase a policy to replace an existing life insurance policy or annuity contract. You must understand the basic features of the proposed policy and your existing coverage before you decide to replace your present coverage. You must also know if the replacement will result in any income taxes. The policy is neither a deposit nor an obligation of, underwritten or guaranteed by, any financial institution or credit union. It is not federally insured or endorsed by the Federal Deposit Insurance Corporation or any other state or federal agency. Policy investments are subject to risk, including the fluctuation of policy values and possible loss of principal invested or premiums paid. The Securities and Exchange Commission ("SEC") has neither approved nor disapproved these securities, nor passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. This prospectus provides important information that you should know before investing. Read and keep this prospectus for future reference.
IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT US AT: [envelope] PHOENIX VARIABLE PRODUCTS MAIL OPERATIONS ("VPMO") PO Box 8027 Boston, MA 02266-8027 [telephone] VARIABLE AND UNIVERSAL LIFE ADMINISTRATION ("VULA") (800) 541-0171
1 TABLE OF CONTENTS Heading Page - ------------------------------------------------------------- GLOSSARY OF SPECIAL TERMS............................. 3 RISK/BENEFIT SUMMARY ................................. 4 Policy Benefits ................................... 4 Policy Risks ...................................... 4 FEE TABLES ........................................... 6 Transaction Fees .................................. 6 Periodic Charges Other the Fund Operating Expenses.......................................... 7 Minimum and Maximum Fund Operating Expenses........ 8 Annual Fund Expenses............................... 9 PHOENIX LIFE INSURANCE COMPANY ....................... 11 PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT.......... 11 Valuation Date..................................... 11 Performance History ............................... 11 VOTING RIGHTS ........................................ 11 THE GUARANTEED INTEREST ACCOUNTS ..................... 12 CHARGES AND DEDUCTIONS................................ 12 General ........................................... 12 Charges Deducted from Premium Payments ............ 12 Periodic Charges .................................. 13 Conditional Charges ............................... 14 Transfer Charge.................................... 15 Other Tax Charges ................................. 15 Fund Charges....................................... 15 THE POLICY ........................................... 15 Contract Rights: Owner, Insured, Beneficiary ...... 15 Contract Limitations............................... 15 Purchasing a Policy................................ 16 GENERAL .............................................. 17 Postponement of Payments .......................... 17 Optional Insurance Benefits ....................... 17 Death Benefit...................................... 18 PAYMENT OF PROCEEDS .................................. 19 Surrender and Death Benefit Proceeds .............. 19 Surrenders......................................... 20 Transfer of Policy Value........................... 20 Disruptive Trading and Market Timing............... 21 Loans.............................................. 23 Lapse.............................................. 24 FEDERAL INCOME TAX CONSIDERATIONS .................... 24 Introduction....................................... 24 Income Tax Status.................................. 24 Policy Benefits.................................... 24 Business-Owned Policies............................ 25 Modified Endowment Contracts ...................... 25 Limitations on Unreasonable Mortality and Expense Charges......................................... 26 Qualified Plans.................................... 26 Diversification Standards.......................... 26 Change of Ownership or Insured or Assignment....... 26 Other Taxes........................................ 27 Withholding........................................ 27 FINANCIAL STATEMENTS.................................. 27 APPENDIX A - INVESTMENT OPTIONS....................... A-1 2 GLOSSARY OF SPECIAL TERMS - -------------------------------------------------------------------------------- The following is a list of terms and their meanings when used in this prospectus. ATTAINED AGE: The age of the insured on the birthday nearest the most recent policy anniversary. CASH SURRENDER VALUE: The cash surrender value is the policy value less any applicable surrender charge on the date of surrender and less any debt. DEATH BENEFIT OPTION: The type of death benefit described in effect. DEBT: Unpaid policy loans with accrued interest. DUE PROOF OF DEATH: A certified death certificate, or an order of a court of competent jurisdiction, or any other proof acceptable to us. GUARANTEED INTEREST ACCOUNT: The Guaranteed Interest Account is not part of the Separate Account; it is part of our general account. IN FORCE: The policy has not terminated or otherwise lapsed in accordance with the grace period and lapse provision. IN WRITING (WRITTEN NOTICE, WRITTEN REQUEST): Is a written form signed by you, satisfactory to us and received by us. INSURED: The person upon whose life the policy is issued. LONG-TERM GUARANTEED INTEREST ACCOUNT: The Long-term Guaranteed Interest Account is not part of the Separate Account; it is part of our general account. MONTHLY CALCULATION DATE: The first monthly calculation date is the same day as the policy date. Subsequent monthly calculation dates are the same days of each month thereafter or, if such day does not fall within a given month, the last day of that month will be the monthly calculation date. NET AMOUNT AT RISK: On a monthly calculation date it is the death benefit minus the policy value prior to the deduction of the cost of insurance charge. On any other day it is the death benefit minus the policy value. PAYMENT DATE: The valuation date on which a premium payment or loan repayment is received by us unless it is received after the close of the New York Stock Exchange in which case it will be the next valuation date. POLICY ANNIVERSARY: The anniversary of the policy date. POLICY DATE: The policy date shown on the schedule pages from which policy years and policy anniversaries are measured. POLICY MONTH: The period from one monthly calculation date up to, but not including, the next monthly calculation date. POLICY VALUE: The sum of your policy's share in the value of each subaccount plus the value of your policy allocated to the Guaranteed Interest Account. POLICY YEAR: The first policy year is the one-year period from the policy date up to, but not including, the first policy anniversary. Each succeeding policy year is the one-year period from the policy anniversary up to, but not including, the next policy anniversary. SEPARATE ACCOUNT: Phoenix Life Variable Universal Life Account. A separate investment account of Phoenix Life Insurance Company. SUBACCOUNTS: The accounts within our Separate Account to which nonloaned assets under the policy are allocated. UNIT: A standard of measurement used to determine the share of this policy in the value of each subaccount of the Separate Account. VALUATION PERIOD: The period in days from the end of one valuation date through the next valuation date. VULA: Variable Universal Life Administration. WE (OUR, US, COMPANY): Phoenix Life Insurance Company. YOU (YOUR): The owner of this policy at the time an owner's right is exercised 3 RISK/BENEFIT SUMMARY - -------------------------------------------------------------------------------- This summary does not contain all of the detailed information that may be important to you. Please read the entire prospectus carefully before you decide to purchase a policy. This prospectus is a disclosure document which summarizes your rights under the insurance product that you are purchasing. As with any summary it may differ in certain instances from the underlying insurance policy. You should read your insurance policy carefully. CERTAIN TERMS USED THROUGHOUT THE PROSPECTUS HAVE BEEN DEFINED AND CAN BE FOUND IN "APPENDIX B-GLOSSARY OF SPECIAL TERMS." POLICY BENEFITS DEATH BENEFITS The policy is first and foremost, a life insurance policy. While the policy remains in force we will pay a death benefit to your named beneficiary upon the death of the person insured under the policy. You will choose a death benefit when you apply for a policy. [diamond] Death Benefit Option 1 is equal to the greater of the policy's face amount, or the minimum death benefit. [diamond] Death Benefit Option 2 equals the greater of the face amount plus the policy value, or the minimum death benefit. You may change your Death Benefit Option at any time. Death Benefit Option 1 applies if you do not choose an option. Generally, the minimum face amount is $25,000. The minimum death benefit is equal to the policy value increased by a percentage taken from a table in the policy based on the policy year and the insured person's age. Also available, is the Guaranteed Death Benefit Rider, an additional insurance option that you may purchase by paying specified premiums. LOANS AND SURRENDERS Generally, you may take loans against 90% of the policy's cash surrender value subject to certain conditions. The cash surrender value is the policy value reduced by outstanding loans and loan interest and any applicable surrender charge. You may partially surrender any part of the policy anytime. A partial surrender fee will apply and a separate surrender charge may also be imposed. You may fully surrender this policy anytime for its cash surrender value. A surrender charge may be imposed. TEMPORARY INSURANCE COVERAGE We will issue you a Temporary Insurance Receipt when you submit the complete, signed application and issue premium. This will provide you with immediate insurance protection under the terms set forth in the policy and in the Receipt. FLEXIBLE PREMIUMS The only premiums you must pay are the issue premium and any payments that may be required to prevent policy lapse. OPTIONAL INSURANCE BENEFITS The following benefits may be available to you by rider: [diamond] Disability Waiver of Specified Premium [diamond] Accidental Death Benefit [diamond] Death Benefit Protection [diamond] Whole Life Exchange Option (not available after January 27, 2003) [diamond] Purchase Protection Plan [diamond] Living Benefits [diamond] Cash Value Accumulation [diamond] Child Term [diamond] Family Term [diamond] Phoenix Individual Edge Term [diamond] Age 100+ Rider [diamond] LifePlan Options Rider Availability of these riders depends upon state approval and may involve extra cost. YOUR RIGHT TO CANCEL THE POLICY You have the right to review the policy and cancel it if you are not satisfied. Simply return the policy to us within 10 days after you receive it, or within 45 days of signing the application. Your state may require a longer period. POLICY RISKS VARIATIONS The policy is subject to laws and regulations in every state where the policy is sold and the terms of the policy may vary from state to state. SUITABILITY RISK Variable life insurance is designed for long term financial planning, and the policy is not suitable as a short-term investment. Surrender charges apply during the first ten years; therefore, it may not be appropriate for you to purchase a policy if you foresee the need to withdraw all or part of the policy value during the first several policy years. TAX EFFECTS Generally, under current federal income tax law, death benefits are not subject to income taxes. Earnings on the premiums invested in the Separate Account or the Guaranteed Interest Account are not subject to income taxes until there is a distribution from the policy. Taking a loan or a full or partial surrender from the policy could result in recognition of income for tax purposes. RISK OF LAPSE During the first eight policy years the policy will remain in force as long as the policy value is enough to pay the monthly charges incurred under the policy. After that, your policy will remain in force as long as the cash surrender value is enough 4 to pay the monthly charges incurred under the policy. If the cash surrender value (or the policy value in the first 8 years) is no longer enough to pay the monthly charges, the policy will lapse, or end. We will alert you to an impending lapse situation and give you an opportunity to keep the policy in force by paying a specified amount. Withdrawals, loans and associated loan interest can negatively affect policy value, and increase the risk of policy lapse. INVESTMENT RISK A comprehensive discussion of the risks of each fund purchased by a subaccount of the Separate Account may be found in the funds' prospectuses. Each series is subject to market fluctuations and the risks inherent with ownership of securities. There is no assurance that any series will achieve its stated investment objective. THE FOLLOWING TABLES DESCRIBE THE FEES, AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND SURRENDERING THE POLICY. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE POLICY, SURRENDER THE POLICY, OR TRANSFER CASH VALUE BETWEEN INVESTMENT OPTIONS. 5 FEE TABLES - -------------------------------------------------------------------------------- TRANSACTION FEES
- ------------------------------------------------------------------------------------------------------------------------------------ CHARGE WHEN DEDUCTED AMOUNT DEDUCTED - -------------------------------- ---------------------------- ---------------------------------------------------------------------- PREMIUM TAX Upon Payment. 2.25 % of each premium. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- FEDERAL TAX CHARGE Upon Payment. 1.50 % of each premium. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- ISSUE CHARGE 1/12th of the fee is The maximum charge is $600(2). deducted on each of the first 12 monthly calculation days(1). - -------------------------------- ---------------------------- ---------------------------------------------------------------------- SURRENDER CHARGE Upon full surrender or A maximum of 2.25 times the Commission Target Premium(3). We will lapse. provide your surrender charges before we issue your policy. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- PARTIAL SURRENDER CHARGE Upon Partial Surrender or For a partial surrender: a decrease in the policy ------------------------ face amount. The charge that would apply upon a full surrender multiplied by the partial surrender amount divided by the result of subtracting the full surrender charge from the policy value. For a decrease in face amount: ------------------------------ The charge that would apply upon a full surrender multiplied by the decrease in face amount divided by the face amount prior to the decrease. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- PARTIAL SURRENDER FEE Upon Partial Surrender. 2% of surrender amount(4). - -------------------------------- ---------------------------- ---------------------------------------------------------------------- TRANSFER CHARGE Upon Transfer. At present, we do not charge for transfers between investment options, but we reserve the right to charge up to $10 per transfer after the first two transfers in any given policy year. - ------------------------------------------------------------------------------------------------------------------------------------
(1) The monthly calculation day occurs on same day as the policy date (the date from which policy years and anniversaries are measured) or if that date does not fall in any given month, it will be the last day of the month. (2) The Issue Charge is $1.50 per $1,000 of face amount. Policies with a face amount of less than $400,000 will have a total charge of less than $600. (3) The Commission Target Premium (CTP) is an arithmetical formula based on personal information (i.e., age, gender, risk class), and the policy face amount. We will provide your surrender charges before we issue your policy. (4) We limit this fee to $25 for each partial surrender. 6 PERIODIC CHARGES OTHER THAN FUND OPERATING EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------------ CHARGE WHEN DEDUCTED AMOUNT DEDUCTED - -------------------------------- ---------------------------- ---------------------------------------------------------------------- COST OF INSURANCE(1) On each Monthly Calculation Day. Minimum and Maximum Charges ............................ We currently charge $0.05 - $83.33 per $1,000 of amount at risk(2) each month. Example for a male age 45 in ............................ We would charge $0.25 per $1,000 of amount at risk(2) per month. We nonsmoker premium class. will increase this charge as he ages. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- ADMINISTRATIVE CHARGE On each Monthly $10 per month.(3) Calculation Day. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- MORTALITY AND EXPENSE RISK On each Monthly 0.80% of average daily net assets, on an annual basis, of CHARGE(4) Calculation Day. investments in the subaccounts. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- OTHER TAX CHARGES When we become liable for We currently do not charge for taxes, however we reserve the right- taxes. to impose a charge should we become liable for taxes in the future. Possible taxes would include state or federal income taxes on investment gains of the Separate Account and would be included in our calculation of subaccount values. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- LOAN INTEREST RATE CHARGED(5) Interest accrues daily and The maximum net cost to the policy value is 2% of the loan balance is due on each policy anniversary. If not paid on an annual basis. on that date, we will treat the accrued interest as another loan against the policy. - ------------------------------------------------------------------------------------------------------------------------------------ OPTIONAL INSURANCE BENEFITS - ------------------------------------------------------------------------------------------------------------------------------------ DEATH BENEFIT PROTECTION RIDER On each Monthly $0.01 per $1,000 of face amount per month. Calculation Day. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- PURCHASE PROTECTION PLAN On Rider Date, and on each RIDER Monthly Calculation Day. Minimum and Maximum ............................ $0.05 - $0.17 per unit(9) purchased per month. Example for a male age 35 in ............................ $0.16 per unit9 purchased per month. the nonsmoker premium class. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- CHILD TERM RIDER(6) On each Monthly Calculation Day. Minimum and Maximum ............................ $$0.06 - $0.11 per $1,000 of rider face amount per month. Minimum and Maximum ............................ $0.06 per $1,000 of rider face amount. Example for a male age 10. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- FAMILY TERM RIDER(6) On each Monthly Calculation Day. Minimum and Maximum ............................ $0.08 - $6.49 per $1,000 of rider face amount per month. Example for a male age 45. ............................ $1.91 per $1,000 of rider face amount per month. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- PHOENIX INDIVIDUAL EDGE TERM On each Monthly RIDER(6) Calculation Day. Minimum and Maximum ............................ $0.05 - $156.94 per $1.000 of rider face amount per month. Minimum and Maximum ............................ $0.19 per $1.000 of rider face amount per month. Example for a male age 45 in the nonsmoker premium class. - ------------------------------------------------------------------------------------------------------------------------------------
7
- ------------------------------------------------------------------------------------------------------------------------------------ CHARGE WHEN DEDUCTED AMOUNT DEDUCTED - -------------------------------- ---------------------------- ---------------------------------------------------------------------- DISABILITY WAIVER OF SPECIFIED On each Monthly PREMIUM RIDER(7) Calculation Day. Minimum and Maximum ............................ $0.22 -$0.82 per $100 of premium waived per month. Example for a male age 45 in ............................ $0.66 per $100 of premium waived per month. the nonsmoker premium class. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- ACCIDENTAL DEATH BENEFIT On each Monthly RIDER(7) Calculation Day. Minimum and Maximum ............................ $0.07 -$0.26 per $1,000 of rider amount per month. Example for a male age 45 in ............................ $0.79 per $1,000 of rider amount per month. the nonsmoker premium class. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- LIVING BENEFITS RIDER We do not charge for this We describe this rider later under "Optional Insurance Benefits." rider. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- CASH VALUE ACCUMULATION RIDER We do not charge for this We describe this rider later under "Optional Insurance Benefits." rider. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- WHOLE LIFE EXCHANGE RIDER(8) We do not charge for this We describe this rider later under "Optional Insurance Benefits." rider. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- AGE 100+ RIDER We do not charge for this We describe this rider later under "Optional Insurance Benefits." rider. - -------------------------------- ---------------------------- ---------------------------------------------------------------------- LIFEPLAN OPTIONS RIDER We do not charge for this Though we do not charge for this rider, to the extent there is an rider. increase in face amount, there will be an increase in the cost of insurance. We describe this rider later under "Optional Insurance Benefits." - ------------------------------------------------------------------------------------------------------------------------------------
(1) Cost of insurance charges will vary according to age, gender, premium class, policy year, net amount at risk, and face amount. The cost of insurance charges shown in the table may not be typical of the charges you will pay. Your policy's specifications page will indicate the guaranteed cost of insurance applicable to your policy. More detailed information concerning your cost of insurance is available upon request. Before you purchase the policy, we will provide you personalized illustrations of your future benefits under the policy based upon the age and premium class of the person you wish to insure, the death benefit option, face amount, planned periodic premiums, and riders requested. (2) The amount at risk at any given time is the difference between the total death benefit we would pay and the policy value. (3) As of the date of this prospectus, we limit this charge to $5 per month. (4) We currently offer reduced mortality and expense risk charges beginning in policy year 16 of 0.25% of average daily net assets invested in the subaccounts. We do not deduct this charge from investments in the Guaranteed Interest Account. (5) The maximum net cost to the policy is the difference between the rate we charge for the outstanding loan, and the rate we credit the loaned portion of the Guaranteed Interest Account, where we allocate policy value equal to the amount of the loan, as collateral. The net cost to the policy can be as low as 0.25% on an annual basis. For more information see "Charges and Deductions" and "Loans." (6) This charge will vary according to age, gender and risk classification. Charges will generally increase with age. (7) This charge for this rider depends on age, gender and risk classification at issue, but will not increase with age. (8) This rider is no longer available. (9) Each unit entitles you to purchase $1,000 face amount of insurance on each of the first two option dates defined in the rider, and $667 in face amount of insurance on each subsequent option date defined in the rider. THE NEXT TABLE SHOWS THE MINIMUM AND MAXIMUM FEES AND EXPENSES CHARGED BY THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE POLICY. MORE DETAIL CONCERNING EACH OF THE FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND. MINIMUM AND MAXIMUM FUND OPERATING EXPENSES
Minimum Maximum Total Annual Fund Operating Expenses(1) 0.29% 2.68% (expenses that are deducted from a fund's assets, including management fees, distribution and/or 12b-1 fees, and other expenses)
(1) The total and net fund operating expenses for each available investment portfolio are given in the following tables. 8 ANNUAL FUND EXPENSES (as a percentage of fund average net assets for the year ended 12/31/04) - -----------------------------------------------------------------------------------------------------------------------------------
Rule Investment 12b-1 Other Operating Total Annual Fund Series Management Fee Fees Expenses Expenses - ----------------------------------------------------------------------------------------------------------------------------------- THE PHOENIX EDGE SERIES FUND - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International 0.75% N/A 0.30% 1.05% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth 0.75% N/A 0.47% (3) 1.22% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth 0.85% N/A 0.89% (1) 1.74% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index 0.45% N/A 0.27% (2) 0.72% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities 0.75% N/A 0.29% 1.04% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth 0.66% N/A 0.21% 0.87% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income 0.70% N/A 0.28% (3) 0.98% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth 0.90% N/A 0.67% (4) 1.57% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation 0.58% N/A 0.20% 0.78% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity 0.70% N/A 0.28% (3) 0.98% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market 0.40% N/A 0.24% 0.64% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income 0.50% N/A 0.23% 0.73% - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond 0.50% (5) N/A 0.58% (2) 1.08% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends 0.70% N/A 0.75% (1) 1.45% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value 0.90% N/A 1.78% (1) 2.68% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select 0.90% N/A 0.40% (1) 1.30% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 0.35% N/A 0.56% (3) 0.91% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) 0.35% N/A 0.74% (3) 1.09% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value 1.05% N/A 0.29% (3) 1.34% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value 1.05% N/A 0.38% (3) 1.43% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth 0.80% N/A 0.38% (4) 1.18% (6) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme 0.75% N/A 0.33% 1.08% - -----------------------------------------------------------------------------------------------------------------------------------
(1) The advisor voluntarily agrees to reimburse this series for other operating expenses that exceed 0.15% of the series' average net assets. (2) The advisor voluntarily agrees to reimburse this series for other operating expenses that exceed 0.20% of the series' average net assets. (3) The advisor voluntarily agrees to reimburse this series for other operating expenses that exceed 0.25% of the series' average net assets. (4) The advisor voluntarily agrees to reimburse this series for other operating expenses that exceed 0.35% of the series' average net assets. (5) The advisor voluntarily waived the management fee for the period through May 31, 2004, giving an annual management fee of less than 0.50% of the series' average net assets for 2004. Without the waiver, the annual management fee rate is 0.50%. The chart below, showing net annual fund expenses, assumes the 0.50% rate for this series. (6) The chart below shows net annual fund expenses after voluntary reimbursements by the advisor.
Net Annual Fund Net Annual Fund --------------- --------------- Series Reimbursements Expenses Series Reimbursements Expenses ------ -------------- -------- ------ -------------- -------- Phoenix-AIM Growth (0.22%) 1.00% Phoenix-Kayne Small-Cap Quality Value (1.63%) 1.05% Phoenix-Alger Small-Cap Growth (0.74%) 1.00% Phoenix-Lazard International Equity Phoenix-Alliance/Bernstein Enhanced Select (0.25%) 1.05% Index (0.07%) 0.65% Phoenix-Northern Dow 30 (0.31%) 0.60% Phoenix-Engemann Growth and Income (0.03%) 0.95% Phoenix-Northern Nasdaq-100 Index(R) (0.49%) 0.60% Phoenix-Engemann Small-Cap Growth (0.32%) 1.25% Phoenix-Sanford Bernstein Mid-Cap Phoenix-Engemann Value Equity (0.03%) 0.95% Value (0.04%) 1.30% Phoenix-Goodwin Multi-Sector Short Phoenix-Sanford Bernstein Term Bond (0.38%) 0.70% Small-Cap Value (0.13%) 1.30% Phoenix-Kayne Rising Dividends (0.60%) 0.85% Phoenix-Seneca Mid-Cap Growth (0.03%) 1.15%
(NOTE: Each or all of the voluntary expense reimbursements noted in the chart above may be changed or eliminated at anytime without notice.) - -----------------------------------------------------------------------------------------------------------------------------------
Net Annual Rule Fund Expenses Investment 12b-1 or Other Contractual After Management Service Operating Total Annual Reimbursements Reimbursements Series Fee Fees Expenses Fund Expenses & Waivers & Waivers - ----------------------------------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS - SERIES I SHARES - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund 0.61% N/A 0.30% 0.91% (0.00%) 0.91% - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund 0.73% N/A 0.31% 1.04% (0.00%) 1.04% - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund 0.61% N/A 0.30% 0.91% (0.00%) 0.91% - ----------------------------------------------------------------------------------------------------------------------------------- THE ALGER AMERICAN FUND - CLASS O SHARES - ----------------------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio 0.85% N/A 0.12% 0.97% (0.00%) 0.97% - -----------------------------------------------------------------------------------------------------------------------------------
9 - -----------------------------------------------------------------------------------------------------------------------------------
Net Annual Rule Fund Expenses Investment 12b-1 or Other Contractual After Management Service Operating Total Annual Reimbursements Reimbursements Series Fee Fees Expenses Fund Expenses & Waivers & Waivers - ----------------------------------------------------------------------------------------------------------------------------------- FEDERATED INSURANCE SERIES - ----------------------------------------------------------------------------------------------------------------------------------- Federated Fund for U.S. Government Securities II 0.60% 0.25% (1) 0.13% 0.98% --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II - Primary 0.60% 0.25% (1) 0.14% 0.99% --- ---(11) Shares - ----------------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VARIABLE INSURANCE PRODUCTS - SERVICE CLASS - ----------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio 0.57% 0.10% 0.11% (2) 0.78% --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio 0.58% 0.10% 0.14% (2) 0.82% --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio 0.58% 0.10% 0.10% (2) 0.78% --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - CLASS 2 - ----------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund 0.60% 0.25% (4) 0.15% 1.00% (0.00%) 1.00% - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund 1.25% 0.25% 0.29% 1.79% (0.00%) 1.79% - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund 0.68% 0.25% 0.19% 1.12% (0.05%) (5) 1.07% - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund 0.61% 0.25% 0.24% 1.10% (0.01%) (5) 1.09% - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund 0.79% (3) 0.25% (4) 0.07% 1.11% (0.00%) 1.11% - ----------------------------------------------------------------------------------------------------------------------------------- LAZARD RETIREMENT SERIES - ----------------------------------------------------------------------------------------------------------------------------------- Lazard Retirement Small Cap Portfolio 0.75% 0.25% 0.37% 1.37% (0.12%) (6) 1.25% - ----------------------------------------------------------------------------------------------------------------------------------- LORD ABBETT SERIES FUND, INC. - CLASS VC - ----------------------------------------------------------------------------------------------------------------------------------- Bond-Debenture Portfolio 0.50% N/A 0.48% 0.98% (0.08%) (7) 0.90% - ----------------------------------------------------------------------------------------------------------------------------------- Growth and Income Portfolio 0.50% N/A 0.39% 0.89% (0.00%) 0.89% - ----------------------------------------------------------------------------------------------------------------------------------- Mid-Cap Value Portfolio 0.75% N/A 0.42% 1.17% (0.00%) 1.17% - ----------------------------------------------------------------------------------------------------------------------------------- THE RYDEX VARIABLE TRUST - ----------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Juno Fund 0.90% N/A 0.73% 1.63% (0.00%) 1.63% - ----------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Nova Fund 0.75% N/A 0.71% 1.46% (0.00%) 1.46% - ----------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund 0.90% N/A 0.73% 1.63% (0.00%) 1.63% - ----------------------------------------------------------------------------------------------------------------------------------- SCUDDER INVESTMENTS VIT FUNDS - CLASS A - ----------------------------------------------------------------------------------------------------------------------------------- Scudder VIT EAFE(R) Equity Index Fund 0.45% N/A 0.37% 0.82% (0.17%) (8) 0.65% - ----------------------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund 0.20% N/A 0.09% 0.29% (0.00%) 0.29% - ----------------------------------------------------------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - CLASS I SHARES - ----------------------------------------------------------------------------------------------------------------------------------- Technology Portfolio 0.80% N/A 0.49% 1.29% (9) --- ---(11) - ----------------------------------------------------------------------------------------------------------------------------------- WANGER ADVISORS TRUST - ----------------------------------------------------------------------------------------------------------------------------------- Wanger International Select 1.00% N/A 0.43% 1.43% (0.01%) (10) 1.42% - ----------------------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap 1.17% N/A 0.19% 1.36% (0.16%) (10) 1.20% - ----------------------------------------------------------------------------------------------------------------------------------- Wanger Select 0.95% N/A 0.15% 1.10% (0.10%) (10) 1.00% - ----------------------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies 0.92% N/A 0.08% 1.00% (0.01%) (10) 0.99% - -----------------------------------------------------------------------------------------------------------------------------------
(1) The fund has voluntarily agreed to waive this service fee. (2) A portion of the brokerage commissions that the fund paid was used to reduce the fund's expenses. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances are used to reduce a portion of the fund's custodian expenses. These offsets may be discontinued at anytime. (3) The fund administration fee is paid indirectly through the management fee. (4) While the maximum amount payable under the fund's Rule 12b-1 plan is 0.35% per year of the fund's average annual net assets, the fund's Board of Trustees has set the current rate at 0.25% per year. (5) The advisor has contractually agreed to reduce its investment management fee to reflect reduced services resulting from the fund's investment in a Franklin Templeton Money Market Fund (the Sweep Fund). This reduction is required by the fund's Board of Trustees and an order by the SEC. After such reductions, the management fees are 0.63% for the Templeton Foreign Securities Fund and 0.60% for the Templeton Global Asset Allocation Fund. (6) Reflects a contractual obligation by the Investment Manager to waive its fee and, if necessary, reimburse the Portfolio through December 31, 2005, to the extent Total Annual Portfolio Operating Expenses exceed 1.25% of the Portfolio's average daily net assets. (7) For the year ending December 31, 2004, Lord, Abbett & Co. LLC has contractually agreed to reimburse a portion of the Fund's expenses to the extent necessary to maintain its "Other Expenses" at an aggregate rate of 0.40% of its average daily net assets. (8) The advisor has contractually agreed, for the one-year period beginning May 1, 2005, to waive its fees and/or reimburse expenses of the fund in excess of 0.65% of the average daily net assets. (9) The advisor has voluntarily agreed to waive a portion or all of its management fee and/or reimburse expenses to the extent necessary so that total annual operating expenses, excluding certain investment related expenses such as foreign country tax expense and interest expense on borrowing, do not exceed the operating expense limitation of 1.15%. (10) Management fees have been restated to reflect contractual changes to the management fee for the fund as of February 10, 2005. The fee waiver was effective as of February 10, 2005 but applied as if it had gone into effect on December 1, 2004. (11) The chart below shows net annual fund expenses after voluntary reimbursements or waivers by the advisor.
Net Annual Fund Net Annual Fund --------------- --------------- Series Reimbursements Expenses Series Reimbursements Expenses ------ -------------- -------- ------ -------------- -------- Federated Fund for U.S. Government VIP Growth Opportunities Portfolio (0.02%) 0.80% Securities II (0.26%) 0.72% VIP Growth Portfolio (0.03%) 0.75% Federated High Income Bond Fund Technology Portfolio (0.14%) 1.15% II - Primary Shares (0.25%) 0.74% VIP Contrafund(R) Portfolio (0.02%) 0.76%
(NOTE: Each or all of the voluntary expense reimbursements and waivers noted in the chart above may be changed or eliminated at anytime without notice.) 10 PHOENIX LIFE INSURANCE COMPANY - -------------------------------------------------------------------------------- On June 25, 2001, Phoenix Home Life Mutual Insurance Company (a New York mutual life insurance company, originally chartered in Connecticut in 1851 and redomiciled to New York in 1992) converted to a stock life insurance company by "demutualizing" pursuant to a plan of reorganization approved by the New York Superintendent of Insurance and changed its name to Phoenix Life Insurance Company ("Phoenix"). As part of the demutualization, Phoenix became a wholly owned subsidiary of The Phoenix Companies, Inc., a publicly traded Delaware corporation. Our executive and administrative office is at One American Row, Hartford, Connecticut, 06115. Our New York principal office is at 10 Krey Boulevard, East Greenbush, New York 12144. We sell life insurance policies and annuity contracts through producers of affiliated distribution companies and through brokers. PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT - -------------------------------------------------------------------------------- Phoenix Life Insurance Company established the Separate Account as a separate account under New York insurance law on June 17, 1985. The Separate Account is registered with the Securities and Exchange Commission (the "SEC") as a unit investment trust under the Investment Company Act of 1940. The SEC does not supervise the management, investment practices or policies of the Separate Account or of Phoenix. All income, gains or losses whether or not realized of the Separate Account are credited to or charged against amounts placed in the Separate Account without regard to the other income, gains and losses of Phoenix. The assets of the Separate Account may not be charged with liabilities arising out of any other business we conduct. Phoenix is responsible for all obligations under the policies. The Separate Account is divided into subaccounts, each of which is available for allocation of policy value. We determine the value of each subaccount's shares at the end of every valuation day that the New York Stock Exchange ("NYSE") is open. Each subaccount will invest solely in a single investment portfolio of a fund. The fund names and the portfolio names are listed on page one of this prospectus. Each portfolio's investment type is given in Appendix A. Phoenix does not guarantee the investment performance of the Separate Account or any of its subaccounts. The policy value allocated to the Separate Account depends on the investment performance of the underlying funds. As policy owner, you bear the full investment risk for all monies invested in the Separate Account. We reserve the right to add, remove, modify, or substitute portfolios in which the Separate Account invests. Copies of the fund prospectuses may be obtained by writing to us or calling us at the address or telephone number provided on the front page of this prospectus. VALUATION DATE A valuation date is every day the New York Stock Exchange ("NYSE") is open for trading and Phoenix is open for business. However, transaction processing may be postponed for the following reasons 1. the NYSE is closed or may have closed early; 2. the SEC has determined that a state of emergency exists; or 3. on days when a certain market is closed (e.g., the U.S. Government bond market is closed on Columbus Day and Veteran's Day). The NYSE Board of Directors reserves the right to change the NYSE schedule as conditions warrant. On each valuation date, the value of the Separate Account is determined at the close of the NYSE (currently 4:00 p.m. Eastern Time). The NYSE is scheduled to be closed on the following days: ----------------------------------- ------------------------ New Year's Day Independence Day ----------------------------------- ------------------------ Martin Luther King, Jr. Day Labor Day ----------------------------------- ------------------------ Presidents Day Thanksgiving Day ----------------------------------- ------------------------ Good Friday Christmas Day ----------------------------------- ------------------------ Memorial Day ----------------------------------- ------------------------ PERFORMANCE HISTORY We may choose to include performance history of the subaccounts or the underlying portfolios in advertisements, sales literature or reports. Performance information about each subaccount is based on past performance and is not an indication of future performance. VOTING RIGHTS - -------------------------------------------------------------------------------- We legally own all fund shares held by the subaccounts; however, we vote those shares at shareholder meetings according to voting instructions we receive from policy owners with an interest in the subaccounts. We may decide to vote the shares in our own right should the law change to permit us to do so. While your policy is in effect, you may provide us with voting instructions for each subaccount in which you have an interest. We determine the number of votes you may cast by applying your percentage interest in a subaccount to the total number of votes attributable to the subaccount. We will send you proxy material, reports and other materials relevant to the subaccounts in which you have a voting interest. In order to vote you must complete the proxy form and return it with your voting instructions. You may also be able to vote your interest by telephone or over the Internet if such instructions are included in the proxy material. We will vote all of the shares we own on your behalf, in accordance with your instructions. We will vote the shares for which we do not receive instructions, and any other shares we own, in the same proportion as the shares for which we do receive instructions. We may ask you to provide voting instructions for such items as: 11 1) the election of the fund's Trustees; 2) the ratification of the independent accountants for the fund; 3) approval or amendment of investment advisory agreements; 4) a change in fundamental policies or restrictions of the series; and 5) any other matters requiring a shareholder vote. You may obtain an available fund's prospectus by contacting us at the address and telephone number given on page one. THE GUARANTEED INTEREST ACCOUNTS - -------------------------------------------------------------------------------- In addition to the Separate Account, you may allocate premiums or transfer values to the Guaranteed Interest Account or Long-term Guaranteed Interest Accounts. Amounts you allocate to the Guaranteed Interest Accounts are deposited in our general account. You do not share in the investment experience of our general account. Rather, we guarantee a minimum rate of return on the allocated amounts. Although we are not obligated to credit interest at a higher rate than the minimum, we may credit any excess interest as determined by us based on expected investment yield information. The Long-term Guaranteed Interest Account has more restrictive transfer options out of the general account than the Guaranteed Interest Account so that longer term investments can be made. We reserve the right to limit total deposits to the Guaranteed Interest Accounts to no more than $250,000 during any one-week period per policy. You may make transfers into the Guaranteed Interest Accounts at any time. In general, you may make only one transfer per year from the Guaranteed Interest Accounts. Transfers from the Guaranteed Interest Accounts may also be subject to other rules as described in this prospectus. Because of exemptive and exclusionary provisions, we have not registered interests in our general account under the Securities Act of 1933. Also, we have not registered our general account as an investment company under the Investment Company Act of 1940, as amended. Therefore, neither the general account nor any of its interests are subject to these Acts, and the U.S. Securities and Exchange Commission ("SEC") has not reviewed the general account disclosures. These disclosures may, however, be subject to certain provisions of the federal securities law regarding accuracy and completeness of statements made in this prospectus. The features specific to each type of Guaranteed Interest Account are detailed below. GUARANTEED INTEREST ACCOUNT We reserve the right to limit transfers to the Guaranteed Interest Account to no more than $250,000 during any one-week period per policy. The amount that can be transferred out is limited to the greater of $1,000 or 25% of the policy value in the nonloaned portion of the Guaranteed Interest Account as of the date of the transfer. You may transfer the total policy value out of the Guaranteed Interest Account to one or more of the subaccounts over a consecutive 4-year period according to the following schedule: [diamond] First Year: 25% of the total value [diamond] Second Year: 33% of remaining value [diamond] Third Year: 50% of remaining value [diamond] Fourth Year: 100% of remaining value LONG-TERM GUARANTEED INTEREST ACCOUNT This investment option is only available to policies issued on or after September 27, 2004. The amount that can be transferred out is limited to the greatest of (a) $1,000, (b) 10% of the policy value in the Long-term Guaranteed Interest Account as of the date of the transfer, or (c) the amount of policy value transferred out of the Long-term Guaranteed Interest Account in the prior policy year. Transfers from the Long-term Guaranteed Interest Account are not permitted under the Systematic Transfer Programs. We reserve the right to limit transfers and cumulative premium payments to $1,000,000 over a 12-month period. CHARGES AND DEDUCTIONS - -------------------------------------------------------------------------------- GENERAL Charges are deducted in connection with the policy to compensate us for: [diamond] our expenses in selling the policy; [diamond] underwriting and issuing the policy; [diamond] premium and federal taxes incurred on premiums received; [diamond] providing the insurance benefits set forth in the policy; and [diamond] assuming certain risks in connection with the policy. The nature and amount of these charges are more fully described in sections below. When we issue policies under group or sponsored arrangements, we may reduce or eliminate the: [diamond] issue expense charge; and/or [diamond] surrender charge. Sales to a group or through sponsored arrangement often result in lower per policy costs and often involve a greater stability of premiums paid into the policies. Under such circumstances, Phoenix tries to pass these savings onto the purchasers. The amount of reduction will be determined on a case-by-case basis and will reflect the cost reduction we expect as a result of these group or sponsored sales. Certain charges are deducted only once, others are deducted periodically, while certain others are deducted only if certain events occur. CHARGES DEDUCTED FROM PREMIUM PAYMENTS ISSUE EXPENSE CHARGE There is an issue expense charge of $1.50 per $1,000 of base face amount with a $600 maximum. One twelfth of the charge 12 is deducted on each monthly calculation day, for the first policy year. You will incur a new issue expense charge if you increase your policy's face amount. We will assess the new charge only on the amount of the increase. We deduct this charge in 12 equal installments for the year following policy issue or a face amount increase. Any unpaid balance of the issue expense charge will be paid to Phoenix upon policy lapse or termination. PREMIUM TAX CHARGE Various states (and counties and cities) impose a tax on premiums received by insurance companies. Premium taxes vary from state to state. Currently, these taxes range from 0.62% to 4% of premiums paid. Moreover, certain municipalities in Louisiana, Kentucky, Alabama and South Carolina also impose taxes on premiums paid, in addition to the state taxes imposed. The premium tax charge represents an amount we consider necessary to pay all premium taxes imposed by these taxing authorities, and we do not expect to derive a profit from this charge. Policies will be assessed a tax charge equal to 2.25% of the premiums paid. These charges are deducted from each premium payment. FEDERAL TAX CHARGE A charge equal to 1.50% of each premium will be deducted from each premium payment to cover the estimated cost to us of the federal income tax treatment of deferred acquisition costs. PERIODIC CHARGES MONTHLY CHARGES We make monthly deductions on each monthly calculation day. The amount we deduct is allocated among subaccounts and the nonloaned portion of the Guaranteed Interest Account and the Long-term Guaranteed Interest Account based on your specified allocation schedule. You will select this schedule in your application, and you can change it later. If the amount allocated to a subaccount or the nonloaned portion of the Guaranteed Interest Account is less than the amount to be deducted, we will proportionally increase the deduction from the other subaccounts or Guaranteed Interest Account. [diamond] ADMINISTRATIVE CHARGE. We currently charge $5 to cover the cost of daily administration, monthly processing, updating daily values and for annual/quarterly statements. We guarantee this charge will never exceed $10 per month. [diamond] COST OF INSURANCE. We determine this charge by multiplying the appropriate cost of insurance rate by the amount at risk. The amount at risk is the difference between your policy's death benefit and your policy value. We generally base our rates on the insured person's gender, attained age, and risk class. We also consider the duration, or how long the policy has been in force. We are not permitted to consider gender as a factor in some states and under certain qualified plans. We base the current monthly cost of insurance charge on what we expect our future mortality experiences will be. Charges will not exceed the guaranteed cost of insurance rates set forth in your policy. The guaranteed maximum rates are equal to 100% of the 1980 Commissioners' Standard Ordinary Mortality Table, adjusted for risk classifications. We will apply any change in our cost of insurance rates uniformly to all persons of the same gender, insurance age and risk class whose policies have been in force for the same length of time. We currently insure each life as either a standard risk class or a risk class involving a higher mortality risk. We determine your risk class based on your health and the medical information you provide. A life in the standard risk classes will have a lower cost of insurance for an otherwise identical policy, than a life in a higher mortality risk class. A nonsmoker will generally incur a lower cost of insurance than a similarly situated smoker. [diamond] COST OF OPTIONAL INSURANCE BENEFITS. Certain policy riders require the payment of additional premiums to pay for the benefit provided by the rider. These options are available if approved in your state. Certain riders are available at no charge with every Individual Edge policy: o LIVING BENEFITS RIDER. This rider allows, in the event of terminal illness of the insured, an accelerated payment of up to 75% of the policy's death benefit, to a maximum of $250,000, with the provision that a minimum of $10,000 face amount remain on the policy thereafter. o CASH VALUE ACCUMULATION RIDER. You must elect this rider before we issue your policy. The rider generally allows you to pay more premium than would otherwise be permitted. o AGE 100+ RIDER. This rider maintains the full death benefit under the policy after the insured's age 100, as long as the cash surrender value is greater than zero. o LIFE PLANS OPTIONS RIDER. At specified policy anniversaries, you can exercise or elect one of three options to: (1) increase the face amount; (2) to reduce the face amount without incurring a partial surrender charge; or (3) to exchange the policy for an annuity without incurring a surrender charge. For policies issued on or after September 3, 2002, this Rider is not available with any policy issued as part of a qualified plan. o WHOLE LIFE EXCHANGE OPTION RIDER. This rider permits you to exchange your policy for a fixed benefit whole life policy at the later of age 65 or policy year 15. To the extent there is an increase in face amount there will be an increase in the cost of insurance. This rider is no longer available. We charge for providing benefits under the following riders: o DISABILITY WAIVER OF SPECIFIED PREMIUM RIDER charges will depend on the age and gender of the person we insure, and the amount of premium waived. We also offer this rider with substandard ratings of 150% and 200%. We insure people from age 5 through 60 under this rider and terminate the rider when the insured person reaches age 65. 13 o ACCIDENTAL DEATH BENEFIT RIDER charges vary based on age, sex, and amount of additional death benefit. o PURCHASE PROTECTION PLAN RIDER charges vary based on age. The maximum number of PPP units allowed varies with issue age and cannot be more than twice the initial base face amount in thousands. This rider is available to those we insure up to age 37. o CHILD TERM RIDER charges depend on the child's age and gender, and the Rider's face amount. This rider is available for children up to age 17, and will terminate when the child reaches age 25. o FAMILY TERM RIDER charges vary based on the age(s), gender(s), smoker classification(s) of the family members and with the Rider' face amount. This rider is available for family members of the person insured under the policy who are between the ages of 18 and 60, and will terminate when the family member reaches age 70. o PHOENIX INDIVIDUAL EDGE TERM RIDER charges vary based on age, gender, smoker classification, and table rating, and the Rider's face amount. o DEATH BENEFIT PROTECTION RIDER charge is based upon the face amount. DAILY CHARGES We deduct a percentage each business day from every subaccount. This deduction is reflected in each subaccount's daily value. [diamond] MORTALITY AND EXPENSE RISK CHARGE. We assume a mortality risk that, as a whole, the lives we insure may be shorter than we expected. We would then pay greater total death benefits than we had expected. We assume an expense risk that expenses we incur in issuing and maintaining the policies may exceed the administrative charges expected for the policies. We also assume other risks associated with issuing the policies, such as incurring greater than expected costs due to policy loans. If our expenses do not exceed the charges, or if our mortality projections prove to be accurate, we may profit from this charge. We may use profits from this charge for any proper purpose, including the payment of sales expenses or any other expenses that may exceed income in a given year. We will deduct this charge only from your investments in the Separate Account. We do not make any deduction for this charge from policy value allocated to the Guaranteed Interest Account. For the first 15 policy years we charge the maximum mortality and expense charge of 0.80% of your policy value in the subaccounts each month for all policy options. Beginning in policy year 16 we charge a reduced mortality and expense risk charge of 0.25%. [diamond] LOAN INTEREST CHARGED. We charge your policy for outstanding loans at the rates illustrated in the tables below. As shown, the rate we charge your policy is higher than the rate we credit the loaned portion of the Guaranteed Interest Account. These rates apply until the person insured reaches age 65, after that, the rates for Policy Years 16+ will apply. ----------------------------------------------------------- RATE WE CREDIT THE LOANED PORTION OF LOAN INTEREST RATE THE GUARANTEED CHARGED INTEREST ACCOUNT ---------- ----------------------- ------------------------ POLICY MOST NEW YORK/ MOST NEW YORK/ YEARS: STATES NEW JERSEY STATES NEW JERSEY ---------- ---------- ------------ --------- -------------- 1-10 4% 6% 2% 4% ---------- ---------- ------------ --------- -------------- 11-16 3% 5% 2% 4% ---------- ---------- ------------ --------- -------------- 16+ 2.25% 4.25% 2% 4% ----------------------------------------------------------- Loans can reduce the policy's death benefit. We deduct the amount of any outstanding loans plus any accrued loan interest from your policy value before we calculate the death benefit. CONDITIONAL CHARGES These are other charges that are imposed only if certain events occur. [diamond] SURRENDER CHARGE. During the first 10 policy years, there is a difference between the amount of policy value and the amount of cash surrender value of the policy. This difference is the surrender charge, which is a contingent deferred sales charge. The surrender charge is designed to recover the expense of distributing policies that are terminated before distribution expenses have been recouped from revenue generated by these policies. These are contingent charges because they are paid only if the policy is surrendered (or the face amount is reduced or the policy lapses) during this period. They are deferred charges because they are not deducted from premiums. The following table shows the surrender charges applicable for a male Nonsmoker for a face amount of $100,000: ISSUE AGE INITIAL SURRENDER 25 $1,235.25 35 1,923.75 45 3,127.94 55 4,611.17 65 5,850.00 75 5,850.00 85 5,850.00 The following table gives a specific example for the duration of the surrender charge period for a male age 35 nonsmoker, for a face amount of $100,000. The surrender charge is equal to: 14 - ------------------------------------------------------ SURRENDER CHARGE SCHEDULE - ------------------------------------------------------ POLICY SURRENDER POLICY SURRENDER MONTH CHARGE MONTH CHARGE 1-12 $1923.75 89 $1179.90 13-24 1923.75 90 1154.25 25-36 1923.75 91 1128.60 37-48 1923.75 92 1102.95 49-60 1923.75 93 1077.30 61 1898.10 94 1051.65 62 1872.45 95 1026.00 63 1846.80 96 1000.35 64 1821.15 97 958.63 65 1795.50 98 916.90 66 1769.85 99 875.18 67 1744.20 100 833.45 68 1718.55 101 791.73 69 1692.90 102 750.01 70 1667.25 103 708.28 71 1641.60 104 666.56 72 1615.95 105 624.83 73 1590.30 106 583.11 74 1564.65 107 541.39 75 1539.00 108 499.66 76 1513.35 109 457.94 77 1487.70 110 416.21 78 1462.05 111 374.49 79 1436.40 112 332.77 80 1410.75 113 291.04 81 1385.10 114 249.32 82 1359.45 115 207.59 83 1333.80 116 165.87 84 1308.15 117 124.15 85 1282.50 118 82.42 86 1256.85 119 40.70 87 1231.20 120 00.00 88 1205.55 [diamond] PARTIAL SURRENDER CHARGE (FACE AMOUNT DECREASE). If less than all of the policy is surrendered, the amount withdrawn is a "partial surrender." A charge as described below is deducted from the policy value upon a partial surrender of the policy. This is equal to the charge that would apply upon a full surrender multiplied by the partial surrender amount divided by the result of subtracting the full surrender charge from the policy value. We withdraw this amount from the subaccounts and the Guaranteed Interest Account in the same proportion as for the withdrawal. A partial surrender charge also is deducted from policy value upon a decrease in face amount. The charge is equal to the applicable surrender charge multiplied by a fraction equal to the decrease in face amount divided by the face amount of the policy prior to the decrease. This charge is intended to recoup the costs of issuing the policy. [diamond] PARTIAL SURRENDER FEE. In the case of a partial surrender, an additional fee is imposed. This fee is equal to 2% of the amount withdrawn but not more than $25. It is intended to recover the actual costs of processing the partial surrender request and will be deducted from each subaccount and Guaranteed Interest Account in the same proportion as the withdrawal is allocated. If no allocation is made at the time of the request for the partial surrender, withdrawal allocation will be made in the same manner as are monthly deductions. TRANSFER CHARGE Currently we do not charge for transfers between subaccounts, however we reserve the right to charge up to $10 for each transfer in excess of two each calendar year. This charge, if we were to have a transfer charge, would be intended to recoup for the cost of administering the transfer. OTHER TAX CHARGES Currently no charge is made to the Separate Account for federal income taxes that may be attributable to the Separate Account. We may, however, make such a charge in the future for these or any other taxes attributable to the Separate Account. FUND CHARGES As compensation for investment management services to the funds, the advisors are entitled to fees, payable monthly and based on an annual percentage of the average aggregate daily net asset values of each series. We provide a table of these charges in the section titled "Fee Tables--Minimum and Maximum Fund Operating Expenses." These fund charges and other expenses are described more fully in the respective fund prospectuses. THE POLICY - -------------------------------------------------------------------------------- CONTRACT RIGHTS: OWNER, INSURED, BENEFICIARY OWNER The owner is the person who applies for the policy and who will generally make the choices that determine how the policy operates while it is in force. When we use the terms "you" or "your", in this prospectus, we are referring to the owner. INSURED The insured is the person on whose life the policy is issued. You name the insured in the application for the policy. We will not issue a policy for an insured that is more than 85 years old. Before issuing a policy, we will require evidence that the insured is, in fact, insurable. This will usually require a medical examination. BENEFICIARY The beneficiary is the person you name in the application to receive any death benefit. You may name different classes of beneficiaries, such as primary and secondary. These classes will set the order of payment. Unless an irrevocable beneficiary has been named, you can change the beneficiary at any time before the insured dies by sending a written request to us. Generally, the change will take effect as of the date your request is signed. If no beneficiary is living when the insured dies, unless you have given us different instructions, we will pay you the death benefit. If you are deceased, it will be paid to your estate. CONTRACT LIMITATIONS ASSIGNMENT The policy may be assigned. We will not be bound by the assignment until a written copy has been received and we will not be liable with respect to any payment made prior to receipt. 15 We assume no responsibility for determining whether an assignment is valid. PURCHASING A POLICY UNDERWRITING PROCEDURES We base our rates on the insured person's gender, attained age, and risk class. We also consider the duration, or how long the policy has been in force. We may require certain medical information in order to determine the risk class of the person to be insured. We are not permitted to consider gender as a factor in some states and under certain qualified plans. We will accept payment with your application and allocate the premium as described below. We may refuse to issue your policy within 5 business days, in which case we will provide a policy refund, as outlined below. ELIGIBLE PURCHASERS Any person up to the age of 85 is eligible to be insured under a newly purchased policy after providing suitable evidence of insurability. You can purchase a policy to insure the life of another person provided that you have an insurable interest in that life and the prospective insured consents. PREMIUM PAYMENTS The Individual Edge(R) policy is a flexible premium variable universal life insurance policy. It has a death benefit, cash surrender value and a loan privilege as does a traditional fixed benefit whole life policy. The policy differs from a fixed benefit whole life policy, however, because you may allocate your premium into one or more of several subaccounts of the Separate Account or the Guaranteed Interest Account. Each subaccount of the Separate Account, in turn, invests its assets exclusively in a portfolio of the funds. The policy value varies according to the investment performance of the series to which premiums have been allocated. The minimum issue premium for a policy is generally 1/6 of the planned annual premium (an amount determined at the time of application) and is due on the policy date. The insured must be alive when the issue premium is paid. Thereafter, the amount and payment frequency of planned premiums are as shown on the schedule page of the policy. The issue premium payment should be delivered to your registered representative for forwarding to our Underwriting Department. Additional payments should be sent to VPMO. A number of factors concerning the person you insure and the policy features you desire will affect our required issue premium. The person's age, gender and risk class can affect the issue premium, as can policy features such as face amount and added benefits. We will generally allocate the issue premium, less applicable charges, according to your instructions when we receive your completed application. We may issue some policies with a Temporary Money Market Allocation Amendment. Under this amendment we allocate the net issue premium and the net of other premiums paid during your right to cancel period to the Phoenix-Goodwin Money Market subaccount. When your right to cancel expires we allocate the policy value among the subaccounts and/or the Guaranteed Interest Account according to your instructions. We may use the Temporary Money Market Allocation Amendment depending on the state of issue and under certain other circumstances. We reduce premium payments by the premium expense charge before we apply them to your policy. We will apply this net premium among your chosen investment options. We will buy any subaccount units at the subaccount unit values next calculated after we receive the premium. We establish maximum premium limits and may change them from time to time. You may make additional premium payments at any time. The minimum premium payment during a grace period is the amount needed to prevent policy lapse. At all other times the minimum acceptable payment is $25. The policy contains a total premium limit as shown on the schedule page. This limit is applied to the sum of all premiums paid under the policy. If the total premium limit is exceeded, the policy owner will receive the excess, with interest at an annual rate of not less than 4%, not later than 60 days after the end of the policy year in which the limit was exceeded. The policy value will then be adjusted to reflect the refund. To pay such refund, amounts taken from each subaccount or the Guaranteed Interest Account will be done in the same manner as for monthly deductions. You may write to us and give us different instructions. The total premium limit may be exceeded if additional premium is needed to prevent lapse or if we subsequently determine that additional premium would be permitted by federal laws or regulations. PAYMENT BY CHECK We may wait to credit your policy if you pay by check until your check has cleared your bank. AUTOMATED PAYMENTS You may elect to have us deduct periodic premium payments directly from your bank account. The minimum we will withdraw under such a plan is $25 per month. ALLOCATION OF PREMIUM We will generally allocate the issue premium less applicable charges to the Separate Account or to the Guaranteed Interest Accounts upon receipt of a completed application, in accordance with the allocation instructions in the application for a policy. However, policies issued in certain states and policies issued in certain states pursuant to applications which state the policy is intended to replace existing insurance, are issued with a Temporary Money Market Allocation Amendment. Under this Amendment, we temporarily allocate the entire issue premium paid less applicable charges (along with any other premiums paid during your right to cancel period) to the Phoenix-Goodwin Money Market Subaccount of the Separate Account and, at the expiration of the right to cancel period, the policy value of the Phoenix-Goodwin Money Market Subaccount is allocated among the subaccounts of the Separate Account or to the Guaranteed Interest Account in accordance with the applicant's allocation instructions in the application for insurance. Premium payments received by us will be reduced by a 2.25% state premium tax and by 1.50% for federal tax charges. The issue premium also will be reduced by the issue expense charge deducted in equal monthly installments over a 12-month period. Any unpaid balance of the issue expense charge will be paid to Phoenix upon policy lapse or termination. 16 Premium payments received during a grace period, after deduction of state and federal tax charges and any sales charge, will first be used to cover any monthly deductions during the grace period. Any balance will be applied on the payment date to the various subaccounts of the Separate Account or to the Guaranteed Interest Account, based on the premium allocation schedule elected in the application for the policy or by your most recent instructions. See "Transfer of Policy Value--Nonsystematic Transfers." POLICY REFUND Should you elect to return your policy under your right to cancel we will treat your policy as if we had never issued it. For policies other than those issued with a Temporary Money Market Allocation Amendment, we will return the sum of the following as of the date we receive the returned policy: 1) the current policy value less any unpaid loans and loan interest; plus 2) any monthly deductions, partial surrender fees and other charges made under the policy. For policies issued with the Temporary Money Market Amendment, the amount returned will equal any premiums paid less any unpaid loans and loan interest and less any partial surrender amounts paid. We retain the right to decline to process an application within seven days of our receipt of the completed application for insurance. If we decline to process the application, we will return the premium paid. Even if we have approved the application for processing, we retain the right to decline to issue the policy. If we decline to issue the policy, we will refund to you the same amount as would have been refunded under the policy had it been issued but returned for refund while you have your right to cancel. GENERAL - -------------------------------------------------------------------------------- POSTPONEMENT OF PAYMENTS GENERAL Payment of any amount upon complete or partial surrender, policy loan or benefits payable at death (in excess of the initial face amount) or maturity may be postponed: [diamond] for up to 6 months from the date of the request, for any transactions dependent upon the value of the Guaranteed Interest Account; [diamond] We may postpone payment whenever the NYSE is closed other than for customary weekend and holiday closings, trading on the NYSE is restricted, on days when a certain market is closed (e.g., the U.S. Government bond market is closed on Columbus Day and Veteran's Day); or [diamond] whenever an emergency exists, as decided by the SEC as a result of which disposal of securities is not reasonably practicable or it is not reasonably practicable to determine the value of the Separate Account's net assets. Transfers also may be postponed under these circumstances. OPTIONAL INSURANCE BENEFITS You may elect additional benefits under a policy, and you may cancel these benefits at anytime. A charge will be deducted monthly from the policy value for each additional rider benefit chosen except where noted below. More details will be included in the form of a rider to the policy if any of these benefits is chosen. The following benefits are currently available and additional riders may be available as described in the policy (if approved in your state). [diamond] DISABILITY WAIVER OF SPECIFIED PREMIUM RIDER. We waive the specified premium if the insured becomes totally disabled and the disability continues for at least six months. Premiums will be waived to the policy anniversary nearest the insured's 65th birthday (provided that the disability continues). If premiums have been waived continuously during the entire five years prior to such date, the waiver will continue beyond that date. The premium will be waived upon our receipt of notice that the Insured is totally disabled and that the disability occurred while the rider was in force. [diamond] ACCIDENTAL DEATH BENEFIT RIDER. An additional death benefit will be paid before the policy anniversary nearest the insured's 75th birthday, if: o the insured dies from bodily injury that results from an accident; and o the insured dies no later than 90 days after injury. We assess a monthly charge for this rider. This policy is elected at issue. [diamond] DEATH BENEFIT PROTECTION RIDER. The purchase of this rider provides that the death benefit will be guaranteed. The amount of the guaranteed death benefit is equal to the initial face amount, or the face amount that you may increase or decrease, provided that certain minimum premiums are paid. Unless we agree otherwise, the initial face amount and the face amount remaining after any decrease must at least equal $50,000 and the minimum issue age of the insured must be 20. Three death benefit guarantee periods are available. The minimum premium required to maintain the guaranteed death benefit is based on the length of the guarantee period as elected on the application. The three available guarantee periods are: 1 death benefit guaranteed until the later of the policy anniversary nearest the insured's 70th birthday or policy year seven; 2 death benefit guaranteed until the later of the policy anniversary nearest the insured's 80th birthday or policy year 10; 3 death benefit guaranteed until the later of the policy anniversary nearest the insured's 100th birthday. Death benefit guarantee periods 1 or 2 may be extended provided that the policy's cash surrender value is sufficient and you pay the new minimum required premium. 17 For policies issued in New York, two guarantee periods are available: 1 The policy anniversary nearest the Insured's 75th birthday or the 10th policy year; or 2 The policy anniversary nearest the Insured's 100th birthday. [diamond] PURCHASE PROTECTION PLAN RIDER. Under this rider you may, at predetermined future dates, purchase additional insurance protection without evidence of insurability. [diamond] LIVING BENEFIT RIDER. Under certain conditions, in the event of the terminal illness of the insured, an accelerated payment of up to 75% of the policy's death benefit (up to a maximum of $250,000) is available. The minimum face amount of the policy after any such accelerated benefit payment is $10,000. There is no charge for this rider. This rider is automatically attached to the policy at issue. However, the rider is not available with qualified plans. [diamond] CASH VALUE ACCUMULATION RIDER. This rider generally permits you to pay more in premium than otherwise would be permitted. This rider must be elected before the policy is issued. There is no charge for this rider. [diamond] CHILD TERM RIDER. This rider provides annually renewable term coverage on children of the insured who are between 14 days old and age 18. The term insurance is renewable to age 25. Each child will be insured under a separate rider and the amount of insurance must be the same. Coverage may be converted to a new whole life or variable insurance policy at any time prior to the policy anniversary nearest insured child's 25th birthday. We assess a monthly charge for this rider. This rider is elected at issue, within 14 days of birth or at adoption. [diamond] FAMILY TERM RIDER. This rider provides annually renewable term insurance coverage to age 70 on the insured or members of the insured's immediate family who are at least 18 years of age. The rider is fully convertible through age 70 for each insured to either a fixed benefit or variable policy. We assess a monthly charge for this rider. This rider is elected at issue. [diamond] PHOENIX INDIVIDUAL EDGE TERM RIDER. This rider provides annually renewable term insurance coverage to age 100 on the life of the insured under the base policy. The face amount of the term insurance may be level or increasing. The initial rider death benefit cannot exceed four times the initial face amount of the policy. This rider is elected at issue. [diamond] AGE 100+ RIDER. This rider maintains the full death benefit under the policy after the insured's age 100, as long as the cash surrender value is greater than zero. There is no charge for this rider. [diamond] LIFEPLAN OPTIONS RIDER. At specified 5th, 10th and 15th year policy Anniversaries, subject to various limitations as set forth in the rider, the following policy options may be exercised or elected. 1 An option to increase the total face amount of the policy by up to $1,000,000 without a medical exam requirement, while other traditional underwriting rules will still apply. 2 An option to reduce the base policy face amount up to 50% without incurring a partial surrender charge. 3 An option to exchange the policy for an annuity without incurring a surrender charge. This option is not available until the 10th policy anniversary. While there is no charge for this rider, if you select option 1, you will incur an increase in your cost of insurance due to the increase in face amount. For policies issued on or after September 3, 2002, this Rider is not available with any policy issued as part of a qualified plan. This rider will automatically be attached to the policy at issue. [diamond] WHOLE LIFE EXCHANGE OPTION RIDER. This rider permits you to exchange the policy for a fixed benefit whole life policy at the later of age 65 or policy year 15. There is no charge for this option. This option is no longer available. DEATH BENEFIT GENERAL The death benefit under Option 1 equals the policy's face amount on the date of the death of the insured or, if greater, the minimum death benefit on the date of death. Under Option 2, the death benefit equals the policy's face amount on the date of the death of the insured, plus the policy value or, if greater, the minimum death benefit on that date. Under either option, the minimum death benefit is the policy value on the date of death of the insured increased by a percentage determined from a table contained in the policy. This percentage will be based on the insured's attained age at the beginning of the policy year in which the death occurs. If no option is elected, Option 1 will apply. Loans can reduce the policy's death benefit. We deduct the amount of any outstanding loans plus any accrued loan interest from your policy value before we calculate the death benefit. REQUESTS FOR INCREASE IN FACE AMOUNT Any time after the first policy anniversary, you may request an increase in the face amount of insurance provided under the policy. Requests for face amount increases must be made in writing, and we require additional evidence of insurability. The effective date of the increase generally will be the policy anniversary following approval of the increase. The increase may not be less than $25,000 and no increase will be permitted after the insured's age 75. The charge for the increase is $1.50 per $1,000 of face amount increase requested subject to a maximum of $600. No additional monthly administration charge will be assessed for face amount increase. We will deduct any charges associated with the increase (the increases in cost of insurance charges), from the policy value, whether or not you pay an additional premium in connection with the 18 increase. The surrender charge applicable to the policy also will increase. At the time of the increase, the cash value must be sufficient to pay the monthly deduction on that date, or additional premiums will be paid on or before the effective date. Also, a new right to cancel period (see "Summary--Right to Cancel") will be established for the amount of the increase. PARTIAL SURRENDER AND DECREASES IN FACE AMOUNT: EFFECT ON DEATH BENEFIT A partial surrender or a decrease in face amount generally decreases the death benefit. Upon a decrease in face amount or partial surrender, a partial surrender charge will be deducted from the policy value based on the amount of the decrease or partial surrender. If the charge is a decrease in face amount, the death benefit under a policy would be reduced on the next monthly calculation day. If the charge is a partial surrender, the death benefit under a policy would be reduced immediately. A decreased in the death benefit may have certain income tax consequences. REQUESTS FOR DECREASE IN FACE AMOUNT You may request a decrease in face amount at any time after the first policy year. Unless we agree otherwise, the decrease must be at least equal to $10,000 and face amount remaining after the decrease must be at least $25,000. All face amount decrease requests must be in writing and will be effective on the first monthly calculation day following the date we approve the request. A partial surrender charge will be deducted from the policy value based on the amount of the decrease. The charge will equal the applicable surrender charge that would apply to a full surrender multiplied by a fraction (which is equal to the decrease in face amount divided by the face amount of the policy before the decrease). PAYMENT OF PROCEEDS - -------------------------------------------------------------------------------- SURRENDER AND DEATH BENEFIT PROCEEDS Death benefit proceeds and the proceeds of full or partial surrenders will be processed at unit values next computed after we receive the request for surrender or due proof of death, provided such request is complete and in good order. Payment of surrender or death proceeds usually will be made in one lump sum within seven days, unless another payment option has been elected. Payment of the death proceeds, however, may be delayed if the claim for payment of the death proceeds needs to be investigated, e.g., to ensure payment of the proper amount to the proper payee. Any such delay will not be beyond that reasonably necessary to investigate such claims consistent with insurance practices customary in the life insurance industry. Under certain conditions, in the event of the terminal illness of the insured, an accelerated payment of up to 75% of the policy's death benefit (up to maximum of $250,000), is available under the Living Benefits Rider. The minimum face amount remaining after any such accelerated benefit payment is $10,000. While the insured is living, you may elect a payment option for payment of the death proceeds to the beneficiary. You may revoke or change a prior election, unless such right has been waived. The beneficiary may make or change an election before payment of the death proceeds, unless you have made an election that does not permit such further election or changes by the beneficiary. A written request in a form satisfactory to us is required to elect, change or revoke a payment option. The minimum amount of surrender or death benefit proceeds that may be applied under any payment option is $1,000. If the policy is assigned as collateral security, we will pay any amount due the assignee in one lump sum. Any remaining proceeds will remain under the option elected. PAYMENT OPTIONS All or part of the surrender or death proceeds of a policy may be applied under one or more of the following payment options or such other payment options or alternative versions of the options listed as we may choose to make available in the future. OPTION 1--LUMP SUM Payment in one lump sum. OPTION 2--LEFT TO EARN INTEREST A payment of interest during the payee's lifetime on the amount payable as a principal sum. Interest rates are guaranteed to be at least 3% per year. OPTION 3--PAYMENT FOR A SPECIFIC PERIOD Equal installments are paid for a specified period of years whether the payee lives or dies. The first payment will be on the date of settlement. The assumed interest rate on the unpaid balance is guaranteed not to be less than 3% per year. OPTION 4--LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN Equal installments are paid until the later of: [diamond] the death of the payee; or [diamond] the end of the period certain. The first payment will be on the date of settlement. The period certain must be chosen at the time this option is elected. The periods certain that you may choose from are as follows: [diamond] 10 years; [diamond] 20 years; or [diamond] until the installments paid refund the amount applied under this option. If the payee is not living when the final payment falls due, that payment will be limited to the amount which needs to be added to the payments already made to equal the amount applied under this option. If, for the age of the payee, a period certain is chosen that is shorter than another period certain paying the same installment amount, we will consider the longer period certain as having been elected. Any life annuity provided under Option 4 is computed using an interest rate guaranteed to be no less than 3% per year, but any life annuity providing a period certain of 20 years or more is 19 computed using an interest rate guaranteed to be no less than 3% per year. OPTION 5--LIFE ANNUITY Equal installments are paid only during the lifetime of the payee. The first payment will be on the date of settlement. Any life annuity as may be provided under Option 5 is computed using an interest rate guaranteed to be no less than 3% per year. OPTION 6--PAYMENTS OF A SPECIFIED AMOUNT Equal installments of a specified amount, out of the principal sum and interest on that sum, are paid until the principal sum remaining is less than the amount of the installment. When that happens, the principal sum remaining with accrued interest will be paid as a final payment. The first payment will be on the date of settlement. The payments will include interest on the remaining principal at a guaranteed rate of at least 3% per year. This interest will be credited at the end of each year. If the amount of interest credited at the end of the year exceeds the income payments made in the last 12 months, that excess will be paid in one sum on the date credited. OPTION 7--JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN The first payment will be on the date of settlement. Equal installments are paid until the latest of: [diamond] the end of the 10-year period certain; [diamond] the death of the insured; or [diamond] the death of the other named annuitant. The other annuitant must have attained age 40, must be named at the time this option is elected and cannot later be changed. Any joint survivorship annuity that may be provided under this option is computed using a guaranteed interest rate to equal at least 33/8% per year. For additional information concerning the above payment options, see the policy. SURRENDERS GENERAL At any time during the lifetime of the insured and while the policy is in force, you may partially or fully surrender the policy by sending to VPMO a written release and surrender in a form satisfactory to us. We may also require you to send the policy to us. The amount available for surrender is the cash surrender value at the end of the valuation period during which the surrender request is received at VPMO. Upon partial or full surrender, we generally will pay to you the amount surrendered within seven days after we receive the written request for the surrender. Under certain circumstances, the surrender payment may be postponed. See "General Provisions--Postponement of Payments." For the federal tax effects of partial and full surrenders, see "Federal Income Tax Considerations." FULL SURRENDERS If the policy is being fully surrendered, the policy itself must be returned to VPMO, along with the written release and surrender of all claims in a form satisfactory to us. You may elect to have the amount paid in a lump sum or under a payment option. See "Conditional Charges--Surrender Charge" and "Payment Options." PARTIAL SURRENDERS You may obtain a partial surrender of the policy by requesting payment of the policy's cash surrender value. It is possible to do this at any time during the lifetime of the insured, while the policy is in force, with a written request to VPMO. We may require the return of the policy before payment is made. A partial surrender will be effective on the date the written request is received or, if required, the date the policy is received by us. Surrender proceeds may be applied under any of the payment options described under "Payment of Proceeds--Payment Options." We reserve the right not to allow partial surrenders of less than $500. In addition, if the share of the policy value in any subaccount or in the Guaranteed Interest Account is reduced as a result of a partial surrender and is less than $500, we reserve the right to require surrender of the entire remaining balance in that subaccount or the Guaranteed Interest Account. Upon a partial surrender, the policy value will be reduced by the sum of the following: [diamond] The partial surrender amount paid--this amount comes from a reduction in the policy's share in the value of each subaccount or the Guaranteed Interest Account based on the allocation requested at the time of the partial surrender. If no allocation request is made, the withdrawals from each subaccount will be made in the same manner as that provided for monthly deductions. [diamond] The partial surrender fee--this fee is the lesser of $25 or 2% of the partial surrender amount paid. The assessment to each subaccount or the Guaranteed Interest Account will be made in the same manner as provided for the partial surrender amount paid. [diamond] A partial surrender charge--this charge is equal to a pro rata portion of the applicable surrender charge that would apply to a full surrender, determined by multiplying the applicable surrender charge by a fraction (equal to the partial surrender amount payable divided by the result of subtracting the applicable surrender charge from the policy value). This amount is assessed against the subaccount or the Guaranteed Interest Account in the same manner as provided for the partial surrender amount paid. The cash surrender value will be reduced by the partial surrender amount paid plus the partial surrender fee. The face amount of the policy will be reduced by the same amount as the policy value is reduced as described above. TRANSFER OF POLICY VALUE INTERNET, INTERACTIVE VOICE RESPONSE AND TELEPHONE TRANSFERS You may transfer your policy value among the available investment options and make changes to your premium payment allocations by Internet, Interactive Voice Response or 20 Telephone. You may write to VPMO or call VULA between the hours of 8:30 AM and 4:00 PM, Eastern Time. (The appropriate address and telephone number are on page 1.) We will execute a written request the day we receive it at VPMO. We will execute transfers on the day you make the request except as noted below. We do not charge for transfers at this time. However, we reserve the right to charge a fee of $10 for each transfer after your first two transfers in a policy year. Should we begin imposing this charge, we would not count transfers made under a Systematic Transfer Program toward the two-transfer limit. You may permit your registered representative to submit transfer requests on your behalf. Phoenix and Phoenix Equity Planning Corporation ("PEPCO"), our national distributor, will use reasonable procedures to confirm that transfer instructions are genuine. We require verification of account information and will record telephone instructions on tape. You will receive written confirmation of all transfers. Phoenix and PEPCO may be liable for following unauthorized instructions if we fail to follow our established security procedures. However, you will bear the risk of a loss resulting from instructions entered by an unauthorized third party that Phoenix and PEPCO reasonably believe to be genuine. We may modify or terminate your transfer and allocation privileges at any time. You may find it difficult to exercise these privileges during times of extreme market volatility. In such a case, you should submit your request in writing. We will not accept batches of transfer instructions from registered representatives acting under powers of attorney for multiple policy owners, unless the registered representative's broker-dealer firm and Phoenix have entered into a third-party service agreement. If we reject a transfer request for any of these reasons, we will notify you of our decision in writing. TRANSFER RESTRICTIONS We do not permit transfers of less than $500 unless either: [diamond] the entire balance in the subaccount or the Guaranteed Interest Account is being transferred; or [diamond] the transfer is part of a Systematic Transfer Program. We reserve the right to prohibit a transfer to any subaccount if the value of your investment in that subaccount immediately after the transfer would be less than $500. We further reserve the right to require that the entire balance of a subaccount or the Guaranteed Interest Account be transferred if the value of your investment in that subaccount immediately after the transfer, would be less than $500. You may make only one transfer per policy year from the non-loaned portion of the Guaranteed Interest Account unless the transfers are made as part of a Systematic Transfer Program or unless we agree to make an exception to this rule. The amount you may transfer is limited to the greatest of $1,000 or 25% of the value of the non-loaned portion of the Guaranteed Interest Account. You may transfer policy value into the Guaranteed Interest Account at anytime. DISRUPTIVE TRADING AND MARKET TIMING Your ability to make transfers among subaccounts under the policy is subject to modification if we determine, in our sole opinion, that your exercise of the transfer privilege may disadvantage or potentially harm the rights or interests of other policy owners. Frequent purchases, redemptions and transfers, programmed transfers, transfers into and then out of a subaccount in a short period of time, and transfers of large amounts at one time ("Disruptive Trading") can have harmful effects for other policy owners. These risks and harmful effects include: [diamond] dilution of the interests of long-term investors in a subaccount, if market timers or others transfer into the subaccount at prices that are below the true value or transfer out of the subaccount at prices that are higher than the true value; [diamond] an adverse affect on portfolio management, as determined by portfolio management in its sole discretion, such as causing the underlying fund to maintain a higher level of cash than would otherwise be the case, or causing the underlying fund to liquidate investments prematurely; and [diamond] increased brokerage and administrative expenses. To protect our policy owners and the underlying funds from Disruptive Trading, we have adopted certain market timing policies and procedures. Under our market timing policy, we could modify your transfer privileges for some or all of the subaccounts. Modifications include, but are not limited to, not accepting a transfer request from you or from any person, asset allocation service, and/or market timing service made on your behalf. We may also limit the amount that may be transferred into or out of any subaccount at any one time. Unless prohibited by the terms of the policy, we may (but are not obligated to): [diamond] limit the dollar amount and frequency of transfers (e.g., prohibit more than one transfer a week, or more than two a month, etc.), [diamond] restrict the method of making a transfer (e.g., require that all transfers into a particular subaccount be sent to our Service Center by first class U.S. mail and rescind telephone or fax transfer privileges), [diamond] require a holding period for some subaccounts (e.g., prohibit transfers into a particular subaccount within a specified period of time after a transfer out of that subaccount), [diamond] impose redemption fees on short-term trading (or implement and administer redemption fees imposed by one or more of the underlying funds), or [diamond] impose other limitations or restrictions. Currently we attempt to detect Disruptive Trading by monitoring both the dollar amount of individual transfers and the frequency 21 of a policy owner's transfers. With respect to both dollar amount and frequency, we may consider an individual transfer alone or when combined with transfers from other policies owned by or under the control or influence of the same individual or entity. We currently review transfer activity on a regular basis. We also consider any concerns brought to our attention by the managers of the underlying funds. We may change our monitoring procedures at any time without notice. Because we reserve discretion in applying these policies, they may not be applied uniformly. However, we will to the best of our ability apply these policies uniformly. Consequently, there is a risk that some policy owners could engage in market timing while others will bear the effects of their market timing. Currently we attempt to detect Disruptive Trading by monitoring activity for all policies. If a policy owner's transfer request exceeds the transfer parameters, we may send the owner a warning letter. Then, if at any time thereafter the owner's transfer activity exceeds the transfer parameters, we will revoke the policy owner's right to make Internet and Interactive Voice Response (IVR) transfers. We will notify policy owners in writing (by mail to their address of record on file with us) if we limit their trading. We have adopted these policies and procedures as a preventative measure to protect all policy owners from the potential affects of Disruptive Trading, while also abiding by any rights that policy owners may have to make transfers and providing reasonable and convenient methods of making transfers that do not have the potential to harm other policy owners. We currently do not make any exceptions to the policies and procedures discussed above to detect and deter Disruptive Trading. We may reinstate Internet, IVR, telephone and fax transfer privileges after they are revoked, but we will not reinstate these privileges if we have reason to believe that they might be used thereafter for Disruptive Trading. We cannot guarantee that our monitoring will be 100% successful in detecting all transfer activity that exceeds the parameters discussed above (and we do not guarantee that these are appropriate transfer parameters to prevent Disruptive Trading). Moreover, we cannot guarantee that revoking or limiting a policy owner's Internet, IVR, telephone and fax transfer privileges will successfully deter all Disruptive Trading. In addition, some of the underlying funds are available to insurance companies other than Phoenix and we do not know whether those other insurance companies have adopted any policies and procedures to detect and deter Disruptive Trading, or if so what those policies and procedures might be. Because we may not be able to detect or deter all Disruptive Trading and because some of these funds are available through other insurance companies, some policy owners may be treated differently than others, resulting in the risk that some policy owners could engage in market timing while others will bear the effects of their market timing. We may, without prior notice, take whatever action we deem appropriate to comply with or take advantage of any state or federal regulatory requirement. In addition, orders for the purchase of underlying fund shares are subject to acceptance by the relevant fund. We reserve the right to reject, without prior notice, any transfer request into any subaccount if the purchase of shares in the corresponding underlying fund is not accepted for any reason. We do not include transfers made pursuant to the Dollar Cost Averaging, Automatic Asset Rebalancing or other similar programs when applying our market timing policy. SYSTEMATIC TRANSFER PROGRAMS You may elect a systematic transfer program that we offer under the policy. We reserve the right to change, eliminate or add optional programs subject to applicable laws. We base transfers under a Systematic Transfer Program on the subaccount values on the first day of the month following our receipt of your transfer request. Should the first day of the month fall on a holiday or weekend, we will process the transfer on the next business day. You may have only one program in effect at a time. We do not charge for these programs. DOLLAR COST AVERAGING PROGRAM: Dollar Cost Averaging periodically transfers policy value from one of the subaccounts or from the Guaranteed Interest Account (a "source account") to one or several of the available subaccounts ("target subaccounts") and the Long-term Guaranteed Interest Account. You choose to make these transfers monthly, quarterly, semiannually or annually. The minimums you may transfer from the source account are: [diamond] $25 monthly [diamond] $150 semiannually [diamond] $75 quarterly [diamond] $300 annually You must have at least $1,000 in the source account to begin a Dollar Cost Averaging Program. Should the value in the source account fall below the transfer amount, we will transfer the remaining balance and end the Program. Transfers must be made in approximately equal amounts over a minimum of 18 months. The Dollar Cost Averaging Program is not available if you invest through a bank draft program. You may start or discontinue this program at any time by submitting a written request to VPMO or by calling VULA (see page 1). Dollar Cost Averaging does not ensure a profit nor guarantee against a loss in a declining market. The Dollar Cost Averaging Program is not available while the Asset Rebalancing Program is in effect. We do not charge for this program. We may at different times offer an Enhanced Dollar Cost Averaging Program. This Enhanced DCA Program can offer a higher interest rate during selected periods. ASSET REBALANCING PROGRAM: Under this program, we transfer policy value among the subaccounts to match your chosen allocation percentages. You can choose to have us make these transfers monthly, quarterly, semi-annually or annually. We do not permit transfers to or from the Guaranteed Interest Account. You may start or discontinue this program at any time by submitting a written request to VPMO or by calling VULA (see 22 page 1). The Asset Rebalancing Program does not ensure a profit nor guarantee against a loss in a declining market. The Asset Rebalancing Program is not available while the Dollar Cost Averaging Program is in effect. We do not charge for this program. LOANS Generally, while the policy is in force, a loan may be taken against the policy up to the available loan value. The loan value on any day is 90% of the policy value reduced by an amount equal to the surrender charge. The available loan value is the loan value on the current day less any outstanding debt. The amount of any loan will be added to the loaned portion of the Guaranteed Interest Account and subtracted from the policy's share of the subaccounts or the nonloaned portion of the Guaranteed Interest Account, based on the allocation requested at the time of the loan. The total reduction will equal the amount added to the loaned portion of the Guaranteed Interest Account. Allocations generally must be expressed in terms of whole percentages. If no allocation request is made, the amount subtracted from the share of each subaccount or the nonloaned portion of the Guaranteed Interest Account will be determined in the same manner as provided for monthly deductions. Interest will be credited and the loaned portion of the Guaranteed Interest Account will increase at an effective annual rate of 2% (4% in New York and New Jersey only), compounded daily and payable in arrears. At the end of each policy year and at the time of any debt repayment, interest credited to the loaned portion of the Guaranteed Interest Account will be transferred to the nonloaned portion of the Guaranteed Interest Account. Debt may be repaid at any time during the lifetime of the insured while the policy is in force. Any debt repayment received by us during a grace period will be reduced to pay any overdue monthly deductions and only the balance will be applied to reduce the debt. Such balance will first be used to pay any outstanding accrued loan interest, and then will be applied to reduce the loaned portion of the Guaranteed Interest Account. The nonloaned portion of the Guaranteed Interest Account will be increased by the same amount the loaned portion is decreased. If the amount of a loan repayment exceeds the remaining loan balance and accrued interest, the excess will be allocated among the subaccounts as you may request at the time of the repayment and, if no allocation request is made, according to the most recent premium allocation schedule on file. Payments received by us for the policy will be applied directly to reduce outstanding debt unless specified as a premium payment by you. Until the debt is fully repaid, additional debt repayments may be made at any time during the lifetime of the insured while the policy is in force. Failure to repay a policy loan or to pay loan interest will not terminate the policy unless the policy value becomes insufficient to maintain the policy in force. Policy value for loaned amounts increases at the rate we credit the loaned portion of the Guaranteed Interest Account, whereas nonloaned policy value varies with the investment performance of the chosen subaccounts or at the rate we credit the nonloaned portion of the Guaranteed Interest Account and the Long-term Guaranteed Interest Account. Loans can also reduce your policy's death benefit. We deduct the amount of any outstanding loans plus any accrued loan interest from your policy value before we calculate the death benefit. The amount available for a full surrender is similarly reduced by the amount of any outstanding loans and loan interest. The proceeds of policy loans may be subject to federal income tax. See "Federal Income Tax Considerations." In the future, we may not allow policy loans of less than $500, unless such loan is used to pay a premium on another Phoenix policy. [diamond] In all states except New York and New Jersey, the rates in effect following the policy anniversary nearest the insured's 65th birthday will be 21/4%. The rates in effect before the insured reaches age 65 will be: o Policy years 1-10: 4% o Policy years 11-15: 3% o Policy years 16 and thereafter: 2 1/4% [diamond] In New York and New Jersey only, the rates in effect before the Insured reaches age 65 will be: o Policy years 1-10: 6% o Policy years 11-15: 5% o Policy years 16 and thereafter: 4 1/4% You will pay interest on the loan at the noted effective annual rates, compounded daily and payable in arrears. At the end of each policy year, any interest due on the debt will be treated as a new loan and will be offset by a transfer from your subaccounts and the nonloaned portion of the Guaranteed Interest Account or the Long-term Guaranteed Interest Account to the loaned portion of the Guaranteed Interest Account. A policy loan, whether or not repaid, has a permanent effect on the policy value because the investment results of the subaccounts or nonloaned portion of the Guaranteed Interest Account will apply only to the amount remaining in the subaccounts or the nonloaned portion of the Guaranteed Interest Account and the Long-term Guaranteed Interest Account. The longer a loan is outstanding, the greater the effect is likely to be. The effect could be favorable or unfavorable. Under Death Benefit Option 1, outstanding policy loans do not reduce the policy's gross death benefit, because the policy value is inclusive of the gross death benefit amount. A policy loan can also have an effect on the policy's death benefit under Death Benefit Option 2 due to any resulting differences in policy value. If the subaccounts or the nonloaned portion of the Guaranteed Interest Account and the Long-term Guaranteed Interest Account earn more than the annual interest rate for funds held in the loaned portion of the Guaranteed Interest Account, the policy value does not increase as rapidly as it would have had no loan been made. If the subaccounts or the Guaranteed Interest Account earn less than the annual interest rate for 23 funds held in the loaned portion of the Guaranteed Interest Account, the policy value is greater than it would have been had no loan been made. A policy loan, whether or not repaid, also has a similar effect on the policy's death benefit due to any resulting differences in cash surrender value. LAPSE Unlike conventional life insurance policies, the payment of the issue premium, no matter how large, or the payment of additional premiums will not necessarily continue the policy in force to its maturity date. If on any monthly calculation day during the first 8 policy years, the policy value is insufficient to cover the monthly deduction, a grace period of 61 days will be allowed for the payment of an amount equal to three times the required monthly deduction. If on any monthly calculation day during any subsequent policy year, the cash surrender value (which should have become positive) is less than the required monthly deduction, a grace period of 61 days will be allowed for the payment of an amount equal to three times the required monthly deduction. During the grace period, the policy will continue in force but subaccount transfers, loans, partial or full surrenders will not be permitted. Failure to pay the additional amount within the grace period will result in lapse of the policy, but not until 30 days has passed after we have mailed a written notice to you. If a premium payment for the additional amount is received by us during the grace period, any amount of premium over what is required to prevent lapse will be allocated among the subaccounts or to the Guaranteed Interest Account according to the current premium allocation schedule. In determining the amount of "excess" premium to be applied to the subaccounts or the Guaranteed Interest Account, we will deduct the premium tax and the amount needed to cover any monthly deductions made during the grace period. If the insured dies during the grace period, the death benefit will equal the amount of the death benefit immediately prior to the commencement of the grace period. FEDERAL INCOME TAX CONSIDERATIONS - -------------------------------------------------------------------------------- INTRODUCTION This discussion is general in nature and is not intended as income tax advice. We make no attempt to consider any estate and inheritance taxes, or any state, local or other tax laws. Because this discussion is based upon our understanding of federal income tax laws as they are currently interpreted, we cannot guarantee the income tax status of any policy. The Internal Revenue Service ("IRS") makes no representation regarding the likelihood of continuation of current federal income tax laws, U.S. Treasury regulations or of the current interpretations. We reserve the right to make changes to the policy to assure that it will continue to qualify as a life insurance contract for federal income tax purposes. The ultimate effect of federal income taxes on values under the Separate Account and on the economic benefit to you or your beneficiary depends on our income tax status and upon the income tax status of the individual concerned. For complete information on federal and state income tax considerations, an income tax advisor should be consulted. The Internal Revenue Service ("IRS") makes no representation regarding the likelihood of continuation of current federal income tax laws, Treasury regulations or of the current interpretations. We reserve the right to make changes to the policy to assure that it will continue to qualify as a life insurance contract for federal income tax purposes. INCOME TAX STATUS We are taxed as a life insurance company under the Internal Revenue Code of 1986 (the "Code"), as amended. For federal income tax purposes, neither the Separate Account nor the Guaranteed Interest Account is a separate entity from Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company and their operations form a part of the companies. Investment income and realized capital gains on the assets of the Separate Account are reinvested and taken into account in determining the value of the Separate Account. Investment income of the Separate Account, including realized net capital gains, is not taxed to us. Due to our income tax status under current provisions of the Code, no charge currently will be made to the Separate Account for our federal income taxes which may be attributable to the Separate Account. We reserve the right to make a deduction for taxes if our federal income tax treatment is determined to be other than what we currently believe it to be, if changes are made affecting the income tax treatment to our variable life insurance contracts, or if changes occur in our income tax status. If imposed, such charge would be equal to the federal income taxes attributable to the investment results of the Separate Account. POLICY BENEFITS DEATH BENEFIT PROCEEDS The policy, whether or not it is a modified endowment contract (see "Modified Endowment Contracts"), should be treated as meeting the definition of a life insurance contract for federal income tax purposes under Section 7702 of the Code. As such, the death benefit proceeds thereunder should be excludable from the gross income of the beneficiary under Code Section 101(a)(1). Also, a policy owner should not be considered to be in constructive receipt of the cash value, including investment income. However, see the sections below on possible taxation of amounts received under the policy, via full surrender, partial surrender or loan. In addition, a benefit paid under a Living Benefits Rider may be taxable as income in the year of receipt. Code Section 7702 imposes certain conditions with respect to premiums received under a policy. We monitor the premiums to assure compliance with such conditions. However, if the premium limitation is exceeded during the year, we may return the excess premium, with interest, to the policy owner within 60 days after the end of the policy year, and maintain the qualification of the policy as life insurance for federal income tax purposes. 24 FULL SURRENDER Upon full surrender of a policy for its cash value, the excess, if any, of the cash value (unreduced by any outstanding indebtedness) over the premiums paid will be treated as ordinary income for federal income tax purposes. The full surrender of a policy that is a modified endowment contract may result in the imposition of an additional 10% tax on any income received. PARTIAL SURRENDER If the policy is a modified endowment contract, partial surrenders and other distributions are fully taxable to the extent of income in the policy and are possibly subject to an additional 10% tax. See the discussion on modified endowment contracts below. If the policy is not a modified endowment contract, partial surrenders still may be taxable, as follows. Code Section 7702(f)(7) provides that where a reduction in death benefits occurs during the first 15 years after a policy is issued and there is a cash distribution associated with that reduction, the policy owner may be taxed on all or a part of that amount distributed. A reduction in death benefits may result from a partial surrender. After 15 years, the proceeds will not be subject to tax, except to the extent such proceeds exceed the total amount of premiums paid but not previously recovered. We suggest you consult with your tax advisor in advance of a proposed decrease in death benefits or a partial surrender as to the portion, if any, which would be subject to tax, and in addition as to the impact such partial surrender might have under the new rules affecting modified endowment contracts. The benefit payment under the Living Benefits Rider is not considered a partial surrender. LOANS We believe that any loan received under a policy will be treated as your indebtedness. If the policy is a modified endowment contract, loans are fully taxable to the extent of income in the policy and are possibly subject to an additional 10% tax. See the discussion on modified endowment contracts. If the policy is not a modified endowment contract, we believe that no part of any loan under a policy will constitute income to you. The deductibility by a policy owner of loan interest under a policy may be limited under Code Section 264, depending on the circumstances. A policy owner intending to fund premium payments through borrowing should consult an income tax advisor with respect to the tax consequences. Under the "personal" interest limitation provisions of the Code, interest on policy loans used for personal purposes is not tax deductible. Other rules may apply to allow all or part of the interest expense as a deduction if the loan proceeds are used for "trade or business" or "investment" purposes. See your tax advisor for further guidance. BUSINESS-OWNED POLICIES If a business or a corporation owns the policy, the Code may impose additional restrictions. The Code limits the interest deduction on business-owned policy loans and may impose tax upon the inside build-up of corporate-owned life insurance policies through the corporate alternative minimum tax. MODIFIED ENDOWMENT CONTRACTS GENERAL Pursuant to Code Section 72(e), loans and other amounts received under modified endowment contracts will, in general, be taxed to the extent of accumulated income (generally, the excess of cash value over premiums paid). Life insurance policies can be modified endowment contracts if they fail to meet what is known as "the 7-pay test." This test compares your policy to a hypothetical life insurance policy of equal face amount which requires seven equal annual premiums to be "fully paid-up," continuing to provide a level death benefit with no further premiums. A policy becomes a modified endowment contract if, at any time during the first seven years, the cumulative premium paid on the policy exceeds the cumulative premium that would have been paid under the hypothetical policy. Premiums paid during a policy year but which are returned by us with interest within 60 days after the end of the policy year will be excluded from the 7-pay test. A life insurance policy received in exchange for a modified endowment contract will be treated as a modified endowment contract. REDUCTION IN BENEFITS DURING THE FIRST SEVEN YEARS If there is a reduction in death benefits or reduction or elimination of any Optional Insurance Benefits previously elected, during the first seven policy years, the premiums are redetermined for purposes of the 7-pay test as if the policy originally had been issued at the reduced death benefit level and the new limitation is applied to the cumulative amount paid for each of the first seven policy years. DISTRIBUTIONS AFFECTED If a policy fails to meet the 7-pay test, it is considered a modified endowment contract only as to distributions in the year in which the test is failed and all subsequent policy years. However, distributions made in anticipation of such failure (there is a presumption that distributions made within two years prior to such failure were "made in anticipation") also are considered distributions under a modified endowment contract. If the policy satisfies the 7-pay test for seven years, distributions and loans generally will not be subject to the modified endowment contract rules. PENALTY TAX Any amounts taxable under the modified endowment contract rule will be subject to an additional 10% excise tax, with certain exceptions. This additional tax will not apply in the case of distributions that are: [diamond] made on or after the taxpayer attains age 59 1/2; [diamond] attributable to the taxpayer's disability (within the meaning of Code Section 72(m)(7)); or [diamond] part of a series of substantially equal periodic payments (not less often than annually) made for the life (or life expectancy) of the taxpayer or the joint lives (or life expectancies) of the taxpayer and his beneficiary. MATERIAL CHANGE RULES Any determination of whether the policy meets the 7-pay test will begin again any time the policy undergoes a "material 25 change," which includes any increase in death benefits or any increase in or addition of a qualified additional benefit, or any increase in or addition of any rider benefit available as an Optional Insurance Benefit (described above), with the following two exceptions. [diamond] First, if an increase is attributable to premiums paid "necessary to fund" the lowest death benefit and qualified additional benefits payable in the first seven policy years or to the crediting of interest or dividends with respect to these premiums, the "increase" does not constitute a material change. [diamond] Second, to the extent provided in regulations, if the death benefit or qualified additional benefit increases as a result of a cost-of-living adjustment based on an established broad-based index specified in the policy, this does not constitute a material change if: o the cost-of-living determination period does not exceed the remaining premium payment period under the policy; and o the cost-of-living increase is funded ratably over the remaining premium payment period of the policy. A reduction in death benefits is not considered a material change unless accompanied by a reduction in premium payments. A material change may occur at any time during the life of the policy (within the first seven years or thereafter), and future taxation of distributions or loans would depend upon whether the policy satisfied the applicable 7-pay test from the time of the material change. An exchange of policies is considered to be a material change for all purposes. SERIAL PURCHASE OF MODIFIED ENDOWMENT CONTRACTS All modified endowment contracts issued by the same insurer (or affiliated companies of the insurer) to the same policy owner within the same calendar year will be treated as one modified endowment contract in determining the taxable portion of any loans or distributions made to the policy owner. The U.S. Treasury has been given specific legislative authority to issue regulations to prevent the avoidance of the new distribution rules for modified endowment contracts. A tax advisor should be consulted about the tax consequences of the purchase of more than one modified endowment contract within any calendar year. LIMITATIONS ON UNREASONABLE MORTALITY AND EXPENSE CHARGES The Code imposes limitations on unreasonable mortality and expense charges for purposes of ensuring that a policy qualifies as a life insurance contract for federal income tax purposes. The mortality charges taken into account to compute permissible premium levels may not exceed those charges required to be used in determining the federal income tax reserve for the policy, unless U.S. Treasury regulations prescribe a higher level of charge. In addition, the expense charges taken into account under the guideline premium test are required to be reasonable, as defined by the U.S. Treasury regulations. We will comply with the limitations for calculating the premium we are permitted to receive from you. QUALIFIED PLANS A policy may be used in conjunction with certain qualified plans. Since the rules governing such use are complex, you should not use the policy in conjunction with a qualified plan until you have consulted a pension consultant or income tax advisor. DIVERSIFICATION STANDARDS To comply with the Diversification Regulations under Code Section 817(h), ("Diversification Regulations") each series is required to diversify its investments. The Diversification Regulations generally require that on the last day of each calendar quarter the series' assets be invested in no more than: [diamond] 55% in any one investment [diamond] 70% in any two investments [diamond] 80% in any three investments [diamond] 90% in any four investments A "look-through" rule applies to treat a pro rata portion of each asset of a series as an asset of the Separate Account; therefore, each series will be tested for compliance with the percentage limitations. For purposes of these diversification rules, all securities of the same issuer are treated as a single investment, but each United States government agency or instrumentality is treated as a separate issuer. The general diversification requirements are modified if any of the assets of the Separate Account are direct obligations of the U.S. Treasury. In this case, there is no limit on the investment that may be made in U.S. Treasury securities, and for purposes of determining whether assets other than U.S. Treasury securities are adequately diversified, the generally applicable percentage limitations are increased based on the value of the Separate Account's investment in U.S. Treasury securities. Notwithstanding this modification of the general diversification requirements, the portfolios of the funds will be structured to comply with the general diversification standards because they serve as an investment vehicle for certain variable annuity contracts that must comply with these standards. In connection with the issuance of the Diversification Regulations, the U.S. Treasury announced that such regulations do not provide guidance concerning the extent to which you may direct your investments to particular divisions of a separate account. It is possible that a revenue ruling or other form of administrative pronouncement in this regard may be issued in the near future. It is not clear, at this time, what such a revenue ruling or other pronouncement will provide. It is possible that the policy may need to be modified to comply with such future U.S. Treasury announcements. For these reasons, we reserve the right to modify the policy, as necessary, to prevent you from being considered the owner of the assets of the Separate Account. We intend to comply with the Diversification Regulations to assure that the policies continue to qualify as a life insurance contract, for federal income tax purposes. CHANGE OF OWNERSHIP OR INSURED OR ASSIGNMENT Changing the policy owner or the insured or an exchange or assignment of the policy may have tax consequences 26 depending on the circumstances. Code Section 1035 provides that a life insurance contract can be exchanged for another life insurance contract, without recognition of gain or loss, assuming that no money or other property is received in the exchange, and that the policies relate to the same Insured. If the surrendered policy is subject to a policy loan, this may be treated as the receipt of money on the exchange. We recommend that any person contemplating such actions seek the advice of an income tax advisor. OTHER TAXES Federal estate tax, state and local estate, inheritance and other tax consequences of ownership or receipt of policy proceeds depend on the circumstances of each policy owner or beneficiary. We do not make any representations or guarantees regarding the tax consequences of any policy with respect to these types of taxes. WITHHOLDING We are required to withhold federal income taxes on the taxable portion of any amounts received under the policy unless you elect to not have any withholding or in certain other circumstances. You are not permitted to elect out of withholding if you do not provide a social security number or other taxpayer identification number. Special withholding rules apply to payments made to nonresident aliens. You are liable for payment of federal income taxes on the taxable portion of any amounts received under the policy. You may be subject to penalties if your withholding or estimated tax payments are insufficient. FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The financial statements of Phoenix Life Variable Universal Life Account (Flex Edge, Flex Edge Success(R), Joint Edge(R) and Individual Edge(R)) at December 31, 2004 and the results of its operations and the changes in its net assets for each of the periods indicated and the consolidated financial statements of Phoenix Life Insurance Company at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 are contained in the Statement of Additional Information (SAI), which you can get free of charge by calling the toll free number given on page one. The consolidated financial statements of Phoenix Life Insurance Company included herein should be considered only as bearing upon the ability of Phoenix Life Insurance Company to meet its obligations under the policies. You should not consider them as bearing on the investment performance of the assets held in the Separate Account or on Guaranteed Interest Account rates that we credit during a guarantee period. 27 APPENDIX A - INVESTMENT OPTIONS - -------------------------------------------------------------------------------- INVESTMENT TYPES - -------------------------------------------------------------------------------------------------------------------
Investment Type ------------------------------------------------------------------ Aggressive Growth & Subaccount Growth Conservative Growth Income Income Specialty - ------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series |X| - ------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund |X| - ------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund |X| - ------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund |X| - ------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Federated Fund for U.S. Government Securities II |X| - ------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II |X| - ------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund |X| - ------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund |X| - ------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund |X| - ------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund |X| - ------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund |X| - ------------------------------------------------------------------------------------------------------------------- Lazard Retirement Small Cap Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Bond-Debenture Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Growth and Income Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Mid-Cap Value Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Juno Fund |X| - ------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Nova Fund |X| - ------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund |X| - ------------------------------------------------------------------------------------------------------------------- Scudder VIT EAFE(R) Equity Index Fund |X| - ------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund |X| - ------------------------------------------------------------------------------------------------------------------- Technology Portfolio |X| - ------------------------------------------------------------------------------------------------------------------- Wanger International Select |X| - ------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap |X| - ------------------------------------------------------------------------------------------------------------------- Wanger Select |X| - ------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies |X| - -------------------------------------------------------------------------------------------------------------------
A-1 INVESTMENT ADVISORS - ----------------------------------------------------------------------------------------------------------------------------------
Advisors - ---------------------------------------------------------------------------------------------------------------------------------- Duff & Phoenix Phoenix Phelps Deutsche Federated Investment Variable Investment AIM Engemann Fred Alger Asset Investment Counsel, Advisors, Management Advisors, Asset Management, Management, Management Subaccounts Inc. Inc. Co. Inc. Management Inc. Inc. Company - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series |X| - ---------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio |X| - ---------------------------------------------------------------------------------------------------------------------------------- Federated Fund for U.S. Government Securities II |X| - ---------------------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II |X| - ---------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund - ---------------------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund - ---------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund - ---------------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund - ---------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund - ---------------------------------------------------------------------------------------------------------------------------------- Lazard Retirement Small Cap Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Bond-Debenture Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Growth and Income Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Mid-Cap Value Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Juno Fund - ---------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Nova Fund - ---------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund - ---------------------------------------------------------------------------------------------------------------------------------- Scudder VIT EAFE(R) Equity Index Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund |X| - ---------------------------------------------------------------------------------------------------------------------------------- Technology Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Wanger International Select - ---------------------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap - ---------------------------------------------------------------------------------------------------------------------------------- Wanger Select - ---------------------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies - ---------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- Advisors - ----------------------------------------------------------------------------------------------------------------------------- Fidelity Morgan Management Franklin Lazard Lord, Stanley Templeton Templeton and Mutual Asset Abbett Investment Rydex Asset Global Research Advisers, Management & Co. Management Global Management, Advisors Subaccounts Company LLC LLC LLC Inc. Advisors Ltd. Limited - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series - ----------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series - ----------------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund - ----------------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund - ----------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund - ----------------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio - ----------------------------------------------------------------------------------------------------------------------------- Federated Fund for U.S. Government Securities II - ----------------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II - ----------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund - ----------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund - ----------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Lazard Retirement Small Cap Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Bond-Debenture Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Growth and Income Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Mid-Cap Value Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Juno Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Nova Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund |X| - ----------------------------------------------------------------------------------------------------------------------------- Scudder VIT EAFE(R) Equity Index Fund - ----------------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund - ----------------------------------------------------------------------------------------------------------------------------- Technology Portfolio |X| - ----------------------------------------------------------------------------------------------------------------------------- Wanger International Select - ----------------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap - ----------------------------------------------------------------------------------------------------------------------------- Wanger Select - ----------------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies - ----------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------ Advisors - ------------------------------------------------------------------ Templeton Wanger Investment Asset Counsel, Management, Subaccounts LLC L.P. - ------------------------------------------------------------------ Phoenix-Aberdeen International Series - ------------------------------------------------------------------ Phoenix-AIM Growth Series - ------------------------------------------------------------------ Phoenix-Alger Small-Cap Growth Series - ------------------------------------------------------------------ Phoenix-Alliance/Bernstein Enhanced Index Series - ------------------------------------------------------------------ Phoenix-Duff & Phelps Real Estate Securities Series - ------------------------------------------------------------------ Phoenix-Engemann Capital Growth Series - ------------------------------------------------------------------ Phoenix-Engemann Growth and Income Series - ------------------------------------------------------------------ Phoenix-Engemann Small-Cap Growth Series - ------------------------------------------------------------------ Phoenix-Engemann Strategic Allocation Series - ------------------------------------------------------------------ Phoenix-Engemann Value Equity Series - ------------------------------------------------------------------ Phoenix-Goodwin Money Market Series - ------------------------------------------------------------------ Phoenix-Goodwin Multi-Sector Fixed Income Series - ------------------------------------------------------------------ Phoenix-Goodwin Multi-Sector Short Term Bond Series - ------------------------------------------------------------------ Phoenix-Kayne Rising Dividends Series - ------------------------------------------------------------------ Phoenix-Kayne Small-Cap Quality Value Series - ------------------------------------------------------------------ Phoenix-Lazard International Equity Select Series - ------------------------------------------------------------------ Phoenix-Northern Dow 30 Series - ------------------------------------------------------------------ Phoenix-Northern Nasdaq-100 Index(R) Series - ------------------------------------------------------------------ Phoenix-Sanford Bernstein Mid-Cap Value Series - ------------------------------------------------------------------ Phoenix-Sanford Bernstein Small-Cap Value Series - ------------------------------------------------------------------ Phoenix-Seneca Mid-Cap Growth Series - ------------------------------------------------------------------ Phoenix-Seneca Strategic Theme Series - ------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund - ------------------------------------------------------------------ AIM V.I. Mid Cap Core Equity Fund - ------------------------------------------------------------------ AIM V.I. Premier Equity Fund - ------------------------------------------------------------------ Alger American Leveraged AllCap Portfolio - ------------------------------------------------------------------ Federated Fund for U.S. Government Securities II - ------------------------------------------------------------------ Federated High Income Bond Fund II - ------------------------------------------------------------------ VIP Contrafund(R) Portfolio - ------------------------------------------------------------------ VIP Growth Opportunities Portfolio - ------------------------------------------------------------------ VIP Growth Portfolio - ------------------------------------------------------------------ Mutual Shares Securities Fund - ------------------------------------------------------------------ Templeton Developing Markets Securities Fund - ------------------------------------------------------------------ Templeton Foreign Securities Fund |X| - ------------------------------------------------------------------ Templeton Global Asset Allocation Fund |X| - ------------------------------------------------------------------ Templeton Growth Securities Fund - ------------------------------------------------------------------ Lazard Retirement Small Cap Portfolio - ------------------------------------------------------------------ Bond-Debenture Portfolio - ------------------------------------------------------------------ Growth and Income Portfolio - ------------------------------------------------------------------ Mid-Cap Value Portfolio - ------------------------------------------------------------------ Rydex Variable Trust Juno Fund - ------------------------------------------------------------------ Rydex Variable Trust Nova Fund - ------------------------------------------------------------------ Rydex Variable Trust Sector Rotation Fund - ------------------------------------------------------------------ Scudder VIT EAFE(R) Equity Index Fund - ------------------------------------------------------------------ Scudder VIT Equity 500 Index Fund - ------------------------------------------------------------------ Technology Portfolio - ------------------------------------------------------------------ Wanger International Select |X| - ------------------------------------------------------------------ Wanger International Small Cap |X| - ------------------------------------------------------------------ Wanger Select |X| - ------------------------------------------------------------------ Wanger U.S. Smaller Companies |X| - ------------------------------------------------------------------
A-2 INVESTMENT SUBADVISORS - ------------------------------------------------------------------------------------------------------------------------------------
Subadvisors -------------------------------------------------------------------------------------- Kayne Anderson Aberdeen AIM Alliance Rudnick Lazard Asset Capital Capital Engemann Fred Alger Investment Asset Management Management, Management, Asset Management, Management, Management Subaccounts Inc. Inc. L.P. Management Inc. LLC LLC - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Aberdeen International Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-AIM Growth Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Alger Small-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Alliance/Bernstein Enhanced Index Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Capital Growth Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Growth and Income Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Small-Cap Growth Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Strategic Allocation Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Engemann Value Equity Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Kayne Rising Dividends Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Kayne Small-Cap Quality Value Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Lazard International Equity Select Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Northern Dow 30 Series - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Northern Nasdaq-100 Index(R) Series - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Sanford Bernstein Mid-Cap Value Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Sanford Bernstein Small-Cap Value Series |X| - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Seneca Mid-Cap Growth Series - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix-Seneca Strategic Theme Series - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------- Subadvisors --------------------------- Northern Seneca Trust Capital Investments, Management, Subaccounts N.A. LLC - ------------------------------------------------------------------------- Phoenix-Aberdeen International Series - ------------------------------------------------------------------------- Phoenix-AIM Growth Series - ------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series - ------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series - ------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series - ------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series - ------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series - ------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series - ------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series - ------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series - ------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series - ------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series - ------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series |X| - ------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series |X| - ------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series - ------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series - ------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series |X| - ------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series |X| - -------------------------------------------------------------------------
A-3 PHOENIX LIFE INSURANCE COMPANY P.O. Box 22012 Albany, NY 12201-2012 Additional information about the Individual Edge(R) (the "Policy") and the Phoenix Life Variable Universal Life Account (the "Separate Account") is contained in the Policy's Statement of Additional Information ("SAI") dated May 1, 2005 which has been filed with the Securities and Exchange Commission ("SEC") and is incorporated by reference into this prospectus. The SAI, personalized illustrations of death benefits, cash surrender values and cash values are available, without charge, upon request. Inquiries and requests for the SAI and other requests should be directed in writing to Phoenix Variable Products Mail Operations, PO Box 8027, Boston, Massachusetts 02266-8027, or by telephone (800) 541-0171. Information about the Separate Account, including the SAI, can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room by calling the SEC at (202) 942-8090. Reports and other information about the Separate Account are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov. Copies of the information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC Public Reference Section, 450 Fifth Street, NW, Washington, D.C. 20549-0102. Phoenix Life Insurance Company A member of The Phoenix Companies, Inc. PhoenixWealthManagement.com V603 (PIE) Investment Company Act File No. 811-04721 [logo] add value to wealth(SM) L0252PR (C)2005 The Phoenix Companies, Inc. 5-05 PART B ================================================================================ FLEX EDGE FLEX EDGE SUCCESS(R)/JOINT EDGE(R) INDIVIDUAL EDGE(R) ================================================================================ THE PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT ISSUED BY: PHOENIX LIFE INSURANCE COMPANY STATEMENT OF ADDITIONAL INFORMATION MAY 1, 2005 -------------------- FLEXIBLE PREMIUM FIXED AND VARIABLE UNIVERSAL LIFE INSURANCE POLICIES This Statement of Additional Information ("SAI") is not a prospectus and should be read in conjunction with the prospectuses dated May 1, 2005. You may obtain a copy of each prospectus without charge by contacting Phoenix Life Insurance Company ("Phoenix") at the address or telephone number below. Defined terms used in the current prospectuses are incorporated in this SAI. -------------------- TABLE OF CONTENTS PAGE Phoenix Life Insurance Company............................................ 2 The Separate Account...................................................... 2 The Policy................................................................ 3 Servicing Agent........................................................... 3 Underwriter and Sales of the Policies..................................... 3 Performance History....................................................... 3 Additional Information.................................................... 6 Voting Rights............................................................. 7 Safekeeping of the Separate Account's Assets.............................. 7 State Regulation.......................................................... 7 Reports................................................................... 7 Experts .................................................................. 7 Separate Account Financial Statements..................................... SA-1 Company Financial Statements.............................................. F-1 -------------------- IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT US AT: [envelope] PHOENIX VARIABLE PRODUCTS MAIL OPERATIONS ("VPMO") PO Box 8027 Boston, Massachusetts 02266-8027 [telephone] VARIABLE AND UNIVERSAL LIFE ADMINISTRATION ("VULA") Tel. (800) 541-0171
1 PHOENIX LIFE INSURANCE COMPANY - -------------------------------------------------------------------------------- On June 25, 2001, Phoenix Home Life Mutual Insurance Company (a New York mutual life insurance company, originally chartered in Connecticut in 1851 and redomiciled to New York in 1992) converted to a stock life insurance company by "demutualizing" pursuant to a plan of reorganization approved by the New York Superintendent of Insurance and changed its name to Phoenix Life Insurance Company ("Phoenix"). As part of the demutualization, Phoenix became a wholly owned subsidiary of The Phoenix Companies, Inc., a newly-formed, publicly-traded Delaware corporation. Our executive and administrative office is at One American Row, Hartford, Connecticut, 06102. Our New York principal office is at 10 Krey Boulevard, East Greenbush, New York 12144. We sell life insurance policies and annuity contracts through producers of affiliated distribution companies and through brokers. SURPLUS Policies issued on or after the date of Phoenix's demutualization, June 25, 2001, will not be eligible to share in Phoenix's profits or surplus earnings. The demutualization will not change any eligibility, described in the next paragraph, of a policy owned prior to the date of demutualization. You may share in divisible surplus of Phoenix to the extent decided annually by the Phoenix Board of Directors. However, it is not currently expected that the Board will authorize these payments since you will be participating directly in the subaccount's investment results. THE SEPARATE ACCOUNT - -------------------------------------------------------------------------------- Phoenix established the Phoenix Life Variable Universal Life Account ("Separate Account") as a separate account under New York insurance law on June 17, 1985. The Separate Account is registered with the SEC as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act") under which it meets the definition of a "separate account." All income, gains or losses of the Separate Account will be credited to or charged against amounts placed in the Separate Account without regard to the other income, gains and losses of Phoenix. The assets of the Separate Account may not be charged with liabilities arising out of any other business we may conduct. Obligations under the Policies are obligations of Phoenix. The Separate Account is divided into subaccounts, each of which is available for allocation of policy value. Each subaccount will invest solely in a single investment portfolio of a fund. Each portfolio has its own specified investment objective. The policy value allocated to the Separate Account depends on the investment performance of the underlying funds. The policy owner bears the full investment risk for all monies invested in the Separate Account. REINVESTMENT AND REDEMPTION All dividend distributions of the fund are automatically reinvested in shares of the fund at their net asset value on the date of distribution; all capital gains distributions of the fund, if any, are likewise reinvested at the net asset value on the record date. Phoenix redeems fund shares at their net asset value to the extent necessary to make payments under the policy. SUBSTITUTION OF INVESTMENTS We reserve the right to make additions to, deletions from, or substitutions for the investments held by the Separate Account, subject to compliance with the law as currently applicable or as subsequently changed. If the shares of any of the portfolios of a fund should no longer be available for investment, or if in our judgment, further investment in shares of any of the portfolios becomes inappropriate in view of the objectives of the policy, then we may substitute shares of another fund for shares already purchased, or to be purchased in the future. No substitution of fund shares held by the Separate Account may take place without prior approval of the SEC and prior notice to you. In the event of a substitution, you will be given the option of transferring the policy value from the affected subaccount to another subaccount without penalty. DETERMINATION OF SUBACCOUNT VALUES We establish the unit value of each subaccount of the Separate Account on the first valuation date of that subaccount. The unit value of a subaccount on any other valuation date is determined by multiplying the unit value of that subaccount on the just prior valuation date by the net investment factor for that subaccount for the then current valuation period. The unit value of each subaccount on a day other than a valuation date is the unit value on the next valuation date. Unit values are carried to six decimal places. The unit value of each subaccount on a valuation date is determined at the end of that day. The net investment factor for each subaccount is determined by the investment performance of the assets held by the subaccount during the valuation period. Each valuation will follow applicable law and accepted procedures. The net investment factor is determined by the formula: (A) + (B) ----------- - (D) where: (C) (A)= the value of the assets in the subaccount on the current valuation date, including accrued net investment income and realized and unrealized capital gains and losses, but excluding the net value of any transactions during the current valuation period; (B)= the amount of any dividend (or, if applicable, any capital gain distribution) received by the subaccount if the "ex-dividend" date for shares of the fund occurs during the current valuation period; (C)= the value of the assets in the subaccount as of the just prior valuation date, including accrued net investment income and realized and unrealized capital gains and losses, and including the net value amount of any deposits and withdrawals made during the valuation period ending on that date; 2 (D)= the sum of the following daily charges multiplied by the number of days in the current valuation period: 1. the mortality and expense risk charge; and 2. the charge, if any, for taxes and reserves for taxes on investment income, and realized and unrealized capital gains. THE POLICY - -------------------------------------------------------------------------------- The number of units credited to a subaccount of the Separate Account will be determined by dividing the portion of the net premium applied to that subaccount by the unit value of the subaccount on the payment date. You may increase or decrease the planned premium amount (within limits) or payment frequency at any time by writing to VPMO. We reserve the right to limit increases to such maximums as may be established from time to time. Additional premium payments may be made at any time. Each premium payment must at least equal $25 or, if made during a grace period, the payment must equal the amount needed to prevent lapse of the policy. THE CONTRACT The policy and attached copy of the application are the entire contract. Only statements in the application can be used to void the policy. The statements are considered representations and not warranties. Only an executive officer of Phoenix can agree to change or waive any provisions of the policy. SUICIDE If the insured (or either of the insureds with respect to survivorship policies) commits suicide within two years after the policy's date of issue, the policy will stop and become void. We will pay you the policy value adjusted by the addition of any monthly deductions and other fees and charges, minus any debt owed to us under the policy. INCONTESTABILITY We cannot contest this policy or any attached rider after it has been in force during the insured's (or either of the insureds with respect to survivorship policies) lifetime or for two years from the policy date. MISSTATEMENT OF AGE OR SEX If the age or sex of the insured (or either of the insureds with respect to survivorship policies) has been misstated, the death benefit will be adjusted based on what the cost of insurance charge for the most recent monthly deduction would have purchased based on the correct age and sex. SERVICING AGENT - -------------------------------------------------------------------------------- The Phoenix Edge Series Fund reimburses Phoenix Life Insurance Company for various shareholder services provided by the Variable Product Operations area. The Phoenix Edge Series Fund is an open-ended management investment company with many separate series. Shares of the fund are not directly offered to the public, but through policies issued by PHL Variable, Phoenix and Phoenix Life and Annuity Company. The functions performed include investor inquiry support, shareholder trading, confirmation of investment activity, quarterly statement processing and Web/Interactive Voice Response trading. The rate of reimbursement for 2005 is 0.073% of the fund's average daily net assets. The total administrative service fees paid by the fund for the last three fiscal years follows: - ---------------------------------------------------------- YEAR ENDED DECEMBER 31, FEE PAID - ------------------------------- -------------------------- 2002 N/A - ------------------------------- -------------------------- 2003 $1.7 Million - ------------------------------- -------------------------- 2004 $2.2 Million - ---------------------------------------------------------- UNDERWRITER AND SALES OF THE POLICIES - -------------------------------------------------------------------------------- Phoenix Equity Planning Corporation ("PEPCO") is the principal underwriter and national distributor for the policies pursuant to an underwriting agreement dated November 1, 2000. Its principal business address is One American Row, Hartford, CT 06102. PEPCO is a directly wholly owned subsidiary of Phoenix Investment Partners, Inc. ("PXP"). PXP is an indirectly owned subsidiary of PNX. PEPCO is an affiliated subsidiary of both the Separate Account and Phoenix. PEPCO, an affiliate of Phoenix, offers these policies on a continuous basis. PEPCO is not compensated for any underwriting commissions. Phoenix directly bears all underwriting commission costs. The basis of the mortality rates guaranteed in the policy is the 1980 Commissioners' Standard Ordinary Mortality Table, adjusted for risk classifications. Policies may be purchased from broker-dealers registered under the 1934 Act whose representatives are authorized by applicable law to sell policies under terms of agreements provided by PEPCO. Sales commissions will be paid to registered representatives on purchase payments we receive under these policies. Phoenix will pay a maximum total sales commission of 50% of premiums. To the extent that the sales charge under the policies is less than the sales commissions paid with respect to the policies, we will pay the shortfall from our General Account assets, which will include any profits we may derive under the policies. To the extent permitted by NASD rules, overrides and promotional incentives or payments also may be provided to broker-dealers based on sales volumes, the assumption of wholesaling functions, or other sales-related criteria. Additional payments may be made for other services not directly related to the sale of the policies, including the recruitment and training of personnel, production of promotional literature and similar services. PERFORMANCE HISTORY - -------------------------------------------------------------------------------- These rates of return shown are not an estimate nor a guarantee of future performance. The performance history shown is solely for the underlying investment portfolios. They do not illustrate how actual performance will affect the benefits under your policy because they do not account for any of the charges and 3 deductions that apply to your policy value. (see "Charges and Deductions"). Yield of the Phoenix-Goodwin Money Market Series. We calculate the yield of the Phoenix-Goodwin Money Market Series for a 7-day "base period" by determining the "net change in value" of a hypothetical pre-existing account. We assume the hypothetical account had an initial balance of one share of the series at the beginning of the base period. We then determine what the value of the hypothetical account would have been at the end of the 7-day base period. We assume no policy charges were deducted from the hypothetical account. The end value minus the initial value gives us the net change in value for the hypothetical account. The net change in value can then be divided by the initial value giving us the base period return (one week's return). To find the equivalent annual return we multiply the base period return by 365/7. The equivalent effective annual yield differs from the annual return because we assume all returns are reinvested in the subaccount. We carry results to the nearest hundredth of one percent. Example Calculation: The following example of a return/yield calculation for the Phoenix-Goodwin Money Market Series is based on the 7-day period ending December 31, 2004: Value of hypothetical pre-existing account with exactly one unit at the beginning of the period:..................... $1.000000 Value of the same account (excluding capital changes) at the end of the 7-day period:................................. 1.000288 Calculation: Ending account value..................................... 1.000288 Less beginning account value............................. 1.000000 Net change in account value.............................. 0.000288 Base period return: (adjusted change/beginning account value)................ 0.000288 Current annual yield = return x (365/7) =................... 1.50% Effective annual yield = [(1 + return)(365/7)] - 1 =........ 1.51% The current yield and effective yield information will fluctuate. Yield and return information may not provide a suitable basis for comparison with bank deposits or other investments which are insured and/or pay a fixed yield for a stated period of time, or other investment companies, due to charges which will be deducted on the Separate Account level. Total Return. We will usually advertise the average annual total return for a subaccount calculated for one year, three years, five years, ten years and since the inception date of the underlying portfolio. We assume the reinvestment of all distributions at net asset value but do not account for the deduction of any of the daily or monthly charges made under the policy. Performance is the compounded return for the time period indicated, net of all fund level fees. Returns for the periods greater than one year are annualized. Performance does not include the effects of product charges, including any or all of the following: issue, sales and tax charges; mortality and expense risk fees; cost of insurance charges; administrative and transfer fees; and surrender charges. If these charges were reflected in these returns, performance would be significantly lower than shown. Please obtain a personalized illustration by contacting your registered representative. The illustration will show all applicable product charges deducted, including the cost of insurance. Since subaccount performance fluctuates, the policy value, when redeemed, may be worth more or less than the original cost. Withdrawals will affect the policy value and death benefit. You may obtain a copy of the most up-to-date performance numbers from your registered representative. 4 - ---------------------------------------------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED DECEMBER 31, 2004 - ----------------------------------------------------------------------------------------------------------------------
Series Inception Date 1 Year 5 Years 10 Years Since Inception - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International Series 5/1/1990 20.78% -2.80% 7.68% 7.22% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth Series 12/15/1999 4.21% -9.53% -8.39% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series 8/12/2002 2.12% 21.09% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series 7/14/1997 9.84% -3.77% 4.27% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities Series 5/1/1995 34.69% 23.82% 17.08% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series 12/31/1982 4.97% -11.69% 4.92% 11.79% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series 3/2/1998 10.48% -1.32% 4.13% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series 8/15/2000 9.69% -7.50% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series 9/17/1984 7.46% 3.14% 9.34% 10.88% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series 3/2/1998 12.92% 3.44% 7.42% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market Series 10/8/1982 0.79% 2.53% 3.84% 5.40% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income Series 12/31/1982 6.84% 8.75% 9.02% 9.51% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond Series 6/2/2003 5.33% 5.26% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series 8/12/2002 5.26% 8.32% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series 8/12/2002 25.68% 19.38% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series 8/12/2002 15.86% 16.51% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series 12/15/1999 4.67% 0.01% 0.50% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series 8/15/2000 10.04% -17.41% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series 3/2/1998 20.41% 17.42% 8.75% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Small-Cap Value Series 11/20/2000 22.67% 18.19% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series 3/2/1998 6.72% -4.63% 5.03% - ---------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series 1/29/1996 5.44% -9.56% 6.50% - ---------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund 5/5/1993 6.63% -6.51% 8.36% 9.00% - ---------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund 9/10/2001 13.82% 10.30% - ---------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund 5/5/1993 5.77% -7.19% 8.67% 9.03% - ---------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio 1/25/1995 8.19% -9.45% 14.96% - ---------------------------------------------------------------------------------------------------------------------- Federated Fund For U.S. Government Securities II 3/28/1994 3.61% 6.56% 6.11% 5.91% - ---------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II 3/1/1994 10.46% 4.77% 7.59% 6.61% - ---------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio 11/3/1997 15.34% 1.85% 8.24% - ---------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio 11/3/1997 7.06% -5.14% 0.52% - ---------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio 11/3/1997 3.26% -6.88% 4.24% - ---------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund 11/8/1996 12.63% 8.55% 9.37% - ---------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund 9/27/1996 24.71% 3.54% 0.36% - ---------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund 5/11/1992 18.53% 0.92% 8.61% 9.27% - ---------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund 11/28/1988 15.72% 5.64% 11.08% 10.48% - ---------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund 3/15/1994 16.03% 4.59% 9.74% 9.27% - ---------------------------------------------------------------------------------------------------------------------- Lazard Retirement Small Cap Portfolio 11/4/1997 14.89% 13.26% 9.12% - ---------------------------------------------------------------------------------------------------------------------- Bond-Debenture Portfolio 11/30/2001 7.89% 10.98% - ---------------------------------------------------------------------------------------------------------------------- Growth and Income Portfolio 12/11/1989 12.65% 5.49% 12.77% 12.54% - ---------------------------------------------------------------------------------------------------------------------- Mid-Cap Value Portfolio 9/15/1999 24.04% 18.12% 16.72% - ---------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Juno Fund 5/1/2003 -10.67% -6.93% - ---------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Nova Fund 5/7/1997 14.62% -8.98% 2.66% - ---------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund 5/1/2002 10.71% 4.19% - ---------------------------------------------------------------------------------------------------------------------- Scudder VIT EAFE(R) Equity Index Fund 8/22/19997 19.07% -4.81% 1.71% - ---------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund 10/1/1997 10.59% -2.58% 4.60% - ---------------------------------------------------------------------------------------------------------------------- Technology Portfolio 11/30/1999 -1.64% -21.93% -18.23% - ---------------------------------------------------------------------------------------------------------------------- Wanger International Select 2/1/1999 24.34% 1.45% 12.20% - ---------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap 5/1/1995 30.27% -1.04% 16.49% - ---------------------------------------------------------------------------------------------------------------------- Wanger Select 2/1/1999 19.31% 11.46% 15.21% - ---------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies 5/1/1995 18.33% 7.60% 16.37% - ----------------------------------------------------------------------------------------------------------------------
5 We may include information about a series' or an advisor's investment strategies and management style in advertisements, sales literature and other communications. An advisor may alter investment strategies and style in response to changing market and economic conditions. A fund may advertise all or part of a series' portfolio holdings, including holdings in specific industries. A fund may also separately illustrate the income and capital gains portions of a series' total return. A fund may also advertise performance by dividing returns into equity and debt components. A series may compare its returns to any of a number of well-known benchmarks of market performance; including, but not limited to: The Dow Jones Industrial Average(SM) (DJIA) First Boston High Yield Index Salomon Brothers Corporate Index Salomon Brothers Government Bond Index Standard & Poor's 500 Index(R) (S&P 500) Each subaccount may include its yield and total return in advertisements or communications with current or prospective contract owners. Each subaccount may also include in such advertisements, its ranking or comparison to similar mutual funds by such organizations as: Lipper Analytical Services Morningstar, Inc. Thomson Financial A fund may also compare a series' performance to other investment or savings vehicles (such as certificates of deposit) and may refer to results published in such publications as: Barron's Business Week Changing Times Forbes Fortune Consumer Reports Investor's Business Daily Financial Planning Financial Services Weekly Money The New York Times Personal Investor Registered Representative U.S. News and World Report The Wall Street Journal The DJIA is an unweighted index of 30 industrial "blue chip" U.S. stocks. It is the oldest continuing U.S. market index. The 30 stocks now in the DJIA are both widely-held and a major influence in their respective industries. The average is computed in such a way as to preserve its historical continuity and account for such factors as stock splits and periodic changes in the components of the index. The editors of The Wall Street Journal select the component stocks of the DJIA. The S&P 500 is a market-value weighted index composed of 500 stocks chosen for market size, liquidity, and industry group representation. It is one of the most widely used indicators of U.S. stock market performance. The composition of the S&P 500 changes from time to time. Standard & Poor's Index Committee makes all decisions about the S&P 500. Weighted and unweighted indexes: A market-value, or capitalization, weighted index uses relative market value (share price multiplied by the number of shares outstanding) to "weight" the influence of a stock's price on the index. Simply put, larger companies' stock prices influence the index more than smaller companies' stock prices. An unweighted index (such as the DJIA) uses stock price alone to determine the index value. A company's relative size has no bearing on its impact on the index. The funds' annual reports, available upon request and without charge, contain a discussion of the performance of the funds and a comparison of that performance to a securities market index. You may obtain an Annual Report by contacting your registered representative or VULA at the address and telephone number on the first page of the prospectus. ADDITIONAL INFORMATION - -------------------------------------------------------------------------------- REDUCTION IN CHARGES Each policy is available for purchase by individuals and groups. We may reduce or eliminate the mortality and expense risk charge, monthly administrative charge, monthly cost of insurance charges, surrender charges or other charges normally assessed where we expect that the size or nature of such policy or policies will result in savings of sales, underwriting, administrative or other costs. Eligibility for the amount of these reductions will be determined by a number of factors including: [diamond] the number of insureds, [diamond] total premiums expected to be paid, [diamond] total assets under management for the policyowner, [diamond] the nature of the relationship among individual insureds, [diamond] the purpose for which the policies are being purchased, [diamond] where there is a preexisting relationship with us, such as being an employee of Phoenix or its affiliates and their spouses; or employees or agents who retire from Phoenix or its affiliates or Phoenix Equity Planning Corporation ("PEPCO"), or its affiliates or registered representatives of the principal underwriter and registered representatives of broker-dealers with whom PEPCO has selling agreements, [diamond] internal transfers from other policies or contracts issued by the Company or an affiliate, or making transfers of amounts held under qualified plans sponsored by the Company or an affiliate, and [diamond] other circumstances which in our opinion are rationally related to the expected reduction in expenses. Any variations in the charge structure will be determined in a uniform manner, reflecting differences in costs of services and not unfairly discriminatory to policyholders. 6 VOTING RIGHTS - -------------------------------------------------------------------------------- We will vote the series' shares held by the subaccounts at any regular and special meetings of shareholders of the funds. To the extent required by law, such voting will be pursuant to instructions received from you. However, if the 1940 Act or any regulation thereunder should be amended or if the present interpretation thereof should change, and as a result, we decide that we are permitted to vote the series' shares at our own discretion, we may elect to do so. The number of votes that you have the right to cast will be determined by applying your percentage interest in a subaccount to the total number of votes attributable to the subaccount. In determining the number of votes, fractional shares will be recognized. We will vote series shares held in a subaccount for which no timely instructions are received, and series shares which are not otherwise attributable to policy owners, in proportion to the voting instructions that are received with respect to all policies participating in that subaccount. Instructions to abstain on any item to be voted upon will be applied to reduce the votes eligible to be cast by Phoenix. You will receive proxy materials, reports and other materials related to the funds. We may, when required by state insurance regulatory authorities, disregard voting instructions if the instructions require that the shares be voted so as to cause a change in the subclassification or investment objective of one or more of the portfolios of the funds or to approve or disapprove an investment advisory contract for the funds. In addition, Phoenix itself may disregard voting instructions in favor of changes initiated by a policy owner in the investment policies or the investment advisor of the funds if Phoenix reasonably disapproves of such changes. A change would be disapproved only if the proposed change is contrary to state law or prohibited by state regulatory authorities or we decide that the change would have an adverse effect on the General Account because the proposed investment policy for a series may result in overly speculative or unsound investments. In the event Phoenix does disregard voting instructions, a summary of that action and the reasons for such action will be included in the next periodic report to policy owners. SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS - -------------------------------------------------------------------------------- We hold the assets of the Separate Account. The assets of the Separate Account are held separate and apart from our General Account. We maintain records of all purchases and redemptions of shares of the funds. STATE REGULATION - -------------------------------------------------------------------------------- We are subject to the provisions of the New York insurance laws applicable to life insurance companies and to regulation and supervision by the New York Superintendent of Insurance. We also are subject to the applicable insurance laws of all the other states and jurisdictions in which we do insurance business. State regulation of Phoenix includes certain limitations on the investments which we may make, including investments for the Separate Account and the Guaranteed Interest Account. This regulation does not include, however, any supervision over the investment policies of the Separate Account. REPORTS - -------------------------------------------------------------------------------- All policyowners will be furnished with those reports required by the 1940 Act and related regulations or by any other applicable law or regulation. EXPERTS - -------------------------------------------------------------------------------- The financial statements of Phoenix Life Variable Universal Life Account (Flex Edge, Flex Edge Success(R), Joint Edge(R), Individual Edge(R)) at December 31, 2004, and the results of its operations and the changes in its net assets for each of the periods indicated and the consolidated financial statements of Phoenix Life Insurance Company at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, included in this prospectus have been so included in reliance on the reports of PricewaterhouseCoopers LLP, 100 Pearl Street, Hartford, Connecticut, 06103, independent registered public accounting firm, given on the authority of said firm and as experts in auditing and accounting. Joseph P. DeCresce, Counsel, and Brian Giantonio, Vice President, Tax and ERISA Counsel, Phoenix Life Insurance Company, have provided opinion on certain matters relating to the federal securities and income tax laws, respectively, in connection with the contracts described in this prospectus. 7 A N N U A L R E P O R T Flex Edge Flex Edge Success(R) Joint Edge(R) Individual Edge(R) V a r i a b l e U n i v e r s a l L i f e P H O E N I X L I F E V A R I A B L E U N I V E R S A L L I F E A C C O U N T DECEMBER 31, 2004 [LOGO] PHOENIX(R) L0252AR (C) 2005 The Phoenix Companies, Inc. STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004
PHOENIX- PHOENIX- PHOENIX-ALGER ALLIANCE/ ABERDEEN PHOENIX-AIM SMALL-CAP BERNSTEIN INTERNATIONAL GROWTH GROWTH ENHANCED INDEX SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ ASSETS Investment at cost $ 59,144,437 $ 21,325,138 $ 1,594,820 $ 28,799,062 =================== ================== ================== ================== Investment at market $ 53,937,922 $ 15,951,709 $ 1,709,887 $ 24,680,847 ------------------- ------------------ ------------------ ------------------ Total assets 53,937,922 15,951,709 1,709,887 24,680,847 LIABILITIES Accrued expenses 35,293 10,659 1,170 16,546 ------------------- ------------------ ------------------ ------------------ NET ASSETS $ 53,902,629 $ 15,941,050 $ 1,708,717 $ 24,664,301 =================== ================== ================== ================== Accumulation units outstanding 21,901,133 26,260,036 1,102,620 18,956,499 =================== ================== ================== ================== Unit value $ 2.461180 $ 0.607046 $ 1.549689 $ 1.301100 =================== ================== ================== ================== PHOENIX- PHOENIX- PHOENIX-DUFF & PHOENIX- ENGEMANN ENGEMANN PHELPS REAL ENGEMANN GROWTH AND SMALL-CAP ESTATE SECURITIES CAPITAL GROWTH INCOME GROWTH SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ ASSETS Investment at cost $ 14,779,608 $ 231,906,750 $ 20,302,355 $ 3,797,313 =================== ================== ================== ================== Investment at market $ 22,796,572 $ 182,499,880 $ 20,823,844 $ 4,581,815 ------------------- ------------------ ------------------ ------------------ Total assets 22,796,572 182,499,880 20,823,844 4,581,815 LIABILITIES Accrued expenses 15,150 123,269 13,910 3,062 ------------------- ------------------ ------------------ ------------------ NET ASSETS $ 22,781,422 $ 182,376,611 $ 20,809,934 $ 4,578,753 =================== ================== ================== ================== Accumulation units outstanding 6,345,492 50,699,279 16,663,411 6,943,058 =================== ================== ================== ================== Unit value $ 3.590174 $ 3.597223 $ 1.248840 $ 0.659472 =================== ================== ================== ================== PHOENIX- PHOENIX- ENGEMANN PHOENIX- PHOENIX- GOODWIN MULTI- STRATEGIC ENGEMANN VALUE GOODWIN MONEY SECTOR FIXED ALLOCATION EQUITY MARKET INCOME SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ ASSETS Investment at cost $ 68,324,296 $ 25,692,447 $ 36,294,013 $ 41,102,619 =================== ================== ================== ================== Investment at market $ 69,947,024 $ 27,013,844 $ 36,294,013 $ 40,651,910 ------------------- ------------------ ------------------ ------------------ Total assets 69,947,024 27,013,844 36,294,013 40,651,910 LIABILITIES Accrued expenses 47,173 18,015 24,482 27,391 ------------------- ------------------ ------------------ ------------------ NET ASSETS $ 69,899,851 $ 26,995,829 $ 36,269,531 $ 40,624,519 =================== ================== ================== ================== Accumulation units outstanding 16,941,554 17,619,044 21,327,253 12,149,131 =================== ================== ================== ================== Unit value $ 4.125941 $ 1.532196 $ 1.700619 $ 3.343821 =================== ================== ================== ==================
See Notes to Financial Statements SA-1 STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (CONTINUED)
PHOENIX- GOODWIN MULTI- PHOENIX-KAYNE PHOENIX-LAZARD SECTOR SHORT PHOENIX-KAYNE SMALL-CAP INTERNATIONAL TERM BOND RISING DIVIDENDS QUALITY VALUE EQUITY SELECT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ ASSETS Investment at cost $ 1,807,982 $ 1,456,122 $ 1,144,443 $ 3,340,074 =================== ================== ================== ================== Investment at market $ 1,832,088 $ 1,606,046 $ 1,414,046 $ 4,096,504 ------------------- ------------------ ------------------ ------------------ Total assets 1,832,088 1,606,046 1,414,046 4,096,504 LIABILITIES Accrued expenses 1,227 1,068 888 2,648 ------------------- ------------------ ------------------ ------------------ NET ASSETS $ 1,830,861 $ 1,604,978 $ 1,413,158 $ 4,093,856 =================== ================== ================== ================== Accumulation units outstanding 1,709,703 1,351,751 943,384 2,896,992 =================== ================== ================== ================== Unit value $ 1.070865 $ 1.187332 $ 1.497966 $ 1.413140 =================== ================== ================== ================== PHOENIX-LAZARD PHOENIX-LORD PHOENIX-LORD PHOENIX-LORD SMALL-CAP VALUE ABBETT BOND- ABBETT LARGE- ABBETT MID-CAP SELECT DEBENTURE CAP VALUE VALUE SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ ASSETS Investment at cost $ 520,737 $ 1,244,203 $ 6,063,469 $ 2,503,345 =================== ================== ================== ================== Investment at market $ 603,285 $ 1,308,497 $ 7,081,485 $ 3,104,698 ------------------- ------------------ ------------------ ------------------ Total assets 603,285 1,308,497 7,081,485 3,104,698 LIABILITIES Accrued expenses 398 870 4,439 1,991 ------------------- ------------------ ------------------ ------------------ NET ASSETS $ 602,887 $ 1,307,627 $ 7,077,046 $ 3,102,707 =================== ================== ================== ================== Accumulation units outstanding 395,091 981,506 4,954,651 2,044,458 =================== ================== ================== ================== Unit value $ 1.525944 $ 1.332266 $ 1.428364 $ 1.517619 =================== ================== ================== ================== PHOENIX- NORTHERN PHOENIX-SANFORD PHOENIX-SANFORD PHOENIX- NASDAQ-100 BERNSTEIN MID- BERNSTEIN SMALL- NORTHERN DOW 30 INDEX(R) CAP VALUE CAP VALUE SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ ASSETS Investment at cost $ 5,251,096 $ 4,952,159 $ 17,228,551 $ 10,069,198 =================== ================== ================== ================== Investment at market $ 5,762,986 $ 4,905,434 $ 22,424,250 $ 13,064,569 ------------------- ------------------ ------------------ ------------------ Total assets 5,762,986 4,905,434 22,424,250 13,064,569 LIABILITIES Accrued expenses 3,852 3,322 14,930 8,558 ------------------- ------------------ ------------------ ------------------ NET ASSETS $ 5,759,134 $ 4,902,112 $ 22,409,320 $ 13,056,011 =================== ================== ================== ================== Accumulation units outstanding 5,945,255 12,062,446 13,337,682 6,655,013 =================== ================== ================== ================== Unit value $ 0.968694 $ 0.406395 $ 1.680151 $ 1.961831 =================== ================== ================== ==================
See Notes to Financial Statements SA-2 STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (CONTINUED)
PHOENIX-SENECA PHOENIX-SENECA AIM V.I. CAPITAL AIM V.I. MID-CAP MID-CAP GROWTH STRATEGIC THEME APPRECIATION CORE EQUITY SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ ASSETS Investment at cost $ 17,962,234 $ 32,158,354 $ 2,792,913 $ 2,602,847 =================== ================== ================== ================== Investment at market $ 14,550,072 $ 19,552,923 $ 3,221,018 $ 2,539,058 ------------------- ------------------ ------------------ ------------------ Total assets 14,550,072 19,552,923 3,221,018 2,539,058 LIABILITIES Accrued expenses 9,747 13,176 2,114 1,497 ------------------- ------------------ ------------------ ------------------ NET ASSETS $ 14,540,325 $ 19,539,747 $ 3,218,904 $ 2,537,561 =================== ================== ================== ================== Accumulation units outstanding 11,217,778 13,096,327 3,599,005 2,495,504 =================== ================== ================== ================== Unit value $ 1.296186 $ 1.492002 $ 0.894387 $ 1.016853 =================== ================== ================== ================== FEDERATED FUND FEDERATED HIGH ALGER AMERICAN FOR U.S. INCOME BOND AIM V.I. PREMIER LEVERAGED GOVERNMENT FUND II -- EQUITY ALLCAP SECURITIES II PRIMARY SHARES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ ASSETS Investment at cost $ 2,003,920 $ 7,646,725 $ 15,475,486 $ 6,691,115 =================== ================== ================== ================== Investment at market $ 2,003,905 $ 8,767,524 $ 15,699,974 $ 7,109,248 ------------------- ------------------ ------------------ ------------------ Total assets 2,003,905 8,767,524 15,699,974 7,109,248 LIABILITIES Accrued expenses 1,323 5,869 10,541 4,544 ------------------- ------------------ ------------------ ------------------ NET ASSETS $ 2,002,582 $ 8,761,655 $ 15,689,433 $ 7,104,704 =================== ================== ================== ================== Accumulation units outstanding 2,274,721 14,629,848 11,756,250 5,877,310 =================== ================== ================== ================== Unit value $ 0.880364 $ 0.598889 $ 1.334561 $ 1.208836 =================== ================== ================== ================== VIP GROWTH MUTUAL SHARES VIP CONTRAFUND(R) OPPORTUNITIES VIP GROWTH SECURITIES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ ASSETS Investment at cost $ 13,208,298 $ 1,421,553 $ 10,337,019 $ 7,391,417 =================== ================== ================== ================== Investment at market $ 16,589,586 $ 1,710,905 $ 11,406,709 $ 8,872,210 ------------------- ------------------ ------------------ ------------------ Total assets 16,589,586 1,710,905 11,406,709 8,872,210 LIABILITIES Accrued expenses 10,981 1,129 7,614 5,849 ------------------- ------------------ ------------------ ------------------ NET ASSETS $ 16,578,605 $ 1,709,776 $ 11,399,095 $ 8,866,361 =================== ================== ================== ================== Accumulation units outstanding 15,575,365 2,230,387 17,452,278 5,715,635 =================== ================== ================== ================== Unit value $ 1.064412 $ 0.766583 $ 0.653158 $ 1.551247 =================== ================== ================== ==================
See Notes to Financial Statements SA-3 STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (CONTINUED)
TEMPLETON DEVELOPING TEMPLETON TEMPLETON TEMPLETON MARKETS FOREIGN GLOBAL ASSET GROWTH SECURITIES SECURITIES ALLOCATION SECURITIES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ ASSETS Investment at cost $ 980,872 $ 9,992,590 $ 460,269 $ 7,549,483 =================== ================== ================== ================== Investment at market $ 1,228,177 $ 10,876,717 $ 443,567 $ 9,042,467 ------------------- ------------------ ------------------ ------------------ Total assets 1,228,177 10,876,717 443,567 9,042,467 LIABILITIES Accrued expenses 806 7,176 287 5,981 ------------------- ------------------ ------------------ ------------------ NET ASSETS $ 1,227,371 $ 10,869,541 $ 443,280 $ 9,036,486 =================== ================== ================== ================== Accumulation units outstanding 666,870 8,501,812 286,021 5,597,604 =================== ================== ================== ================== Unit value $ 1.840495 $ 1.278497 $ 1.549819 $ 1.614349 =================== ================== ================== ================== RYDEX VARIABLE SCUDDER VIT RYDEX VARIABLE RYDEX VARIABLE TRUST SECTOR EAFE(R) EQUITY TRUST JUNO TRUST NOVA ROTATION INDEX SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ ASSETS Investment at cost $ 234,488 $ 317,776 $ 347,890 $ 4,451,609 =================== ================== ================== ================== Investment at market $ 207,119 $ 395,059 $ 389,391 $ 4,260,407 ------------------- ------------------ ------------------ ------------------ Total assets 207,119 395,059 389,391 4,260,407 LIABILITIES Accrued expenses 142 255 247 2,784 ------------------- ------------------ ------------------ ------------------ NET ASSETS $ 206,977 $ 394,804 $ 389,144 $ 4,257,623 =================== ================== ================== ================== Accumulation units outstanding 221,505 284,970 306,533 4,795,685 =================== ================== ================== ================== Unit value $ 0.934409 $ 1.385420 $ 1.269504 $ 0.887803 =================== ================== ================== ================== WANGER WANGER SCUDDER VIT INTERNATIONAL INTERNATIONAL EQUITY 500 INDEX TECHNOLOGY SELECT SMALL CAP SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ ASSETS Investment at cost $ 6,676,696 $ 14,314,258 $ 4,652,287 $ 32,211,713 =================== ================== ================== ================== Investment at market $ 8,229,686 $ 5,556,937 $ 5,359,421 $ 36,238,456 ------------------- ------------------ ------------------ ------------------ Total assets 8,229,686 5,556,937 5,359,421 36,238,456 LIABILITIES Accrued expenses 5,492 3,722 3,500 23,682 ------------------- ------------------ ------------------ ------------------ NET ASSETS $ 8,224,194 $ 5,553,215 $ 5,355,921 $ 36,214,774 =================== ================== ================== ================== Accumulation units outstanding 7,186,838 18,561,391 2,732,875 15,254,601 =================== ================== ================== ================== Unit value $ 1.144341 $ 0.299181 $ 1.959812 $ 2.374023 =================== ================== ================== ==================
See Notes to Financial Statements SA-4 STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (CONTINUED)
WANGER U.S. SMALLER WANGER SELECT COMPANIES SUBACCOUNT SUBACCOUNT ------------------- ------------------ ASSETS Investment at cost $ 4,526,383 $ 42,461,831 =================== ================== Investment at market $ 6,664,057 $ 64,746,594 ------------------- ------------------ Total assets 6,664,057 64,746,594 LIABILITIES Accrued expenses 4,387 42,979 ------------------- ------------------ NET ASSETS $ 6,659,670 $ 64,703,615 =================== ================== Accumulation units outstanding 2,912,296 26,179,632 =================== ================== Unit value $ 2.286742 $ 2.471525 =================== ==================
See Notes to Financial Statements SA-5 STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 2004
PHOENIX- PHOENIX- PHOENIX-ALGER ALLIANCE/ ABERDEEN PHOENIX-AIM SMALL-CAP BERNSTEIN INTERNATIONAL GROWTH GROWTH ENHANCED INDEX SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ Investment income Distributions $ 1,306,194 $ 14,902 $ - $ 342,665 Expenses Mortality and expense fees 378,363 121,032 12,613 185,979 Indexing (gain) loss 8,471 1,391 148 2,567 ------------------- ------------------ ------------------ ------------------ Net investment income (loss) 919,360 (107,521) (12,761) 154,119 ------------------- ------------------ ------------------ ------------------ Net realized gain (loss) from share transactions (366,587) 1,721 4,799 23,031 Net realized gain distribution from Fund - - 26,153 - Net change in unrealized appreciation (depreciation) on investment 8,464,131 617,253 (23,044) 1,871,159 ------------------- ------------------ ------------------ ------------------ Net gain (loss) on investment 8,097,544 618,974 7,908 1,894,190 Net increase (decrease) in net assets resulting from operations $ 9,016,904 $ 511,453 $ (4,853) $ 2,048,309 =================== ================== ================== ================== PHOENIX- PHOENIX- PHOENIX-DUFF & PHOENIX- ENGEMANN ENGEMANN PHELPS REAL ENGEMANN GROWTH AND SMALL-CAP ESTATE SECURITIES CAPITAL GROWTH INCOME GROWTH SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ Investment income Distributions $ 457,031 $ 1,559,134 $ 223,878 $ - Expenses Mortality and expense fees 147,475 1,461,651 139,844 35,578 Indexing (gain) loss 4,493 16,097 1,898 665 ------------------- ------------------ ------------------ ------------------ Net investment income (loss) 305,063 81,386 82,136 (36,243) ------------------- ------------------ ------------------ ------------------ Net realized gain (loss) from share transactions (124,117) (8,589,955) 14,908 (116,020) Net realized gain distribution from Fund 1,819,487 - - - Net change in unrealized appreciation (depreciation) on investment 3,497,143 15,800,612 1,689,267 396,489 ------------------- ------------------ ------------------ ------------------ Net gain (loss) on investment 5,192,513 7,210,657 1,704,175 280,469 Net increase (decrease) in net assets resulting from operations $ 5,497,576 $ 7,292,043 $ 1,786,311 $ 244,226 =================== ================== ================== ================== PHOENIX- PHOENIX- ENGEMANN PHOENIX- PHOENIX- GOODWIN MULTI- STRATEGIC ENGEMANN VALUE GOODWIN MONEY SECTOR FIXED ALLOCATION EQUITY MARKET INCOME SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ Investment income Distributions $ 1,801,690 $ 194,479 $ 307,046 $ 2,333,672 Expenses Mortality and expense fees 554,935 159,693 316,247 295,017 Indexing (gain) loss 5,018 2,244 1,370 2,015 ------------------- ------------------ ------------------ ------------------ Net investment income (loss) 1,241,737 32,542 (10,571) 2,036,640 ------------------- ------------------ ------------------ ------------------ Net realized gain (loss) from share transactions 222,255 4,874 - (6,574) Net realized gain distribution from Fund 1,765,125 - - - Net change in unrealized appreciation (depreciation) on investment 1,234,314 2,777,700 - 177,767 ------------------- ------------------ ------------------ ------------------ Net gain (loss) on investment 3,221,694 2,782,574 - 171,193 Net increase (decrease) in net assets resulting from operations $ 4,463,431 $ 2,815,116 $ (10,571) $ 2,207,833 =================== ================== ================== ==================
See Notes to Financial Statements SA-6 STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
PHOENIX- GOODWIN MULTI- PHOENIX-KAYNE PHOENIX-LAZARD SECTOR SHORT PHOENIX-KAYNE SMALL-CAP INTERNATIONAL TERM BOND RISING DIVIDENDS QUALITY VALUE EQUITY SELECT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ Investment income Distributions $ 57,813 $ 21,868 $ 9,485 $ 39,529 Expenses Mortality and expense fees 10,167 10,820 6,229 22,720 Indexing (gain) loss 69 117 137 422 ------------------- ------------------ ------------------ ------------------ Net investment income (loss) 47,577 10,931 3,119 16,387 ------------------- ------------------ ------------------ ------------------ Net realized gain (loss) from share transactions 337 1,414 1,181 712 Net realized gain distribution from Fund - - 12,156 22,310 Net change in unrealized appreciation (depreciation) on investment 15,829 42,528 191,682 444,836 ------------------- ------------------ ------------------ ------------------ Net gain (loss) on investment 16,166 43,942 205,019 467,858 Net increase (decrease) in net assets resulting from operations $ 63,743 $ 54,873 $ 208,138 $ 484,245 =================== ================== ================== ================== PHOENIX- LAZARD PHOENIX-LORD PHOENIX-LORD PHOENIX-LORD SMALL-CAP VALUE ABBETT BOND- ABBETT LARGE- ABBETT MID-CAP SELECT DEBENTURE CAP VALUE VALUE SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ Investment income Distributions $ - $ 58,433 $ 50,775 $ 11,996 Expenses Mortality and expense fees 3,690 8,600 36,520 15,051 Indexing (gain) loss 76 69 570 333 ------------------- ------------------ ------------------ ------------------ Net investment income (loss) (3,766) 49,764 13,685 (3,388) ------------------- ------------------ ------------------ ------------------ Net realized gain (loss) from share transactions 233 898 (176) 1,192 Net realized gain distribution from Fund 48,412 16,934 26,290 17,825 Net change in unrealized appreciation (depreciation) on investment 21,894 18,077 613,386 451,018 ------------------- ------------------ ------------------ ------------------ Net gain (loss) on investment 70,539 35,909 639,500 470,035 Net increase (decrease) in net assets resulting from operations $ 66,773 $ 85,673 $ 653,185 $ 466,647 =================== ================== ================== ================== PHOENIX- NORTHERN PHOENIX-SANFORD PHOENIX-SANFORD PHOENIX- NASDAQ-100 BERNSTEIN MID- BERNSTEIN SMALL- NORTHERN DOW 30 INDEX(R) CAP VALUE CAP VALUE SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ Investment income Distributions $ 89,118 $ 27,842 $ 34,010 $ - Expenses Mortality and expense fees 41,681 34,511 154,760 85,818 Indexing (gain) loss 354 468 3,112 1,814 ------------------- ------------------ ------------------ ------------------ Net investment income (loss) 47,083 (7,137) (123,862) (87,632) ------------------- ------------------ ------------------ ------------------ Net realized gain (loss) from share transactions 1,714 2,190 25,462 56,485 Net realized gain distribution from Fund - - 1,541,190 1,046,379 Net change in unrealized appreciation (depreciation) on investment 178,389 412,846 2,122,857 1,306,201 ------------------- ------------------ ------------------ ------------------ Net gain (loss) on investment 180,103 415,036 3,689,509 2,409,065 Net increase (decrease) in net assets resulting from operations $ 227,186 $ 407,899 $ 3,565,647 $ 2,321,433 =================== ================== ================== ==================
See Notes to Financial Statements SA-7 STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
PHOENIX-SENECA PHOENIX-SENECA AIM V.I. CAPITAL AIM V.I. MID-CAP MID-CAP GROWTH STRATEGIC THEME APPRECIATION CORE EQUITY SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT(1) ------------------- ------------------ ------------------ ------------------ Investment income Distributions $ - $ - $ - $ 3,699 Expenses Mortality and expense fees 101,898 151,506 20,367 1,498 Indexing (gain) loss 1,508 2,035 272 64 ------------------- ------------------ ------------------ ------------------ Net investment income (loss) (103,406) (153,541) (20,639) 2,137 ------------------- ------------------ ------------------ ------------------ Net realized gain (loss) from share transactions 24,344 (536,259) (1,250) 29 Net realized gain distribution from Fund - - - 109,180 Net change in unrealized appreciation (depreciation) on investment 983,467 1,518,389 195,851 (63,789) ------------------- ------------------ ------------------ ------------------ Net gain (loss) on investment 1,007,811 982,130 194,601 45,420 Net increase (decrease) in net assets resulting from operations $ 904,405 $ 828,589 $ 173,962 $ 47,557 =================== ================== ================== ================== FEDERATED FUND FEDERATED HIGH ALGER AMERICAN FOR U.S. INCOME BOND AIM V.I. PREMIER LEVERAGED GOVERNMENT FUND II -- EQUITY ALLCAP SECURITIES II PRIMARY SHARES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ Investment income Distributions $ 8,989 $ - $ 621,662 $ 371,347 Expenses Mortality and expense fees 14,513 57,624 121,620 46,527 Indexing (gain) loss 172 929 737 442 ------------------- ------------------ ------------------ ------------------ Net investment income (loss) (5,696) (58,553) 499,305 324,378 ------------------- ------------------ ------------------ ------------------ Net realized gain (loss) from share transactions 3,042 (36,113) 54,596 2,457 Net realized gain distribution from Fund - - 72,594 - Net change in unrealized appreciation (depreciation) on investment 100,124 742,283 (177,765) 233,819 ------------------- ------------------ ------------------ ------------------ Net gain (loss) on investment 103,166 706,170 (50,575) 236,276 Net increase (decrease) in net assets resulting from operations $ 97,470 $ 647,617 $ 448,730 $ 560,654 =================== ================== ================== ================== VIP GROWTH MUTUAL SHARES VIP CONTRAFUND(R) OPPORTUNITIES VIP GROWTH SECURITIES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ Investment income Distributions $ 28,250 $ 6,487 $ 14,523 $ 60,398 Expenses Mortality and expense fees 106,094 11,966 79,106 62,875 Indexing (gain) loss 1,835 144 1,126 899 ------------------- ------------------ ------------------ ------------------ Net investment income (loss) (79,679) (5,623) (65,709) (3,376) ------------------- ------------------ ------------------ ------------------ Net realized gain (loss) from share transactions 226,256 7,446 (49,789) 1,920 Net realized gain distribution from Fund - - - - Net change in unrealized appreciation (depreciation) on investment 1,798,767 96,919 404,540 904,511 ------------------- ------------------ ------------------ ------------------ Net gain (loss) on investment 2,025,023 104,365 354,751 906,431 Net increase (decrease) in net assets resulting from operations $ 1,945,344 $ 98,742 $ 289,042 $ 903,055 =================== ================== ================== ==================
See Notes to Financial Statements SA-8 STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
TEMPLETON DEVELOPING TEMPLETON TEMPLETON TEMPLETON MARKETS FOREIGN GLOBAL ASSET GROWTH SECURITIES SECURITIES ALLOCATION SECURITIES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ Investment income Distributions $ 20,781 $ 97,618 $ 10,998 $ 97,569 Expenses Mortality and expense fees 8,973 73,273 3,136 64,017 Indexing (gain) loss 214 1,371 58 1,165 ------------------- ------------------ ------------------ ------------------ Net investment income (loss) 11,594 22,974 7,804 32,387 ------------------- ------------------ ------------------ ------------------ Net realized gain (loss) from share transactions 7,651 (5,462) 1,493 (11,678) Net realized gain distribution from Fund - - - - Net change in unrealized appreciation (depreciation) on investment 223,649 1,560,199 47,514 1,121,716 ------------------- ------------------ ------------------ ------------------ Net gain (loss) on investment 231,300 1,554,737 49,007 1,110,038 Net increase (decrease) in net assets resulting from operations $ 242,894 $ 1,577,711 $ 56,811 $ 1,142,425 =================== ================== ================== ================== RYDEX VARIABLE SCUDDER VIT RYDEX VARIABLE RYDEX VARIABLE TRUST SECTOR EAFE(R)EQUITY TRUST JUNO TRUST NOVA ROTATION INDEX SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ Investment income Distributions $ - $ 180 $ - $ 76,442 Expenses Mortality and expense fees 2,070 2,719 2,061 26,826 Indexing (gain) loss 6 51 37 578 ------------------- ------------------ ------------------ ------------------ Net investment income (loss) (2,076) (2,590) (2,098) 49,038 ------------------- ------------------ ------------------ ------------------ Net realized gain (loss) from share transactions (15,848) 596 169 5,190 Net realized gain distribution from Fund 2,421 - - - Net change in unrealized appreciation (depreciation) on investment (20,784) 43,363 31,628 577,675 ------------------- ------------------ ------------------ ------------------ Net gain (loss) on investment (34,211) 43,959 31,797 582,865 Net increase (decrease) in net assets resulting from operations $ (36,287) $ 41,369 $ 29,699 $ 631,903 =================== ================== ================== ================== WANGER WANGER SCUDDER VIT INTERNATIONAL INTERNATIONAL EQUITY 500 INDEX TECHNOLOGY SELECT SMALL CAP SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------- ------------------ ------------------ ------------------ Investment income Distributions $ 84,770 $ - $ 12,128 $ 219,033 Expenses Mortality and expense fees 61,054 42,470 33,827 249,977 Indexing (gain) loss 845 444 786 5,618 ------------------- ------------------ ------------------ ------------------ Net investment income (loss) 22,871 (42,914) (22,485) (36,562) ------------------- ------------------ ------------------ ------------------ Net realized gain (loss) from share transactions 26,236 (9,426) 108,188 244,413 Net realized gain distribution from Fund - - - - Net change in unrealized appreciation (depreciation) on investment 674,860 (90,283) 879,098 8,092,682 ------------------- ------------------ ------------------ ------------------ Net gain (loss) on investment 701,096 (99,709) 987,286 8,337,095 Net increase (decrease) in net assets resulting from operations $ 723,967 $ (142,623) $ 964,801 $ 8,300,533 =================== ================== ================== ==================
See Notes to Financial Statements SA-9 STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
WANGER U.S. SMALLER WANGER SELECT COMPANIES SUBACCOUNT SUBACCOUNT ------------------- ------------------ Investment income Distributions $ - $ - Expenses Mortality and expense fees 43,944 464,697 Indexing (gain) loss 826 9,022 ------------------- ------------------ Net investment income (loss) (44,770) (473,719) ------------------- ------------------ Net realized gain (loss) from share transactions 3,924 344,415 Net realized gain distribution from Fund 4,773 - Net change in unrealized appreciation (depreciation) on investment 1,006,634 9,749,881 ------------------- ------------------ Net gain (loss) on investment 1,015,331 10,094,296 Net increase (decrease) in net assets resulting from operations $ 970,561 $ 9,620,577 =================== ==================
Footnotes for Statements of Operations For the period ended December 31, 2004 (1) From inception date December 3, 2004 to December 31, 2004. See Notes to Financial Statements SA-10 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2004
PHOENIX- PHOENIX- PHOENIX-ALGER ALLIANCE/ ABERDEEN PHOENIX-AIM SMALL-CAP BERNSTEIN INTERNATIONAL GROWTH GROWTH ENHANCED INDEX SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ 919,360 $ (107,521) $ (12,761) $ 154,119 Net realized gain (loss) (366,587) 1,721 30,952 23,031 Net change in unrealized appreciation (depreciation) on investment 8,464,131 617,253 (23,044) 1,871,159 ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations 9,016,904 511,453 (4,853) 2,048,309 ------------------ ----------------- ----------------- ----------------- FROM CONTRACT TRANSACTIONS Participant deposits 5,665,444 3,259,260 367,006 3,368,436 Participant transfers 658,694(e) (876,198) 422,041 (392,023) Participant withdrawals (7,555,330) (1,904,172) (205,720) (3,296,772) ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from participant transactions (1,231,192) 478,890 583,327 (320,359) ------------------ ----------------- ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 7,785,712 990,343 578,474 1,727,950 NET ASSETS Beginning of period 46,116,917 14,950,707 1,130,243 22,936,351 ------------------ ----------------- ----------------- ----------------- End of period $ 53,902,629 $ 15,941,050 $ 1,708,717 $ 24,664,301 ================== ================= ================= ================= PHOENIX- PHOENIX- PHOENIX-DUFF & PHOENIX- ENGEMANN ENGEMANN PHELPS REAL ENGEMANN GROWTH AND SMALL-CAP ESTATE SECURITIES CAPITAL GROWTH INCOME GROWTH SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ 305,063 $ 81,386 $ 82,136 $ (36,243) Net realized gain (loss) 1,695,370 (8,589,955) 14,908 (116,020) Net change in unrealized appreciation (depreciation) on investment 3,497,143 15,800,612 1,689,267 396,489 ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations 5,497,576 7,292,043 1,786,311 244,226 ------------------ ----------------- ----------------- ----------------- FROM CONTRACT TRANSACTIONS Participant deposits 2,198,240 26,534,221 3,415,615 764,641 Participant transfers 1,464,466 (9,568,767)(c) 2,011,275(b) 111,850 Participant withdrawals (2,399,539) (31,823,533) (2,605,904) (585,431) ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from participant transactions 1,263,167 (14,858,079) 2,820,986 291,060 ------------------ ----------------- ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 6,760,743 (7,566,036) 4,607,297 535,286 NET ASSETS Beginning of period 16,020,679 189,942,647 16,202,637 4,043,467 ------------------ ----------------- ----------------- ----------------- End of period $ 22,781,422 $ 182,376,611 $ 20,809,934 $ 4,578,753 ================== ================= ================= =================
See Notes to Financial Statements SA-11 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
PHOENIX- PHOENIX- ENGEMANN PHOENIX- PHOENIX- GOODWIN MULTI- STRATEGIC ENGEMANN VALUE GOODWIN MONEY SECTOR FIXED ALLOCATION EQUITY MARKET INCOME SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ 1,241,737 $ 32,542 $ (10,571) $ 2,036,640 Net realized gain (loss) 1,987,380 4,874 - (6,574) Net change in unrealized appreciation (depreciation) on investment 1,234,314 2,777,700 - 177,767 ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations 4,463,431 2,815,116 (10,571) 2,207,833 ------------------ ----------------- ----------------- ----------------- FROM CONTRACT TRANSACTIONS Participant deposits 6,882,874 3,479,985 13,672,614 4,609,110 Participant transfers (1,786,938) 6,202,457(d) (11,421,450) 9,591,245(a) Participant withdrawals (10,893,112) (2,623,562) (9,705,324) (4,352,499) ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from participant transactions (5,797,176) 7,058,880 (7,454,160) 9,847,856 ------------------ ----------------- ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (1,333,745) 9,873,996 (7,464,731) 12,055,689 NET ASSETS Beginning of period 71,233,596 17,121,833 43,734,262 28,568,830 ------------------ ----------------- ----------------- ----------------- End of period $ 69,899,851 $ 26,995,829 $ 36,269,531 $ 40,624,519 ================== ================= ================= ================= PHOENIX- GOODWIN MULTI- PHOENIX-KAYNE PHOENIX-LAZARD SECTOR SHORT PHOENIX-KAYNE SMALL-CAP INTERNATIONAL TERM BOND RISING DIVIDENDS QUALITY VALUE EQUITY SELECT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ 47,577 $ 10,931 $ 3,119 $ 16,387 Net realized gain (loss) 337 1,414 13,337 23,022 Net change in unrealized appreciation (depreciation) on investment 15,829 42,528 191,682 444,836 ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations 63,743 54,873 208,138 484,245 ------------------ ----------------- ----------------- ----------------- FROM CONTRACT TRANSACTIONS Participant deposits 191,644 398,651 216,548 961,690 Participant transfers 1,042,242 471,876 599,863 1,234,432 Participant withdrawals (210,789) (267,898) (106,873) (405,870) ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from participant transactions 1,023,097 602,629 709,538 1,790,252 ------------------ ----------------- ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,086,840 657,502 917,676 2,274,497 NET ASSETS Beginning of period 744,021 947,476 495,482 1,819,359 ------------------ ----------------- ----------------- ----------------- End of period $ 1,830,861 $ 1,604,978 $ 1,413,158 $ 4,093,856 ================== ================= ================= =================
See Notes to Financial Statements SA-12 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
PHOENIX- LAZARD PHOENIX-LORD PHOENIX-LORD PHOENIX-LORD SMALL-CAP VALUE ABBETT BOND- ABBETT LARGE- ABBETT MID-CAP SELECT DEBENTURE CAP VALUE VALUE SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ (3,766) $ 49,764 $ 13,685 $ (3,388) Net realized gain (loss) 48,645 17,832 26,114 19,017 Net change in unrealized appreciation (depreciation) on investment 21,894 18,077 613,386 451,018 ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations 66,773 85,673 653,185 466,647 ------------------ ----------------- ----------------- ----------------- FROM CONTRACT TRANSACTIONS Participant deposits 122,167 242,141 1,997,495 398,386 Participant transfers 215,828 424,461 2,531,684 1,355,754 Participant withdrawals (91,821) (182,676) (597,258) (247,585) ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from participant transactions 246,174 483,926 3,931,921 1,506,555 ------------------ ----------------- ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 312,947 569,599 4,585,106 1,973,202 NET ASSETS Beginning of period 289,940 738,028 2,491,940 1,129,505 ------------------ ----------------- ----------------- ----------------- End of period $ 602,887 $ 1,307,627 $ 7,077,046 $ 3,102,707 ================== ================= ================= ================= PHOENIX- NORTHERN PHOENIX-SANFORD PHOENIX-SANFORD PHOENIX- NASDAQ-100 BERNSTEIN MID- BERNSTEIN SMALL- NORTHERN DOW 30 INDEX(R) CAP VALUE CAP VALUE SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ 47,083 $ (7,137) $ (123,862) $ (87,632) Net realized gain (loss) 1,714 2,190 1,566,652 1,102,864 Net change in unrealized appreciation (depreciation) on investment 178,389 412,846 2,122,857 1,306,201 ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations 227,186 407,899 3,565,647 2,321,433 ------------------ ----------------- ----------------- ----------------- FROM CONTRACT TRANSACTIONS Participant deposits 966,756 986,015 2,891,244 2,210,823 Participant transfers 257,436 240,750 1,338,137 659,229 Participant withdrawals (604,396) (480,522) (2,311,970) (1,245,228) ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from participant transactions 619,796 746,243 1,917,411 1,624,824 ------------------ ----------------- ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 846,982 1,154,142 5,483,058 3,946,257 NET ASSETS Beginning of period 4,912,152 3,747,970 16,926,262 9,109,754 ------------------ ----------------- ----------------- ----------------- End of period $ 5,759,134 $ 4,902,112 $ 22,409,320 $ 13,056,011 ================== ================= ================= =================
See Notes to Financial Statements SA-13 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
PHOENIX-SENECA PHOENIX-SENECA AIM V.I. CAPITAL AIM V.I. MID-CAP MID-CAP GROWTH STRATEGIC THEME APPRECIATION CORE EQUITY SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT(1) ------------------ ----------------- ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ (103,406) $ (153,541) $ (20,639) $ 2,137 Net realized gain (loss) 24,344 (536,259) (1,250) 109,209 Net change in unrealized appreciation (depreciation) on investment 983,467 1,518,389 195,851 (63,789) ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations 904,405 828,589 173,962 47,557 ------------------ ----------------- ----------------- ----------------- FROM CONTRACT TRANSACTIONS Participant deposits 2,499,667 3,596,046 733,948 377,497 Participant transfers 273,060 (1,537,995) 628,056 2,342,342(f) Participant withdrawals (1,733,509) (3,280,886) (373,274) (229,835) ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from participant transactions 1,039,218 (1,222,835) 988,730 2,490,004 ------------------ ----------------- ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,943,623 (394,246) 1,162,692 2,537,561 NET ASSETS Beginning of period 12,596,702 19,933,993 2,056,212 - ------------------ ----------------- ----------------- ----------------- End of period $ 14,540,325 $ 19,539,747 $ 3,218,904 $ 2,537,561 ================== ================= ================= ================= FEDERATED FUND FEDERATED HIGH ALGER AMERICAN FOR U.S. INCOME BOND AIM V.I. PREMIER LEVERAGED GOVERNMENT FUND II -- EQUITY ALLCAP SECURITIES II PRIMARY SHARES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ (5,696) $ (58,553) $ 499,305 $ 324,378 Net realized gain (loss) 3,042 (36,113) 127,190 2,457 Net change in unrealized appreciation (depreciation) on investment 100,124 742,283 (177,765) 233,819 ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations 97,470 647,617 448,730 560,654 ------------------ ----------------- ----------------- ----------------- FROM CONTRACT TRANSACTIONS Participant deposits 380,026 1,424,767 3,024,524 2,125,291 Participant transfers 44,256 1,253,007 (3,784,290) 118,293 Participant withdrawals (316,149) (902,546) (2,232,034) (711,053) ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from participant transactions 108,133 1,775,228 (2,991,800) 1,532,531 ------------------ ----------------- ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 205,603 2,422,845 (2,543,070) 2,093,185 NET ASSETS Beginning of period 1,796,979 6,338,810 18,232,503 5,011,519 ------------------ ----------------- ----------------- ----------------- End of period $ 2,002,582 $ 8,761,655 $ 15,689,433 $ 7,104,704 ================== ================= ================= =================
See Notes to Financial Statements SA-14 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
VIP GROWTH MUTUAL SHARES VIP CONTRAFUND(R) OPPORTUNITIES VIP GROWTH SECURITIES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ (79,679) $ (5,623) $ (65,709) $ (3,376) Net realized gain (loss) 226,256 7,446 (49,789) 1,920 Net change in unrealized appreciation (depreciation) on investment 1,798,767 96,919 404,540 904,511 ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations 1,945,344 98,742 289,042 903,055 ------------------ ----------------- ----------------- ----------------- FROM CONTRACT TRANSACTIONS Participant deposits 2,494,069 286,639 2,305,303 1,356,304 Participant transfers 3,969,286 191,015 1,407,787 593,758 Participant withdrawals (2,036,637) (193,439) (1,097,485) (1,197,504) ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from participant transactions 4,426,718 284,215 2,615,605 752,558 ------------------ ----------------- ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 6,372,062 382,957 2,904,647 1,655,613 NET ASSETS Beginning of period 10,206,543 1,326,819 8,494,448 7,210,748 ------------------ ----------------- ----------------- ----------------- End of period $ 16,578,605 $ 1,709,776 $ 11,399,095 $ 8,866,361 ================== ================= ================= ================= TEMPLETON DEVELOPING TEMPLETON TEMPLETON TEMPLETON MARKETS FOREIGN GLOBAL ASSET GROWTH SECURITIES SECURITIES ALLOCATION SECURITIES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ 11,594 $ 22,974 $ 7,804 $ 32,387 Net realized gain (loss) 7,651 (5,462) 1,493 (11,678) Net change in unrealized appreciation (depreciation) on investment 223,649 1,560,199 47,514 1,121,716 ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations 242,894 1,577,711 56,811 1,142,425 ------------------ ----------------- ----------------- ----------------- FROM CONTRACT TRANSACTIONS Participant deposits 111,738 1,634,645 58,926 1,431,009 Participant transfers (67,300) 787,831 (14,307) 239,788 Participant withdrawals (155,502) (1,208,721) (86,632) (974,004) ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from participant transactions (111,064) 1,213,755 (42,013) 696,793 ------------------ ----------------- ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 131,830 2,791,466 14,798 1,839,218 NET ASSETS Beginning of period 1,095,541 8,078,075 428,482 7,197,268 ------------------ ----------------- ----------------- ----------------- End of period $ 1,227,371 $ 10,869,541 $ 443,280 $ 9,036,486 ================== ================= ================= =================
See Notes to Financial Statements SA-15 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
RYDEX VARIABLE SCUDDER VIT RYDEX VARIABLE RYDEX VARIABLE TRUST SECTOR EAFE(R) EQUITY TRUST JUNO TRUST NOVA ROTATION INDEX SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ (2,076) $ (2,590) $ (2,098) $ 49,038 Net realized gain (loss) (13,427) 596 169 5,190 Net change in unrealized appreciation (depreciation) on investment (20,784) 43,363 31,628 577,675 ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations (36,287) 41,369 29,699 631,903 ------------------ ----------------- ----------------- ----------------- FROM CONTRACT TRANSACTIONS Participant deposits 41,634 103,329 64,326 612,729 Participant transfers (124,267) 28,057 194,732 556,215 Participant withdrawals (43,124) (37,453) (44,287) (361,318) ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from participant transactions (125,757) 93,933 214,771 807,626 ------------------ ----------------- ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (162,044) 135,302 244,470 1,439,529 NET ASSETS Beginning of period 369,021 259,502 144,674 2,818,094 ------------------ ----------------- ----------------- ----------------- End of period $ 206,977 $ 394,804 $ 389,144 $ 4,257,623 ================== ================= ================= ================= WANGER WANGER SCUDDER VIT INTERNATIONAL INTERNATIONAL EQUITY 500 INDEX TECHNOLOGY SELECT SMALL CAP SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ 22,871 $ (42,914) $ (22,485) $ (36,562) Net realized gain (loss) 26,236 (9,426) 108,188 244,413 Net change in unrealized appreciation (depreciation) on investment 674,860 (90,283) 879,098 8,092,682 ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from operations 723,967 (142,623) 964,801 8,300,533 ------------------ ----------------- ----------------- ----------------- FROM CONTRACT TRANSACTIONS Participant deposits 1,127,487 1,174,982 696,859 3,786,429 Participant transfers 1,136,694 (469,838) (133,847) (513,972) Participant withdrawals (1,426,260) (772,195) (528,272) (4,311,798) ------------------ ----------------- ----------------- ----------------- Net increase (decrease) in net assets resulting from participant transactions 837,921 (67,051) 34,740 (1,039,341) ------------------ ----------------- ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,561,888 (209,674) 999,541 7,261,192 NET ASSETS Beginning of period 6,662,306 5,762,889 4,356,380 28,953,582 ------------------ ----------------- ----------------- ----------------- End of period $ 8,224,194 $ 5,553,215 $ 5,355,921 $ 36,214,774 ================== ================= ================= =================
See Notes to Financial Statements SA-16 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
WANGER U.S. SMALLER WANGER SELECT COMPANIES SUBACCOUNT SUBACCOUNT ------------------ ----------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ (44,770) $ (473,719) Net realized gain (loss) 8,697 344,415 Net change in unrealized appreciation (depreciation) on investment 1,006,634 9,749,881 ------------------ ----------------- Net increase (decrease) in net assets resulting from operations 970,561 9,620,577 ------------------ ----------------- FROM CONTRACT TRANSACTIONS Participant deposits 744,655 6,525,048 Participant transfers 1,176,362 29,295 Participant withdrawals (767,412) (7,492,806) ------------------ ----------------- Net increase (decrease) in net assets resulting from participant transactions 1,153,605 (938,463) ------------------ ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 2,124,166 8,682,114 NET ASSETS Beginning of period 4,535,504 56,021,501 ------------------ ----------------- End of period $ 6,659,670 $ 64,703,615 ================== =================
Footnotes for Statements of Changes in Net ASSETS For the period ended December 31, 2004 (1) From inception date December 3, 2004 to December 31, 2004. (a) Participant transfers include net assets transferred in from Janus Flexible Income on April 16, 2004. (b) Participant transfers include net assets transferred in from Alliance/Bernstein Growth + Value and MFS Investors Trust on September 17, 2004. (c) Participant transfers include net assets transferred in from Lazard U.S. Multi-Cap on September 24, 2004. (d) Participant transfers include net assets transferred in from MFS Value on September 24, 2004. (e) Participant transfers include net assets transferred in from Sanford Bernstein Global Value on September 24, 2004. (f) Participant transfers include net assets transferred in from AIM Mid-Cap Equity on December 3, 2004. See Notes to Financial Statements SA-17 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2003
PHOENIX- PHOENIX- ALLIANCE/ PHOENIX-ALLIANCE/ ABERDEEN PHOENIX-AIM BERNSTEIN BERNSTEIN INTERNATIONAL MID-CAP EQUITY ENHANCED INDEX GROWTH + VALUE SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ 437,412 $ (9,001) $ 59,684 $ (1,232) Net realized gain (loss) 279,096 1,260 (63,521) 1,387 Net change in unrealized appreciation (depreciation) on investments 10,712,020 294,194 4,725,849 147,458 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 11,428,528 286,453 4,722,012 147,613 ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 5,426,590 352,346 4,298,636 128,206 Participant transfers 333,667(+) 465,870 (844,841) 614,389 Participant withdrawals (6,312,495) (122,264) (4,031,207) (68,180) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions (552,238) 695,952 (577,412) 674,415 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 10,876,290 982,405 4,144,600 822,028 NET ASSETS Beginning of period 35,240,627 742,980 18,791,751 245,663 ------------------ ----------------- ----------------- ------------------ End of period $ 46,116,917 1,725,385 $ 22,936,351 $ 1,067,691 ================== ================= ================= ================== PHOENIX- PHOENIX-DUFF & PHOENIX- ENGEMANN SMALL PHOENIX- PHELPS REAL ENGEMANN & MID-CAP GOODWIN MONEY ESTATE SECURITIES CAPITAL GROWTH GROWTH MARKET SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ 350,427 $ (1,240,657) $ (21,932) $ (59,022) Net realized gain (loss) 470,232 (11,153,922) 1,686 - Net change in unrealized appreciation (depreciation) on investments 3,474,505 51,722,140 1,028,036 - ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 4,295,164 39,327,561 1,007,790 (59,022) ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 2,095,946 30,734,295 497,025 20,211,228 Participant transfers 568,034 (9,016,705) 1,351,390 (15,899,011) Participant withdrawals (2,411,237) (30,796,593) (330,216) (13,962,469) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions 252,743 (9,079,003) 1,518,199 (9,650,252) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 4,547,907 30,248,558 2,525,989 (9,709,274) NET ASSETS Beginning of period 11,472,772 159,694,089 1,517,478 53,443,536 ------------------ ----------------- ----------------- ------------------ End of period $ 16,020,679 $ 189,942,647 $ 4,043,467 $ 43,734,262 ================== ================= ================= ==================
See Notes to Financial Statements SA-18 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2003 (CONTINUED)
PHOENIX- PHOENIX- GOODWIN MULTI- GOODWIN MULTI- SECTOR FIXED SECTOR SHORT PHOENIX-JANUS PHOENIX-KAYNE INCOME TERM BOND FLEXIBLE INCOME RISING DIVIDENDS SUBACCOUNT SUBACCOUNT(2) SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ 1,578,297 $ 10,766 $ 148,205 $ (104) Net realized gain (loss) 18,472 50 112,813 5,384 Net change in unrealized appreciation (depreciation) on investments 1,831,138 8,277 (114) 110,826 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 3,427,907 19,093 260,904 116,106 ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 3,169,789 740,586 1,090,642 387,711 Participant transfers 1,574,746 11,942 1,286,811 449,101 Participant withdrawals (4,215,301) (27,600) (806,683) (155,488) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions 529,234 724,928 1,570,770 681,324 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 3,957,141 744,021 1,831,674 797,430 NET ASSETS Beginning of period 24,611,689 - 3,904,407 150,046 ------------------ ----------------- ----------------- ------------------ End of period $ 28,568,830 $ 744,021 $ 5,736,081 $ 947,476 ================== ================= ================= ================== PHOENIX-KAYNE PHOENIX-LAZARD PHOENIX-LAZARD SMALL-CAP INTERNATIONAL SMALL-CAP VALUE PHOENIX-LAZARD QUALITY VALUE EQUITY SELECT SELECT U.S. MULTI-CAP SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ 1,347 $ 1,909 $ (1,359) $ 262 Net realized gain (loss) 353 4,025 11,320 7,925 Net change in unrealized appreciation (depreciation) on investments 76,175 310,687 61,174 36,945 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 77,875 316,621 71,135 45,132 ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 190,790 395,129 72,930 86,414 Participant transfers 176,816 1,167,192 185,298 288,220 Participant withdrawals (25,910) (275,003) (117,043) (35,035) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions 341,696 1,287,318 141,185 339,599 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 419,571 1,603,939 212,320 384,731 NET ASSETS Beginning of period 75,911 215,420 77,620 8,970 ------------------ ----------------- ----------------- ------------------ End of period $ 495,482 $ 1,819,359 $ 289,940 $ 393,701 ================== ================= ================= ==================
See Notes to Financial Statements SA-19 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2003 (CONTINUED)
PHOENIX-LORD PHOENIX-LORD PHOENIX-LORD PHOENIX-MFS ABBETT BOND- ABBETT LARGE- ABBETT MID-CAP INVESTORS GROWTH DEBENTURE CAP VALUE VALUE STOCK SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ 25,722 $ (958) $ 401 $ (107,150) Net realized gain (loss) 7,584 5,128 5,609 3,506 Net change in unrealized appreciation (depreciation) on investments 44,333 403,669 147,610 2,663,147 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 77,639 407,839 153,620 2,559,503 ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 112,791 464,239 197,001 3,361,470 Participant transfers 513,763 1,612,725 692,398 983,377(++) Participant withdrawals (102,054) (191,588) (47,595) (2,034,655) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions 524,500 1,885,376 841,804 2,310,192 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 602,139 2,293,215 995,424 4,869,695 NET ASSETS Beginning of period 135,889 198,725 134,081 10,081,012 ------------------ ----------------- ----------------- ------------------ End of period $ 738,028 $ 2,491,940 $ 1,129,505 $ 14,950,707 ================== ================= ================= ================== PHOENIX- NORTHERN PHOENIX-MFS PHOENIX-MFS PHOENIX- NASDAQ-100 INVESTORS TRUST VALUE NORTHERN DOW 30 INDEX(R) SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ (575) $ 30,665 $ 32,174 $ (21,333) Net realized gain (loss) 1,720 10,589 (3,462) (1,064) Net change in unrealized appreciation (depreciation) on investments 102,363 903,811 853,370 1,001,490 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 103,508 945,065 882,082 979,093 ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 102,576 1,102,561 534,380 534,385 Participant transfers 275,684 854,636 555,430 809,736 Participant withdrawals (81,440) (368,928) (382,621) (294,028) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions 296,820 1,588,269 707,189 1,050,093 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 400,328 2,533,334 1,589,271 2,029,186 NET ASSETS Beginning of period 273,900 2,478,317 3,322,881 1,718,784 ------------------ ----------------- ----------------- ------------------ End of period $ 674,228 $ 5,011,651 $ 4,912,152 $ 3,747,970 ================== ================= ================= ==================
See Notes to Financial Statements SA-20 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2003 (CONTINUED)
PHOENIX- PHOENIX- OAKHURST PHOENIX- PHOENIX-SANFORD OAKHURST GROWTH STRATEGIC OAKHURST VALUE BERNSTEIN GLOBAL AND INCOME ALLOCATION EQUITY VALUE SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ 46,152 $ 1,219,956 $ 18,824 $ 13,972 Net realized gain (loss) 9,035 (264,756) (4,391) 1,079 Net change in unrealized appreciation (depreciation) on investments 3,258,607 10,622,146 3,096,543 405,443 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 3,313,794 11,577,346 3,110,976 420,494 ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 3,044,539 7,380,425 3,377,748 283,678 Participant transfers 374,904 (1,645,214) (304,742) 605,586 Participant withdrawals (2,569,173) (10,652,142) (2,291,692) (127,430) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions 850,270 (4,916,931) 781,314 761,834 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 4,164,064 6,660,415 3,892,290 1,182,328 NET ASSETS Beginning of period 12,038,573 64,573,181 13,229,543 866,705 ------------------ ----------------- ----------------- ------------------ End of period $ 16,202,637 $ 71,233,596 $ 17,121,833 $ 2,049,033 ================== ================= ================= ================== PHOENIX-SANFORD PHOENIX-SANFORD BERNSTEIN MID- BERNSTEIN SMALL- PHOENIX-SENECA PHOENIX-SENECA CAP VALUE CAP VALUE MID-CAP GROWTH STRATEGIC THEME SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ (87,525) $ (54,742) $ (88,004) $ (140,375) Net realized gain (loss) 628,851 150,613 1,998 (545,007) Net change in unrealized appreciation (depreciation) on investments 4,294,971 2,482,485 2,676,840 5,927,094 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 4,836,297 2,578,356 2,590,834 5,241,712 ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 2,276,364 1,476,769 2,638,049 3,665,561 Participant transfers (821,951) 611,172 (33,940) (997,609) Participant withdrawals (2,170,385) (890,880) (1,537,329) (3,095,079) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions (715,972) 1,197,061 1,066,780 (427,127) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 4,120,325 3,775,417 3,657,614 4,814,585 NET ASSETS Beginning of period 12,805,937 5,334,337 8,939,088 15,119,408 ------------------ ----------------- ----------------- ------------------ End of period $ 16,926,262 $ 9,109,754 $ 12,596,702 $ 19,933,993 ================== ================= ================= ==================
See Notes to Financial Statements SA-21 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2003 (CONTINUED)
PHOENIX-STATE STREET RESEARCH ALGER AMERICAN SMALL-CAP AIM V.I. CAPITAL AIM V.I. PREMIER LEVERAGED GROWTH APPRECIATION EQUITY ALLCAP SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ (4,262) $ (10,391) $ (7,167) $ (43,725) Net realized gain (loss) 41,375 608 2,033 (261,187) Net change in unrealized appreciation (depreciation) on investments 139,540 351,148 331,430 1,825,639 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 176,653 341,365 326,296 1,520,727 ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 180,048 417,902 391,585 1,188,716 Participant transfers 786,086 766,214 65,817 361,961 Participant withdrawals (57,815) (171,446) (178,540) (798,419) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions 908,319 1,012,670 278,862 752,258 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 1,084,972 1,354,035 605,158 2,272,985 NET ASSETS Beginning of period 45,271 702,177 1,191,821 4,065,825 ------------------ ----------------- ----------------- ------------------ End of period $ 1,130,243 $ 2,056,212 $ 1,796,979 $ 6,338,810 ================== ================= ================= ================== FEDERATED FUND FEDERATED HIGH FOR U.S. INCOME BOND GOVERNMENT FUND II -- VIP GROWTH SECURITIES II PRIMARY SHARES VIP CONTRAFUND(R) OPPORTUNITIES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ 492,736 $ 246,719 $ (38,126) $ (2,708) Net realized gain (loss) 94,115 12,811 (19,088) (21,889) Net change in unrealized appreciation (depreciation) on investments (309,946) 570,088 1,910,414 279,254 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 276,905 829,618 1,853,200 254,657 ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 3,828,727 812,252 1,792,860 281,296 Participant transfers (359,743) 1,431,088 3,017,714 223,967 Participant withdrawals (3,502,295) (1,090,503) (917,142) (186,679) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions (33,311) 1,152,837 3,893,432 318,584 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 243,594 1,982,455 5,746,632 573,241 NET ASSETS Beginning of period 17,988,909 3,029,064 4,459,911 753,578 ------------------ ----------------- ----------------- ------------------ End of period $ 18,232,503 $ 5,011,519 $ 10,206,543 $ 1,326,819 ================== ================= ================= ==================
See Notes to Financial Statements SA-22 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2003 (CONTINUED)
TEMPLETON DEVELOPING TEMPLETON MUTUAL SHARES MARKETS FOREIGN VIP GROWTH SECURITIES SECURITIES SECURITIES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ (41,130) $ 14,157 $ 3,618 $ 60,223 Net realized gain (loss) (277,616) 11,031 (21,667) 16,952 Net change in unrealized appreciation (depreciation) on investments 2,094,380 1,307,958 434,209 1,820,378 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 1,775,634 1,333,146 416,160 1,897,553 ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 1,632,737 1,251,300 131,960 1,413,285 Participant transfers 1,317,473 276,823 (157,186) 461,019 Participant withdrawals (888,657) (673,086) (195,011) (915,485) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions 2,061,553 855,037 (220,237) 958,819 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 3,837,187 2,188,183 195,923 2,856,372 NET ASSETS Beginning of period 4,657,261 5,022,565 899,618 5,221,703 ------------------ ----------------- ----------------- ------------------ End of period $ 8,494,448 $ 7,210,748 $ 1,095,541 $ 8,078,075 ================== ================= ================= ================== TEMPLETON TEMPLETON GLOBAL ASSET GROWTH RYDEX VARIABLE RYDEX VARIABLE ALLOCATION SECURITIES TRUST JUNO TRUST NOVA SUBACCOUNT SUBACCOUNT SUBACCOUNT(1) SUBACCOUNT(2) ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ 6,294 $ 35,486 $ (1,022) $ (768) Net realized gain (loss) (6,110) 4,172 9,619 231 Net change in unrealized appreciation (depreciation) on investments 101,080 1,490,118 (6,585) 33,920 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 101,264 1,529,776 2,012 33,383 ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 57,218 983,944 18,517 94,875 Participant transfers (8,255) 1,137,403 355,749 137,875 Participant withdrawals (64,807) (555,787) (7,257) (6,631) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions (15,844) 1,565,560 367,009 226,119 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 85,420 3,095,336 369,021 259,502 NET ASSETS Beginning of period 343,062 4,101,932 - - ------------------ ----------------- ----------------- ------------------ End of period $ 428,482 $ 7,197,268 $ 369,021 $ 259,502 ================== ================= ================= ==================
See Notes to Financial Statements SA-23 STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED DECEMBER 31, 2003 (CONTINUED)
RYDEX VARIABLE SCUDDER VIT TRUST SECTOR EAFE(R) EQUITY SCUDDER VIT ROTATION INDEX EQUITY 500 INDEX TECHNOLOGY SUBACCOUNT(2) SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ (402) $ 64,332 $ 7,045 $ (36,113) Net realized gain (loss) 184 (2,664) 8,321 (18,950) Net change in unrealized appreciation (depreciation) on investments 9,873 549,478 1,123,904 1,640,141 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 9,655 611,146 1,139,270 1,585,078 ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 26,624 391,025 842,705 1,318,480 Participant transfers 113,990 515,558 3,030,114 349,991 Participant withdrawals (5,595) (321,296) (731,371) (722,027) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions 135,019 585,287 3,141,448 946,444 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 144,674 1,196,433 4,280,718 2,531,522 NET ASSETS Beginning of period - 1,621,661 2,381,588 3,231,367 ------------------ ----------------- ----------------- ------------------ End of period $ 144,674 $ 2,818,094 $ 6,662,306 $ 5,762,889 ================== ================= ================= ================== WANGER WANGER U.S. WANGER FOREIGN INTERNATIONAL SMALLER FORTY SMALL CAP WANGER TWENTY COMPANIES SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ------------------ ----------------- ----------------- ------------------ FROM OPERATIONS Net investment income (loss) $ (14,539) $ (114,244) $ (30,349) $ (383,863) Net realized gain (loss) 6,827 (18,231) 1,225 (55,654) Net change in unrealized appreciation (depreciation) on investments 1,057,695 9,185,247 986,835 17,004,162 ------------------ ----------------- ----------------- ------------------ Net increase (decrease) resulting from operations 1,049,983 9,052,772 957,711 16,564,645 ------------------ ----------------- ----------------- ------------------ FROM ACCUMULATION UNIT TRANSACTIONS Participant deposits 642,804 3,614,441 754,628 6,749,248 Participant transfers 875,794 720,078 420,920 (1,023,336) Participant withdrawals (474,317) (3,292,867) (567,274) (6,420,697) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets resulting from participant transactions 1,044,281 1,041,652 608,274 (694,785) ------------------ ----------------- ----------------- ------------------ Net increase (decrease) in net assets 2,094,264 10,094,424 1,565,985 15,869,860 NET ASSETS Beginning of period 2,262,116 18,859,158 2,969,519 40,151,641 ------------------ ----------------- ----------------- ------------------ End of period $ 4,356,380 $ 28,953,582 $ 4,535,504 $ 56,021,501 ================== ================= ================= ==================
(+) Participant transfers include net assets transferred in from Aberdeen New Asia on February 7, 2003. (++) Participant transfers include net assets transferred in from MFS Investors Growth and Van Kampen Focus Equity on February 14, 2003. Footnotes for Statements of Changes in Net Assets For the period ended December 31, 2003 (1) From inception June 2, 2003 to December 31, 2003. (2) From inception June 4, 2003 to December 31, 2003. See Notes to Financial Statements SA-24 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R) AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 1--ORGANIZATION The Phoenix Life Variable Universal Life Account (the "Account"), is a separate investment account of Phoenix Life Insurance Company ("Phoenix"). Phoenix is a wholly-owned subsidiary of The Phoenix Companies, Inc. The Account is registered as a unit investment trust under the Investment Company Act of 1940, as amended, and was established June 17, 1985. The Account is used to fund benefits for variable life products issued by Phoenix, including Flex Edge, Flex Edge Success(R), Joint Edge(R) and Individual Edge(R) (the "Product"). These financial statements are presented for the Product. The Account currently consists of 50 subaccounts that invest in shares of a specific series of a mutual fund. The mutual funds include The Phoenix Edge Series Fund, AIM Variable Insurance Funds, The Alger American Fund, Federated Insurance Series, Fidelity(R) Variable Insurance Products, Franklin Templeton Variable Insurance Products Trust, The Rydex Variable Trust, Scudder Investments VIT Funds, The Universal Institutional Funds, Inc. and Wanger Advisors Trust (collectively, the "Funds"). As of December 31, 2004, all subaccounts were available for investment. Each series has distinct investment objectives as outlined below. Additionally, policyholders also may direct the allocation of their investments between the Account and the Guaranteed Interest Account. The investment objectives as listed below are consistent with the investment objectives as listed in The Phoenix Edge Series annual report. The investment objectives for all of the Funds can also be found in the various Funds' prospectuses.
- ----------------------------------------------------------------------------------------------------------------------------------- SERIES NAME INVESTMENT OBJECTIVE - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Aberdeen International Series High total return consistent with reasonable risk - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-AIM Growth Series Long-term growth of capital and future income rather than current (formerly, Phoenix-MFS Investors Growth Stock Series) income - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alger Small-Cap Growth Series (formerly, Phoenix-State Street Research Small-Cap Long-term capital growth Growth Series) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Alliance/Bernstein Enhanced Index Series High total return - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Duff & Phelps Real Estate Securities Series Capital appreciation and income with approximately equal emphasis - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Capital Growth Series Intermediate and long-term growth of capital appreciation with income as a secondary consideration - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Growth and Income Series Dividend growth, current income and capital appreciation (formerly, Phoenix-Oakhurst Growth and Income Series) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Small-Cap Growth Series (formerly, Phoenix-Engemann Small & Mid-Cap Growth Long-term growth of capital Series) - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Strategic Allocation Series High total return over an extended period of time consistent with (formerly, Phoenix-Oakhurst Strategic Allocation Series) prudent investment risk - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Engemann Value Equity Series Long-term capital appreciation with current income as a secondary (formerly, Phoenix-Oakhurst Value Equity Series) consideration - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Money Market Series As high a level of current income as is consistent with the preservation of capital and maintenance of liquidity - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Fixed Income Series Long-term total return - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Goodwin Multi-Sector Short Term Bond Series To provide high current income while attempting to limit changes in the series` net asset value per share caused by interest rate changes - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Rising Dividends Series Long-term capital appreciation with dividend income as a secondary consideration - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Kayne Small-Cap Quality Value Series Long-term capital appreciation with dividend income as a secondary consideration - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard International Equity Select Series Long-term capital appreciation - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Lazard Small-Cap Value Series Long-term capital appreciation - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Lord Abbett Bond-Debenture Series High current income and long-term capital appreciation to produce a high total return - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Lord Abbett Large-Cap Value Series Capital appreciation with income as a secondary consideration - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Lord Abbett Mid-Cap Value Series Capital appreciation - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Dow 30 Series To track the total return of the Dow Jones Industrial Average(SM) before series expenses - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Northern Nasdaq-100 Index(R) Series To track the total return of the Nasdaq-100 Index(R) before series expenses - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Sanford Bernstein Mid-Cap Value Series Long-term capital appreciation with current income as a secondary investment objective - ----------------------------------------------------------------------------------------------------------------------------------- Long-term capital appreciation by investing primarily in small- Phoenix-Sanford Bernstein Small-Cap Value Series capitalization stocks that appear to be undervalued with current income as a secondary investment objective - -----------------------------------------------------------------------------------------------------------------------------------
SA-25 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R) AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------------------------------------- SERIES NAME INVESTMENT OBJECTIVE - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Mid-Cap Growth Series Capital appreciation - ----------------------------------------------------------------------------------------------------------------------------------- Phoenix-Seneca Strategic Theme Series Long-term capital appreciation - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund Growth of capital - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund Long-term growth of capital - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund Long-term growth of capital with income as a secondary objective - ----------------------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio Long-term capital appreciation - ----------------------------------------------------------------------------------------------------------------------------------- Federated Fund for U.S. Government Securities II Current income by investing primarily in a diversified portfolio or U.S. government securities - ----------------------------------------------------------------------------------------------------------------------------------- Federated High Income Bond Fund II High current income by investing primarily in a professionally managed, diversified portfolio of fixed income securities - ----------------------------------------------------------------------------------------------------------------------------------- VIP Contrafund(R) Portfolio Long-term capital appreciation - ----------------------------------------------------------------------------------------------------------------------------------- VIP Growth Opportunities Portfolio Capital growth - ----------------------------------------------------------------------------------------------------------------------------------- VIP Growth Portfolio Capital appreciation - ----------------------------------------------------------------------------------------------------------------------------------- Mutual Shares Securities Fund Capital appreciation with income as a secondary goal - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Developing Markets Securities Fund Long-term capital appreciation - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Fund Long-term capital growth - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Global Asset Allocation Fund High total return - ----------------------------------------------------------------------------------------------------------------------------------- Templeton Growth Securities Fund Long-term capital growth - ----------------------------------------------------------------------------------------------------------------------------------- To provide investment results that will inversely correlate to the price movements of a benchmark for U.S. Treasury debt instruments or Rydex Variable Trust Juno Fund futures contract on a specified debt instrument. The Fund's current benchmark is the inverse of the daily price movement of the Long Treasury Bond. - ----------------------------------------------------------------------------------------------------------------------------------- To provide investment results that match the performance of a specific Rydex Variable Trust Nova Fund benchmark on a daily basis. The Fund's current benchmark is 150% of the performance of the S&P 500(R)Index (the "underlying index"). - ----------------------------------------------------------------------------------------------------------------------------------- Rydex Variable Trust Sector Rotation Fund Long-term capital appreciation - ----------------------------------------------------------------------------------------------------------------------------------- Match the performance of the Morgan Stanley Capital International Scudder VIT EAFE(R)Equity Index Fund EAFE(R) Index which emphasizes stocks of companies in major markets in Europe, Australasia and the Far East - ----------------------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund Match the performance of the Standard & Poor's 500 Composite Stock Price Index which emphasizes stocks of large U.S. companies - ----------------------------------------------------------------------------------------------------------------------------------- Technology Portfolio Long-term capital appreciation - ----------------------------------------------------------------------------------------------------------------------------------- Wanger International Select Long-term growth of capital (formerly, Wanger Foreign Forty) - ----------------------------------------------------------------------------------------------------------------------------------- Wanger International Small Cap Long-term growth of capital - ----------------------------------------------------------------------------------------------------------------------------------- Wanger Select Long-term growth of capital (formerly, Wanger Twenty) - ----------------------------------------------------------------------------------------------------------------------------------- Wanger U.S. Smaller Companies Long-term growth of capital - -----------------------------------------------------------------------------------------------------------------------------------
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: Investment transactions are recorded on the trade date. 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 from the Funds are recorded by each subaccount on the ex-dividend date. E. USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities, revenues and expenses. Actual results could differ from those estimates. F. CONTRACTS IN PAYOUT (ANNUITIZATION) PERIOD: As of December 31, 2004, there were no contracts in the payout (annuitization) period. SA-26 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 3--PURCHASES AND PROCEEDS FROM SALES OF SHARES OF THE FUNDS Purchases and proceeds from sales of shares of the Funds for the period ended December 31, 2004 aggregated the following:
SUBACCOUNT PURCHASES SALES - ---------- --------- ----- THE PHOENIX EDGE SERIES FUND - ---------------------------- Phoenix-Aberdeen International Series $ 9,043,205 $ 9,351,971 Phoenix-AIM Growth Series 2,572,292 2,200,854 Phoenix-Alger Small-Cap Growth Series 1,052,176 455,087 Phoenix-Alliance/Bernstein Enhanced Index Series 2,683,864 2,849,618 Phoenix-Duff & Phelps Real Estate Securities Series 7,077,759 3,686,280 Phoenix-Engemann Capital Growth Series 16,032,325 30,820,072 Phoenix-Engemann Growth and Income Series 5,042,004 2,136,329 Phoenix-Engemann Small-Cap Growth Series 2,137,722 1,882,674 Phoenix-Engemann Strategic Allocation Series 7,489,006 10,282,942 Phoenix-Engemann Value Equity Series 9,483,434 2,385,984 Phoenix-Goodwin Money Market Series 11,633,689 19,105,794 Phoenix-Goodwin Multi-Sector Fixed Income Series 16,605,089 4,713,692 Phoenix-Goodwin Multi-Sector Short Term Bond Series 1,411,562 340,197 Phoenix-Kayne Rising Dividends Series 858,578 244,588 Phoenix-Kayne Small-Cap Quality Value Series 827,054 101,696 Phoenix-Lazard International Equity Select Series 2,127,745 297,368 Phoenix-Lazard Small-Cap Value Series 396,759 105,727 Phoenix-Lord Abbett Bond-Debenture Series 696,947 145,966 Phoenix-Lord Abbett Large-Cap Value Series 4,304,400 329,770 Phoenix-Lord Abbett Mid-Cap Value Series 1,729,138 206,890 Phoenix-Northern Dow 30 Series 1,741,736 1,074,372 Phoenix-Northern Nasdaq-100 Index(R) Series 1,597,400 857,571 Phoenix-Sanford Bernstein Mid-Cap Value Series 5,949,936 2,612,108 Phoenix-Sanford Bernstein Small-Cap Value Series 4,524,085 1,938,283 Phoenix-Seneca Mid-Cap Growth Series 2,942,288 2,005,695 Phoenix-Seneca Strategic Theme Series 2,637,718 4,015,053
SA-27 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 3--PURCHASES AND PROCEEDS FROM SALES OF SHARES OF THE FUNDS (CONTINUED)
SUBACCOUNT PURCHASES SALES - ---------- --------- ----- AIM VARIABLE INSURANCE FUNDS -- SERIES I SHARES - ----------------------------------------------- AIM V.I. Capital Appreciation Fund $ 1,328,803 $ 360,000 AIM V.I. Mid Cap Core Equity Fund 2,609,258 6,440 AIM V.I. Premier Equity Fund 472,027 369,519 THE ALGER AMERICAN FUND -- CLASS O SHARES - ----------------------------------------- Alger American Leveraged AllCap Portfolio 2,631,626 913,562 FEDERATED INSURANCE SERIES - -------------------------- Federated Fund for U.S. Government Securities II 4,143,834 6,566,333 Federated High Income Bond Fund II -- Primary Shares 3,411,901 1,554,066 FIDELITY(R) VARIABLE INSURANCE PRODUCTS -- SERVICE CLASS - -------------------------------------------------------- VIP Contrafund(R)Portfolio 5,561,497 1,210,570 VIP Growth Opportunities Portfolio 503,796 225,000 VIP Growth Portfolio 3,237,452 685,911 FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST -- CLASS 2 - --------------------------------------------------------------- Mutual Shares Securities Fund 1,752,300 1,002,272 Templeton Developing Markets Securities Fund 105,445 204,865 Templeton Foreign Securities Fund 2,350,829 1,112,569 Templeton Global Asset Allocation Fund 61,170 95,393 Templeton Growth Securities Fund 2,177,635 1,447,467 THE RYDEX VARIABLE TRUST - ------------------------ Rydex Variable Trust Juno Fund 245,892 371,483 Rydex Variable Trust Nova Fund 280,177 188,749 Rydex Variable Trust Sector Rotation Fund 284,553 71,726 SCUDDER INVESTMENT VIT FUNDS -- CLASS A - --------------------------------------- Scudder VIT EAFE(R)Equity Index Fund 1,343,098 485,603 Scudder VIT Equity 500 Index Fund 2,618,357 1,756,681 THE UNIVERSAL INSTITUTIONAL FUNDS, INC. -- CLASS I SHARES - --------------------------------------------------------- Technology Portfolio 1,058,035 1,168,369 WANGER ADVISORS TRUST - --------------------- Wanger International Select 1,576,858 1,564,151 Wanger International Small Cap 4,576,645 5,649,274 Wanger Select 1,686,987 572,208 Wanger U.S. Smaller Companies 5,119,233 6,527,983
SA-28 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 4--FINANCIAL HIGHLIGHTS A summary of Financial Highlights of the Account for the periods ended December 31, 2004, 2003, 2002 and 2001 follows:
PERIOD ENDED SUBACCOUNT DECEMBER 31, - ---------- ================================================================== THE PHOENIX EDGE SERIES FUND 2004 2003 2002 2001 - ---------------------------- =========== ========== ========== ========== PHOENIX-ABERDEEN INTERNATIONAL SERIES Accumulation units outstanding 21,901,133 22,450,957 22,442,042 24,473,284 Unit value $2.461180 $2.054118 $1.570295 $1.858078 Net assets (thousands) $53,903 $46,117 $35,241 $45,473 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 2.76% 1.94% 1.06% - Total return 19.82% 30.81% (15.49%) (24.66%) PHOENIX-AIM GROWTH SERIES Accumulation units outstanding 26,260,036 25,459,713 20,576,182 15,785,620 Unit value $0.607046 $0.587230 $0.489936 $0.694053 Net assets (thousands) $15,941 $14,951 $10,081 $10,956 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 0.10% - - - Total return 3.37% 19.86% (29.41%) (24.46%) PHOENIX-ALGER SMALL-CAP GROWTH SERIES(5) Accumulation units outstanding 1,102,620 738,851 45,030 - Unit value $1.549689 $1.529729 $1.005350 - Net assets (thousands) $1,709 $1,130 $45 - Mortality and expense ratio 0.80% 0.80% 0.80% * - Investment income ratio - - - * - Total return 1.30% 52.16% 0.54% - PHOENIX-ALLIANCE/BERNSTEIN ENHANCED INDEX SERIES Accumulation units outstanding 18,956,499 19,207,454 19,705,536 20,048,035 Unit value $1.301100 $1.194138 $0.953628 $1.259680 Net assets (thousands) $24,664 $22,936 $18,792 $25,254 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 1.47% 1.11% 0.91% 0.69% Total return 8.96% 25.22% (24.30%) (12.61%) PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES Accumulation units outstanding 6,345,492 5,962,385 5,856,566 4,420,316 Unit value $3.590174 $2.686958 $1.958959 $1.761879 Net assets (thousands) $22,781 $16,021 $11,473 $7,788 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 2.48% 3.46% 3.96% 4.23% Total return 33.61% 37.16% 11.19% 5.76%
SA-29 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 4--FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED DECEMBER 31, ================================================================== 2004 2003 2002 2001 =========== ========== ========== ========== PHOENIX-ENGEMANN CAPITAL GROWTH SERIES Accumulation units outstanding 50,699,279 54,984,183 58,005,630 61,718,275 Unit value $3.597223 $3.454497 $2.753080 $3.691068 Net assets (thousands) $182,377 $189,943 $159,694 $227,808 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 0.85% 0.10% - 0.06% Total return 4.13% 25.48% (25.41%) (35.11%) PHOENIX-ENGEMANN GROWTH AND INCOME SERIES Accumulation units outstanding 16,663,411 14,218,676 13,358,248 12,075,563 Unit value $1.248840 $1.139532 $0.901209 $1.172440 Net assets (thousands) $20,810 $16,203 $12,039 $14,158 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 1.28% 1.15% 0.82% 0.53% Total return 9.59% 26.44% (23.13%) (8.90%) PHOENIX-ENGEMANN SMALL-CAP GROWTH SERIES Accumulation units outstanding 6,943,058 6,672,024 3,637,075 1,815,149 Unit value $0.659472 $0.606033 $0.417225 $0.590777 Net assets (thousands) $4,579 $4,043 $1,517 $1,072 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio - - - 0.05% Total return 8.82% 45.25% (29.38%) (27.31%) PHOENIX-ENGEMANN STRATEGIC ALLOCATION SERIES Accumulation units outstanding 16,941,554 18,404,299 19,839,016 12,604,034 Unit value $4.125941 $3.870487 $3.254858 $3.710712 Net assets (thousands) $69,900 $71,234 $64,573 $46,770 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 2.60% 2.65% 2.81% 2.53% Total return 6.60% 18.91% (12.28%) 1.05% PHOENIX-ENGEMANN VALUE EQUITY SERIES Accumulation units outstanding 17,619,044 12,517,067 11,884,844 9,739,141 Unit value $1.532196 $1.367879 $1.113144 $1.437383 Net assets (thousands) $26,996 $17,122 $13,230 $13,999 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 0.97% 0.94% 0.95% 0.92% Total return 12.01% 22.88% (22.56%) (18.62%)
SA-30 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 4--FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED DECEMBER 31, ================================================================== 2004 2003 2002 2001 =========== ========== ========== ========== PHOENIX-GOODWIN MONEY MARKET SERIES Accumulation units outstanding 21,327,253 25,713,300 31,383,764 29,389,267 Unit value $1.700619 $1.700842 $1.702904 $1.692597 Net assets (thousands) $36,270 $43,734 $53,444 $49,744 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 0.78% 0.69% 1.40% 3.64% Total return (0.01%) (0.12%) 0.61% 2.99% PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES Accumulation units outstanding 12,149,131 9,054,876 8,866,173 8,751,521 Unit value $3.343821 $3.155077 $2.775909 $2.543934 Net assets (thousands) $40,625 $28,569 $24,612 $22,263 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 6.33% 6.69% 7.13% 8.14% Total return 5.98% 13.66% 9.12% 5.24% PHOENIX-GOODWIN MULTI-SECTOR SHORT TERM BOND SERIES(10) Accumulation units outstanding 1,709,703 725,999 - - Unit value $1.070865 $1.024824 - - Net assets (thousands) $1,831 $744 - - Mortality and expense ratio 0.80% 0.80% * - - Investment income ratio 4.55% 5.38% * - - Total return 4.49% 2.00% - - PHOENIX-KAYNE RISING DIVIDENDS SERIES(4) Accumulation units outstanding 1,351,751 833,221 155,893 - Unit value $1.187332 $1.137122 $0.962489 - Net assets (thousands) $1,605 $947 $150 - Mortality and expense ratio 0.80% 0.80% 0.80% * - Investment income ratio 1.62% 0.80% 1.22% * - Total return 4.42% 18.14% (3.75)% - PHOENIX-KAYNE SMALL-CAP QUALITY VALUE SERIES(7) Accumulation units outstanding 943,384 412,407 75,388 - Unit value $1.497966 $1.201440 $1.006924 - Net assets (thousands) $1,413 $495 $76 - Mortality and expense ratio 0.80% 0.80% 0.80% * - Investment income ratio 1.22% 1.32% 3.84% * - Total return 24.68% 19.32% (2.01%) -
SA-31 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 4--FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED DECEMBER 31, ================================================================== 2004 2003 2002 2001 =========== ========== ========== ========== PHOENIX-LAZARD INTERNATIONAL EQUITY SELECT SERIES(8) Accumulation units outstanding 2,896,992 1,479,667 225,617 - Unit value $1.413140 $1.229572 $0.954805 - Net assets (thousands) $4,094 $1,819 $215 - Mortality and expense ratio 0.80% 0.80% 0.80% * - Investment income ratio 1.39% 1.02% - * - Total return 14.93% 28.78% (1.09%) - PHOENIX-LAZARD SMALL-CAP VALUE SERIES(5) Accumulation units outstanding 395,091 215,574 79,546 - Unit value $1.525944 $1.344974 $0.975786 - Net assets (thousands) $603 $290 $78 - Mortality and expense ratio 0.80% 0.80% 0.80% * - Investment income ratio - 0.11% 1.46% * - Total return 13.46% 37.83% (2.93%) - PHOENIX-LORD ABBETT BOND-DEBENTURE SERIES(5) Accumulation units outstanding 981,506 595,839 128,155 - Unit value $1.332266 $1.238637 $1.060350 - Net assets (thousands) $1,308 $738 $136 - Mortality and expense ratio 0.80% 0.80% 0.80% * - Investment income ratio 5.44% 5.91% 11.58% * - Total return 7.56% 16.81% 6.09% - PHOENIX-LORD ABBETT LARGE-CAP VALUE SERIES(4) Accumulation units outstanding 4,954,651 1,949,575 200,867 - Unit value $1.428364 $1.278196 $0.989338 - Net assets (thousands) $7,077 $2,492 $199 - Mortality and expense ratio 0.80% 0.80% 0.80% * - Investment income ratio 1.11% 0.75% 1.27% * - Total return 11.75% 29.20% (1.07%) - PHOENIX-LORD ABBETT MID-CAP VALUE SERIES(6) Accumulation units outstanding 2,044,458 917,275 134,444 - Unit value $1.517619 $1.231371 $0.997297 - Net assets (thousands) $3,103 $1,130 $134 - Mortality and expense ratio 0.80% 0.80% 0.80% * - Investment income ratio 0.64% 0.90% 1.71% * - Total return 23.25% 23.47% (1.78%) -
SA-32 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 4--FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED DECEMBER 31, ================================================================== 2004 2003 2002 2001 =========== ========== ========== ========== PHOENIX-NORTHERN DOW 30 SERIES Accumulation units outstanding 5,945,255 5,265,344 4,501,536 2,814,609 Unit value $0.968694 $0.932921 $0.738166 $0.880617 Net assets (thousands) $5,759 $4,912 $3,323 $2,479 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 1.71% 1.71% 1.57% 1.81% Total return 3.83% 26.38% (16.18%) (6.74%) PHOENIX-NORTHERN NASDAQ-100 INDEX(R) SERIES Accumulation units outstanding 12,062,446 10,067,422 6,817,243 3,878,705 Unit value $0.406395 $0.372287 $0.252123 $0.407147 Net assets (thousands) $4,902 $3,748 $1,719 $1,579 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 0.65% - - - Total return 9.16% 47.66% (38.08%) (33.60%) PHOENIX-SANFORD BERNSTEIN MID-CAP VALUE SERIES Accumulation units outstanding 13,337,682 12,032,936 12,731,319 8,522,555 Unit value $1.680151 $1.406661 $1.005861 $1.108762 Net assets (thousands) $22,409 $16,926 $12,806 $9,449 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 0.18% 0.19% 0.95% 1.69% Total return 19.44% 39.85% (9.28%) 22.00% PHOENIX-SANFORD BERNSTEIN SMALL-CAP VALUE SERIES Accumulation units outstanding 6,655,013 5,650,848 4,722,211 1,700,551 Unit value $1.961831 $1.612104 $1.129627 $1.245022 Net assets (thousands) $13,056 $9,110 $5,334 $2,117 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio - - 0.61% 1.38% Total return 21.69% 42.71% (9.27%) 14.83% PHOENIX-SENECA MID-CAP GROWTH SERIES Accumulation units outstanding 11,217,778 10,288,649 9,331,184 7,666,487 Unit value $1.296186 $1.224330 $0.957980 $1.430671 Net assets (thousands) $14,540 $12,597 $8,939 $10,968 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio - - - - Total return 5.87% 27.80% (33.04%) (25.89%)
SA-33 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 4--FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED DECEMBER 31, ============================================================== 2004 2003 2002 2001 =========== ========== ========== ========== PHOENIX-SENECA STRATEGIC THEME SERIES Accumulation units outstanding 13,096,327 13,974,176 14,431,997 14,905,929 Unit value $1.492002 $1.426488 $1.047631 $1.624256 Net assets (thousands) $19,540 $19,934 $15,119 $24,211 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio - - - - Total return 4.59% 36.16% (35.50%) (27.95%) AIM VARIABLE INSURANCE FUNDS -- SERIES I SHARES - ----------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND(2) Accumulation units outstanding 3,599,005 2,431,737 1,066,959 188,887 Unit value $0.894387 $0.845573 $0.658111 $0.877030 Net assets (thousands) $3,219 $2,056 $702 $166 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% * Investment income ratio - - - - * Total return 5.77% 28.48% (24.96%) (12.30%) AIM V.I. MID CAP CORE EQUITY FUND(11) Accumulation units outstanding 2,495,504 - - - Unit value $1.016853 - - - Net assets (thousands) $2,538 - - - Mortality and expense ratio 0.80% * - - - Investment income ratio 1.98% * - - - Total return 1.92% - - - AIM V.I. PREMIER EQUITY FUND(1) Accumulation units outstanding 2,274,721 2,141,722 1,762,520 615,289 Unit value $0.880364 $0.839035 $0.676203 $0.977417 Net assets (thousands) $2,003 $1,797 $1,192 $601 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% * Investment income ratio 0.50% 0.33% 0.42% 0.39% * Total return 4.93% 24.08% (30.82%) (2.26%) THE ALGER AMERICAN FUND -- CLASS O SHARES - ----------------------------------------- ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO Accumulation units outstanding 14,629,848 11,359,445 9,737,826 6,415,325 Unit value $0.598889 $0.558021 $0.417529 $0.636852 Net assets (thousands) $8,762 $6,339 $4,066 $4,086 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio - - 0.01% - Total return 7.32% 33.65% (34.44%) (16.61%)
SA-34 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 4--FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED DECEMBER 31, ============================================================== 2004 2003 2002 2001 =========== ========== ========== ========== FEDERATED INSURANCE SERIES - -------------------------- FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II Accumulation units outstanding 11,756,250 14,041,679 14,068,442 3,854,015 Unit value $1.334561 $1.298456 $1.278671 $1.182044 Net assets (thousands) $15,689 $18,233 $17,989 $4,556 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 4.09% 3.51% 3.13% 2.01% Total return 2.78% 1.55% 8.17% 6.17% FEDERATED HIGH INCOME BOND FUND II -- PRIMARY SHARES Accumulation units outstanding 5,877,310 4,542,732 3,328,858 2,268,237 Unit value $1.208836 $1.103195 $0.909941 $0.904719 Net assets (thousands) $7,105 $5,012 $3,029 $2,052 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 6.39% 6.37% 9.22% 7.51% Total return 9.58% 21.24% 0.58% 0.57% FIDELITY(R) VARIABLE INSURANCE PRODUCTS -- SERVICE CLASS - -------------------------------------------------------- VIP CONTRAFUND(R) PORTFOLIO Accumulation units outstanding 15,575,365 10,971,356 6,104,174 2,191,035 Unit value $1.064412 $0.930290 $0.730633 $0.813167 Net assets (thousands) $16,579 $10,207 $4,460 $1,782 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 0.21% 0.26% 0.49% 0.41% Total return 14.42% 27.33% (10.15%) (13.07%) VIP GROWTH OPPORTUNITIES PORTFOLIO Accumulation units outstanding 2,230,387 1,838,204 1,342,868 524,240 Unit value $0.766583 $0.721802 $0.561171 $0.724485 Net assets (thousands) $1,710 $1,327 $754 $380 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 0.43% 0.55% 0.66% 0.18% Total return 6.20% 28.62% (22.54%) (15.13%) VIP GROWTH PORTFOLIO Accumulation units outstanding 17,452,278 13,322,032 9,620,908 4,190,048 Unit value $0.653158 $0.637624 $0.484077 $0.069911 Net assets (thousands) $11,399 $8,494 $4,657 $2,929 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 0.15% 0.17% 0.10% - Total return 2.44% 31.72% (30.76%) (18.39%)
SA-35 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 4--FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED DECEMBER 31, ============================================================== 2004 2003 2002 2001 =========== ========== ========== ========== FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST -- CLASS 2 - --------------------------------------------------------------- MUTUAL SHARES SECURITIES FUND Accumulation units outstanding 5,715,635 5,193,660 4,491,339 2,494,390 Unit value $1.551247 $1.388375 $1.118326 $1.278341 Net assets (thousands) $8,866 $7,211 $5,023 $3,189 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 0.77% 1.05% 0.87% 1.69% Total return 11.73% 24.15% (12.52%) 6.19% TEMPLETON DEVELOPING MARKETS SECURITIES FUND Accumulation units outstanding 666,870 736,400 917,754 1,021,204 Unit value $1.840495 $1.487699 $0.980238 $0.989599 Net assets (thousands) $1,227 $1,096 $900 $1,011 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 1.85% 1.21% 1.38% 0.98% Total return 23.71% 51.77% (0.95%) (8.82%) TEMPLETON FOREIGN SECURITIES FUND Accumulation units outstanding 8,501,812 7,429,243 6,298,509 4,278,615 Unit value $1.278497 $1.087335 $0.829038 $1.026214 Net assets (thousands) $10,870 $8,078 $5,222 $4,391 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 1.07% 1.77% 1.51% 2.79% Total return 17.58% 31.16% (19.21%) (16.67%) TEMPLETON GLOBAL ASSET ALLOCATION FUND Accumulation units outstanding 286,021 317,369 332,615 430,437 Unit value $1.549819 $1.350105 $1.031409 $1.087442 Net assets (thousands) $443 $428 $343 $468 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 2.81% 2.54% 1.81% 0.93% Total return 14.79% 30.90% (5.15%) (10.67%) TEMPLETON GROWTH SECURITIES FUND Accumulation units outstanding 5,597,604 5,131,416 3,833,470 1,628,111 Unit value $1.614349 $1.402589 $1.070031 $1.323337 Net assets (thousands) $9,036 $7,197 $4,102 $2,155 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 1.22% 1.50% 2.24% 16.83% Total return 15.10% 31.08% (19.14%) (2.09%)
SA-36 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 4--FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED DECEMBER 31, ============================================================== 2004 2003 2002 2001 =========== ========== ========== ========== THE RYDEX VARIABLE TRUST - ------------------------ RYDEX VARIABLE TRUST JUNO FUND(9) Accumulation units outstanding 221,505 349,980 - - Unit value $0.934409 $1.054405 - - Net assets (thousands) $207 $369 - - Mortality and expense ratio 0.80% 0.80% * - - Investment income ratio - - * - - Total return (11.38%) 5.44% - - RYDEX VARIABLE TRUST NOVA FUND(10) Accumulation units outstanding 284,970 212,982 - - Unit value $1.385420 $1.218423 - - Net assets (thousands) $395 $260 - - Mortality and expense ratio 0.80% 0.80% * - - Investment income ratio 0.05% - * - - Total return 13.71% 18.43% - - RYDEX VARIABLE TRUST SECTOR ROTATION FUND(10) Accumulation units outstanding 306,533 125,163 - - Unit value $1.269504 $1.155895 - - Net assets (thousands) $389 $145 - - Mortality and expense ratio 0.80% 0.80% * - - Investment income ratio - - * - - Total return 9.83% 13.37% - - SCUDDER INVESTMENT VIT FUNDS -- CLASS A - --------------------------------------- SCUDDER VIT EAFE(R) EQUITY INDEX FUND Accumulation units outstanding 4,795,685 3,749,180 2,854,079 2,495,507 Unit value $0.887803 $0.751656 $0.568199 $0.730569 Net assets (thousands) $4,258 $2,818 $1,622 $1,823 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 2.28% 4.11% 1.48% - Total return 18.11% 32.29% (22.23%) (25.30%) SCUDDER VIT EQUITY 500 INDEX FUND(3) Accumulation units outstanding 7,186,838 6,387,129 2,902,712 122,489 Unit value $1.144341 $1.043083 $0.820470 $1.054972 Net assets (thousands) $8,224 $6,662 $2,382 $129 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% * Investment income ratio 1.11% 0.98% 2.87% - * Total return 9.71% 27.13% (22.94%) 5.50%
SA-37 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 4--FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED DECEMBER 31, ============================================================== 2004 2003 2002 2001 =========== ========== ========== ========== THE UNIVERSAL INSTITUTIONAL FUNDS, INC. -- CLASS I SHARES - --------------------------------------------------------- TECHNOLOGY PORTFOLIO Accumulation units outstanding 18,561,391 18,794,402 15,448,380 12,509,589 Unit value $0.299181 $0.306628 $0.209173 $0.413206 Net assets (thousands) $5,553 $5,763 $3,231 $5,169 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio - - - - Total return (2.43%) 46.59% (49.38%) (49.26%) WANGER ADVISORS TRUST - --------------------- WANGER INTERNATIONAL SELECT Accumulation units outstanding 2,732,875 2,741,745 1,994,708 1,540,402 Unit value $1.959812 $1.588908 $1.134059 $1.349598 Net assets (thousands) $5,356 $4,356 $2,262 $2,079 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 0.29% 0.30% - 0.12% Total return 23.34% 40.11% (15.97%) (27.21%) WANGER INTERNATIONAL SMALL CAP Accumulation units outstanding 15,254,601 15,760,868 15,160,217 14,822,518 Unit value $2.374023 $1.837055 $1.243990 $1.455318 Net assets (thousands) $36,215 $28,954 $18,859 $21,571 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio 0.70% 0.30% - - Total return 29.23% 47.67% (14.52%) (21.79%) WANGER SELECT Accumulation units outstanding 2,912,296 2,347,379 1,993,062 1,403,212 Unit value $2.286742 $1.932157 $1.489928 $1.625799 Net assets (thousands) $6,660 $4,536 $2,970 $2,281 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio - - - - Total return 18.35% 29.68% (8.36%) 8.22%
SA-38 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 4--FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED DECEMBER 31, ============================================================== 2004 2003 2002 2001 =========== ========== ========== ========== WANGER U.S. SMALLER COMPANIES Accumulation units outstanding 26,179,632 26,607,737 27,094,473 26,940,784 Unit value $2.471525 $2.105459 $1.481915 $1.795730 Net assets (thousands) $64,704 $56,022 $40,152 $48,378 Mortality and expense ratio 0.80% 0.80% 0.80% 0.80% Investment income ratio - - - 0.06% Total return 17.39% 42.08% (17.48%) 10.49%
MORTALITY AND EXPENSE RATIO: These amounts represent the annualized contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. These ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund have been excluded. INVESTMENT INCOME RATIO: These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccount invests. The prior periods' income ratios have been changed to conform with current year presentation. TOTAL RETURN: These amounts represent the total return for the periods indicated, including changes in the value of the underlying fund, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the variable account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. (1) From inception April 11, 2001 to December 31, 2001. (2) From inception May 30, 2001 to December 31, 2001. (3) From inception October 30, 2001 to December 31, 2001. (4) From inception August 12, 2002 to December 31, 2002. (5) From inception August 14, 2002 to December 31, 2002. (6) From inception August 20, 2002 to December 31, 2002. (7) From inception August 26, 2002 to December 31, 2002. (8) From inception September 10, 2002 to December 31, 2002. (9) From inception of June 2, 2003 to December 31, 2003. (10) From inception of June 4, 2003 to December 31, 2003. (11) From inception of December 3, 2004 to December 31, 2004. *Annualized. SA-39 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2004
SUBACCOUNT --------------------------------------------------------------------------------- PHOENIX- PHOENIX- PHOENIX-ALGER ALLIANCE/ ABERDEEN PHOENIX-AIM SMALL-CAP BERNSTEIN FLEX EDGE, FLEX EDGE SUCCESS INTERNATIONAL GROWTH GROWTH ENHANCED INDEX AND INDIVIDUAL EDGE SERIES SERIES SERIES SERIES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 21,153,505 23,912,877 687,164 18,453,986 Participant deposits 2,377,001 5,049,484 194,015 2,597,561 Participant transfers 288,667(e) (1,402,616) 207,644 (280,416) Participant withdrawals (3,263,355) (3,014,834) (113,258) (2,539,246) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 20,555,818 24,544,911 975,565 18,231,885 ================================================================================= PHOENIX- PHOENIX- ALLIANCE/ ABERDEEN PHOENIX-ALGER BERNSTEIN INTERNATIONAL PHOENIX-AIM SMALL-CAP ENHANCED INDEX JOINT EDGE SERIES GROWTH SERIES GROWTH SERIES SERIES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 1,297,452 1,546,836 51,687 753,468 Participant deposits 250,172 550,962 52,904 182,244 Participant transfers 34,707(e) (109,454) 48,402 (36,598) Participant withdrawals (237,016) (273,219) (25,938) (174,500) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 1,345,315 1,715,125 127,055 724,614 ================================================================================= PHOENIX-DUFF & PHOENIX- PHOENIX- PHOENIX- PHELPS REAL ENGEMANN ENGEMANN ENGEMANN FLEX EDGE, FLEX EDGE SUCCESS ESTATE SECURITIES CAPITAL GROWTH GROWTH AND SMALL-CAP AND INDIVIDUAL EDGE SERIES SERIES INCOME SERIES GROWTH SERIES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 5,648,170 51,432,217 13,189,240 6,386,157 Participant deposits 675,122 6,997,717 2,482,744 1,141,878 Participant transfers 402,106 (2,522,849)(c) 1,260,346(b) (26,636) Participant withdrawals (750,303) (8,458,233) (1,984,681) (913,590) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 5,975,095 47,448,852 14,947,649 6,587,809 ================================================================================= PHOENIX-DUFF & PHOENIX- PHOENIX- PHOENIX- PHELPS REAL ENGEMANN ENGEMANN ENGEMANN ESTATE SECURITIES CAPITAL GROWTH GROWTH AND SMALL-CAP JOINT EDGE SERIES SERIES INCOME SERIES GROWTH SERIES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 314,215 3,551,966 1,029,436 285,867 Participant deposits 67,830 694,443 470,140 114,621 Participant transfers 42,014 (244,486)(c) 475,449(b) 964 Participant withdrawals (53,662) (751,496) (259,263) (46,203) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 370,397 3,250,427 1,715,762 355,249 =================================================================================
SA-40 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
SUBACCOUNT --------------------------------------------------------------------------------- PHOENIX- PHOENIX- PHOENIX- ENGEMANN ENGEMANN PHOENIX- GOODWIN MULTI- FLEX EDGE, FLEX EDGE SUCCESS STRATEGIC VALUE EQUITY GOODWIN MONEY SECTOR FIXED AND INDIVIDUAL EDGE ALLOCATION SERIES SERIES MARKET SERIES INCOME SERIES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 17,432,644 11,917,311 24,272,024 8,705,774 Participant deposits 1,598,942 2,199,274 6,257,581 1,329,169(a) Participant transfers (450,585) 3,954,658(d) (5,245,517) 2,865,764 Participant withdrawals (2,579,884) (1,715,159) (5,265,914) (1,287,680) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 16,001,117 16,356,084 20,018,174 11,613,027 ================================================================================= PHOENIX- PHOENIX- PHOENIX- ENGEMANN ENGEMANN PHOENIX- GOODWIN MULTI- STRATEGIC VALUE EQUITY GOODWIN MONEY SECTOR FIXED JOINT EDGE ALLOCATION SERIES SERIES MARKET SERIES INCOME SERIES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 971,655 599,756 1,441,276 349,102 Participant deposits 155,476 263,024 1,787,066 117,312 Participant transfers 3,496 541,174(d) (1,474,312) 148,001(a) Participant withdrawals (190,190) (140,994) (444,951) (78,311) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 940,437 1,262,960 1,309,079 536,104 ================================================================================= PHOENIX- GOODWIN MULTI- PHOENIX-KAYNE PHOENIX-LAZARD SECTOR SHORT PHOENIX-KAYNE SMALL-CAP INTERNATIONAL FLEX EDGE, FLEX EDGE SUCCESS TERM BOND RISING DIVIDENDS QUALITY VALUE EQUITY SELECT AND INDIVIDUAL EDGE SERIES SERIES SERIES SERIES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 693,636 798,976 275,068 1,366,110 Participant deposits 156,140 320,174 94,005 559,506 Participant transfers 850,988 374,332 370,383 885,608 Participant withdrawals (173,343) (212,560) (57,663) (245,588) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 1,527,421 1,280,922 681,793 2,565,636 ================================================================================= PHOENIX- GOODWIN MULTI- PHOENIX-KAYNE PHOENIX-LAZARD SECTOR SHORT PHOENIX-KAYNE SMALL-CAP INTERNATIONAL TERM BOND RISING DIVIDENDS QUALITY VALUE EQUITY SELECT JOINT EDGE SERIES SERIES SERIES SERIES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 32,363 34,245 137,339 113,557 Participant deposits 27,665 24,415 69,328 202,432 Participant transfers 150,834 30,831 77,765 92,066 Participant withdrawals (28,580) (18,662) (22,841) (76,699) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 182,282 70,829 261,591 331,356 =================================================================================
SA-41 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
SUBACCOUNT --------------------------------------------------------------------------------- PHOENIX-LORD PHOENIX-LAZARD PHOENIX-LORD ABBETT PHOENIX-LORD FLEX EDGE, FLEX EDGE SUCCESS SMALL-CAP VALUE ABBETT BOND- LARGE-CAP ABBETT MID-CAP AND INDIVIDUAL EDGE SERIES DEBENTURE SERIES VALUE SERIES VALUE SERIES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 204,855 549,300 1,813,495 839,524 Participant deposits 82,250 172,739 1,349,102 249,730 Participant transfers 150,594 273,395 1,693,338 937,238 Participant withdrawals (63,792) (117,476) (359,834) (148,471) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 373,907 877,958 4,496,101 1,878,021 ================================================================================= PHOENIX-LORD PHOENIX-LORD PHOENIX-LAZARD PHOENIX-LORD ABBETT ABBETT SMALL-CAP VALUE ABBETT BOND- LARGE-CAP MID-CAP JOINT EDGE SERIES DEBENTURE SERIES VALUE SERIES VALUE SERIES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 10,719 46,539 136,080 77,751 Participant deposits 6,316 18,615 176,144 47,471 Participant transfers 6,508 63,802 242,098 75,941 Participant withdrawals (2,359) (25,408) (95,772) (34,726) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 21,184 103,548 458,550 166,437 ================================================================================= PHOENIX- PHOENIX- PHOENIX- NORTHERN SANFORD SANFORD PHOENIX- NASDAQ-100 BERNSTEIN BERNSTEIN FLEX EDGE, FLEX EDGE SUCCESS NORTHERN DOW 30 INDEX(R) MID-CAP SMALL-CAP AND INDIVIDUAL EDGE SERIES SERIES VALUE SERIES VALUE SERIES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 5,043,880 9,630,342 11,433,739 5,383,890 Participant deposits 973,340 2,498,605 1,791,938 1,236,343 Participant transfers 282,903 568,388 735,222 387,494 Participant withdrawals (622,893) (1,204,327) (1,453,176) (667,433) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 5,677,230 11,493,008 12,507,723 6,340,294 ================================================================================= PHOENIX- PHOENIX- PHOENIX- NORTHERN SANFORD SANFORD PHOENIX- NASDAQ-100 BERNSTEIN BERNSTEIN NORTHERN DOW 30 INDEX(R) MID-CAP SMALL-CAP JOINT EDGE SERIES SERIES VALUE SERIES VALUE SERIES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 221,464 437,080 599,197 266,958 Participant deposits 68,553 147,854 148,012 81,521 Participant transfers 10,257 72,740 181,713 22,956 Participant withdrawals (32,249) (88,236) (98,963) (56,716) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 268,025 569,438 829,959 314,719 =================================================================================
SA-42 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
SUBACCOUNT --------------------------------------------------------------------------------- AIM V.I. AIM V.I. PHOENIX-SENECA PHOENIX-SENECA CAPITAL MID CAP FLEX EDGE, FLEX EDGE SUCCESS MID-CAP GROWTH STRATEGIC THEME APPRECIATION CORE EQUITY AND INDIVIDUAL EDGE SERIES SERIES FUND FUND ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 9,730,381 12,897,350 2,218,432 - Participant deposits 1,947,349 2,234,550 718,493 156,772 Participant transfers 30,415 (1,086,704) 661,983 2,224,960 Participant withdrawals (1,337,889) (2,111,191) (386,566) (17,760) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 10,370,256 11,934,005 3,212,342 2,363,972 ================================================================================= AIM V.I. AIM V.I. PHOENIX-SENECA PHOENIX-SENECA CAPITAL MID CAP MID-CAP GROWTH STRATEGIC THEME APPRECIATION CORE EQUITY JOINT EDGE SERIES SERIES FUND FUND ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 558,268 1,076,826 213,305 - Participant deposits 163,762 361,700 156,514 1,758 Participant transfers 242,104 (17,234) 76,349 130,973(f) Participant withdrawals (116,612) (258,970) (59,505) (1,199) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 847,522 1,162,322 386,663 131,532 ================================================================================= FEDERATED FEDERATED FUND HIGH ALGER AMERICAN FOR U.S. INCOME BOND FLEX EDGE, FLEX EDGE SUCCESS AIM V.I. PREMIER LEVERAGED GOVERNMENT FUND II -- AND INDIVIDUAL EDGE EQUITY FUND ALLCAP PORTFOLIO SECURITIES II PRIMARY SHARES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 2,038,046 10,924,072 13,301,481 4,139,423 Participant deposits 397,995 2,377,871 1,861,303 1,553,482 Participant transfers 45,240 1,823,663 (2,961,815) 86,980 Participant withdrawals (344,101) (1,488,730) (1,525,409) (541,992) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 2,137,180 13,636,876 10,675,560 5,237,893 ================================================================================= FEDERATED FEDERATED FUND HIGH ALGER AMERICAN FOR U.S. INCOME BOND AIM V.I. PREMIER LEVERAGED GOVERNMENT FUND II -- JOINT EDGE EQUITY FUND ALLCAP PORTFOLIO SECURITIES II PRIMARY SHARES ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 103,676 435,373 740,198 403,309 Participant deposits 58,161 167,772 444,618 298,514 Participant transfers 8,683 507,023 69,912 17,023 Participant withdrawals (32,979) (117,196) (174,038) (79,429) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 137,541 992,972 1,080,690 639,417 =================================================================================
SA-43 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
SUBACCOUNT --------------------------------------------------------------------------------- VIP GROWTH FLEX EDGE, FLEX EDGE SUCCESS VIP CONTRAFUND(R) OPPORTUNITIES VIP GROWTH MUTUAL SHARES AND INDIVIDUAL EDGE PORTFOLIO PORTFOLIO PORTFOLIO SECURITIES FUND ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 10,389,664 1,762,618 12,315,092 4,908,647 Participant deposits 2,357,803 358,496 3,084,945 840,467 Participant transfers 3,818,847 256,973 2,022,530 362,890 Participant withdrawals (1,946,849) (249,693) (1,558,515) (758,603) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 14,619,465 2,128,394 15,864,052 5,353,401 ================================================================================= VIP GROWTH VIP CONTRAFUND(R) OPPORTUNITIES VIP GROWTH MUTUAL SHARES JOINT EDGE PORTFOLIO PORTFOLIO PORTFOLIO SECURITIES FUND ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 581,692 75,586 1,006,940 285,013 Participant deposits 226,382 40,752 563,693 107,800 Participant transfers 288,638 5,467 202,479 50,922 Participant withdrawals (140,812) (19,812) (184,886) (81,501) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 955,900 101,993 1,588,226 362,234 ================================================================================= TEMPLETON TEMPLETON DEVELOPING TEMPLETON GLOBAL ASSET TEMPLETON FLEX EDGE, FLEX EDGE SUCCESS MARKETS FOREIGN ALLOCATION GROWTH AND INDIVIDUAL EDGE SECURITIES FUND SECURITIES FUND FUND SECURITIES FUND ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 723,961 6,898,433 303,207 4,926,034 Participant deposits 69,265 1,194,296 39,573 872,513 Participant transfers (42,685) 638,134 (10,443) 81,919 Participant withdrawals (96,096) (963,689) (59,096) (610,942) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 654,445 7,767,174 273,241 5,269,524 ================================================================================= TEMPLETON TEMPLETON DEVELOPING TEMPLETON GLOBAL ASSET TEMPLETON MARKETS FOREIGN ALLOCATION GROWTH JOINT EDGE SECURITIES FUND SECURITIES FUND FUND SECURITIES FUND ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 12,439 530,810 14,162 205,382 Participant deposits 2,005 250,781 2,005 110,582 Participant transfers 63 49,303 92 63,871 Participant withdrawals (2,082) (96,256) (3,479) (51,755) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 12,425 734,638 12,780 328,080 =================================================================================
SA-44 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
SUBACCOUNT --------------------------------------------------------------------------------- SCUDDER VIT RYDEX VARIABLE EAFE(R) EQUITY FLEX EDGE, FLEX EDGE SUCCESS RYDEX VARIABLE RYDEX VARIABLE TRUST SECTOR INDEX AND INDIVIDUAL EDGE TRUST JUNO FUND TRUST NOVA FUND ROTATION FUND FUND ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 341,652 132,524 118,735 3,491,468 Participant deposits 38,686 63,944 27,623 576,024 Participant transfers (151,977) 10,853 139,907 687,447 Participant withdrawals (31,608) (22,734) (34,227) (385,840) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 196,753 184,587 252,038 4,369,099 ================================================================================= SCUDDER VIT RYDEX VARIABLE EAFE(R) EQUITY RYDEX VARIABLE RYDEX VARIABLE TRUST SECTOR INDEX JOINT EDGE TRUST JUNO FUND TRUST NOVA FUND ROTATION FUND FUND ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 8,328 80,458 6,428 257,712 Participant deposits 3,029 18,914 29,341 201,689 Participant transfers 26,047 9,129 22,893 41,194 Participant withdrawals (12,652) (8,118) (4,167) (74,009) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 24,752 100,383 54,495 426,586 ================================================================================= SCUDDER VIT WANGER WANGER FLEX EDGE, FLEX EDGE SUCCESS EQUITY 500 INDEX TECHNOLOGY INTERNATIONAL INTERNATIONAL AND INDIVIDUAL EDGE FUND PORTFOLIO SELECT SMALL CAP ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 6,267,214 17,773,347 2,590,189 14,672,517 Participant deposits 981,729 3,861,370 370,919 1,700,610 Participant transfers 1,015,029 (1,637,893) (95,770) (243,896) Participant withdrawals (1,297,919) (2,456,979) (283,581) (1,952,350) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 6,966,053 17,539,845 2,581,757 14,176,881 ================================================================================= SCUDDER VIT WANGER WANGER EQUITY 500 INDEX TECHNOLOGY INTERNATIONAL INTERNATIONAL JOINT EDGE FUND PORTFOLIO SELECT SMALL CAP ----------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 119,915 1,021,055 151,556 1,088,351 Participant deposits 78,070 330,210 38,515 182,797 Participant transfers 55,617 (52,194) (12,366) (10,727) Participant withdrawals (32,817) (277,525) (26,587) (182,701) --------------------------------------------------------------------------------- Accumulation units outstanding, end of period 220,785 1,021,546 151,118 1,077,720 =================================================================================
SA-45 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2004 (CONTINUED)
SUBACCOUNT ---------------------------------------------------------------------- WANGER U.S. SMALLER FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE WANGER SELECT COMPANIES ----------------- ----------------- Accumulation units outstanding, beginning of period 2,215,040 24,779,612 Participant deposits 311,142 2,701,361 Participant transfers 557,334 12,130 Participant withdrawals (342,916) (3,093,881) ------------------------------------- Accumulation units outstanding, end of period 2,740,600 24,399,222 ===================================== WANGER U.S. SMALLER JOINT EDGE WANGER SELECT COMPANIES ----------------- ----------------- Accumulation units outstanding, beginning of period 132,339 1,828,125 Participant deposits 54,039 282,491 Participant transfers 15,565 (15,851) Participant withdrawals (30,247) (314,355) ------------------------------------- Accumulation units outstanding, end of period 171,696 1,780,410 =====================================
(a) Participant transfers include units transferred in from Janus Flexible Income on April 16, 2004. (b) Participant transfers include units transferred in from Alliance/Bernstein Growth + Value and MFS Investors Trust on September 17, 2004. (c) Participant transfers include units transferred in from Lazard U.S. Multi-Cap on September 24, 2004. (d) Participant transfers include units transferred in from MFS Value on September 24, 2004. (e) Participant transfers include units transferred in from Sanford Bernstein Global Value on September 24, 2004. (f) Participant transfers include units transferred in from AIM Mid-Cap Equity on December 3, 2004. SA-46 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2003
SUBACCOUNT ---------------------------------------------------------------------------- PHOENIX- PHOENIX-ALLIANCE/ PHOENIX-ALLIANCE/ ABERDEEN PHOENIX-AIM BERNSTEIN BERNSTEIN INTERNATIONAL MID-CAP EQUITY ENHANCED INDEX GROWTH + VALUE FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE SERIES SERIES SERIES SERIES ----------------- ---------------- ----------------- ----------------- Accumulation units outstanding, beginning of period 21,175,822 752,800 18,961,458 299,730 Participant deposits 2,998,602 315,449 3,904,800 120,307 Participant transfers 379,851 425,205 (748,304) 690,014 Participant withdrawals (3,400,770) (110,541) (3,663,968) (75,773) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 21,153,505 1,382,913 18,453,986 1,034,278 ============================================================================ PHOENIX- PHOENIX-ALLIANCE/ PHOENIX-ALLIANCE/ ABERDEEN PHOENIX-AIM BERNSTEIN BERNSTEIN INTERNATIONAL MID-CAP EQUITY ENHANCED INDEX GROWTH + VALUE JOINT EDGE SERIES SERIES SERIES SERIES ----------------- ---------------- ------------------ ----------------- Accumulation units outstanding, beginning of period 1,266,220 37,126 744,078 9,468 Participant deposits 276,305 17,116 240,569 25,287 Participant transfers 116,914 11,640 (50,215) 5,621 Participant withdrawals (361,987) (6,278) (180,964) - ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 1,297,452 59,604 753,468 40,376 ============================================================================ PHOENIX-DUFF & PHOENIX- PHOENIX- PHELPS REAL ENGEMANN ENGEMANN SMALL PHOENIX- ESTATE SECURITIES CAPITAL GROWTH & MID-CAP GOODWIN MONEY FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE SERIES SERIES GROWTH SERIES MARKET SERIES ----------------- --------------- ---------------- ----------------- Accumulation units outstanding, beginning of period 5,574,055 54,369,021 3,515,566 30,142,011 Participant deposits 885,213 9,190,015 895,163 10,297,898 Participant transfers 225,343 (2,826,234) 2,574,700 (8,448,228) Participant withdrawals (1,036,441) (9,300,585) (599,272) (7,719,657) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 5,648,170 51,432,217 6,386,157 24,272,024 ============================================================================ PHOENIX-DUFF & PHOENIX- PHOENIX- PHELPS REAL ENGEMANN ENGEMANN SMALL PHOENIX- ESTATE SECURITIES CAPITAL GROWTH & MID-CAP GOODWIN MONEY JOINT EDGE SERIES SERIES GROWTH SERIES MARKET SERIES ----------------- --------------- ---------------- ----------------- Accumulation units outstanding, beginning of period 282,511 3,636,609 121,509 1,241,753 Participant deposits 64,161 887,159 88,638 1,573,887 Participant transfers 26,285 (174,494) 120,822 (891,609) Participant withdrawals (58,742) (797,308) (45,102) (482,755) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 314,215 3,551,966 285,867 1,441,276 ============================================================================
SA-47 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2003(CONTINUED)
SUBACCOUNT ---------------------------------------------------------------------------- PHOENIX- PHOENIX- GOODWIN MULTI- GOODWIN MULTI- SECTOR SHORT PHOENIX-JANUS PHOENIX-KAYNE SECTOR FIXED TERM BOND FLEXIBLE INCOME RISING DIVIDENDS FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE INCOME SERIES SERIES SERIES SERIES -------------- -------------- --------------- ---------------- Accumulation units outstanding, beginning of period 8,542,076 - 3,005,298 153,223 Participant deposits 1,015,100 736,476 787,850 366,765 Participant transfers 528,119 (24,386) 868,190 424,262 Participant withdrawals (1,379,521) (18,454) (588,138) (145,274) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 8,705,774 693,636 4,073,200 798,976 ============================================================================ PHOENIX- PHOENIX- GOODWIN MULTI- GOODWIN MULTI- SECTOR SHORT PHOENIX-JANUS PHOENIX-KAYNE SECTOR FIXED TERM BOND FLEXIBLE INCOME RISING DIVIDENDS JOINT EDGE INCOME SERIES SERIES SERIES SERIES -------------- -------------- --------------- ---------------- Accumulation units outstanding, beginning of period 324,097 - 161,738 2,670 Participant deposits 61,165 2,491 69,206 7,093 Participant transfers 22,284 38,828 149,036 28,041 Participant withdrawals (58,444) (8,956) (44,517) (3,559) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 349,102 32,363 335,463 34,245 ============================================================================ PHOENIX-KAYNE PHOENIX-LAZARD SMALL-CAP INTERNATIONAL PHOENIX-LAZARD PHOENIX-LAZARD QUALITY VALUE EQUITY SELECT SMALL-CAP VALUE U.S. MULTI-CAP FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE SERIES SERIES SERIES SERIES -------------- -------------- --------------- -------------- Accumulation units outstanding, beginning of period 75,200 218,059 76,673 7,961 Participant deposits 81,588 331,867 63,226 70,703 Participant transfers 145,025 1,049,283 156,616 253,286 Participant withdrawals (26,745) (233,099) (91,660) (28,739) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 275,068 1,366,110 204,855 303,211 ============================================================================ PHOENIX-KAYNE PHOENIX-LAZARD SMALL-CAP INTERNATIONAL PHOENIX-LAZARD PHOENIX-LAZARD QUALITY VALUE EQUITY SELECT SMALL-CAP VALUE U.S. MULTI-CAP JOINT EDGE SERIES SERIES SERIES SERIES -------------- ------------- --------------- -------------- Accumulation units outstanding, beginning of period 188 7,558 2,873 992 Participant deposits 118,819 39,206 1,748 2,691 Participant transfers 18,332 86,551 6,397 1,259 Participant withdrawals - (19,758) (299) (555) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 137,339 113,557 10,719 4,387 ============================================================================
SA-48 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2003(CONTINUED)
SUBACCOUNT ---------------------------------------------------------------------------- PHOENIX-LORD PHOENIX-LORD PHOENIX-LORD PHOENIX-MFS ABBETT BOND- ABBETT LARGE-CAP ABBETT MID-CAP INVESTORS GROWTH FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE DEBENTURE SERIES VALUE SERIES VALUE SERIES STOCK SERIES ---------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 120,556 193,203 125,168 19,566,319 Participant deposits 88,461 376,322 159,577 6,360,455 Participant transfers 426,050 1,396,847 593,393 1,840,592 Participant withdrawals (85,767) (152,877) (38,614) (3,854,489) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 549,300 1,813,495 839,524 23,912,877 ============================================================================ PHOENIX-LORD PHOENIX-LORD PHOENIX-LORD PHOENIX-MFS ABBETT BOND- ABBETT LARGE-CAP ABBETT MID-CAP INVESTORS GROWTH JOINT EDGE DEBENTURE SERIES VALUE SERIES VALUE SERIES STOCK SERIES ---------------- ---------------- -------------- ---------------- Accumulation units outstanding, beginning of period 7,599 7,664 9,276 1,009,863 Participant deposits 9,052 35,117 20,848 2,881 Participant transfers 33,571 109,834 53,041 535,873 Participant withdrawals (3,683) (16,535) (5,414) (1,781) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 46,539 136,080 77,751 1,546,836 ============================================================================ PHOENIX- PHOENIX-MFS PHOENIX- NORTHERN INVESTORS TRUST PHOENIX-MFS NORTHERN DOW 30 NASDAQ-100 FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE SERIES VALUE SERIES SERIES INDEX(R) SERIES --------------- ------------ --------------- --------------- Accumulation units outstanding, beginning of period 299,642 2,485,671 4,346,493 6,636,546 Participant deposits 95,258 898,219 604,200 1,633,393 Participant transfers 273,192 951,086 546,785 2,277,428 Participant withdrawals (83,492) (342,331) (453,598) (917,025) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 584,600 3,992,645 5,043,880 9,630,342 ============================================================================ PHOENIX- PHOENIX-MFS PHOENIX- NORTHERN INVESTORS TRUST PHOENIX-MFS NORTHERN DOW 30 NASDAQ-100 JOINT EDGE SERIES VALUE SERIES SERIES INDEX(R) SERIES --------------- ------------ --------------- --------------- Accumulation units outstanding, beginning of period 35,216 260,770 155,043 180,697 Participant deposits 20,054 262,179 62,354 101,771 Participant transfers 46,699 10,607 29,916 178,866 Participant withdrawals (8,606) (41,840) (25,849) (24,254) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 93,363 491,716 221,464 437,080 ============================================================================
SA-49 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2003(CONTINUED)
SUBACCOUNT ---------------------------------------------------------------------------- PHOENIX- PHOENIX- OAKHURST GROWTH OAKHURST PHOENIX- PHOENIX-SANFORD AND INCOME STRATEGIC OAKHURST VALUE BERNSTEIN GLOBAL FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE SERIES ALLOCATION SERIES EQUITY SERIES VALUE SERIES --------------- ----------------- -------------- ---------------- Accumulation units outstanding, beginning of period 12,426,686 18,881,809 11,376,852 1,042,132 Participant deposits 2,855,195 1,944,037 2,662,272 300,662 Participant transfers 307,385 (516,844) (318,918) 678,389 Participant withdrawals (2,400,026) (2,876,358) (1,802,895) (129,097) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 13,189,240 17,432,644 11,917,311 1,892,086 ============================================================================ PHOENIX- PHOENIX- OAKHURST GROWTH OAKHURST PHOENIX- PHOENIX-SANFORD AND INCOME STRATEGIC OAKHURST VALUE BERNSTEIN GLOBAL JOINT EDGE SERIES ALLOCATION SERIES EQUITY SERIES VALUE SERIES --------------- ----------------- -------------- ---------------- Accumulation units outstanding, beginning of period 931,562 957,207 507,992 53,751 Participant deposits 252,756 178,973 195,434 24,040 Participant transfers 102,281 21,641 16,022 10,005 Participant withdrawals (257,163) (186,166) (119,692) (13,053) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 1,029,436 971,655 599,756 74,743 ============================================================================ PHOENIX-SANFORD PHOENIX-SANFORD PHOENIX-SENECA PHOENIX-SENECA BERNSTEIN MID- BERNSTEIN SMALL- MID-CAP GROWTH STRATEGIC THEME FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE CAP VALUE SERIES CAP VALUE SERIES SERIES SERIES ---------------- ---------------- -------------- --------------- Accumulation units outstanding, beginning of period 12,183,798 4,516,283 8,803,216 13,371,067 Participant deposits 1,900,221 1,059,929 2,271,640 2,698,956 Participant transfers (778,963) 477,142 (25,843) (870,459) Participant withdrawals (1,871,317) (669,464) 1,318,632) (2,302,214) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 11,433,739 5,383,890 9,730,381 12,897,350 ============================================================================ PHOENIX-SANFORD PHOENIX-SANFORD PHOENIX-SENECA PHOENIX-SENECA BERNSTEIN MID- BERNSTEIN SMALL- MID-CAP GROWTH STRATEGIC THEME JOINT EDGE CAP VALUE SERIES CAP VALUE SERIES SERIES SERIES ---------------- ---------------- -------------- --------------- Accumulation units outstanding, beginning of period 547,521 205,928 527,968 1,060,930 Participant deposits 140,428 101,824 157,463 311,615 Participant transfers (1,601) (9,026) (41,167) (30,905) Participant withdrawals (87,151) (31,768) (85,996) (264,814) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 599,197 266,958 558,268 1,076,826 ============================================================================
SA-50 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2003(CONTINUED)
SUBACCOUNT ---------------------------------------------------------------------------- PHOENIX-STATE STREET RESEARCH AIM V.I. CAPITAL ALGER AMERICAN SMALL-CAP APPRECIATION AIM V.I. PREMIER LEVERAGED FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE GROWTH SERIES FUND EQUITY FUND ALLCAP PORTFOLIO --------------- ---------------- ---------------- ---------------- Accumulation units outstanding, beginning of period 44,637 971,770 1,672,317 9,412,042 Participant deposits 119,640 508,624 499,173 2,275,674 Participant transfers 561,251 953,063 86,157 742,572 Participant withdrawals (38,364) (215,025) (219,601) (1,506,216) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 687,164 2,218,432 2,038,046 10,924,072 ============================================================================ PHOENIX-STATE STREET RESEARCH AIM V.I. CAPITAL ALGER AMERICAN SMALL-CAP APPRECIATION AIM V.I. PREMIER LEVERAGED JOINT EDGE GROWTH SERIES FUND EQUITY FUND ALLCAP PORTFOLIO --------------- ---------------- ---------------- ---------------- Accumulation units outstanding, beginning of period 393 95,189 90,203 325,784 Participant deposits 11,918 50,952 30,661 160,377 Participant transfers 44,240 81,080 5,582 55,486 Participant withdrawals (4,864) (13,916) (22,770) (106,274) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 51,687 213,305 103,676 435,373 ============================================================================ FEDERATED FUND FEDERATED HIGH FOR U.S. INCOME BOND VIP GROWTH GOVERNMENT FUND II -- VIP CONTRAFUND(R) OPPORTUNITIES FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE SECURITIES II PRIMARY SHARES PORTFOLIO PORTFOLIO -------------- -------------- ----------------- ------------- Accumulation units outstanding, beginning of period 13,517,816 3,084,977 5,864,352 1,316,933 Participant deposits 2,663,726 702,250 2,129,107 410,041 Participant transfers (272,342) 1,332,431 3,431,111 323,304 Participant withdrawals (2,607,719) (980,235) (1,034,906) (287,660) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 13,301,481 4,139,423 10,389,664 1,762,618 ============================================================================ FEDERATED FUND FEDERATED HIGH FOR U.S. INCOME BOND VIP GROWTH GOVERNMENT FUND II -- VIP CONTRAFUND(R) OPPORTUNITIES JOINT EDGE SECURITIES II PRIMARY SHARES PORTFOLIO PORTFOLIO -------------- --------------- ----------------- ------------- Accumulation units outstanding, beginning of period 550,626 243,881 239,822 25,935 Participant deposits 309,836 111,045 119,504 42,160 Participant transfers (4,397) 133,466 311,764 22,020 Participant withdrawals (115,867) (85,083) (89,398) (14,529) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 740,198 403,309 581,692 75,586 ============================================================================
SA-51 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2003(CONTINUED)
SUBACCOUNT ---------------------------------------------------------------------------- TEMPLETON DEVELOPING TEMPLETON VIP GROWTH MUTUAL SHARES MARKETS FOREIGN FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE PORTFOLIO SECURITIES FUND SECURITIES FUND SECURITIES FUND --------------- --------------- --------------- --------------- Accumulation units outstanding, beginning of period 9,196,230 4,321,653 903,868 5,988,755 Participant deposits 2,534,403 924,240 122,988 1,409,688 Participant transfers 2,124,546 169,464 (147,477) 428,287 Participant withdrawals (1,540,087) (506,710) (155,418) (928,297) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 12,315,092 4,908,647 723,961 6,898,433 ============================================================================ TEMPLETON DEVELOPING TEMPLETON VIP GROWTH MUTUAL SHARES MARKETS FOREIGN JOINT EDGE PORTFOLIO SECURITIES FUND SECURITIES FUND SECURITIES FUND --------------- --------------- --------------- --------------- Accumulation units outstanding, beginning of period 424,678 169,686 13,886 309,754 Participant deposits 484,775 112,238 3,029 163,599 Participant transfers 208,745 59,721 (318) 148,967 Participant withdrawals (111,258) (56,632) (4,158) (91,510) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 1,006,940 285,013 12,439 530,810 ============================================================================ TEMPLETON TEMPLETON GLOBAL ASSET GROWTH RYDEX VARIABLE RYDEX VARIABLE FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE ALLOCATION FUND SECURITIES FUND TRUST JUNO FUND TRUST NOVA FUND --------------- --------------- --------------- --------------- Accumulation units outstanding, beginning of period 317,393 3,695,586 - - Participant deposits 48,168 777,882 13,781 81,257 Participant transfers (8,023) 894,155 333,525 57,592 Participant withdrawals (54,331) (441,589) (5,654) (6,325) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 303,207 4,926,034 341,652 132,524 ============================================================================ TEMPLETON TEMPLETON GLOBAL ASSET GROWTH RYDEX VARIABLE RYDEX VARIABLE JOINT EDGE ALLOCATION FUND SECURITIES FUND TRUST JUNO FUND TRUST NOVA FUND --------------- --------------- --------------- --------------- Accumulation units outstanding, beginning of period 15,222 137,884 - - Participant deposits 2,734 61,008 3,646 9,914 Participant transfers 96 36,666 5,721 70,544 Participant withdrawals (3,890) (30,176) (1,039) - ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 14,162 205,382 8,328 80,458 ============================================================================
SA-52 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R), AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 5--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS FOR THE PERIOD ENDED DECEMBER 31, 2003(CONTINUED)
SUBACCOUNT ---------------------------------------------------------------------------- RYDEX VARIABLE SCUDDER VIT SCUDDER VIT TRUST SECTOR EAFE(R) EQUITY EQUITY 500 INDEX TECHNOLOGY FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE ROTATION FUND INDEX FUND FUND PORTFOLIO -------------- -------------- ---------------- ---------- Accumulation units outstanding, beginning of period - 2,674,086 2,883,850 14,600,613 Participant deposits 24,813 578,103 897,450 4,742,998 Participant transfers 98,413 722,613 3,239,700 995,743 Participant withdrawals (4,491) (483,334) (753,786) (2,566,007) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 118,735 3,491,468 6,267,214 17,773,347 ============================================================================ RYDEX VARIABLE SCUDDER VIT SCUDDER VIT TRUST SECTOR EAFE(R) EQUITY EQUITY 500 INDEX TECHNOLOGY JOINT EDGE ROTATION FUND INDEX FUND FUND PORTFOLIO -------------- -------------- ---------------- ---------- Accumulation units outstanding, beginning of period - 179,993 18,862 847,767 Participant deposits 258 42,152 25,021 358,428 Participant transfers 6,819 85,534 88,006 32,058 Participant withdrawals (649) (49,967) (11,974) (217,198) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 6,428 257,712 119,915 1,021,055 ============================================================================ WANGER WANGER U.S. WANGER FOREIGN INTERNATIONAL SMALLER FLEX EDGE, FLEX EDGE SUCCESS AND INDIVIDUAL EDGE FORTY SMALL CAP WANGER TWENTY COMPANIES -------------- ------------- ------------- ----------- Accumulation units outstanding, beginning of period 1,891,263 14,102,625 1,907,511 25,305,670 Participant deposits 479,305 2,323,861 410,492 3,617,259 Participant transfers 578,202 338,253 208,448 (752,067) Participant withdrawals (358,581) (2,092,222) (311,411) (3,391,250) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 2,590,189 14,672,517 2,215,040 24,779,612 ============================================================================ WANGER WANGER U.S. WANGER FOREIGN INTERNATIONAL SMALLER JOINT EDGE FORTY SMALL CAP WANGER TWENTY COMPANIES -------------- ------------- ------------- ----------- Accumulation units outstanding, beginning of period 103,445 1,057,592 85,551 1,788,803 Participant deposits 44,730 233,428 41,510 349,098 Participant transfers 22,454 7,423 30,767 19,297 Participant withdrawals (19,073) (210,092) (25,489) (329,073) ---------------------------------------------------------------------------- Accumulation units outstanding, end of period 151,556 1,088,351 132,339 1,828,125 ============================================================================
SA-53 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R) AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS NOTE 6--POLICY LOANS Policy provisions allow policyowners to borrow up to 90% of the policy's cash surrender value reduced by an amount equal to the surrender charge with interest of 4% (6% in New York and New Jersey) due in policy years 1-10, 3% (5% in New York and New Jersey) due in policy years 11-15, 2(1/2)% (4(1/2)% in New York and New Jersey) in policy years 16 and thereafter for Flex Edge Success and Joint Edge policies and 8% due in policy years 1-10 and 7% in policy years 11 and thereafter for Flex Edge policies and payable on each policy anniversary. Individual Edge policy owners may borrow up to 90% of policy value reduced by any applicable surrender charge with an interest rate of 4% (6% in New York and New Jersey) during policy years 1-10 and 3% (5% in New York and New Jersey) during policy years 11-15 and 2.25% (4.25% in New York and New Jersey) during policy years 16 and thereafter. At the time a loan is granted, an amount equivalent to the amount of the loan is transferred from the Account and the non-loaned portion of the Guaranteed Interest Account to the loaned portion of the Guaranteed Interest Account, a part of Phoenix's general account as collateral for the outstanding loan. Transfers from the Account are included in participant withdrawals in the accompanying financial statements. Amounts in the loaned portion of the Guaranteed Interest Account are credited with interest at 2% (4% in New York and New Jersey) for Flex Edge Success, Joint Edge and Individaul Edge policies, and 6% for Flex Edge policies. Loan repayments result in a transfer of collateral back to the Account and the non-loaned portion of the Guaranteed Interest Account. NOTE 7--FEES AND RELATED PARTY TRANSACTIONS Phoenix and its affiliate, Phoenix Equity Planning Corporation ("PEPCO"), 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 $58,837,125, $58,576,546 and $57,376,792 during the years ended December 31, 2004, 2003 and 2002, respectively. Phoenix receives additional compensation of $10 per month, not to exceed $120 annually, for each policy for administrative services to the Account. Such fees aggregated $2,739,364 for the year ended December 31, 2004. For the year ended December 31, 2004, Phoenix limits this charge to $5 per month. 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). Such costs aggregated $4,413,341, $4,767,400 and $5,036,008 during the years ended December 31, 2004, 2003 and 2002, respectively. 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 surrender charge that would apply to a full surrender, is deducted from the policy value and paid to Phoenix. PEPCO is the principal underwriter and distributor of the Account. Premium taxes and federal taxes which currently range from 2.25% to 3.75% of premiums paid based on the state where the policyowner resides, are paid to Phoenix by a withdrawal of participant units. 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. For Flex Edge Success, Joint Edge, and Individual Edge policies, the Account is charged an annual rate of 0.80% for the first fifteen years and 0.25% thereafter. NOTE 8--DISTRIBUTION OF NET INCOME The Account does not declare distributions 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 9--DIVERSIFICATION REQUIREMENTS Under the provisions of Section 817(h) of the Internal Revenue Code of 1986 (the "Code"), as amended, a variable contract, other than a contract issued in connection with certain types of employee benefit plans, will not be treated as a variable 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. Each subaccount is required to satisfy the requirements of Section 817(h). The Code provides that the "adequately diversified" requirement may be met if the underlying investments satisfy either the statutory safe harbor test or diversification requirements set forth in regulations issued by the Secretary of the Treasury. The Secretary of the Treasury has issued regulations under Section 817(h) of the Code. Phoenix believes that each of the subaccounts satisfies the current requirements of the regulations. Phoenix intends that each of the subaccounts will continue to comply with the diversification requirements and, in the event of failure to comply, will take immediate corrective action to assure compliance. NOTE 10--MERGERS On December 3, 2004, AIM V.I. Mid Cap Core Equity Fund acquired all of the net assets of AIM Mid-Cap Equity pursuant to an Agreement and Plan of Reorganization approved by AIM Mid-Cap Equity shareholders on December 1, 2004. The acquisition was accomplished by a tax-free exchange of 1,345,217 shares of AIM V.I. Mid Cap Core Equity valued at $18,106,619 for 1,441,358 shares of AIM Mid-Cap Equity outstanding on December 3, 2004. AIM Mid-Cap Equity's net assets on that date of $18,106,619, including $2,490,250 of net unrealized appreciation were combined with those of AIM V.I. Mid Cap Core Equity. The shareholders of the AIM Mid-Cap Equity received for each share owned approximately 0.93 shares of AIM V.I. Mid Cap Core Equity. SA-54 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R) AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS On September 24, 2004, Aberdeen International acquired all of the net assets of Sanford Bernstein Global Value pursuant to an Agreement and Plan of Reorganization approved by Sanford Bernstein Global Value shareholders on September 14, 2004. The acquisition was accomplished by a tax-free exchange of 1,785,746 shares of Aberdeen International valued at $19,701,375 for 1,817,620 shares of Sanford Bernstein Global Value outstanding on September 24, 2004. Sanford Bernstein Global Value's net assets on that date of $19,701,375, including $1,968,559 of net unrealized appreciation were combined with those of Aberdeen International. The aggregate net assets of Aberdeen International immediately after the merger were $162,263,002. The shareholders of the Sanford Bernstein Global Value received for each share owned approximately 0.98 shares of Aberdeen International. On September 24, 2004, Engemann Value Equity acquired all of the net assets of MFS Value pursuant to an Agreement and Plan of Reorganization approved by MFS Value shareholders on September 14, 2004. The acquisition was accomplished by a tax-free exchange of 3,058,095 shares of Engemann Value Equity valued at $36,459,749 for 3,269,438 shares of MFS Value outstanding on September 24, 2004. MFS Value's net assets on that date of $36,459,749, including $4,777,441 of net unrealized appreciation were combined with those of Engemann Value Equity. The aggregate net assets of Engemann Value Equity immediately after the merger were $123,477,422. The shareholders of the MFS Value received for each share owned approximately 0.94 shares of Engemann Value Equity. On September 24, 2004, Engemann Capital Growth acquired all of the net assets of Lazard U.S. Multi-Cap pursuant to an Agreement and Plan of Reorganization approved by Lazard U.S. Multi-Cap shareholders on September 14, 2004. The acquisition was accomplished by a tax-free exchange of 544,383 shares of Engemann Capital Growth valued at $7,162,666 for 570,926 shares of Lazard U.S. Multi-Cap outstanding on September 24, 2004. Lazard U.S. Multi-Cap's net assets on that date of $7,162,666, including $542,543 of net unrealized appreciation were combined with those of Engemann Capital Growth. The aggregate net assets of Engemann Capital Growth immediately after the merger were $549,726,397. The shareholders of the Lazard U.S. Multi-Cap received for each share owned approximately 0.95 shares of Engemann Capital Growth. On September 17, 2004, Engemann Growth and Income acquired all of the net assets of Alliance/Bernstein Growth + Value ("Growth + Value") and MFS Investors Trust ("Investors Trust") pursuant to two Agreements and Plans of Reorganization approved by Growth + Value and Investors Trust shareholders on September 14, 2004. The acquisition was accomplished by a tax-free exchange of 1,693,623 shares of Engemann Growth and Income outstanding on September 17, 2004 and valued at $19,106,074 for 1,124,392 shares of Growth + Value valued at $11,309,520 and 772,883 shares of Investors Trust valued at $7,796,554. Growth + Value's net assets of $11,309,520, including $1,005,844 of net unrealized appreciation and Investors Trust's net assets of $7,796,554, including $726,794 of net unrealized appreciation were combined with those of Engemann Growth and Income. The aggregate net assets of Engemann Growth and Income immediately after the merger were $136,382,263. The shareholders of the Alliance/Bernstein Growth + Value received for each share owned approximately 0.89 shares of Engemann Growth and Income. The shareholders of the MFS Investors Trust received for each share owned approximately 0.89 shares of Engemann Growth and Income. On April 16, 2004, Goodwin Multi-Sector Fixed Income acquired all of the net assets of Janus Flexible Income pursuant to an Agreement and Plan of Reorganization approved by Janus Flexible Income shareholders on April 14, 2004. The acquisition was accomplished by a tax-free exchange of 5,476,476 shares of Goodwin Multi-Sector Fixed Income valued at $50,639,637 for 4,789,637 shares of Janus Flexible Income outstanding on April 16, 2004. Janus Flexible Income's net assets on that date of $50,639,637, including $661,921 of net unrealized appreciation were combined with those of Goodwin Multi-Sector Fixed Income. The aggregate net assets of Goodwin Multi-Sector Fixed Income immediately after the merger were $256,054,804. The shareholders of the Janus Flexible Income received for each share owned approximately 1.14 shares of Goodwin Multi-Sector Fixed Income. On February 17, 2003, Janus Growth acquired all of the net assets of MFS Investors Growth Stock ("Growth Stock") and Van Kampen Focus Equity ("Focus Equity") pursuant to two Agreements and Plans of Reorganization approved by Growth Stock and Focus Equity shareholders on February 14, 2003. The acquisition was accomplished by a tax-free exchange of 2,496,714 shares of Janus Growth outstanding on February 17, 2003 for 782,923 shares of Growth Stock valued at $5,807,615 and 1,169,922 shares of Focus Equity valued at $6,179,826. Growth Stock's net assets of $5,807,615, including $135,964 of net unrealized depreciation and Focus Equity's net assets of $6,179,826, including $380,781 of net unrealized depreciation were combined with those of Janus Growth. The aggregate net assets of Janus Growth immediately after the merger were $63,057,943. The shareholders of the MFS Investors Growth Stock received for each share owned approximately 1.54 shares of Janus Growth. The shareholders of the Van Kampen Focus Equity received for each share owned approximately 1.10 shares of Janus Growth. Immediately following the merger, Janus Growth was renamed MFS Investors Growth Stock. Immediately prior to the Special Meeting of Shareholders, Phoenix Variable Advisors, Inc. ("PVA"), as authorized pursuant to an exemptive order from the Securities and Exchange Commission, replaced Janus Capital Management LLC with MFS Investment Management ("MFS") as subadvisor to the series. PVA and MFS also agreed that they would serve as advisor and subadvisor, respectively, to the series for the same management fees as currently charged to the former Phoenix-MFS Investors Growth Stock Series. Accordingly, the annual expenses and expense cap reimbursements for the series are the same as those of the former Phoenix-MFS Investors Growth Stock Series. MFS managed the series in a manner comparable with the former Phoenix-MFS Investors Growth Stock Series. As part of the reorganizations, the series was renamed Phoenix-MFS Investors Growth Stock Series. Effective December 3, 2004, the Board of Trustees of the Fund approved a name change and subadvisory change for the Phoenix-MFS Investors Growth Stock series to Phoenix-AIM Growth Series. This series' investment objectives, principal investment strategies and principal risks will remain the same. The fees and expenses associated with the series are not affected as a result of this change. On February 7, 2003, Aberdeen International acquired all of the net assets of Aberdeen New Asia pursuant to an Agreement and Plan of Reorganization approved by Aberdeen New Asia shareholders on January 27, 2003. The acquisition was accomplished by a tax-free exchange of 1,885,115 shares of Aberdeen International valued at $14,391,123 for 1,913,078 shares of Aberdeen New Asia outstanding on February 7, 2003. Aberdeen New Asia's net assets on that date of $14,391,123, including $618,515 of net unrealized depreciation were combined with those of Aberdeen International. The aggregate net assets of Aberdeen International immediately after the merger were $116,991,498. The shareholders of the Aberdeen New Asia received for each share owned approximately 0.99 shares of Aberdeen International. At its regular meeting in May 2004, the board approved other mergers and substitutions that are currently under further review. NOTE 11--MANAGER OF MANAGERS EXEMPTIVE ORDER The Phoenix Edge Series Fund ("PESF") and the investment advisor PVA, have received an exemptive order from the Securities and Exchange Commission granting exemptions from certain provisions of the Investment Company Act of 1940, as amended, pursuant to which PVA is, subject to SA-55 FLEX EDGE, FLEX EDGE SUCCESS(R), JOINT EDGE(R) AND INDIVIDUAL EDGE(R) PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT NOTES TO FINANCIAL STATEMENTS supervision and approval of PESF's Board of Trustees, permitted to enter into and materially amend subadvisory agreements without such agreements being approved by the shareholders of the applicable series of PESF. PESF and PVA therefore have the right to hire, terminate, or replace subadvisors without shareholder approval, including, without limitation, the replacement or reinstatement of any subadvisor with respect to which a subadvisory agreement has automatically terminated as a result of an assignment. PVA will continue to have the ultimate responsibility to oversee the subadvisors and recommend their hiring, termination and replacement. NOTE 12--MIXED AND SHARED FUNDING Shares of PESF are not directly offered to the public. Shares of PESF are currently offered through separate accounts to fund variable accumulation annuity contracts and variable universal life insurance policies issued by Phoenix, PHL Variable Insurance Company ("PHL Variable"), and Phoenix Life and Annuity Company ("PLAC"). Shares of PESF may be offered to separate accounts of other insurance companies in the future. The interests of variable annuity contract owners and variable life policy owners could diverge based on differences in federal and state regulatory requirements, tax laws, investment management or other unanticipated developments. PESF's Trustees currently do not foresee any such differences or disadvantages at this time. However, PESF's Trustees intend to monitor for any material conflicts and will determine what action, if any, should be taken in response to such conflicts. If such a conflict should occur, one or more separate accounts may be required to withdraw its investment in PESF or shares of another fund may be substituted. NOTE 13--OTHER Effective May 1, 2004, the name of Wanger Twenty changed to Wanger Select, and the name of Wanger Foreign Forty changed to Wanger International Select. The Board of Trustees of PESF approved a name change for the Phoenix-Engemann Small & Mid-Cap Growth Series to Phoenix-Engemann Small-Cap Growth Series. This series' investment objectives, principal investment strategies and principal risks will remain the same. The fees and expenses associated with the series are not affected as a result of this change. The change was effective September 24, 2004. The Board of Trustees of PESF approved a name change for the Phoenix-MFS Investors Growth Stock Series to Phoenix-AIM Growth Series and a subadvisory change replacing MFS Investment Management with A I M Capital Management, Inc. This series' investment objectives, principal strategies and principal risks will remain the same. The fees and expenses associated with the series are not affected as a result of this change. These changes were effective November 29, 2004. Phoenix-Oakhurst Growth and Income Series and Phoenix-Oakhurst Value Equity Series will now be advised by Engemann Asset Management ("Engemann") effective January 1, 2005. Each of these series' will continue to have the same investment objectives and use the same investment strategies. Each series changed their name on January 7, 2005 to Phoenix-Engemann Growth and Income Series and Phoenix-Engemann Value Equity Series, respectively. Engemann Asset Management ("Engemann"), an affiliate of Phoenix Investment Counsel, Inc. ("PIC"), became a subadvisor to manage the equity investments in Phoenix-Oakhurst Strategic Allocation Series effective January 1, 2005. This series' investment objectives, principal investment strategies and principal risks will remain the same. The series name changed to Phoenix-Engemann Strategic Allocation Series on January 7, 2005. Fred Alger Management, Inc. ("Alger"), effective January 7, 2005, will replace State Street Research & Management Company as the subadvisor to Phoenix-State Street Research Small-Cap Growth Series. The series name changed to Phoenix-Alger Small-Cap Growth Series as of January 7, 2005. SA-56 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PRICEWATERHOUSECOOPERS [LOGO] To the Board of Directors of Phoenix Life Insurance Company and Participants of Phoenix Life Variable Universal Life Account (Flex Edge, Flex Edge Success(R), Joint Edge(R), and Individual Edge(R)): In our opinion, the accompanying statements 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 constituting the Phoenix Life Variable Universal Life Account (Flex Edge, Flex Edge Success(R), Joint Edge(R), and Individual Edge(R)) at December 31, 2004, 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 accounting principles generally accepted in the United States of America. These financial statements are the responsibility of Phoenix Life Insurance Company'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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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, 2004 by correspondence with the mutual funds' advisors, provide a reasonable basis for our opinion. /s/ PRICEWATERHOUSECOOPERS LLP Hartford, Connecticut March 31, 2005 SA-57 PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT Phoenix Life Insurance Company One American Row Hartford, Connecticut 06115 PHOENIX EQUITY PLANNING CORPORATION 56 Prospect Street Hartford, Connecticut 06115-0480 Underwriter CUSTODIANS JPMorgan Chase Bank 270 Park Avenue New York, New York 10017-2070 Brown Brothers Harriman & Co. 40 Water Street Boston, Massachusetts 02109 State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts 02110 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP 100 Pearl Street Hartford, Connecticut 06103 SA-58 PHOENIX LIFE INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF THE PHOENIX COMPANIES, INC.) CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 F-1 TABLE OF CONTENTS
PAGE --------------- Report of Independent Registered Public Accounting Firm....................................... F-3 Consolidated Balance Sheet as of December 31, 2004 and 2003................................... F-4 Consolidated Statement of Income and Comprehensive Income for the years ended December 31, 2004, 2003 and 2002........................................ F-5 Consolidated Statement of Cash Flows for the years ended December 31, 2004, 2003 and 2002............................................................ F-6 Consolidated Statement of Changes in Stockholder's Equity for the years ended December 31, 2004, 2003 and 2002............................................................ F-7 Notes to Financial Statements................................................................. F-8 - F-40
F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholder of Phoenix Life Insurance Company: In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income and comprehensive income, cash flows and changes in stockholder's equity present fairly, in all material respects, the financial position of Phoenix Life Insurance Company and its subsidiaries (the Company) at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 provide a reasonable basis for our opinion. As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for goodwill and other intangible assets in 2002. /s/ PRICEWATERHOUSECOOPERS LLP Hartford, CT March 8, 2005 F-3 PHOENIX LIFE INSURANCE COMPANY CONSOLIDATED BALANCE SHEET ($ amounts in millions, except share data) DECEMBER 31, 2004 AND 2003 2004 2003 -------------- -------------- ASSETS: Available-for-sale debt securities, at fair value........................................... $13,473.6 $13,268.8 Available-for-sale equity securities, at fair value......................................... 160.2 184.0 Trading equity securities, at fair value.................................................... 87.3 -- Mortgage loans, at unpaid principal balances................................................ 207.9 284.1 Venture capital partnerships, at equity in net assets....................................... 255.3 234.9 Affiliate equity securities, at equity in net assets........................................ -- 47.5 Policy loans, at unpaid principal balances.................................................. 2,196.7 2,241.4 Other invested assets....................................................................... 367.5 388.7 -------------- -------------- 16,748.5 16,649.4 Available-for-sale debt and equity securities pledged as collateral......................... 1,278.8 1,350.0 -------------- -------------- Total investments........................................................................... 18,027.3 17,999.4 Cash and cash equivalents................................................................... 324.0 382.7 Accrued investment income................................................................... 222.3 222.3 Premiums, accounts and notes receivable..................................................... 163.7 251.8 Deferred policy acquisition costs........................................................... 1,388.1 1,325.7 Deferred income taxes....................................................................... -- 30.2 Intangible assets........................................................................... 0.6 0.6 Goodwill.................................................................................... 4.5 4.5 Other general account assets................................................................ 157.1 148.4 Separate account assets..................................................................... 6,950.3 6,083.2 -------------- -------------- TOTAL ASSETS................................................................................ $27,237.9 $26,448.8 ============== ============== LIABILITIES: Policy liabilities and accruals............................................................. $13,132.3 $13,088.6 Policyholder deposit funds.................................................................. 3,492.4 3,642.7 Indebtedness................................................................................ 204.1 175.0 Deferred income taxes....................................................................... 21.5 -- Other general account liabilities........................................................... 334.6 321.0 Non-recourse collateralized obligations..................................................... 1,355.2 1,472.0 Separate account liabilities................................................................ 6,950.3 6,083.2 -------------- -------------- TOTAL LIABILITIES........................................................................... 25,490.4 24,782.5 ============== ============== MINORITY INTEREST: MINORITY INTEREST IN NET ASSETS OF SUBSIDIARIES............................................. 47.5 27.9 -------------- -------------- STOCKHOLDER'S EQUITY: Common stock, ($1,000 par value, 10,000 shares authorized and outstanding).................. 10.0 10.0 Additional paid-in capital.................................................................. 1,714.9 1,714.9 Accumulated deficit......................................................................... (73.4) (127.5) Accumulated other comprehensive income...................................................... 48.5 41.0 -------------- -------------- TOTAL STOCKHOLDER'S EQUITY.................................................................. 1,700.0 1,638.4 ============== ============== TOTAL LIABILITIES, MINORITY INTEREST AND STOCKHOLDER'S EQUITY............................... $27,237.9 $26,448.8 ============== ==============
The accompanying notes are an integral part of these financial statements. F-4 PHOENIX LIFE INSURANCE COMPANY CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME ($ amounts in millions) YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
2004 2003 2002 -------------- -------------- -------------- REVENUES: Premiums..................................................................... $ 990.6 $ 1,042.2 $ 1,082.0 Insurance and investment product fees........................................ 294.7 279.8 253.7 Investment income, net of expenses........................................... 1,068.0 1,098.2 938.3 Unrealized gain on trading equity securities................................. 85.9 -- -- Net realized investment losses............................................... (2.0) (98.0) (43.8) -------------- -------------- -------------- TOTAL REVENUES............................................................... 2,437.2 2,322.2 2,230.2 -------------- -------------- -------------- BENEFITS AND EXPENSES: Policy benefits, excluding policyholder dividends............................ 1,422.2 1,454.0 1,436.1 Policyholder dividends....................................................... 404.7 418.8 401.8 Policy acquisition cost amortization......................................... 110.0 94.0 91.5 Interest expense on indebtedness............................................. 12.8 12.2 12.2 Interest expense on non-recourse collateralized obligations.................. 33.6 48.9 30.5 Other operating expenses..................................................... 259.9 253.2 291.1 -------------- -------------- -------------- TOTAL BENEFITS AND EXPENSES.................................................. 2,243.2 2,281.1 2,263.2 ============== ============== ============== Income (loss) from continuing operations before income taxes and minority interest.................................. 194.0 41.1 (33.0) Applicable income taxes (benefit)............................................ 59.7 3.9 (18.0) -------------- -------------- -------------- Income (loss) from continuing operations before minority interest............ 134.3 37.2 (15.0) Minority interest in net income of subsidiaries.............................. (0.1) (0.5) (0.6) Equity in undistributed earnings (losses) of affiliates...................... (10.4) (1.8) 4.6 -------------- -------------- -------------- INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES................. 123.8 34.9 (11.0) Cumulative effect of accounting changes...................................... -- -- (10.3) -------------- -------------- -------------- NET INCOME (LOSS)............................................................ $ 123.8 $ 34.9 $ (21.3) ============== ============== ============== COMPREHENSIVE INCOME: NET INCOME (LOSS)............................................................ $ 123.8 $ 34.9 $ (21.3) OTHER COMPREHENSIVE INCOME (LOSS)............................................ 7.5 135.6 (111.8) -------------- -------------- -------------- COMPREHENSIVE INCOME (LOSS).................................................. $ 131.3 $ 170.5 $ (133.1) ============== ============== ==============
The accompanying notes are an integral part of these financial statements. F-5 PHOENIX LIFE INSURANCE COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS ($ amounts in millions) YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
2004 2003 2002 -------------- -------------- -------------- OPERATING ACTIVITIES: Income (loss) from continuing operations..................................... $ 123.8 $ 34.9 $ (11.0) Unrealized gain on trading equity securities................................. (85.9) -- -- Net realized investment losses............................................... 2.0 98.0 43.8 Amortization and depreciation................................................ 12.7 16.2 20.5 Investment (gains) losses.................................................... (73.6) (81.6) 67.2 Equity in losses of affiliates............................................... 17.2 -- -- Deferred income taxes (benefit).............................................. 65.7 4.0 (8.8) Decrease (increase) in receivables........................................... 37.8 (20.9) (50.9) Deferred policy acquisition costs increase................................... (54.7) (111.5) (174.1) Increase in policy liabilities and accruals.................................. 60.1 469.6 468.4 Other assets and other liabilities net change................................ (44.6) (16.4) (57.9) -------------- -------------- -------------- Cash from continuing operations.............................................. 60.5 392.3 297.2 Discontinued operations, net................................................. 16.1 (34.3) (53.1) -------------- -------------- -------------- CASH FROM OPERATING ACTIVITIES............................................... 76.6 358.0 244.1 -------------- -------------- -------------- INVESTING ACTIVITIES: Investment purchases......................................................... (4,159.6) (5,611.5) (4,951.5) Investment sales, repayments and maturities.................................. 4,213.8 4,417.2 3,550.0 Debt and equity securities pledged as collateral purchases................... (17.2) (56.9) (891.6) Debt and equity securities pledged as collateral sales....................... 97.0 171.5 96.0 Subsidiary sales............................................................. 6.6 -- -- Premises and equipment additions............................................. (7.9) (19.6) (13.6) Premises and equipment dispositions.......................................... 26.4 -- -- Discontinued operations, net................................................. -- (6.7) 37.8 -------------- -------------- -------------- CASH FROM (FOR) INVESTING ACTIVITIES......................................... 159.1 (1,106.0) (2,172.9) -------------- -------------- -------------- FINANCING ACTIVITIES: Policyholder deposit fund deposits........................................... 917.3 1,334.2 2,581.1 Policyholder deposit fund withdrawals........................................ (1,067.6) (1,087.2) (911.2) Other indebtedness proceeds.................................................. 171.6 -- -- Indebtedness repayments...................................................... (155.2) -- -- Collateralized obligations proceeds.......................................... -- -- 841.6 Collateralized obligations repayments........................................ (90.8) (99.6) -- Common stock dividends paid.................................................. (69.7) (44.5) (113.8) -------------- -------------- -------------- CASH FROM (FOR) FINANCING ACTIVITIES......................................... (294.4) 102.9 2,397.7 -------------- -------------- -------------- CHANGE IN CASH AND CASH EQUIVALENTS.......................................... (58.7) (645.1) 468.9 Cash and cash equivalents, beginning of year................................. 382.7 1,027.8 558.9 -------------- -------------- -------------- CASH AND CASH EQUIVALENTS, END OF YEAR....................................... $ 324.0 $ 382.7 $ 1,027.8 ============== ============== ==============
Included in cash and cash equivalents above is cash pledged as collateral of $61.0 million, $72.0 million and $57.0 million at December 31, 2004, 2003 and 2002, respectively. The accompanying notes are an integral part of these financial statements. F-6 PHOENIX LIFE INSURANCE COMPANY CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY ($ amounts in millions) YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
2004 2003 2002 -------------- -------------- -------------- COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL: Contribution from parent for transfer of additional minimum pension liability................................................. $ -- $ -- $ 14.4 RETAINED EARNINGS (ACCUMULATED DEFICIT): Net income (loss)............................................................ 123.8 34.9 (21.3) Common stock dividends declared.............................................. (69.7) (44.5) (113.8) Other equity adjustments..................................................... -- 0.7 -- ACCUMULATED OTHER COMPREHENSIVE INCOME: Other comprehensive income (loss)............................................ 7.5 135.6 (111.8) -------------- -------------- -------------- CHANGE IN STOCKHOLDER'S EQUITY............................................... 61.6 126.7 (232.5) Stockholder's equity, beginning of year...................................... 1,638.4 1,511.7 1,744.2 -------------- -------------- -------------- STOCKHOLDER'S EQUITY, END OF YEAR............................................ $ 1,700.0 $ 1,638.4 $ 1,511.7 ============== ============== ============== The accompanying notes are an integral part of these financial statements.
F-7 PHOENIX LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ amounts in millions) YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 1. ORGANIZATION AND OPERATIONS Phoenix Life Insurance Company and its subsidiaries (together, Phoenix Life) offer a broad range of life insurance and annuity products in the United States of America. Phoenix Life Insurance Company is a wholly-owned subsidiary of The Phoenix Companies, Inc. (The Phoenix Companies), a publicly traded company on the New York Stock Exchange. Significant intercompany accounts and transactions have been eliminated in consolidating these financial statements. We have reclassified certain amounts for 2003 and 2002 to conform with 2004 presentations. We have prepared these financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP). In preparing these financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities at reporting dates and the reported amounts of revenues and expenses during the reporting periods. Actual results will differ from these estimates and assumptions. We employ significant estimates and assumptions in the determination of deferred policy acquisition costs; policyholder liabilities and accruals; the valuation of intangible assets, investments in debt and equity securities and venture capital partnerships; pension and other post-employment benefits liabilities; deferred tax balances and accruals for contingent liabilities. Significant accounting policies are presented throughout the notes in italicized type. ACCOUNTING CHANGES Other-Than-Temporary Impairments: Portions of Emerging Issues Task Force Abstract EITF 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" (EITF 03-1), were effective for fiscal periods beginning after June 15, 2004. EITF 03-1 provides guidance as to the determination of other-than-temporary impaired securities and requires additional disclosures with respect to unrealized losses. These accounting and disclosure requirements largely codify our existing practices and thus, did not have a material effect on our consolidated financial statements. The effective date of certain portions of EITF 03-1 has been delayed pending further interpretive guidance. Because significant uncertainty remains surrounding what form the guidance will ultimately take, we cannot predict what effect, if any, adoption of the pending portions will have on our financial results. Postretirement Benefits: On May 19, 2004, the FASB, issued FASB Staff Position No. FAS 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003" (the FSP). For employers that sponsor postretirement benefit plans, or plan sponsors that provide prescription drug benefits to retirees, the FSP requires any effects of the anticipated federal tax subsidy related to those drug benefits be treated as an actuarial gain. The effect of the FSP is not material to our consolidated financial statements. Nontraditional Long-Duration Contracts and Separate Accounts: Effective January 1, 2004, we adopted the AICPA's Statement of Position 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" (SOP 03-1). SOP 03-1 provides guidance related to the accounting, reporting and disclosure of certain insurance contracts and separate accounts, including guidance for computing reserves for products with guaranteed benefits such as guaranteed minimum death benefits and for products with annuitization benefits such as guaranteed minimum income benefits. In addition, SOP 03-1 addresses the presentation and reporting of separate accounts, as well as rules concerning the capitalization and amortization of sales inducements. Since this new accounting standard largely codifies certain accounting and reserving practices related to applicable nontraditional long-duration contracts and separate accounts that we already followed, our adoption did not have a material effect on our consolidated financial statements. F-8 Variable Interest Entities: In January 2003, a new accounting standard was issued, FASB Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51", that interprets the existing standards on consolidation. FIN 46 was subsequently reissued as FIN 46(R) in December 2003, with FIN 46(R) providing additional interpretation as to existing standards on consolidation. FIN 46(R) clarifies the application of standards of consolidation to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties (variable interest entities). Variable interest entities are required to be consolidated by their primary beneficiaries if they do not effectively disperse risks among all parties involved. The primary beneficiary of a variable interest entity is the party that absorbs a majority of the entity's expected losses, receives a majority of its expected residual returns, or both, as a result of holding variable interests. As required under the original standard, on February 1, 2003, we adopted the new standard for variable interest entities created after January 31, 2003 and for variable interest entities in which we obtained an interest after January 31, 2003. In addition, as required by the revised standard, on December 31, 2003 we adopted FIN 46(R) for Special Purpose Entities (SPEs) in which we hold a variable interest that we acquired prior to February 1, 2003. The effect of our adoption of the foregoing provisions of FIN 46(R) is described further in Note 7. FIN 46(R) requires our application of its provisions to non-SPE variable interest entities for periods ending after March 15, 2004. The adoption of FIN 46(R) for our non-SPE variable interest entities did not have a material effect on our consolidated financial statements. Goodwill: At the beginning of 2002, we adopted a new accounting standard for goodwill and other intangible assets and recorded the cumulative effect of the adoption as a charge to earnings. We describe the adoption of this standard further in Note 4. BUSINESS COMBINATIONS AND DISPOSITIONS On November 19, 2004, we received payment in full of a $27.5 million convertible subordinated note issued by Aberdeen Asset Management PLC (Aberdeen), a United Kingdom-based asset management company. Concurrently we relinquished our contractual right to one of two Aberdeen board seats we held related to our 16.5% equity interest in Aberdeen, at which point we concluded that in our judgment, we no longer had the ability to significantly influence Aberdeen's operations. Accordingly, effective November 19, 2004, we changed our method of accounting for our equity holdings in Aberdeen from the equity method of accounting to the fair value method of accounting under SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities". Based on our intent to sell our equity holdings in Aberdeen in the near-term, we designated our equity holdings as trading securities under the fair value method of accounting. Under the fair value method, the changes in fair value, based on the underlying value of Aberdeen's shares as traded on the London Stock Exchange, as compared to our carrying value under the equity method are presented as an after-tax realized investment gain of $55.1 million in our consolidated statement of operations for the year ended December 31, 2004. In addition, our 2004 consolidated statement of income includes a $14.7 million after-tax, non-cash charge related to the accounting for our proportionate share of Aberdeen's December 2004 settlement of alleged misselling activities with the United Kingdom's Financial Services Authority. This charge has been accounted for by us under the equity method of accounting as it pre-dates our November 19, 2004 change in accounting for Aberdeen from the equity method to the fair value method. On January 14, 2005, we closed the sale to third parties of our equity holdings in Aberdeen for net proceeds of $70.4 million, resulting in an after-tax realized investment loss of $7.0 million, which will be recognized as a realized investment loss in our 2005 consolidated statement of income. The January 2005 sale of our equity holdings in Aberdeen completed our disposition of our direct financial interests in Aberdeen. On October 25, 2004, we entered into an agreement with Friends Provident plc (Friends Provident) to sell our 12% interest in Lombard International Assurance S.A. (Lombard) and to relinquish $17.5 million in notes receivable from Lombard's affiliate, Insurance Development Holdings A.G. (IDH). This transaction closed on January 11, 2005 for consideration of $59.0 million and, under the terms of the sale, we may be entitled to additional consideration, in the form of cash, based on Lombard's financial performance through 2006. In July 2004, we sold the stock of Phoenix Global Solutions (India) Pvt. Ltd., our India-based information technology subsidiary, and essentially all of the assets of its United States affiliate, Phoenix Global Solutions, Inc., to Tata Consultancy Services Limited, a division of Tata Sons Ltd. This transaction is not material to our consolidated financial statements. F-9 2. LIFE AND ANNUITY ACTIVITIES Life and Annuity activities include individual life insurance and annuity products, such as universal life, variable life, term life and fixed and variable annuities. They also include the results of our closed block, which consists primarily of participating whole life products. PREMIUM AND FEE REVENUE AND RELATED EXPENSES [begin italic] Revenues for annuity and universal life products consist of net investment income and mortality, administration and surrender charges assessed against the fund values during the period. Related benefit expenses include universal life benefit claims in excess of fund values and net investment income credited to fund values. We recognize premiums for participating life insurance products and other long-duration life insurance products as revenue when due from policyholders. We recognize life insurance premiums for short-duration life insurance products as premium revenue pro rata over the related contract periods. We match benefits, losses and related expenses with premiums over the related contract periods. [end italic] REINSURANCE We use reinsurance agreements to provide for greater diversification of business, control exposure to potential losses arising from large risks and provide additional capacity for growth. [begin italic] We recognize assets and liabilities related to reinsurance ceded contracts on a gross basis. The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies. [end italic] We remain liable to the extent that reinsuring companies may not be able to meet their obligations under reinsurance agreements in effect. Failure of the reinsurers to honor their obligations could result in losses to us; consequently, estimates are established for amounts deemed or estimated to be uncollectible. To minimize our exposure to significant losses from reinsurance insolvencies, we evaluate the financial condition of our reinsurers and monitor concentration of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers. Our reinsurance program varies based on the type of risk, for example: o On direct policies, the maximum of individual life insurance retained by us on any one life is $10 million for single life and joint first-to-die policies and $12 million for joint last-to-die policies, with excess amounts ceded to reinsurers. o We reinsure 80% of the mortality risk on the in-force block of the Confederation Life business we acquired in December 1997. o We entered into two separate reinsurance agreements in 1998 and 1999 to reinsure 80% and 60%, respectively, of the mortality risk on a substantial portion of our otherwise retained individual life insurance business. o We reinsure 80% to 90% of the mortality risk on certain new issues of term. o We reinsure 100% of guaranteed minimum death benefits on a block of variable deferred annuities issued between January 1, 1996 through December 31, 1999, including subsequent deposits. We retain the guaranteed minimum death benefits risks on the remaining variable deferred annuity in force that is not covered by this reinsurance arrangement. o We assume and cede business related to the group accident and health block in run-off. While we are not writing any new contracts, we are contractually obligated to assume and cede premiums related to existing contracts. F-10
DIRECT BUSINESS AND REINSURANCE: YEAR ENDED DECEMBER 31, ($ amounts in millions) --------------------------------------------- 2004 2003 2002 -------------- -------------- -------------- Direct premiums........................................................ $ 1,054.3 $ 1,092.1 $ 1,104.2 Premiums assumed from reinsureds....................................... 2.8 15.5 16.9 Premiums ceded to reinsurers........................................... (66.5) (65.4) (39.1) -------------- -------------- -------------- PREMIUMS............................................................... $ 990.6 $ 1,042.2 $ 1,082.0 ============== ============== ============== Percentage of amount assumed to net premiums........................... 0.3% 1.5% 1.6% ============== ============== ============== Direct policy benefits incurred........................................ $ 416.3 $ 402.9 $ 357.5 Policy benefits assumed from reinsureds................................ 3.9 13.5 12.6 Policy benefits ceded to reinsurers.................................... (52.9) (56.9) (44.8) -------------- -------------- -------------- POLICY BENEFITS........................................................ $ 367.3 $ 359.5 $ 325.3 ============== ============== ============== Direct life insurance in force......................................... $126,367.9 $120,931.3 $110,529.8 Life insurance in force assumed from reinsureds........................ 1,759.5 1,837.3 1,831.2 Life insurance in force ceded to reinsurers............................ (80,040.1) (77,222.3) (74,575.2) -------------- -------------- -------------- LIFE INSURANCE IN FORCE................................................ $ 48,087.3 $ 45,546.3 $ 37,785.8 ============== ============== ============== Percentage of amount assumed to net insurance in force................. 3.7% 4.0% 4.8% ============== ============== ==============
The policy benefit amounts above exclude changes in reserves, interest credited to policyholders and withdrawals, which total $1,054.9 million, $1,094.5 million and $1,110.8 million, net of reinsurance, for the years ended December 31, 2004, 2003 and 2002. Irrevocable letters of credit aggregating $48.1 million at December 31, 2004 have been arranged with commercial banks in favor of us to collateralize the ceded reserves. VALLEY FORGE LIFE INSURANCE Effective July 1, 2002, we acquired the variable life and variable annuity business of Valley Forge Life Insurance Company (a subsidiary of CNA Financial Corporation). The business acquired had a total account value of $557.0 million at June 30, 2002. This transaction was effected through a combination of coinsurance and modified coinsurance. DEFERRED POLICY ACQUISITION COSTS [begin italic] The costs of acquiring new business, principally commissions, underwriting, distribution and policy issue expenses, all of which vary with and are primarily related to production of new business, are deferred. In connection with our acquisitions of the Confederation Life business (1997), we recognized an asset for the present value of future profits (PVFP) representing the present value of estimated net cash flows embedded in the existing contracts acquired. This asset is included in deferred policy acquisition costs (DAC). We amortize DAC and PVFP based on the related policy's classification. For individual participating life insurance policies, DAC and PVFP are amortized in proportion to estimated gross margins. For universal life, variable universal life and accumulation annuities, DAC and PVFP are amortized in proportion to estimated gross profits. Policies may be surrendered for value or exchanged for a different one of our products (internal replacement); the DAC balance associated with the replaced or surrendered policies is amortized to reflect these surrenders. The amortization process requires the use of various assumptions, estimates and judgments about the future. The primary assumptions are expenses, investment performance, mortality and contract cancellations (i.e., lapses, withdrawals and surrenders). These assumptions, which we review on a regular basis, and are generally based on our past experience, industry studies, regulatory requirements and judgments about the future. Changes in estimated gross margins and gross profits based on actual experiences are reflected as an adjustment to total amortization to date resulting in a charge or credit to earnings. Finally, analyses are performed periodically to assess whether there are sufficient gross margins or gross profits to amortize the remaining DAC balances. [end italic] F-11
ACTIVITY IN DEFERRED POLICY ACQUISITION COSTS: YEAR ENDED DECEMBER 31, ($ amounts in millions) --------------------------------------------- 2004 2003 2002 -------------- -------------- -------------- Direct acquisition costs deferred excluding acquisitions..................... $ 164.7 $ 205.5 $ 217.0 Acquisition costs recognized in Valley Forge Life acquisition................ -- -- 48.5 Costs amortized to expenses: Recurring costs related to operations...................................... (110.4) (98.1) (88.5) (Cost) credit related to realized investment gains or losses............... 0.4 4.1 (25.1) Changes in actuarial assumptions........................................... -- -- 22.1 Offsets to net unrealized investment gains or losses included in other comprehensive income................................... 7.7 12.4 (95.9) -------------- -------------- -------------- Change in deferred policy acquisition costs.................................. 62.4 123.9 78.1 Deferred policy acquisition costs, beginning of year......................... 1,325.7 1,201.8 1,123.7 -------------- -------------- -------------- DEFERRED POLICY ACQUISITION COSTS, END OF YEAR............................... $ 1,388.1 $ 1,325.7 $ 1,201.8 ============== ============== ==============
In 2002, we revised the mortality assumptions used in the development of estimated gross margins for the traditional participating block of business to reflect favorable experience. This revision resulted in a decrease in deferred policy acquisition cost amortization of $22.1 million ($14.4 million after income taxes). Also in 2002, we revised the long-term market return assumption for the variable annuity block of business from 8% to 7%. In addition, we recorded an impairment charge related to the recoverability of our deferred acquisition cost asset related to the variable annuity business. The revision in long-term market return assumption and the impairment charge resulted in a $13.5 million pre-tax ($8.8 million after income taxes) increase in policy acquisition cost amortization expense in 2002. POLICY LIABILITIES AND ACCRUALS [begin italic] Future policy benefits are liabilities for life and annuity products. We establish liabilities in amounts adequate to meet the estimated future obligations of policies in-force. Future policy benefits for traditional life insurance are computed using the net level premium method on the basis of actuarial assumptions as to contractual guaranteed rates of interest, mortality rates guaranteed in calculating the cash surrender values described in such contracts and morbidity. Future policy benefits for variable universal life, universal life and annuities in the accumulation phase are computed using the deposit-method which is the sum of the account balance, unearned revenue liability and liability for minimum policy benefits. Future policy benefits for term and annuities in the payout phase that have significant mortality risk are computed using the net premium method on the basis of actuarial assumptions at the issue date of these contracts for rates of interest, contract administrative expenses, mortality and surrenders. We establish liabilities for outstanding claims, losses and loss adjustment expenses based on individual case estimates for reported losses and estimates of unreported losses based on past experience. [end italic] Policyholder liabilities are primarily for participating life insurance policies and universal life insurance policies. For universal life, this includes deposits received from customers and investment earnings on their fund balances, which range from 4.0% to 6.0% as of December 31, 2004, less administrative and mortality charges. Certain of our annuity products contain guaranteed minimum death benefits. The guaranteed minimum death benefit feature provides annuity contract holders with a guarantee that the benefit received at death will be no less than a prescribed amount. This minimum amount is based on the net deposits paid into the contract, the net deposits accumulated at a specified rate, the highest historical account value on a contract anniversary, or more typically, the greatest of these values. As of December 31, 2004 and 2003, the difference between the guaranteed minimum death benefit and the current account value (net amount at risk) for all existing contracts was $123.5 million and $183.1 million, respectively, for which we had established reserves, net of reinsurance recoverables, of $9.1 million and $7.6 million, respectively. PARTICIPATING LIFE INSURANCE Participating life insurance in force was 35.6% and 38.8% of the face value of total individual life insurance in force at December 31, 2004 and 2003, respectively. F-12 FAIR VALUE OF INVESTMENT CONTRACTS [begin italic] For purposes of fair value disclosures (Note 12), we determine the fair value of guaranteed interest contracts by assuming a discount rate equal to the appropriate U.S. Treasury rate plus 150 basis points to determine the present value of projected contractual liability payments through final maturity. We valued the fair value of deferred annuities and supplementary contracts without life contingencies with an interest guarantee of one year or less at the amount of the policy reserve. In determining the fair value of deferred annuities and supplementary contracts without life contingencies with interest guarantees greater than one year, we used a discount rate equal to the appropriate U.S. Treasury rate plus 150 basis points to determine the present value of the projected account value of the policy at the end of the current guarantee period. Deposit type funds, including pension deposit administration contracts, dividend accumulations, and other funds left on deposit not involving life contingencies, have interest guarantees of less than one year for which interest credited is closely tied to rates earned on owned assets. For these liabilities, we assume fair value to be equal to the stated liability balances. [end italic] POLICYHOLDER DEPOSIT FUNDS Policyholder deposit funds primarily consist of annuity deposits received from customers, dividend accumulations and investment earnings on their fund balances, which range from 1.8% to 12.3% as of December 31, 2004, less administrative charges. DEMUTUALIZATION AND CLOSED BLOCK Phoenix Home Life Mutual Insurance Company demutualized on June 25, 2001 by converting from a mutual life insurance company to a stock life insurance company, became a wholly-owned subsidiary of The Phoenix Companies, Inc. and changed its name to Phoenix Life Insurance Company. In connection with the demutualization, we established a closed block as of December 31, 1999 to preserve over time the reasonable dividend expectations of individual life and annuity policyholders for which dividends were currently being paid or were expected to be paid under the then-current dividend scale. The closed block comprises a defined limited group of policies and a defined set of assets, is governed by a set of operating rules and will continue in effect as long as any policy in the closed block remains in effect. Phoenix Life allocated assets to the closed block in an amount we believed sufficient to produce cash flows which, together with anticipated premiums and other revenues from the policies included in the closed block, will support payment of obligations relating to these policies. These obligations include the payment of claims, certain expenses, taxes and policyholder dividends, which we estimate to continue at rates in effect for 2000. [begin italic] The closed block assets, including future assets from cash flows generated by the assets and premiums and other revenues from the policies in the closed block, will benefit only holders of the policies in the closed block. The principal cash flow items that affect the amount of closed block assets and liabilities are premiums, net investment income, investment purchases and sales, policyholder benefits, policyholder dividends, premium taxes and income taxes. The principal income and expense items excluded from the closed block are management and maintenance expenses, commissions, investment income and realized investment gains and losses on investments held outside the closed block that support the closed block business. All of these excluded income and expense items enter into the determination of total gross margins of closed block policies for the purpose of amortization of deferred policy acquisition costs. We present closed block assets, liabilities, revenues and expenses together with all other assets, liabilities, revenues and expenses. Within closed block liabilities, we have established a policyholder dividend obligation to record an additional liability to closed block policyholders for cumulative closed block earnings in excess of expected amounts calculated at the date of demutualization. These closed block earnings will not inure to stockholders but will result in additional future dividends to closed block policyholders unless otherwise offset by future performance of the closed block that is less favorable than expected. [end italic] Because closed block liabilities exceed closed block assets, we have a net closed block liability at each period-end. This net liability represents the maximum future earning contribution to be recognized from the closed block F-13 and the change in this net liability each period is in the earnings contribution recognized from the closed block for the period. To the extent that actual cash flows differ from amounts anticipated, we may adjust policyholder dividends. If the closed block has excess funds, those funds will be available only to the closed block policyholders. However, if the closed block has insufficient funds to make policy benefit payments that are guaranteed, the payments will be made from assets outside of the closed block. CLOSED BLOCK ASSETS AND LIABILITIES: AS OF DECEMBER 31, ($ amounts in millions) ------------------------------ 2004 2003 INCEPTION -------------- -------------- -------------- Debt securities.............................................................. $ 6,949.6 $ 6,906.4 $ 4,773.1 Equity securities............................................................ 90.8 82.9 -- Mortgage loans............................................................... 181.9 228.5 399.0 Venture capital partnerships................................................. 52.4 38.6 -- Policy loans................................................................. 1,363.4 1,386.8 1,380.0 Other invested assets........................................................ 60.0 46.7 -- -------------- -------------- -------------- Total closed block investments............................................... 8,698.1 8,689.9 6,552.1 Cash and cash equivalents.................................................... 100.5 40.5 -- Accrued investment income.................................................... 118.8 120.2 106.8 Receivables.................................................................. 32.7 43.0 35.2 Deferred income taxes........................................................ 359.7 377.0 389.4 Other closed block assets.................................................... 24.0 62.3 6.2 -------------- -------------- -------------- TOTAL CLOSED BLOCK ASSETS.................................................... 9,333.8 9,332.9 7,089.7 -------------- -------------- -------------- Policy liabilities and accruals.............................................. 9,686.9 9,723.1 8,301.7 Policyholder dividends payable............................................... 365.5 369.8 325.1 Policyholder dividend obligation............................................. 535.9 519.2 -- Other closed block liabilities............................................... 41.5 63.0 12.3 -------------- -------------- -------------- TOTAL CLOSED BLOCK LIABILITIES............................................... 10,629.8 10,675.1 8,639.1 -------------- -------------- -------------- EXCESS OF CLOSED BLOCK LIABILITIES OVER CLOSED BLOCK ASSETS.................. $ 1,296.0 $ 1,342.2 $ 1,549.4 ============== ============== ============== YEAR ENDED CLOSED BLOCK REVENUES AND EXPENSES AND CHANGES IN CUMULATIVE DECEMBER 31, POLICYHOLDER DIVIDEND OBLIGATION: FROM ------------------------------ ($ amounts in millions) INCEPTION 2004 2003 -------------- -------------- -------------- Premiums..................................................................... $ 5,170.8 $ 932.8 $ 1,000.1 Net investment income........................................................ 2,771.2 560.0 573.1 Net realized investment losses............................................... (91.1) (2.0) (9.4) -------------- -------------- -------------- TOTAL REVENUES............................................................... 7,850.9 1,490.8 1,563.8 -------------- -------------- -------------- Policy benefits, excluding dividends......................................... 5,367.6 1,007.1 1,058.0 Other operating expenses..................................................... 57.9 8.9 10.0 -------------- -------------- -------------- Total benefits and expenses, excluding policyholder dividends................ 5,425.5 1,016.0 1,068.0 -------------- -------------- -------------- Closed block contribution to income before dividends and income taxes........ 2,425.4 474.8 495.8 Policyholder dividends....................................................... 2,000.2 403.9 419.4 -------------- -------------- -------------- Closed block contribution to income before income taxes...................... 425.2 70.9 76.4 Applicable income taxes...................................................... 149.3 24.7 26.8 -------------- -------------- -------------- CLOSED BLOCK CONTRIBUTION TO INCOME.......................................... $ 275.9 $ 46.2 $ 49.6 ============== ============== ============== Policyholder dividends provided through earnings............................. $ 2,045.4 $ 403.9 $ 419.4 Policyholder dividends provided through other comprehensive income........... 436.5 3.8 (45.5) -------------- -------------- -------------- ADDITIONS TO POLICYHOLDER DIVIDEND LIABILITIES............................... 2,481.9 407.7 373.9 POLICYHOLDER DIVIDENDS PAID.................................................. (1,905.6) (395.3) (395.6) -------------- -------------- -------------- Change in policyholder dividend liabilities.................................. 576.3 12.4 (21.7) Policyholder dividend liabilities, beginning of period....................... 325.1 889.0 910.7 -------------- -------------- -------------- Policyholder dividend liabilities, end of period............................. 901.4 901.4 889.0 Less: Policyholder dividends payable, end of period....................... 365.5 365.5 369.8 -------------- -------------- -------------- POLICYHOLDER DIVIDEND OBLIGATION, END OF PERIOD.............................. $ 535.9 $ 535.9 $ 519.2 ============== ============== ==============
In addition to the closed block assets, we hold assets outside the closed block in support of closed block liabilities. We recognize investment earnings on these invested assets, less deferred policy acquisition cost amortization and allocated expenses, as an additional source of earnings to our stockholders. F-14 3. INVESTING ACTIVITIES DEBT AND EQUITY SECURITIES [begin italic] We classify our debt and equity securities as available-for-sale and report them in our balance sheet at fair value. Trading securities are carried at fair value and changes in fair value are recorded in net income as they occur. Fair value is based on quoted market price, where available. When quoted market prices are not available, we estimate fair value by discounting debt security cash flows to reflect interest rates currently being offered on similar terms to borrowers of similar credit quality (private placement debt securities), by quoted market prices of comparable instruments (untraded public debt securities) and by independent pricing sources or internally developed pricing models (equity securities). For mortgage-backed and other asset-backed debt securities, we recognize income using a constant effective yield based on anticipated prepayments and the estimated economic lives of the securities. When actual prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date and any resulting adjustment is included in net investment income. For certain asset-backed securities, changes in estimated yield are recorded on a prospective basis and specific valuation methods are applied to these securities to determine if there has been an other-than-temporary decline in value. [end italic] See Note 7 for information on available-for-sale debt and equity securities pledged as collateral. AS OF DECEMBER 31, FAIR VALUE AND COST OF DEBT SECURITIES: --------------------------------------------------------------- ($ amounts in millions) 2004 2003 ------------------------------ ------------------------------ FAIR VALUE COST FAIR VALUE COST -------------- -------------- -------------- -------------- U.S. government and agency................................... $ 676.4 $ 622.7 $ 755.2 $ 712.7 State and political subdivision.............................. 446.5 413.7 510.3 468.4 Foreign government........................................... 314.8 284.0 260.4 239.0 Corporate.................................................... 7,365.4 7,040.7 6,763.4 6,410.0 Mortgage-backed.............................................. 3,253.4 3,122.9 3,097.5 2,963.4 Other asset-backed........................................... 1,417.1 1,405.0 1,882.0 1,863.6 -------------- -------------- -------------- -------------- DEBT SECURITIES.............................................. $ 13,473.6 $ 12,889.0 $ 13,268.8 $ 12,657.1 ============== ============== ============== ============== Amounts applicable to the closed block....................... $ 6,949.6 $ 6,515.2 $ 6,906.4 $ 6,471.1 ============== ============== ============== ============== AS OF DECEMBER 31, FAIR VALUE AND COST OF DEBT SECURITIES: --------------------------------------------------------------- ($ amounts in millions) 2004 2003 ------------------------------ ------------------------------ FAIR VALUE COST FAIR VALUE COST -------------- -------------- -------------- -------------- Lombard International Assurance, S.A......................... $ 43.3 $ 43.3 $ 41.1 $ 41.1 Other equity securities...................................... 116.9 101.1 142.9 127.3 -------------- -------------- -------------- -------------- EQUITY SECURITIES............................................ $ 160.2 $ 144.4 $ 184.0 $ 168.4 ============== ============== ============== ============== Amounts applicable to the closed block....................... $ 90.8 $ 78.3 $ 82.9 $ 75.0 ============== ============== ============== ==============
In 2003, we sold our 3.0% and 3.1% equity interests in two life insurance subsidiaries of General Electric Company for $72.0 million and realized a gain of $21.6 million ($14.0 million after income taxes). Also in 2003, we sold our 9.3% equity interest in PXRE Group Ltd., a property catastrophe reinsurer, for $23.1 million and realized a gain of $13.7 million ($8.9 million after income taxes). In January 2005, we sold our equity investment in Lombard as further described in Note 1. HRH. Hilb Rogal and Hobbs (HRH) is a Virginia-based property and casualty insurance and employee benefit products distributor traded on the New York Stock Exchange. Prior to November 2002, we owned 6.4% of its common shares, as well as convertible debt securities which, if converted, would have represented 16.8% of HRH's common stock outstanding. We also had a contractual right to designate two nominees for election to its board of directors. F-15 In November 2002, we converted our HRH note into additional shares of HRH common stock, resulting in total HRH holdings with a fair value of $167.1 million. Following the conversion, we sold the majority of our shares of HRH common stock to The Phoenix Companies for $157.4 million. As a result of these transactions, in 2002 we recorded a gross realized investment gain of $107.1 million, $38.8 million net of offsets for applicable DAC costs and deferred income taxes. We calculated our gains using the specific identification of the securities sold. As a result of the transactions we completed in November 2002, it was no longer appropriate to consider HRH as an affiliate for accounting and reporting purposes. In addition, in 2003 we sold our remaining shares of HRH common stock in the open market for $9.4 million and recorded a gross realized investment gain of $6.9 million ($4.5 million after income taxes).
AS OF DECEMBER 31, ------------------------------------------------------------- UNREALIZED GAINS AND LOSSES FROM 2004 2003 DEBT AND EQUITY SECURITIES: ----------------------------- ----------------------------- ($ amounts in millions) GAINS LOSSES GAINS LOSSES -------------- ------------- -------------- ------------- U.S. government and agency................................... $ 55.4 $ (1.7) $ 44.0 $ (1.5) State and political subdivision.............................. 34.4 (1.6) 43.5 (1.6) Foreign government........................................... 31.1 (0.3) 23.2 (1.8) Corporate.................................................... 364.2 (39.5) 400.4 (47.0) Mortgage-backed.............................................. 137.0 (6.5) 143.4 (9.3) Other asset-backed........................................... 32.4 (20.3) 55.6 (37.2) -------------- ------------- -------------- ------------- Debt securities gains and losses............................. $ 654.5 $ (69.9) $ 710.1 $ (98.4) ============== ============= ============== ============= DEBT SECURITIES NET GAINS.................................... $ 584.6 $ 611.7 ============== ============== Equity securities gains and losses........................... $ 19.1 $ (3.3) $ 17.4 $ (1.8) ============== ============= ============== ============= EQUITY SECURITIES NET GAINS.................................. $ 15.8 $ 15.6 ============== ============== AS OF DECEMBER 31, 2004 ---------------------------------------------------------------------------------------- AGING OF TEMPORARILY IMPAIRED LESS THAN 12 MONTHS GREATER THAN 12 MONTHS TOTAL DEBT AND EQUITY SECURITIES: --------------------------- -------------------------- ----------------------------- ($ amounts in millions) FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED VALUE LOSSES VALUE LOSSES VALUE LOSSES --------------------------- -------------------------- ----------------------------- DEBT SECURITIES U.S. government and agency............... $ 85.6 $ (1.4) $ 4.9 $ (0.3) $ 90.5 $ (1.7) State and political subdivision.......... 41.6 (1.2) 9.0 (0.4) 50.6 (1.6) Foreign government....................... -- -- 10.6 (0.3) 10.6 (0.3) Corporate................................ 1,212.6 (16.1) 418.8 (23.4) 1,631.4 (39.5) Mortgage-backed.......................... 589.4 (4.8) 113.6 (1.7) 703.0 (6.5) Other asset-backed....................... 444.6 (5.3) 96.8 (15.0) 541.4 (20.3) ------------- ------------- ------------- ------------ ------------ ------------- DEBT SECURITIES.......................... $ 2,373.8 $ (28.8) $ 653.7 $ (41.1) $ 3,027.5 $ (69.9) COMMON STOCK............................. 15.3 (2.4) 5.4 (0.9) 20.7 (3.3) ------------- ------------- ------------- ------------ ------------ ------------- TOTAL TEMPORARILY IMPAIRED SECURITIES.... $ 2,389.1 $ (31.2) $ 659.1 $ (42.0) $ 3,048.2 $ (73.2) ============= ============= ============= ============ ============ ============= AMOUNTS INSIDE THE CLOSED BLOCK.......... $ 702.0 $ (10.7) $ 347.9 $ (16.2) $ 1,049.9 $ (26.9) ============= ============= ============= ============ ============ ============= AMOUNTS OUTSIDE THE CLOSED BLOCK......... $ 1,687.1 $ (20.5) $ 311.2 $ (25.8) $ 1,998.3 $ (46.3) ============= ============= ============= ============ ============ ============= AMOUNTS OUTSIDE THE CLOSED BLOCK THAT ARE BELOW INVESTMENT GRADE........ $ 66.8 $ (2.2) $ 68.3 $ (12.2) $ 135.1 $ (14.4) ============= ============= ============= ============ ============ ============= AFTER OFFSETS FOR DEFERRED ACQUISITION COST ADJUSTMENT AND TAXES.............. $ (0.8) $ (4.5) $ (5.3) ============= ============ =============
These securities are considered to be temporarily impaired at December 31, 2004 as each of these securities has performed, and is expected to continue to perform, in accordance with their original contractual terms. F-16 MORTGAGE LOANS AND REAL ESTATE [begin italic] We report mortgage loans at unpaid principal balances, net of valuation reserves on impaired mortgages. We consider a mortgage loan to be impaired if we believe it is probable that we will be unable to collect all amounts of contractual interest and principal as scheduled in the loan agreement. We do not accrue interest income on impaired mortgage loans when the likelihood of collection is doubtful. We estimate the fair value of mortgage loans by discounting the present value of scheduled loan payments. We base the discount rate on the comparable U.S. Treasury rates for loan durations plus spreads of 130 to 800 basis points, depending on our internal quality ratings of the loans. For in-process-of-foreclosure or defaulted loans, we estimate fair value as the lower of the underlying collateral value or the loan balance. [end italic] Mortgage loans are collateralized by the related properties and are generally no greater than 75% of the properties' value at the time the loans are originated.
AS OF DECEMBER 31, CARRYING VALUE OF INVESTMENTS IN MORTGAGE LOANS --------------------------------------------------------------- ($ amounts in millions) 2004 2003 ------------------------------ ------------------------------ CARRYING CARRYING VALUE FAIR VALUE VALUE FAIR VALUE -------------- -------------- -------------- -------------- PROPERTY TYPE Apartment buildings.......................................... $ 81.8 $ 82.8 $ 105.1 $ 106.7 Office buildings............................................. 18.0 18.2 49.0 49.7 Retail stores................................................ 92.5 93.6 109.0 110.7 Industrial buildings......................................... 25.4 25.7 33.7 34.2 Other........................................................ 0.1 0.1 0.1 0.1 -------------- -------------- -------------- -------------- Subtotal..................................................... 217.8 220.4 296.9 301.4 Less: Valuation allowances................................ 9.9 -- 12.8 -- -------------- -------------- -------------- -------------- MORTGAGE LOANS............................................... $ 207.9 $ 220.4 $ 284.1 $ 301.4 ============== ============== ============== ============== Amounts applicable to the closed block....................... $ 181.9 $ 184.1 $ 228.5 $ 242.4 ============== ============== ============== ==============
We had no delinquent or in-process-of-foreclosure mortgage loans as of both December 31, 2004 and 2003. The carrying values of mortgage loans on which the payment terms have been restructured or modified were $12.9 million and $25.8 million as of December 31, 2004 and 2003, respectively. We have provided valuation allowances for restructured or modified mortgage loans.
YEAR ENDED DECEMBER 31, MORTGAGE LOAN VALUATION ALLOWANCE ACTIVITY: --------------------------------------------- ($ amounts in millions) 2004 2003 2002 -------------- -------------- -------------- Valuation allowance, beginning of year....................................... $ 12.8 $ 15.5 $ 15.0 Additions charged to income.................................................. -- 0.8 0.6 Deductions for write-offs and disposals...................................... (2.9) (3.5) (0.1) -------------- -------------- -------------- VALUATION ALLOWANCE, END OF YEAR............................................. $ 9.9 $ 12.8 $ 15.5 ============== ============== ==============
During the three years ended December 31, 2004, the amount of interest that was foregone due to the restructuring of mortgage loans and to non-income producing loans was not material to our consolidated financial statements. Refinancing of mortgage loans was not material in any of the three years ended December 31, 2004. VENTURE CAPITAL PARTNERSHIPS We invest as a limited partner in venture capital limited partnerships. Generally, these partnerships focus on early-stage ventures, primarily in the information technology and life science industries and leveraged buyout funds. We also have direct equity investments in leveraged buyouts and corporate acquisitions. [begin italic] We record our equity in the earnings of venture capital partnerships in net investment income using the most recent financial information received from the partnerships and estimating the change in our share of partnership earnings for the quarter to eliminate any lag in reporting. To estimate the net equity in earnings of the venture capital partnerships for each quarter, we developed a methodology to estimate the change in value of the underlying investee companies in the venture capital F-17 partnerships. For public investee companies, we used quoted market prices at the end of each quarter, applying liquidity discounts to these prices in instances where such discounts were applied in the underlying partnerships' financial statements. For private investee companies, we applied a public industry sector index to estimate changes in valuations each quarter. We apply this methodology consistently each quarter with subsequent adjustments to reflect market events reported by the partnerships (e.g., new rounds of financing, initial public offerings and writedowns by the general partners). Our methodology recognizes both downward and upward adjustments in estimated values based on the indices, but when the general partner reduces the value of a private investee company, we do not adjust the fair value upward (by applying the public sector index) in excess of the most recent value reported by the general partner. Finally, we revise the valuations we have assigned to the investee companies annually to reflect the valuations in the audited financial statements received from the venture capital partnerships. [end italic]
YEAR ENDED DECEMBER 31, NET INVESTMENT INCOME RELATED TO VENTURE CAPITAL PARTNERSHIPS: ---------------------------------------------- ($ amounts in millions) 2004 2003 2002 -------------- -------------- -------------- Net realized gains (losses) on partnership cash and stock distributions...... $ 13.7 $ 17.4 $ (4.7) Net unrealized gains (losses) on partnership investments..................... 14.4 38.2 (47.2) Partnership operating expenses............................................... (2.6) (6.6) (7.4) -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS)................................................. $ 25.5 $ 49.0 $ (59.3) ============== ============== ============== Amounts applicable to the closed block....................................... $ 6.2 $ 12.8 $ -- ============== ============== ==============
As indicated above, we record our equity in earnings of venture capital partnerships based on the most recent financial information and by estimating the earnings for any lag in partnership reporting. As a result, the effect of our adjusting our estimates to actual results reflected in partnership financial statements was to increase net investment income as follows:
YEAR ENDED DECEMBER 31, ADJUSTMENT OF VENTURE CAPITAL INVESTMENT INCOME ---------------------------------------------- RELATED TO RECEIPT OF FINANCIAL STATEMENTS: 2004 2003 2002 ($ amounts in millions) -------------- -------------- -------------- Closed block................................................................. $ 1.0 $ -- $ -- General account.............................................................. 6.8 33.4 12.8 -------------- -------------- -------------- TOTAL........................................................................ $ 7.8 $ 33.4 $ 12.8 ============== ============== ============== YEAR ENDED DECEMBER 31, INVESTMENT ACTIVITY IN VENTURE CAPITAL PARTNERSHIPS: ---------------------------------------------- ($ amounts in millions) 2004 2003 2002 -------------- -------------- -------------- Contributions................................................................ $ 59.2 $ 41.3 $ 43.0 Equity in earnings (losses) of partnerships.................................. 25.5 49.0 (59.3) Distributions................................................................ (64.3) (43.6) (41.7) Proceeds from sale of partnership interests.................................. -- (26.1) -- Realized loss on sale of partnership interests............................... -- (14.3) (5.1) -------------- -------------- -------------- Change in venture capital partnerships....................................... 20.4 6.3 (63.1) Venture capital partnership investments, beginning of period................. 234.9 228.6 291.7 -------------- -------------- -------------- VENTURE CAPITAL PARTNERSHIP INVESTMENTS, END OF PERIOD....................... $ 255.3 $ 234.9 $ 228.6 ============== ============== ============== UNFUNDED COMMITMENTS AND INVESTMENTS IN VENTURE CAPITAL PARTNERSHIPS: AS OF DECEMBER 31, ($ amounts in millions) ------------------------------ 2004 2003 -------------- -------------- UNFUNDED COMMITMENTS Closed block $ 83.0 $ 48.3 Venture capital segment..................................................................... 53.5 76.7 ============== ============== TOTAL UNFUNDED COMMITMENTS.................................................................. $ 136.5 $ 125.0 ============== ============== VENTURE CAPITAL PARTNERSHIPS Closed block $ 52.4 $ 38.6 Venture capital segment..................................................................... 202.9 196.3 ============== ============== TOTAL VENTURE CAPITAL PARTNERSHIPS.......................................................... $ 255.3 $ 234.9 ============== ==============
F-18 In February 2003, we sold a 50% interest in certain of our venture capital partnerships to an outside party and transferred the remaining 50% interest to our closed block. The carrying value of the partnerships sold and transferred totaled $52.2 million after realizing a loss of $5.1 million in 2002 and $14.3 million in 2003 to reflect the proceeds received. AFFILIATE EQUITY AND DEBT SECURITIES [begin italic] Our investments in affiliate equity securities represent investments in operating entities in which we own less than a majority of the outstanding common stock and where we exercise significant influence over the operating and financial policies of the companies. We use the equity method of accounting for our investments in common stock of these affiliates. We evaluate our equity method investments for an other-than-temporary impairment at each balance sheet date considering quantitative and qualitative factors including quoted market price of underlying equity securities, the duration the carrying value is in excess of fair value and historical and projected earnings and cash flow capacity. [end italic] We present affiliate debt securities in the available-for-sale debt securities caption. AS OF DECEMBER 31, 2003 CARRYING VALUE AND COST OF AFFILIATE SECURITIES: ------------------------------ ($ amounts in millions) CARRYING VALUE COST -------------- -------------- Aberdeen common stock....................................................................... $ 38.3 $ 20.0 Other....................................................................................... 9.2 18.9 -------------- -------------- AFFILIATE EQUITY SECURITIES................................................................. $ 47.5 $ 38.9 ============== ============== Aberdeen 7.5% convertible notes............................................................. $ 27.5 $ 27.5 -------------- -------------- AFFILIATE DEBT SECURITIES................................................................... $ 27.5 $ 27.5 ============== ==============
The cost basis of Aberdeen common stock is adjusted to reflect an other-than-temporary impairment of $89.1 million, which we recognized as a realized investment loss in 2003.
YEAR ENDED DECEMBER 31, SOURCES OF EARNINGS FROM AFFILIATE SECURITIES: ---------------------------------------------- ($ amounts in millions) 2004 2003 2002 -------------- -------------- -------------- Aberdeen common stock dividends.............................................. $ 3.0 $ 2.7 $ 3.8 Equity in Aberdeen undistributed income (loss)............................... (21.9) (2.0) 2.3 HRH common stock dividends................................................... -- -- 0.5 Equity in HRH undistributed income........................................... -- -- 2.5 Other........................................................................ 1.7 (2.7) (3.2) -------------- -------------- -------------- AFFILIATE EQUITY SECURITIES INVESTMENT INCOME................................ $ (17.2) $ (2.0) $ 5.9 ============== ============== ============== Aberdeen convertible notes and bonds......................................... $ 2.0 $ 2.5 $ 3.8 Aberdeen 5.875% convertible notes............................................ -- 0.1 1.3 -------------- -------------- -------------- AFFILIATE DEBT SECURITIES INVESTMENT INCOME.................................. $ 2.0 $ 2.6 $ 5.1 ============== ============== ==============
ABERDEEN. As of December 31, 2004 and 2003, we owned 38.1 million shares of Aberdeen common stock, which represented 16.5% of its outstanding common shares. We acquired these shares between 1996 and 2001 at a total cost of $109.1 million, which, through November 18, 2004, we accounted for under the equity method of accounting based on our ability to significantly influence Aberdeen's operations. During 2003, we recorded a non-cash realized investment loss of $89.1 million ($55.0 million after income taxes) related to an other-than-temporary impairment of our equity investment in Aberdeen. In addition, as of December 31, 2003 we owned $27.5 million in Aberdeen convertible subordinated notes which were repaid in full to us on November 19, 2004. Concurrent with this paydown, we relinquished our contractual right to one of two Aberdeen board seats held related to our 16.5% equity interest in Aberdeen at which point we concluded that in our judgment, we no longer had the ability to significantly influence Aberdeen's operations. Accordingly, effective November 19, 2004, we changed our method of accounting for our equity holdings in Aberdeen from the equity method of accounting to the fair value method of accounting under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. Based on our intent to sell our equity holdings in Aberdeen in the F-19 near-term, we designated our equity holdings as trading securities under the fair value method of accounting. Under the fair value method, the changes in fair value, based on the underlying value of Aberdeen's shares as traded on the London Stock Exchange, as compared to our carrying under the equity method are presented as an after-tax realized investment gain of $55.1 million in our consolidated statement of income for the year ended December 31, 2004. In addition, our 2004 consolidated statement of income includes a $14.7 million after-tax, non-cash charge related to the accounting for our proportionate share of Aberdeen's December 2004 settlement of alleged misselling activities with the United Kingdom's Financial Services Authority. This charge has been accounted for by us under the equity method of accounting as it pre-dates our November 19, 2004 change in accounting for Aberdeen from the equity method to the fair value method.
YEAR ENDED DECEMBER 31, AFTER-TAX EFFECT OF EQUITY INTEREST IN ABERDEEN: --------------------------------------------- ($ amounts in millions) 2004 2003 2002 -------------- -------------- -------------- Equity in undistributed earnings (losses) of affiliates...................... $ (12.3) $ 0.5 $ 3.7 Unrealized gain on trading securities........................................ 55.1 -- -- Realized investment gain (loss).............................................. -- (55.0) -- -------------- -------------- -------------- NET INCOME (LOSS)............................................................ $ 42.8 $ (54.5) $ 3.7 ============== ============== ==============
The carrying value of our equity investment in Aberdeen is $87.3 million at December 31, 2004 and is presented as a trading equity security on our consolidated balance sheet. On January 14, 2005, we closed the sale to third parties of our equity holdings in Aberdeen for net proceeds of $70.4 million, resulting in an after-tax realized investment loss of $7.0 million, which will be recognized as a realized investment loss in our 2005 consolidated statement of income. The January 2005 sale of our equity holdings in Aberdeen completed our disposition of our direct financial interests in Aberdeen. We continue to participate in sub-advisory arrangements related to several of our asset management product offerings with Aberdeen, the financial effects of which are not material to our consolidated financial statements. POLICY LOANS AND OTHER INVESTED ASSETS [begin italic] Policy loans are carried at their unpaid principal balances and are collateralized by the cash values of the related policies. We estimate the fair value of fixed rate policy loans by discounting loan interest and loan repayments. We base the discount rate on the 10-year U.S. Treasury rate. We assume that loan interest payments are made at the fixed rate less 17.5 basis points and that loan repayments only occur as a result of anticipated policy lapses. For variable rate policy loans, we consider the unpaid loan balance as fair value, as interest rates on these loans are reset annually based on market rates. Other investments primarily include leveraged lease investments and other partnership and joint venture interests. Leveraged lease investments represent the net amount of the estimated residual value of the lease assets, rental receivables and unearned and deferred income to be allocated over the lease term. Investment income is calculated using the interest method and is recognized only in periods in which the net investment is positive. Other partnership and joint venture interests in which we do not have control or a majority ownership interest are recorded using the equity method of accounting. These investments include affordable housing, mezzanine and other partnership interests. Our derivative instruments primarily include interest rate swap agreements. We report these contracts at fair values, which are based on current settlement values. These values are determined by brokerage quotes that utilize pricing models or formulas based on current assumptions for the respective agreements. [end italic] F-20
AS OF DECEMBER 31, OTHER INVESTED ASSETS: ------------------------------ ($ amounts in millions) 2004 2003 -------------- -------------- Transportation and other equipment leases................................................... $ 67.8 $ 68.7 Separate account equity investments......................................................... 40.0 49.2 Mezzanine partnerships...................................................................... 61.7 50.9 Affordable housing partnerships............................................................. 23.4 24.8 Derivative instruments (Note 12)............................................................ 19.4 30.0 Other affiliate investments................................................................. 8.8 20.3 Real estate................................................................................. 70.1 64.0 Other partnership interests................................................................. 76.3 80.8 -------------- -------------- OTHER INVESTED ASSETS....................................................................... $ 367.5 $ 388.7 ============== ============== Amounts applicable to the closed block...................................................... $ 60.0 $ 46.7 ============== ==============
NET INVESTMENT INCOME AND NET REALIZED INVESTMENT GAINS (LOSSES) [begin italic] We recognize realized investment gains and losses on asset dispositions on a first-in, first-out basis and when declines in fair value of debt and equity securities are considered to be other-than-temporary. The cost basis of these written down investments is adjusted to fair value at the date the determination of impairment is made and the new cost basis is not changed for subsequent recoveries in value. The closed block policyholder dividend obligation, applicable deferred policy acquisition costs and applicable income taxes, which offset realized investment gains and losses, are each reported separately as components of net income. [end italic]
YEAR ENDED DECEMBER 31, SOURCES OF NET INVESTMENT INCOME: ---------------------------------------------- ($ amounts in millions) 2004 2003 2002 -------------- -------------- -------------- Debt securities.............................................................. $ 774.4 $ 767.0 $ 734.1 Equity securities............................................................ 3.2 2.1 3.9 Mortgage loans............................................................... 22.5 32.6 40.4 Venture capital partnerships................................................. 25.5 49.0 (59.3) Affiliate equity securities.................................................. -- -- 5.9 Policy loans................................................................. 167.1 171.7 171.8 Other investments............................................................ 48.8 35.0 17.1 Cash and cash equivalents.................................................... 4.4 6.8 10.8 -------------- -------------- -------------- Total investment income...................................................... 1,045.9 1,064.2 924.7 Less: Investment expenses................................................. 18.0 18.2 17.4 -------------- -------------- -------------- NET INVESTMENT INCOME, GENERAL ACCOUNT INVESTMENTS........................... 1,027.9 1,046.0 907.3 Debt and equity securities pledged as collateral (Note 7).................... 40.1 52.2 31.0 -------------- -------------- -------------- NET INVESTMENT INCOME........................................................ $ 1,068.0 $ 1,098.2 $ 938.3 ============== ============== ============== Amounts applicable to the closed block....................................... $ 560.0 $ 573.1 $ 562.0 ============== ============== ==============
For 2004, 2003 and 2002, net investment income was lower by $9.5 million, $10.4 million and $6.2 million, respectively, due to non-income producing debt securities. Of these amounts, $5.8 million, $5.5 million and $5.2 million, respectively, related to the closed block. F-21
SOURCES OF REALIZED INVESTMENT GAINS (LOSSES): YEAR ENDED DECEMBER 31, ($ amounts in millions) --------------------------------------------- 2004 2003 2002 -------------- -------------- -------------- Debt security impairments.................................................... $ (15.5) $ (76.1) $ (114.3) Equity security impairments.................................................. (1.5) (4.3) (9.8) Mortgage loan impairments.................................................... -- (4.1) (0.6) Venture capital partnership impairments...................................... -- (4.6) (5.1) Affiliate equity security impairments........................................ (11.0) (96.9) -- Other invested asset impairments............................................. (3.3) (16.5) (22.0) Debt and equity securities pledged as collateral impairments................. (16.6) (8.3) (34.9) -------------- -------------- -------------- IMPAIRMENT LOSSES............................................................ (47.9) (210.8) (186.7) -------------- -------------- -------------- Debt security transaction gains.............................................. 39.0 93.7 92.6 Debt security transaction losses............................................. (10.6) (28.9) (45.9) Equity security transaction gains............................................ 17.7 58.8 116.3 Equity security transaction losses........................................... (5.9) (9.2) (22.4) Mortgage loan transaction gains (losses)..................................... 0.2 (1.3) 0.2 Venture capital partnership transaction losses............................... -- (9.7) -- Other invested asset transaction gains (losses).............................. 5.5 9.4 2.1 -------------- -------------- -------------- NET TRANSACTION GAINS........................................................ 45.9 112.8 142.9 -------------- -------------- -------------- NET REALIZED INVESTMENT LOSSES............................................... $ (2.0) $ (98.0) $ (43.8) -------------- -------------- -------------- Net realized investment losses............................................... $ (2.0) $ (98.0) $ (43.8) -------------- -------------- -------------- Applicable closed block policyholder dividend obligation (reduction)......... 3.7 (5.9) (40.3) Applicable deferred policy acquisition costs (benefit)....................... (0.4) (4.1) 25.1 Applicable deferred income tax benefit....................................... 3.1 (35.6) (0.5) -------------- -------------- -------------- Offsets to realized investment losses........................................ 6.4 (45.6) (15.7) -------------- -------------- -------------- NET REALIZED INVESTMENT LOSSES INCLUDED IN NET INCOME........................ $ (8.4) $ (52.4) $ (28.1) ============== ============== ==============
Included in realized impairment losses on debt and equity securities pledged as collateral above, are impairments relating to our direct investments in the consolidated collateralized obligation trusts of $3.7 million, $5.9 million and $8.6 million for 2004, 2003 and 2002, respectively. On May 25, 2004, we sold our Enfield, Connecticut office facility for a loss of $1.0 million ($0.7 million after-tax). In anticipation of that sale, we had recorded a $6.2 million ($4.0 million after-tax) realized impairment loss in 2003. UNREALIZED INVESTMENT GAINS (LOSSES) [begin italic] We recognize unrealized investment gains and losses on investments in debt and equity securities that we classify as available-for-sale. These gains and losses are reported as a component of other comprehensive income, net of the closed block policyholder dividend obligation, applicable DAC and applicable deferred income taxes. [end italic]
SOURCES OF CHANGES IN NET UNREALIZED INVESTMENT GAINS (LOSSES): YEAR ENDED DECEMBER 31, ($ amounts in millions) ---------------------------------------------- 2004 2003 2002 -------------- -------------- -------------- Debt securities.............................................................. $ (27.1) $ (66.1) $ 404.1 Equity securities............................................................ 0.2 (27.7) 22.8 Debt and equity securities pledged as collateral............................. 7.8 116.4 42.6 Other investments............................................................ -- 4.9 (1.1) -------------- -------------- -------------- NET CHANGES IN UNREALIZED INVESTMENT GAINS (LOSSES).......................... $ (19.1) $ 27.5 $ 468.4 ============== ============== ============== Net unrealized investment gains (losses)..................................... $ (19.1) $ 27.5 $ 468.4 -------------- -------------- -------------- Applicable policyholder dividend obligation.................................. 3.6 (45.5) 369.4 Applicable deferred policy acquisition costs................................. (7.7) (12.4) 95.9 Applicable deferred income taxes (benefit)................................... (9.8) (5.4) (13.8) -------------- -------------- -------------- Offsets to net unrealized investment gains................................... (13.9) (63.3) 451.5 -------------- -------------- -------------- NET CHANGES IN UNREALIZED INVESTMENT GAINS (LOSSES) INCLUDED IN OTHER COMPREHENSIVE INCOME (NOTE 10)........................... $ (5.2) $ 90.8 $ 16.9 ============== ============== ==============
F-22 INVESTING CASH FLOWS [begin italic] Cash and cash equivalents consist of cash and short-term investments with original maturities of 90 days or less. [end italic]
INVESTMENT PURCHASES, SALES, REPAYMENTS AND MATURITIES: ($ amounts in millions) YEAR ENDED DECEMBER 31, ---------------------------------------------- 2004 2003 2002 -------------- -------------- -------------- Debt security purchases...................................................... $ (4,052.9) $ (5,385.4) $ (4,725.5) Equity security purchases.................................................... (66.3) (125.4) (58.3) Venture capital partnership investments...................................... (59.3) (41.6) (43.0) Affiliate equity and debt security purchases................................. -- -- (28.0) Other invested asset purchases............................................... (25.8) (27.2) (73.0) Policy loan advances, net.................................................... 44.7 (31.9) (23.7) -------------- -------------- -------------- INVESTMENT PURCHASES......................................................... $ (4,159.6) $ (5,611.5) $ (4,951.5) ============== ============== ============== Debt securities sales........................................................ $ 2,405.2 $ 2,124.7 $ 1,805.1 Debt securities maturities and repayments.................................... 1,483.0 1,792.0 1,305.6 Equity security sales........................................................ 111.2 235.7 273.2 Mortgage loan maturities and principal repayments............................ 77.2 180.3 67.7 Venture capital partnership capital distributions............................ 59.4 54.2 28.5 Affiliate securities sales................................................... 1.0 -- -- Real estate and other invested assets sales.................................. 76.8 30.3 69.9 -------------- -------------- -------------- INVESTMENT SALES, REPAYMENTS AND MATURITIES.................................. $ 4,213.8 $ 4,417.2 $ 3,550.0 ============== ============== ==============
The maturities of general account debt securities and mortgage loans, by contractual sinking fund payment and maturity, as of December 31, 2004 are summarized in the following table. Actual maturities will differ from contractual maturities as certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties, we have the right to put or sell certain obligations back to the issuers and we may refinance mortgage loans. Refinancing of mortgage loans was not significant during the three years ended 2004.
MATURITIES OF DEBT SECURITIES AND MORTGAGE LOANS: MORTGAGE ($ amounts in millions) DEBT LOANS AT SECURITIES CARRYING AT COST VALUE TOTAL -------------- -------------- -------------- Due in one year or less...................................................... $ 164.7 $ 25.1 $ 189.8 Due after one year through five years........................................ 2,356.0 89.3 2,445.3 Due after five years through ten years....................................... 3,642.4 59.8 3,702.2 Due after ten years.......................................................... 6,725.9 33.7 6,759.6 -------------- -------------- -------------- TOTAL........................................................................ $ 12,889.0 $ 207.9 $ 13,096.9 ============== ============== ==============
4. GOODWILL AND OTHER INTANGIBLE ASSETS [begin italic] Effective January 1, 2002, we adopted the new accounting standard for goodwill and other intangible assets, including amounts reflected in our carrying value of equity method investments. Under this new standard, we discontinued recording amortization expense on goodwill and other intangible assets with indefinite lives. For goodwill and indefinite-lived intangible assets, we perform impairment tests at the reporting unit level at least annually. To test for impairments, we calculate the fair value of each reporting unit based on the sum of a multiple of revenue and the fair value of the unit's tangible net assets. We compare the calculated fair value to the recorded values and record an impairment, if warranted. [end italic] Upon adoption of the new accounting standard, we recorded an after-tax cumulative effect charge of $10.3 million to reduce the carrying value of goodwill and other indefinite-lived intangible assets to fair value. This reduction was related to an international equity investment. F-23
GROSS AND NET CARRYING AMOUNTS OF GOODWILL AND YEAR ENDED DECEMBER 31, OTHER INTANGIBLE ASSETS: --------------------------------------------------------------- ($ amounts in millions) 2004 2003 ------------------------------ ------------------------------ GROSS NET GROSS NET -------------- -------------- -------------- -------------- Goodwill..................................................... $ 5.8 $ 4.5 $ 5.8 $ 4.5 Other........................................................ 3.2 0.6 3.2 0.6 -------------- -------------- -------------- -------------- GOODWILL AND OTHER INTANGIBLE ASSETS......................... $ 9.0 $ 5.1 $ 9.0 $ 5.1 ============== ============== ============== ==============
During 2003, in a series of transactions with PFG Holdings, Inc. (PFG), we converted $5.5 million of convertible debentures with PFG and acquired additional common stock of PFG for $5.5 million. These transactions increased our ownership in PFG from 67% to 71% and generated additional goodwill of $2.0 million. No amortization of intangible assets is expected over the next five years. 5. FINANCING ACTIVITIES INDEBTEDNESS [begin italic] We record indebtedness at unpaid principal balances of each instrument. For purposes of fair value disclosures, we determine the fair value of indebtedness based on contractual cash flows discounted at market rates. [end italic]
INDEBTEDNESS: AS OF DECEMBER 31, ($ amounts in millions) --------------------------------------------------------------- 2004 2003 ------------------------------ ------------------------------ CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE -------------- -------------- -------------- -------------- 6.95% surplus notes.......................................... $ 30.2 $ 34.4 $ 175.0 $ 188.8 7.15% surplus notes.......................................... 173.9 174.8 -- -- -------------- -------------- -------------- -------------- TOTAL INDEBTEDNESS........................................... $ 204.1 $ 209.2 $ 175.0 $ 188.8 ============== ============== ============== ==============
Our 6.95% and 7.15% surplus notes are due December 1, 2006 and December 15, 2034, respectively. The carrying value of the 2034 notes is net of $1.1 million of unamortized original issue discount. Interest payments are at an annual rate of 6.95% and 7.15%, respectively, require the prior approval of the Superintendent of Insurance of the State of New York and may be made only out of surplus funds which the Superintendent determines to be available for such payments under New York insurance law. The 6.95% notes have no early redemption provisions. The 7.15% notes may be redeemed at our option at any time at the "make-whole" redemption price set forth in the offering circular. New York insurance law provides that the notes are not part of our legal liabilities. On December 15, 2004, we repurchased $144.8 million of the previously issued $175.0 million outstanding principal on our 6.95% notes and recognized an after-tax charge of $6.4 million for costs incurred, including the tender premium. Concurrent with the closing of the tender, we issued the $175.0 million 7.15% notes. On November 22, 2004, we entered into a new $150.0 million three-year, unsecured senior revolving credit facility to replace our prior $150.0 million credit facility that was to expire on December 20, 2004. The prior facility consisted of two tranches: a $112.5 million, 364-day revolving credit facility and a $37.5 million three-year revolving credit facility. Potential borrowers on the new credit line are The Phoenix Companies, Inc., Phoenix Investment Partners and Phoenix Life. The Phoenix Companies guarantees any loans under this new facility to Phoenix Life and Phoenix Investment Partners. Base rate loans will bear interest at the greater of Wachovia Bank, National Association's prime commercial rate or the federal funds rate plus 0.50%. Eurodollar rate loans will bear interest at LIBOR plus an applicable percentage based on our Standard & Poor's and Moody's ratings. The $25 million drawn by Phoenix Investment Partners on the prior facility was refinanced using this new facility at the Eurodollar rate. F-24
INTEREST EXPENSE ON INDEBTEDNESS: YEAR ENDED DECEMBER 31, ($ amounts in millions) ---------------------------------------------- 2004 2003 2002 -------------- -------------- -------------- INTEREST EXPENSE INCURRED.................................................... $ 12.8 $ 12.2 $ 12.2 ============== ============== ============== INTEREST PAID................................................................ $ 12.6 $ 12.2 $ 12.2 ============== ============== ==============
6. SEPARATE ACCOUNT ASSETS AND LIABILITIES Separate account products are those for which a separate investment and liability account is maintained on behalf of the policyholder. Investment objectives for these separate accounts vary by fund account type, as outlined in the applicable fund prospectus or separate account plan of operations. Our separate account products include variable annuities and variable life insurance contracts. [begin italic] Separate account assets and liabilities related to policyholder funds are carried at market value. Deposits, net investment income and realized investment gains and losses for these accounts are excluded from revenues, and the related liability increases are excluded from benefits and expenses. Fees assessed to the contractholders for management services are included in revenues when services are rendered. [end italic] 7. INVESTMENTS PLEDGED AS COLLATERAL AND NON-RECOURSE COLLATERALIZED OBLIGATIONS We are involved with various entities in the normal course of business that may be deemed to be variable interest entities and, as a result, we may be deemed to hold interests in those entities. In particular, we serve as the investment advisor to eight collateralized obligation trusts that were organized to take advantage of bond market arbitrage opportunities, including the three in the table below. These eight collateralized obligation trusts are investment trusts with aggregate assets of $3.0 billion that are primarily invested in a variety of fixed income securities acquired from third parties. These collateralized obligation trusts, in turn, issued tranched collateralized obligations and residual equity securities to third parties, as well as to our principal life insurance subsidiary's general account. Our asset management affiliates earned advisory fees of $8.0 million, $10.4 million and $7.9 million during the years ended December 31, 2004, 2003 and 2002, respectively. The collateralized obligation trusts reside in bankruptcy remote SPEs for which we provide neither recourse nor guarantees. Accordingly, our financial exposure to these collateralized obligation trusts stems from our life insurance subsidiary's general account direct investment in certain debt or equity securities issued by these collateralized obligation trusts. Our maximum exposure to loss with respect to our life insurance subsidiary's direct investment in the eight collateralized obligation trusts is $79.9 million at December 31, 2004 ($30.9 million of which relates to trusts that are consolidated). Of that exposure, $54.7 million ($20.0 million of which relates to trust that are consolidated) relates to investment grade debt securities and loss of management fees. We consolidated three collateralized obligation trusts as of December 31, 2004, 2003 and 2002. As of December 31, 2004, our direct investment in the three consolidated collateralized obligation trusts is $30.9 million ($20.0 million of which is an investment grade debt security). We recognized investment income on debt and equity securities pledged as collateral, net of interest expense on collateralized obligations and applicable minority interest, of $3.4 million, $3.6 million and $2.6 million for the years ended December 31, 2004, 2003 and 2002, respectively, related to these three consolidated obligation trusts. Five variable interest entities not consolidated by us under FIN 46(R) represent collateralized obligation trusts with approximately $1.6 billion of investment assets pledged as collateral. Our general account's direct investment in these unconsolidated variable interest entities is $49.0 million ($34.7 million of which are investment grade debt securities at December 31, 2004). We recognized investment advisory fee revenues related to the unconsolidated variable interest entities of $4.6 million, $6.8 million and $5.3 million for the years ended December 31, 2004, 2003 and 2002, respectively. F-25
CONSOLIDATED VARIABLE INTEREST ENTITIES: AS OF DECEMBER 31, ($ amounts in millions) ------------------------------ 2004 2003 -------------- -------------- ASSETS PLEDGED AS COLLATERAL, AT FAIR VALUE Phoenix CDO I............................................................................... $ 94.4 $ 148.8 Phoenix CDO II.............................................................................. 294.5 332.6 Phoenix-Mistic 2002-1 CDO................................................................... 967.0 963.4 -------------- -------------- TOTAL....................................................................................... $ 1,355.9 $ 1,444.8 ============== ============== NON-RECOURSE COLLATERALIZED OBLIGATIONS: Phoenix CDO I (March 2011 maturity)......................................................... $ 127.3 $ 183.2 Phoenix CDO II (December 2012 mandatorily redeemable)....................................... 329.4 375.6 Phoenix-Mistic 2002-1 CDO (September 2014 maturity)......................................... 898.5 913.2 -------------- -------------- TOTAL....................................................................................... $ 1,355.2 $ 1,472.0 ============== ==============
Assets pledged as collateral consist of available-for-sale debt and equity securities at fair value of $1,278.8 million and $1,350.0 million at December 31, 2004 and 2003, respectively. In addition, cash and accrued investment income of $77.1 million and $94.8 million are included in these amounts at December 31, 2004 and 2003, respectively. Non-recourse collateralized obligations are comprised of callable collateralized obligations of $1,253.4 million and $1,344.2 million at December 31, 2004 and 2003, respectively, and non-recourse derivative cash flow hedge liabilities of $101.8 million (notional amount of $1,118.2 million with maturities of 2005-2013) and $127.7 million (notional amount of $1,211.3 million with maturities of 2005-2013) at December 31, 2004 and 2003, respectively. Minority interest liabilities related to third-party equity investments in the consolidated variable interest entities is $37.7 million and $22.3 million at December 31, 2004 and 2003, respectively. [begin italic] Collateralized obligations for which Phoenix Investment Partners is the sponsor and actively manages the assets, where we are deemed to be a primary beneficiary as a result of our variable interests, and where there is not a significant amount of outside third-party equity investment in the trust, are consolidated in our financial statements. Our financial exposure is limited to our share of equity and bond investments in these vehicles held in our general account as available-for-sale debt and equity securities, as applicable, and there are no financial guarantees from, or recourse, to us, for these collateralized obligation trusts. Debt and equity securities pledged as collateral are recorded at fair value with any applicable unrealized investment gains or losses reflected as a component of accumulated other comprehensive income, net of applicable minority interest. We recognize realized investment losses on debt and equity securities in these collateralized obligations when declines in fair values, in our judgment, are considered to be other-than-temporarily impaired. Non-recourse obligations issued by the consolidated collateralized obligation trusts at face value and are recorded at unpaid principal balance. Non-recourse derivative cash flow hedges are carried on our consolidated balance sheet at fair value with an offsetting amount recorded in accumulated other comprehensive income. [end italic]
EFFECT OF CONSOLIDATION OF COLLATERALIZED OBLIGATION TRUSTS: AS OF AND FOR THE ($ amounts in millions) YEAR ENDED DECEMBER 31, ---------------------------------------------- 2004 2003 2002 -------------- -------------- -------------- Decrease in net income or increase in net loss............................... $ (12.9) $ (2.4) $ (26.3) ============== ============== ============== Reduction to stockholders' equity............................................ $ (67.5) $ (77.3) $ (204.9) ============== ============== ==============
The above non-cash charges to earnings and stockholders' equity primarily relate to realized and unrealized investment losses within the collateralized obligation trusts. Upon maturity or other liquidation of the trusts, the fair value of the investments pledged as collateral will be used to settle the non-recourse collateralized obligations with any shortfall in such investments inuring to the third-party note and equity holders. To the extent there remains a recorded liability for non-recourse obligations after all the assets pledged as collateral are exhausted, such amount will be reduced to zero with a corresponding benefit to earnings. Accordingly, these investment losses and any future investment losses under this method of consolidation will ultimately reverse upon the maturity or other liquidation of the non-recourse collateralized obligations. These non-recourse obligations F-26 mature between 2011 through 2014 but contain call provisions. The call provisions may be triggered at the discretion of the equity investors based on market conditions and are subject to certain contractual limitations. GAAP requires us to consolidate all the assets and liabilities of these collateralized obligation trusts which results in the recognition of realized and unrealized losses even though we have no legal obligation to fund such losses in the settlement of the collateralized obligations. The FASB continues to evaluate, through the issuance of FASB staff positions, the various technical implementation issues related to consolidation accounting. We will continue to assess the impact of any new implementation guidance issued by the FASB as well as evolving interpretations among accounting professionals. Additional guidance and interpretations may affect our application of consolidation accounting in future periods.
FAIR VALUE AND COST OF DEBT AND EQUITY SECURITIES AS OF DECEMBER 31, PLEDGED AS COLLATERAL: --------------------------------------------------------------- ($ amounts in millions) 2004 2003 ------------------------------ ------------------------------ FAIR VALUE COST FAIR VALUE COST -------------- -------------- -------------- -------------- Debt securities pledged as collateral........................ $ 1,276.9 $ 1,159.9 $ 1,348.8 $ 1,238.6 Equity securities pledged as collateral...................... 1.9 0.4 1.2 0.7 -------------- -------------- -------------- -------------- TOTAL DEBT AND EQUITY SECURITIES PLEDGED AS COLLATERAL....... $ 1,278.8 $ 1,160.3 $ 1,350.0 $ 1,239.3 ============== ============== ============== ============== GROSS AND NET UNREALIZED GAINS AND LOSSES FROM AS OF DECEMBER 31, DEBT AND EQUITY SECURITIES PLEDGED AS COLLATERAL: -------------------------------------------------------------- ($ amounts in millions) 2004 2003 ------------------------------ ----------------------------- GAINS LOSSES GAINS LOSSES -------------- -------------- -------------- -------------- Debt securities pledged as collateral........................ $ 131.3 $ (14.3) $ 138.5 $ (28.3) Equity securities pledged as collateral...................... 1.6 (0.1) 0.7 (0.2) -------------- -------------- -------------- -------------- TOTAL........................................................ $ 132.9 $ (14.4) $ 139.2 $ (28.5) ============== ============== ============== ============== NET UNREALIZED GAINS......................................... $ 118.5 $ 110.7 ============== ==============
AGING OF TEMPORARILY IMPAIRED AS OF DECEMBER 31, 2004 DEBT AND EQUITY SECURITIES PLEDGED ------------------------------------------------------------------------------------ AS COLLATERAL: LESS THAN 12 MONTHS GREATER THAN 12 MONTHS TOTAL ($ amounts in millions) -------------------------- -------------------------- -------------------------- FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED VALUE LOSSES VALUE LOSSES VALUE LOSSES ------------ ------------ ------------ ------------ ------------ ------------ Corporate.................................. $ 16.2 $ (0.2) $ 25.2 $ (4.0) $ 41.4 $ (4.2) Mortgage-backed............................ -- -- 23.9 (8.3) 23.9 (8.3) Other asset-backed......................... -- -- 21.0 (1.8) 21.0 (1.8) ------------ ------------ ------------ ------------ ------------ ------------ DEBT SECURITIES............................ $ 16.2 $ (0.2) $ 70.1 $ (14.1) $ 86.3 $ (14.3) EQUITY SECURITIES PLEDGED AS COLLATERAL.... -- -- -- (0.1) -- (0.1) ------------ ------------ ------------ ------------ ------------ ------------ TOTAL TEMPORARILY IMPAIRED SECURITIES PLEDGED AS COLLATERAL.................... $ 16.2 $ (0.2) $ 70.1 $ (14.2) $ 86.3 $ (14.4) ============ ============ ============ ============ ============ ============
Gross unrealized losses related to debt securities pledged as collateral whose fair value is less than the security's amortized cost totals $14.3 million at December 31, 2004. Gross unrealized losses on debt securities with a fair value less than 80% of the security's amortized cost totaled $7.8 million at December 31, 2004. The majority of these debt securities are investment grade issues that continue to perform to their original contractual terms at December 31, 2004.
MATURITY OF DEBT SECURITIES PLEDGED AS COLLATERAL: 2004 ($ amounts in millions) COST -------------- Due in one year or less..................................................................................... $ 20.7 Due after one year through five years....................................................................... 294.3 Due after five years through ten years...................................................................... 689.8 Due after ten years......................................................................................... 155.1 -------------- TOTAL DEBT SECURITIES....................................................................................... $ 1,159.9 ==============
The amount of CDO-related derivative cash flow hedge ineffectiveness recognized through earnings for the years ended December 31, 2004 and 2003 is ($0.7) million and $0.0 million, respectively. See Note 7 to our consolidated financial statements for information on realized investment losses related to these CDOs. F-27 8. INCOME TAXES [begin italic] We recognize income tax expense or benefit based upon amounts reported in the financial statements and the provisions of currently enacted tax laws. We allocate income taxes to income, other comprehensive income and additional paid-in capital, as applicable. We recognize current income tax assets and liabilities for estimated income taxes refundable or payable based on the current year's income tax returns. We recognize deferred income tax assets and liabilities for the estimated future income tax effects of temporary differences and carryforwards. Temporary differences are the differences between the financial statement carrying amounts of assets and liabilities and their tax bases, as well as the timing of income or expense recognized for financial reporting and tax purposes of items not related to assets or liabilities. If necessary, we establish valuation allowances to reduce the carrying amount of deferred income tax assets to amounts that are more likely than not to be realized. We periodically review the adequacy of these valuation allowances and record any reduction in allowances through earnings. In accordance with an income tax sharing agreement with The Phoenix Companies, we compute the provision for federal income taxes as if we were filing a separate federal income tax return, except that benefits arising from income tax credits and net operating losses are allocated to those subsidiaries producing such benefits to the extent they are utilized in The Phoenix Companies' consolidated federal income tax return. [end italic]
ALLOCATION OF INCOME TAXES: YEAR ENDED DECEMBER 31, ($ amounts in millions) ---------------------------------------------- 2004 2003 2002 -------------- -------------- -------------- Income taxes (benefit) applicable to: Current.................................................................... $ (12.5) $ 1.5 $ (14.3) Deferred................................................................... 72.2 2.4 (3.7) -------------- -------------- -------------- Continuing operations...................................................... 59.7 3.9 (18.0) Equity in earnings of affiliates........................................... (6.8) (0.2) 2.6 -------------- -------------- -------------- NET INCOME (LOSS)............................................................ 52.9 3.7 (15.4) Other comprehensive income................................................... (14.0) (2.4) (6.0) -------------- -------------- -------------- COMPREHENSIVE INCOME (LOSS).................................................. $ 38.9 $ 1.3 $ (21.4) ============== ============== ============== INCOME TAXES PAID (RECOVERED)................................................ $ 6.0 $ 1.3 $ (2.2) ============== ============== ============== EFFECTIVE INCOME TAX RATE: YEAR ENDED DECEMBER 31, ($ amounts in millions) ---------------------------------------------- 2004 2003 2002 -------------- -------------- -------------- Income (loss) from continuing operations before income taxes and minority interest...................................................... $ 194.0 $ 41.1 $ (33.0) -------------- -------------- -------------- Income taxes (benefit) at statutory rate of 35.0%............................ 67.9 14.4 (11.6) Tax-advantaged investment income............................................. (10.8) (6.9) (12.6) Tax interest recoveries...................................................... -- (1.1) -- Realized losses on available-for-sale securities pledged as collateral....... 4.5 0.9 9.2 Other, net................................................................... (1.9) (3.4) (3.0) -------------- -------------- -------------- INCOME TAXES (BENEFIT) APPLICABLE TO CONTINUING OPERATIONS................... $ 59.7 $ 3.9 $ (18.0) ============== ============== ==============
F-28
DEFERRED INCOME TAX BALANCES ATTRIBUTABLE TO TEMPORARY DIFFERENCES: YEAR ENDED ($ amounts in millions) DECEMBER 31, ------------------------------ 2004 2003 -------------- -------------- Deferred income tax assets: Future policyholder benefits................................................................ $ 214.1 $ 215.2 Unearned premiums / deferred revenues....................................................... 118.1 125.1 Employee benefits........................................................................... 73.0 74.0 Intangible assets........................................................................... 2.6 2.7 Net operating loss carryover benefits....................................................... 29.9 39.3 Low income housing tax credit carryover benefits............................................ 12.3 12.3 Foreign tax credits carryover benefits...................................................... 0.1 0.1 Valuation allowance......................................................................... (1.1) (1.7) Other....................................................................................... 6.1 1.0 -------------- -------------- GROSS DEFERRED INCOME TAX ASSETS............................................................ 455.1 468.0 -------------- -------------- Deferred tax liabilities: Deferred policy acquisition costs........................................................... (335.6) (316.1) Investments................................................................................. (133.2) (114.9) Other....................................................................................... (7.8) (6.8) -------------- -------------- GROSS DEFERRED INCOME TAX LIABILITIES....................................................... (476.6) (437.8) -------------- -------------- DEFERRED INCOME TAX ASSETS (LIABILITIES).................................................... $ (21.5) $ 30.2 ============== ==============
We have elected to file a consolidated federal income tax return for 2004 and prior years with The Phoenix Companies. Within the consolidated tax return, we are required by Internal Revenue Service regulations to segregate the entities into two groups: life insurance companies and non-life insurance companies. We are limited as to the amount of any operating losses from one group that can be offset against taxable income of the other group. These limitations affect the amount of any operating loss carryforwards that we have now or in the future. As of December 31, 2004, we had deferred tax assets related to net operating losses of $28.8 million for federal income tax purposes and $1.1 million for state income tax purposes. The deferred tax assets related to the federal net operating losses are scheduled to expire as follows: $21.4 million in 2017, $4.4 million in 2018 and $3.0 million in 2023. The deferred tax assets related to the state net operating losses relate to the non-life subgroup and are scheduled to expire between 2020 and 2023. Due to the inability to combine the life insurance and non-life insurance subgroups for state income tax purposes, a $1.1 million and a $1.7 million valuation allowance has been established at the end of 2004 and 2003, respectively, relative to the state net operating loss carryforwards. As of December 31, 2004, the deferred income tax assets of $12.3 million related to low income housing tax credits are expected to expire as follows: $4.1 million in 2022, $4.1 million in 2023 and $4.1 million in 2024. As of December 31, 2004, we had foreign tax credit carryover totaling $0.1 million, which is scheduled to expire in 2006. We expect to realize the benefits of the foreign tax credits, therefore, no valuation allowance has been recorded against this tax benefit. We have determined, based on our earnings and future income, that it is more likely than not that the deferred income tax assets after valuation allowance already recorded as of December 31, 2004 and 2003 will be realized. In determining the adequacy of future income, we have considered projected future income, reversal of existing temporary differences and available tax planning strategies that could be implemented, if necessary. Our federal income tax returns are routinely audited by the IRS, and estimated provisions are routinely provided in the financial statements in anticipation of the results of these audits. While it is often difficult to predict the outcome of these audits, including the timing of any resolution of any particular tax matter, we believe that our reserves, as reported on our consolidated balance sheet, are adequate for all open tax years. Unfavorable resolution of any particular issue could result in additional use of cash to pay liabilities that would be deemed owed to the IRS. Additionally, any unfavorable or favorable resolution of any particular issue could result in an increase or decrease, respectively, to our effective income tax rate to the extent that our estimates differ from the ultimate resolution. Tax-advantaged investment income for 2004 includes a $5.7 million benefit related to the favorable resolution of certain tax matters with the IRS. F-29 9. EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AGREEMENTS EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AGREEMENTS The Phoenix Companies sponsors a non-contributory, defined benefit pension plan covering substantially all of its employees. Retirement benefits are a function of both years of service and level of compensation. The Phoenix Companies also sponsors a non-qualified supplemental defined benefit plan to provide benefits in excess of amounts allowed pursuant to the Internal Revenue Code. The Phoenix Companies' funding policy is to contribute annually an amount equal to at least the minimum required contribution in accordance with minimum funding standards established by the Employee Retirement Income Security Act of 1974 (ERISA). Contributions are intended to provide not only for benefits attributable to service to date, but also for service expected to be earned in the future. The Phoenix Companies sponsors pension and savings plans for its employees, and employees and agents of its subsidiaries. The qualified plans comply with requirements established by the ERISA and excess benefit plans provide for that portion of pension obligations, which is in excess of amounts permitted by ERISA. The Phoenix Companies also provides certain health care and life insurance benefits for active and retired employees. We incur applicable employee benefit expenses through the process of cost allocation by The Phoenix Companies. In addition to The Phoenix Companies' pension plans, The Phoenix Companies currently provides certain health care and life insurance benefits to retired employees, spouses and other eligible dependents through various plans sponsored by The Phoenix Companies. A substantial portion of Phoenix affiliate employees may become eligible for these benefits upon retirement. The health care plans have varying co-payments and deductibles, depending on the plan. These plans are unfunded. Prior to June 25, 2001, Phoenix Life sponsored the aforementioned employee benefit plans. Effective June 25, 2001, Phoenix Life's parent, The Phoenix Companies, Inc., became the sponsor of these plans. Substantially all of our employees remained participants of the plans. [begin italic] We recognize pension and other post-retirement benefit costs and obligations over the employees' expected service periods by discounting an estimate of aggregate benefits. We estimate aggregate benefits by using assumptions for employee turnover, future compensation increases, rates of return on pension plan assets and future health care costs. We recognize an expense for differences between actual experience and estimates over the average future service period of participants. We recognize an expense for our contributions to employee and agent savings plans at the time employees and agents make contributions to the plans. We also recognize the costs and obligations of severance, disability and related life insurance and health care benefits to be paid to inactive or former employees after employment but before retirement. Effective with the change in sponsorship of employee benefit plans to our parent, the liability for the excess of accrued pension cost of each plan over the amounts contributed to the plans was recorded as an employee benefit liability due to parent. In addition, the allocated expense for each period is recorded as a liability due to parent. Prior to the aforementioned change in plan sponsorship to our parent in 2001, we also recognized an additional liability for any excess of the accumulated benefit obligation of each plan over the fair value of plan assets. The offset to this additional liability is first recognized as an intangible asset, which is limited to unrecognized prior service, including any unrecognized net transition obligation. Any additional offsets are then recognized as an adjustment to accumulated other comprehensive income. Effective with the June 25, 2001 change in sponsorship of our pension plans to our parent, the additional liability for excess of accumulated benefit obligation over the plan assets became a direct liability of our parent. Accordingly we have accounted for this forgiveness of a liability by our parent as a capital contribution of $14.4 million as of January 1, 2002. [end italic] Applicable information regarding the actuarial present value of vested and non-vested accumulated plan benefits, and the net assets of the plans available for benefits is not separately calculated for our participation in the plans. The Phoenix Companies, the plan sponsor, established an accrued liability and amounts attributable to us have been allocated and recorded as an expense and employee benefit liability to our parent. F-30
UNDERLYING PRINCIPAL RATES AND ASSUMPTIONS: YEAR ENDED DECEMBER 31, ---------------------------------------------- 2004 2003 2002 -------------- -------------- -------------- PRINCIPAL RATES AND ASSUMPTIONS ASSUMPTIONS USED TO DETERMINE BENEFIT OBLIGATIONS Projected benefit obligation discount rate................................... 5.75% 6.00% 6.50% Future compensation increase rate............................................ 4.00% 3.50% 3.50% Pension plan assets long-term rate of return................................. 8.50% 8.50% 8.50% Deferred investment gain/loss amortization corridor.......................... 5.00% 5.00% 5.00% Future health care cost increase rate, age 64 and younger.................... 8.50% 9.25% 10.00% Future health care cost increase rate, age 65 and older...................... 10.50% 11.25% 12.00% ASSUMPTIONS USED TO DETERMINE BENEFIT COSTS Projected benefit obligation discount rate................................... 6.00% 6.50% 7.00% Future compensation increase rate............................................ 3.50% 3.50% 4.00% Pension plan assets long-term rate of return................................. 8.50% 8.50% 9.00% Deferred investment gain/loss amortization corridor.......................... 5.00% 5.00% 5.00% Future health care cost increase rate, age 64 and younger.................... 9.25% 10.00% 5.50% Future health care cost increase rate, age 65 and older...................... 11.25% 12.00% 5.50%
CHANGES IN PENSION PLANS' ASSETS AND YEAR ENDED DECEMBER 31, PROJECTED BENEFIT OBLIGATIONS: --------------------------------------------------------------- ($ amounts in millions) EMPLOYEE PLAN SUPPLEMENTAL PLAN ------------------------------ ------------------------------ 2004 2003 2004 2003 -------------- -------------- -------------- -------------- PLANS' ASSETS Plan assets' actual gain (loss).............................. $ 44.3 $ 66.4 $ -- $ -- Employer contributions....................................... 8.9 -- 5.7 5.1 Participant benefit payments................................. (25.7) (25.2) (5.7) (5.1) -------------- -------------- -------------- -------------- Change in plan assets........................................ 27.5 41.2 -- -- Plan assets, beginning of year............................... 368.9 327.7 -- -- -------------- -------------- -------------- -------------- PLANS' ASSETS, END OF YEAR................................... $ 396.4 $ 368.9 $ -- $ -- ============== ============== ============== ============== PLANS' PROJECTED BENEFIT OBLIGATION Service and interest cost accrual............................ $ (36.1) $ (37.1) $ (7.0) $ (8.4) Actuarial gain (loss)........................................ (35.5) (39.9) (11.2) 7.6 Curtailment gain (loss)...................................... 7.5 1.3 2.7 (2.2) Participant benefit payments................................. 25.7 25.2 5.7 5.1 -------------- -------------- -------------- -------------- Change in projected benefit obligation....................... (38.4) (50.5) (9.8) 2.1 Projected benefit obligation, beginning of year.............. (460.6) (410.1) (124.8) (126.9) -------------- -------------- -------------- -------------- PROJECTED BENEFIT OBLIGATION, END OF YEAR.................... $ (499.0) $ (460.6) $ (134.6) $ (124.8) ============== ============== ============== ============== FUNDED STATUS OF PENSION PLANS: YEAR ENDED DECEMBER 31, ($ amounts in millions) --------------------------------------------------------------- EMPLOYEE PLAN SUPPLEMENTAL PLAN ------------------------------ ------------------------------ 2004 2003 2004 2003 -------------- -------------- -------------- -------------- Excess of accrued pension benefit cost over amount contributed to plan........................................ $ (37.0) $ (38.3) $ (86.0) $ (82.0) Excess of accumulated benefit obligation over plan assets... (41.2) (27.4) (40.6) (30.9) -------------- -------------- -------------- -------------- Accrued benefit obligation in other liabilities.............. (78.2) (65.7) (126.6) (112.9) Intangible asset............................................. 8.0 11.0 -- -- Minimum pension liability adjustment in accumulated other comprehensive income................................. 33.2 16.4 40.6 30.9 -------------- -------------- -------------- -------------- Funding status recognized in balance sheet................... (37.0) (38.3) (86.0) (82.0) -------------- -------------- -------------- -------------- Net unamortized loss......................................... (57.6) (44.8) (52.6) (47.6) Unamortized prior service (cost) credit...................... (8.0) (11.0) 4.0 4.8 Net unamortized transition asset............................. -- 2.4 -- -- -------------- -------------- -------------- -------------- Funding status unrecognized in balance sheet................. (65.6) (53.4) (48.6) (42.8) -------------- -------------- -------------- -------------- PLAN ASSETS LESS THAN PROJECTED BENEFIT OBLIGATIONS, END OF YEAR................................................ $ (102.6) $ (91.7) $ (134.6) $ (124.8) ============== ============== ============== ==============
F-31 The Phoenix Companies expects to contribute $43.3 million to the employee pension plan through 2009, including $6.5 million during 2005.
FUNDED STATUS OF OTHER POSTRETIREMENT BENEFIT PLANS: AS OF DECEMBER 31, ($ amounts in millions) ------------------------------ 2004 2003 -------------- -------------- Accrued benefit obligation included in other liabilities.................................... $ (88.0) $ (100.5) -------------- -------------- Net unamortized gain........................................................................ 10.3 6.3 Unamortized prior service (costs) credits................................................... 7.4 15.5 -------------- -------------- Funding status unrecognized in balance sheet................................................ 17.7 21.8 -------------- -------------- PLAN ASSETS LESS THAN PROJECTED BENEFIT OBLIGATIONS, END OF YEAR............................ $ (70.3) $ (78.7) ============== ==============
The health care cost trend rate has a significant effect on the amounts reported. For example, increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation by $1.0 million and the annual service and interest cost by $0.1 million. Decreasing the assumed health care cost trend rates by one percentage point in each year would decrease the accumulated postretirement benefit obligation by $1.0 million and the annual service and interest cost by $0.1 million. MANAGEMENT RESTRUCTURING EXPENSE AND EMPLOYMENT AGREEMENTS The Phoenix Companies and certain of its key executives have entered into agreements that will, in certain circumstances, provide separation benefits upon the termination of the executive's employment by The Phoenix Companies for reasons other than death, disability, cause or retirement, or by the executive for "good reason," as defined in the agreements. For most of these executives, the agreements provide this protection only if the termination occurs following (or is effectively connected with) the occurrence of a change of control, as defined in the agreements. Upon a change in control, The Phoenix Companies is required to make an irrevocable contribution to a trust as soon as possible following such change in control in an amount equal to pay such benefits payable under such agreements. In such circumstances, we might be required to fund all or a portion of any contribution made. We recorded a non-recurring expense of $31.8 million ($20.7 million after income taxes), $5.2 million ($3.2 million after income taxes) and $30.5 million ($20.1 million after income taxes) in 2004, 2003 and 2002, respectively, primarily in connection with organizational and employment-related costs. The 2004 charges relate mainly our allocated portion of charges stemming from The Phoenix Companies' sale of its retail affiliated broker-dealer operations and the outsourcing of our information technology infrastructure services. Reserves for management restructuring agreements are not material to our consolidated financial statements at December 31, 2004 and 2003. 10. OTHER COMPREHENSIVE INCOME [begin italic] We record unrealized gains and losses on available-for-sale securities, minimum pension liability adjustments in excess of unrecognized prior service cost, foreign currency translation gains and losses and effective portions of the gains or losses on derivative instruments designated as cash flow hedges in accumulated other comprehensive income. Unrealized gains and losses on available-for-sale securities are recorded in other comprehensive income until the related securities are sold, reclassified or deemed to be impaired. Minimum pension liability adjustments in excess of unrecognized prior service cost are adjusted or eliminated in subsequent periods to the extent that plan assets exceed accumulated benefits. Foreign currency translation gains and losses are recorded in accumulated other comprehensive income. We also consider unrealized foreign currency losses when evaluating investments for impairment. The effective portions of the gains or losses on derivative instruments designated as cash flow hedges are reclassified into earnings in the same period in which the hedged transaction affects earnings. If it is probable that a hedged forecasted transaction will no longer occur, the effective portions of the gains or losses on derivative instruments designated as cash flow hedges are reclassified into earnings immediately. [end italic] F-32
SOURCES OF OTHER COMPREHENSIVE INCOME: YEAR ENDED DECEMBER 31, ($ amounts in millions) -------------------------------------------------------------------------------------- 2004 2003 2002 --------------------------- -------------------------- --------------------------- GROSS NET GROSS NET GROSS NET ------------ ------------- ------------ ------------ ------------ ------------- Unrealized gains (losses) on investments............................. $ 23.9 $ 17.2 $ 140.9 $ 164.5 $ 609.1 $ 108.3 Net realized investment losses on available-for-sale securities included in net income........................... (43.0) (22.4) (113.4) (73.7) (140.7) (91.4) ------------ ------------- ------------ ------------ ------------ ------------- Net unrealized investment gains........... (19.1) (5.2) 27.5 90.8 468.4 16.9 Net unrealized foreign currency translation adjustment ................. (4.6) (0.6) 11.9 8.2 7.1 1.2 Net unrealized derivative instruments gains (losses).......................... 13.1 13.3 35.9 36.6 (128.0) (129.9) ------------ ------------- ------------ ------------ ------------ ------------- Other comprehensive income (loss)......... (10.6) $ 7.5 75.3 $ 135.6 347.5 $ (111.8) ------------ ============= ------------ ============ ------------ ============= Applicable policyholder dividend obligation.............................. 3.6 (45.5) 369.4 Applicable deferred policy acquisition cost amortization....................... (7.7) (12.4) 95.9 Applicable deferred income taxes (benefit)............................... (14.0) (2.4) (6.0) -------------- ------------- ------------- Offsets to other comprehensive income..... (18.1) (60.3) 459.3 -------------- ------------- ------------- OTHER COMPREHENSIVE INCOME (LOSS)......... $ 7.5 $ 135.6 $ (111.8) ============== ============= =============
COMPONENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME: AS OF DECEMBER 31, ($ amounts in millions) ------------------------------------------------------- 2004 2003 -------------------------- -------------------------- GROSS NET GROSS NET ------------ ------------ ------------ ------------ Unrealized gains on investments.................................... $ 718.9 $ 152.7 $ 738.0 $ 157.9 Unrealized foreign currency translation adjustment................. 5.7 3.2 10.3 3.8 Unrealized losses on derivative instruments........................ (123.2) (107.4) (136.3) (120.7) ------------ ------------ ------------ ------------- Accumulated other comprehensive income............................. 601.4 $ 48.5 612.0 $ 41.0 ------------ ============ ------------ ============= Applicable policyholder dividend obligation........................ 436.3 432.7 Applicable deferred policy acquisition costs....................... 86.4 94.1 Applicable deferred income taxes................................... 30.2 44.2 ------------- ------------- Offsets to accumulated other comprehensive income.................. 552.9 571.0 ------------- ------------- ACCUMULATED OTHER COMPREHENSIVE INCOME............................. $ 48.5 $ 41.0 ============= =============
11. DISCONTINUED OPERATIONS During 1999, we discontinued the operations of three of our business segments which in prior years had been reflected as reportable business segments: reinsurance operations, group life and health operations and real estate management operations. See Note 16 for further information regarding our discontinued reinsurance and group life and health operations. We have excluded assets and liabilities of the discontinued operations from the assets and liabilities of continuing operations and on a net basis included them in other general account assets on our balance sheet. 12. DERIVATIVE INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS DERIVATIVE INSTRUMENTS We maintain an overall interest rate risk-management strategy that primarily incorporates the use of interest rate swaps as hedges of our exposure to changes in interest rates. Our exposure to changes in interest rates primarily results from our commitments to fund interest-sensitive insurance liabilities, as well as from our significant holdings of fixed rate financial instruments. F-33 [begin italic] We recognize all derivative instruments on the balance sheet at fair value. Generally, we designate each derivative according to the associated exposure as either a fair value or cash flow hedge at its inception as we do not enter into derivative contracts for trading or speculative purposes. Except for the foreign currency swaps discussed below, all fair value hedges are accounted for with changes in the fair value of related interest rate swaps recorded on the balance sheet with an offsetting amount recorded to the hedged item's balance sheet carrying amount. Changes in the fair value of foreign currency swaps used as hedges of the fair value of foreign currency denominated assets are reported in current period earnings with the change in value of the hedged asset attributable to the hedged risk. Cash flow hedges are generally accounted for with changes in the fair value of related interest rate swaps recorded on the balance sheet with an offsetting amount recorded in accumulated other comprehensive income. The effective portion of changes in fair values of derivatives hedging the variability of cash flows related to forecasted transactions are reported in accumulated other comprehensive income and reclassified into earnings in the periods during which earnings are affected by the variability of the cash flows of the hedged item. Changes in the fair value of derivative instruments not designated as hedging instruments and ineffective portions of hedges are recognized in net investment income in the period incurred. [end italic]
DERIVATIVE INSTRUMENTS HELD IN AS OF DECEMBER 31, GENERAL ACCOUNT: -------------------------------------------------------- ($ amounts in millions) 2004 2003 -------------------------- --------------------------- NOTIONAL AMOUNT MATURITY ASSET LIABILITY ASSET LIABILITY ------------- ----------- ------------ ------------ ------------- ------------ INTEREST RATE SWAPS Cash flow hedges...................... $ 30 2007 $ 2.8 $ -- $ 4.5 $ -- Non-hedging derivative instruments.... 360 2007 16.5 14.0 25.1 21.7 Other..................................... 50 2004-2008 0.1 -- 0.4 -- ------------- ------------ ------------ ------------- ------------ TOTAL GENERAL ACCOUNT DERIVATIVE INSTRUMENT POSITIONS......... $ 440 $ 19.4 $ 14.0 $ 30.0 $ 21.7 ============= ============ ============ ============= ============
Fair value hedges. We currently hold interest rate swaps that convert a portion of our fixed rate debt portfolio to variable rate debt. These hedges are accounted for under the shortcut method and, therefore, no hedge ineffectiveness is recorded in current period earnings associated with these interest rate swaps. Cash flow hedges. We currently hold interest rates swaps that effectively convert variable rate bond cash flows to fixed cash flows in order to better match the cash flows of associated liabilities. These hedges are accounted for under the shortcut method and, therefore, no hedge ineffectiveness was recorded in earnings for 2004, 2003 and 2002. We do not expect to reclassify any amounts reported in accumulated other comprehensive income into earnings over the next twelve months with respect to these hedges. Non-hedging derivative instruments. We also hold interest rate swaps that were initially entered into as hedges of an anticipated purchase of assets associated with an acquisition of a block of insurance liabilities. Subsequently, offsetting swap positions were taken to lock in a stream of income to supplement the income on the assets purchased. We are exposed to credit risk in the event of non-performance by counterparties to these derivative instruments. We do not expect that counterparties will fail to meet their financial obligation as we only enter into derivative contracts with a number of highly rated financial institutions. The credit exposure of these instruments is the positive fair value at the reporting date, or $19.4 million as of December 31, 2004. We consider the likelihood of any material loss on these instruments to be remote. F-34
FAIR VALUE OF FINANCIAL INSTRUMENTS CARRYING AMOUNTS AND ESTIMATED FAIR VALUES OF AS OF DECEMBER 31, FINANCIAL INSTRUMENTS: --------------------------------------------------------------- ($ amounts in millions) 2004 2003 ------------------------------ ------------------------------ CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE -------------- -------------- -------------- -------------- Cash and cash equivalents.................................... $ 324.0 $ 324.0 $ 382.7 $ 382.7 Debt securities (Note 3)..................................... 13,473.6 13,473.6 13,268.8 13,268.8 Available-for-sale equity securities (Note 3)................ 160.2 160.2 184.0 184.0 Trading equity securities.................................... 87.3 87.3 -- -- Mortgage loans (Note 3)...................................... 207.9 220.4 284.1 301.4 Debt and equity securities pledged as collateral (Note 7).... 1,278.8 1,278.8 1,350.0 1,350.0 Derivative financial instruments............................. 19.4 19.4 30.0 30.0 Policy loans (Note 3)........................................ 2,196.7 2,318.0 2,241.4 2,370.0 -------------- -------------- -------------- -------------- FINANCIAL ASSETS............................................. $ 17,747.9 $ 17,881.7 $ 17,741.0 $ 17,886.9 ============== ============== ============== ============== Investment contracts (Note 2)................................ $ 3,492.4 $ 3,510.8 $ 3,642.7 $ 3,680.8 Non-recourse collateralized obligations (Note 7)............. 1,355.2 1,355.9 1,472.0 1,444.8 Indebtedness (Note 5)........................................ 204.1 209.2 175.0 188.8 Derivative financial instruments............................. 14.0 14.0 21.7 21.7 -------------- -------------- -------------- -------------- FINANCIAL LIABILITIES........................................ $ 5,065.7 $ 5,089.9 $ 5,311.4 $ 5,336.1 ============== ============== ============== ==============
13. PHOENIX LIFE STATUTORY FINANCIAL INFORMATION AND REGULATORY MATTERS
STATUTORY FINANCIAL DATA: AS OF AND FOR THE YEARS ENDED ($ amounts in millions) DECEMBER 31, ---------------------------------------------- 2004 2003 2002 -------------- -------------- -------------- Statutory capital, surplus, and surplus notes................................ $ 814.6 $ 762.9 $ 861.0 Asset valuation reserve (AVR)................................................ 213.6 198.6 147.0 -------------- -------------- -------------- STATUTORY CAPITAL, SURPLUS, SURPLUS NOTES AND AVR............................ $ 1,028.2 $ 961.5 $ 1,008.0 ============== ============== ============== STATUTORY GAIN FROM OPERATIONS............................................... $ 35.1 $ 69.7 $ 44.5 ============== ============== ============== STATUTORY NET INCOME......................................................... $ 47.1 $ 21.5 $ 7.5 ============== ============== ==============
New York Insurance Law requires that New York life insurers report their risk-based capital (RBC). RBC is based on a formula calculated by applying factors to various assets, premium and statutory reserve items. The formula takes into account the risk characteristics of the insurer, including asset risk, insurance risk, interest rate risk and business risk. New York insurance law gives the New York Superintendent of Insurance explicit regulatory authority to require various actions by, or take various actions against, insurers whose total adjusted capital does not exceed certain RBC levels. Each of the U.S. insurance subsidiaries of Phoenix Life is also subject to these same RBC requirements. Phoenix Life and each of its insurance subsidiaries' RBC was in excess of 300% of Company Action Level (the level where a life insurance enterprise must submit a comprehensive plan to state insurance regulators) as of December 31, 2004 and 2003. Under New York Insurance Law, Phoenix Life can pay stockholder dividends to us in any calendar year without prior approval from the New York Insurance Department in the amount of the lesser of 10% of Phoenix Life's surplus to policyholders as of the immediately preceding calendar year or Phoenix Life's statutory net gain from operations for the immediately preceding calendar year, not including realized capital gains. Phoenix Life paid dividends of $69.7 million in 2004 and is able to pay $35.1 million in dividends in 2005 without prior approval from the New York Insurance Department. Any additional dividend payments, in excess of $35.1 million in 2005, would be subject to the discretion of the New York Superintendent of Insurance. 14. PREMISES AND EQUIPMENT [begin italic] Premises and equipment, consisting primarily of office buildings occupied by us, are stated at cost less accumulated depreciation and amortization. We depreciate buildings on the straight-line method over 10 to 45 years and equipment primarily on a modified accelerated method over 3 to 10 years. We amortize leasehold improvements over the terms of the related leases. [end italic] F-35 Premises and equipment are included in other general account assets in our balance sheet.
COST AND CARRYING VALUE: AS OF DECEMBER 31, ($ amounts in millions) --------------------------------------------------------------- 2004 2003 ------------------------------ ------------------------------ CARRYING CARRYING COST VALUE COST VALUE -------------- -------------- -------------- -------------- Real estate.................................................. $ 116.0 $ 45.7 $ 148.8 $ 63.5 Equipment.................................................... 168.7 23.6 154.8 31.8 -------------- -------------- -------------- -------------- Premises and equipment cost and carrying value............... 284.7 $ 69.3 303.6 $ 95.3 ============== ============== Accumulated depreciation and amortization.................... (215.4) (208.3) -------------- -------------- PREMISES AND EQUIPMENT....................................... $ 69.3 $ 95.3 ============== ==============
Depreciation and amortization expense for premises and equipment for 2004, 2003 and 2002 totaled $11.3 million, $16.2 million and $15.7 million, respectively. In May 25, 2004, we sold our Enfield, Connecticut office facility, for a loss of $1.0 million ($0.7 million after-tax). In anticipation of that sale, we had recorded a $6.2 million ($4.0 million after-tax) realized impairment loss in 2003. Rental expenses for operating leases for continuing operations, principally with respect to buildings, amounted to $6.7 million, $11.7 million and $12.7 million in 2004, 2003 and 2002, respectively. Future minimum rental payments under non-cancelable operating leases for continuing operations were $10.1 million as of December 31, 2004, payable as follows: 2004, $3.6 million; 2005, $3.2 million; 2006, $2.4 million; 2007, $0.8 million; and 2008, $0.1 million. 15. RELATED PARTY TRANSACTIONS Phoenix Investment Partners, an indirect wholly-owned subsidiary of The Phoenix Companies, through its affiliated registered investment advisors, provides investment advisory services to Phoenix Life for a fee. Investment advisory fees incurred by Phoenix Life under this arrangement were $8.2 million, $8.2 million and $8.2 million for 2004, 2003 and 2002, respectively. Amounts payable to the affiliated investment advisors were $1.1 million and $1.5 million, as of December 31, 2004 and 2003, respectively. Variable product separate accounts fees were $3.2 million, $2.6 million and $5.3 million for 2004, 2003 and 2002, respectively. On February 26, 2001, Phoenix Life entered into a $69.0 million subordinated loan agreement with Phoenix Investment Partners, due March 1, 2006, in exchange for debentures held by Phoenix Life. Interest is payable quarterly in arrears at an annual rate based on LIBOR plus 2%. The average blended interest rate was approximately 3%, 3% and 4% for the years ended December 31, 2004, 2003 and 2002, respectively. The loan agreement requires no principal repayment prior to maturity. Phoenix Equity Planning Corporation (PEPCO), a wholly-owned subsidiary of Phoenix Investment Partners, is the principal underwriter of Phoenix Life's annuity and variable life contracts. Contracts may be purchased through registered representatives of a former Phoenix affiliate, W.S. Griffith & Co., Inc. (Griffith), as well as other outside broker-dealers who are licensed to sell Phoenix Life annuity contracts. Phoenix Life incurred commissions for contracts underwritten by PEPCO of $51.8 million for 2004 and $51.9 million for 2003. Amounts payable to PEPCO were $6.0 million and $5.5 million, as of December 31, 2004 and 2003, respectively. Effective May 31, 2004, The Phoenix Companies sold Griffith to an unrelated third party. State Farm Mutual Automobile Insurance Company (State Farm) currently owns of record more than five percent of The Phoenix Companies' outstanding common stock. In 2004 and 2003, our subsidiaries incurred $32.4 million and $25.8 million, respectively, as compensation costs for the sale of our insurance and annuity products by entities that were either subsidiaries of State Farm or owned by State Farm employees. F-36 16. CONTINGENT LIABILITIES In addition to the matters discussed below, we are, in the normal cause of business, involved in litigation both as a defendant and as a plaintiff. The litigation naming us as a defendant ordinarily involves our activities as an insurer, employer, investment advisor, investor or taxpayer. In addition, various regulatory bodies regularly make inquiries of us and, from time to time, conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws and laws governing the activities of broker-dealers. While it is not feasible to predict or determine the ultimate outcome of all pending investigations and legal proceedings or to provide reasonable ranges of potential losses, we believe that their outcomes are not likely, either individually or in the aggregate, to have a material adverse effect on our consolidated financial condition. However, given the large or indeterminate amounts sought in certain of these matters and litigation's inherent unpredictability, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on our results of operations or cash flows. Recently, there has been a significant increase in federal and state regulatory activity relating to financial services companies, particularly mutual fund companies. These regulatory inquiries have focused on a number of mutual fund issues, including late-trading and valuation issues. The Phoenix Companies' mutual funds, which we offer through the separate accounts associated with certain of our variable life insurance policies and variable annuity products, entitle us to impose restrictions on frequent exchanges and trades in the mutual funds and on transfers between sub-accounts and variable products. We, like many others in the financial services industry, have received requests for information from the SEC and state authorities, in each case requesting documentation and other information regarding various mutual fund regulatory issues. We continue to cooperate fully with these regulatory agencies in responding to these requests. In addition, representatives from the SEC's Office of Compliance, Inspections and Examinations are conducting compliance examinations of our mutual fund, variable annuity and mutual fund transfer agent operations. A number of companies have announced settlements of enforcement actions with various regulatory agencies, primarily the SEC and the New York Attorney General's Office. While no such action has been initiated against us, it is possible that one or more regulatory agencies may pursue an action against us in the future. These types of lawsuits and regulatory actions may be difficult to assess or quantify, may seek recovery of indeterminate amounts, including punitive and treble damages, and the nature and magnitude of their outcomes may remain unknown for substantial periods of time. While it is not feasible to predict or determine the ultimate outcome of all pending investigations and legal proceedings or to provide reasonable ranges of potential losses, we believe that their outcomes are not likely, either individually or in the aggregate, to have a material adverse effect on our consolidated financial condition. Discontinued Reinsurance Operations In 1999, we discontinued our reinsurance operations through a combination of sale, reinsurance and placement of certain retained group accident and health reinsurance business into run-off. We adopted a formal plan to stop writing new contracts covering these risks and to end the existing contracts as soon as those contracts would permit. However, we remain liable for claims under those contracts. We also purchased aggregate excess-of-loss reinsurance to further protect us from unfavorable results from this discontinued business. On February 7, 2005 we notified the aggregate excess-of-loss reinsurer that we were exercising our option to commute this contract. The commutation will be effective during the second quarter of 2005. The effect of the commutation will not be material to our consolidated financial statements. We have established reserves for claims and related expenses that we expect to pay on our discontinued group accident and health reinsurance business. These reserves are based on currently known facts and estimates about, among other things, the amount of insured losses and expenses that we believe we will pay, the period over which they will be paid, the amount of reinsurance we believe we will collect under our aggregate excess-of-loss reinsurance, the amounts we believe we will collect from our retrocessionaires and the likely legal and administrative costs of winding down the business. Our total reserves, including coverage available from our aggregate excess-of-loss reinsurance and reserves for amounts recoverable from retrocessionaires, were $110.0 million as of December 31, 2004. Our total amounts recoverable from retrocessionaires related to paid losses were $60.0 million as of December 31, 2004. We did F-37 not recognize any gains or losses related to our discontinued group accident and health reinsurance business during the years ended December 31, 2004, 2003 and 2002, respectively. We expect our reserves and reinsurance to cover the run-off of the business; however, the nature of the underlying risks is such that the claims may take years to reach the reinsurers involved. Therefore, we expect to pay claims out of existing estimated reserves for up to ten years as the level of business diminishes. In addition, unfavorable or favorable claims and/or reinsurance recovery experience is reasonably possible and could result in our recognition of additional losses or gains, respectively, in future years. Given the uncertainty associated with litigation and other dispute resolution proceedings, as described below, as well as the lack of sufficient claims information (which has resulted from disputes among ceding reinsurers leading to delayed processing, reporting blockages and standstill agreements among reinsurers), the range of any reasonably possible additional future losses or gains is not currently estimable. However, it is our opinion, based on current information and after consideration of the provisions made in these financial statements, as described above, that any future adverse or favorable development of recorded reserves and/or reinsurance recoverables will not have a material effect on our financial position. Additional information with respect to our group accident and health reinsurance run-off exposures follows: Unicover Managers, Inc. A significant portion of the claims arising from our discontinued group accident and health reinsurance business arises from the activities of Unicover Managers, Inc. (Unicover). Unicover organized and managed a group, or pool, of insurance companies (Unicover pool) and two other facilities (Unicover facilities), which reinsured the life and health insurance components of workers' compensation insurance policies issued by various property and casualty insurance companies. We were a member of the Unicover pool but terminated our participation in the pool effective March 1, 1999. We are involved in disputes relating to the activities of Unicover. Under Unicover's underwriting authority, the Unicover pool and Unicover facilities wrote a dollar amount of reinsurance coverage that was many times greater than originally estimated. As a member of the Unicover pool, we were involved in several proceedings in which the pool members asserted that they could deny coverage to certain insurers that claimed that they purchased reinsurance coverage from the pool. Those matters were settled. Also, the pool members were involved in proceedings arising from business ceded to the London market. Those proceedings were settled. Further, we were, along with Sun Life Assurance of Canada (Sun Life) and Cologne Life Reinsurance Company (Cologne Life), a retrocessionaire (meaning a reinsurer of other reinsurers) of the Unicover pool and two other Unicover facilities, providing the pool and facility members with reinsurance of the risks that the pool and facility members had assumed. In September 1999, we joined an arbitration proceeding that Sun Life had begun against the members of the Unicover pool and the Unicover facilities. In this arbitration, we and Sun Life sought to cancel our retrocession agreements on the grounds that material misstatements and nondisclosures were made to us about, among other things, the amount of risks we would be reinsuring. The arbitration proceeded only with respect to the Unicover pool because we, Sun Life and Cologne Life reached settlement with the two Unicover facilities in the first quarter of 2000. In October 2002, the arbitration panel issued its decision that the agreement by which we provided retrocessional reinsurance to the pool was valid only to the extent of business bound or renewed to that agreement on or before August 31, 1998. This decision had the effect of granting us a substantial discount on our potential liabilities, because most of the business was bound or renewed to the agreement after August 31, 1998. In a clarification dated January 4, 2003, the arbitration panel confirmed its decision. Subsequently, billing disputes have arisen between certain pool members and the retrocessionaires, including us, concerning certain losses ceded to the retrocession agreements. A significant portion of our remaining potential liabilities as a retrocessionaire of the Unicover pool has been recovered from certain of our retrocessionaires, and additional amounts may be recovered from one other retrocessionaire, as discussed below under "Related Proceedings." In one of the Unicover facilities' settlements, the Reliance facility settlement of January 2000, we paid a settlement amount of $97.9 million and were released from all of our obligations as a retrocessionaire of the facility. Subsequently, we were reimbursed by one of our retrocessionaires for $38.8 million of the amount we paid under the settlement. A significant portion of the remainder of the settlement payment may be recovered from one other retrocessionaire, as discussed below under "Related Proceedings." F-38 In the other Unicover facilities' settlement, the Lincoln facility settlement of March 2000, we paid a settlement amount of $11.6 million and were released from all of our obligations as a retrocessionaire of the facility. Subsequently, we were reimbursed by one of our retrocessionaires for $6.0 million of the amount we paid under the settlement. The amounts paid and the results achieved in the above settlements and arbitration decision were consistent with the amounts previously reflected in our consolidated financial statements. Related Proceedings In our capacity as a retrocessionaire of the Unicover business, we had an extensive program of our own reinsurance in place to protect us from financial exposure to the risks we had assumed. We have been involved in disputes with certain of our own retrocessionaires who had sought on various grounds to avoid paying any amounts to us. Most of those disputes, as described below, have been resolved. Currently, we remain involved in a London arbitration proceeding with one of those retrocessionaires. The arbitration concerns an agreement under which the retrocessionaire reinsures us for up to $45 thousand per loss in excess of a $5 thousand retention. In June 2003, the arbitration panel issued its decision, which upheld in all material respects the retrocessional obligations to us. The retrocessionaire appealed the arbitration decision only with respect to the Unicover business. We received a favorable decision from the Court of Appeal in December 2004. The retrocessionaire submitted a request to the House of Lords to review the decision. Two other disputes with this retrocessionaire were settled in March 2004 and did not have a material effect on our reinsurance recoverable balances. As of December 31, 2004, the reinsurance recoverable balance from this retrocessionaire related to paid losses was $45.0 million, subject to further development. A dispute with another retrocessionaire was the subject of arbitration proceedings that we initiated in December 2003. The purpose of the arbitration proceedings was to confirm the validity and enforce the terms of the retrocessional contracts. In December 2004, we settled the dispute and discontinued the arbitration proceedings. The amount received and the results achieved in the settlement were consistent with the amounts previously reflected in our consolidated financial statements. As of December 31, 2004, the reinsurance recoverable balance from this retrocessionaire was $0.0 million. A dispute with a third retrocessionaire, which sought to avoid an excess-of-loss retrocession agreement, a surplus share retrocession agreement and a quota share retrocession agreement, was the subject of an arbitration in November 2003. In December 2003, the arbitration panel issued its interim decision, which is confidential. The financial implications of the interim decision are consistent with our current financial provisions. Since then, this retrocessionaire has paid $8.0 million to bring the account current. As of December 31, 2004, the reinsurance recoverable balance from this retrocessionaire related to paid losses was $0.0 million, subject to further development. In June 2004 the arbitration panel relinquished its jurisdiction. Because the same retrocession program that covers our Unicover business covers a significant portion of our other remaining group accident and health reinsurance business, we could have additional material losses if one or more of our remaining retrocessionaires disputes and successfully avoids its obligations. At this stage, we cannot estimate the amount at risk related to these potential disputes with a reliable degree of certainty. This is due in part to our lack of sufficient claims information (which has resulted from disputes among ceding reinsurers that have led to delayed processing, reporting blockages, and standstill agreements among reinsurers). This applies with regard both to business related to Unicover and business not related to Unicover. Other Proceedings Another set of disputes involves personal accident business that was reinsured in the London reinsurance market in which we participated from 1994 to 1997. These disputes involve multiple layers of reinsurance and allegations that the reinsurance programs created by the brokers involved in placing those layers were interrelated and devised to disproportionately pass losses to a top layer of reinsurers. Many companies who participated in this business are involved in litigation or arbitration in attempts to avoid their obligations on the basis of misrepresentation. Because of the complexity of the disputes and the reinsurance arrangements, we and many of these companies have participated in negotiations that have resulted in settlements of disputes relating to the F-39 1994 and 1995 contract years. The amounts paid and the results achieved in the 1994 and 1995 contract year settlements are consistent with the amounts previously reflected in our consolidated financial statements. Although we are vigorously defending our contractual rights in respect of the 1996 and 1997 contract year disputes, we remain actively involved in attempts to reach negotiated business solutions. At this stage, we cannot predict the outcome, nor can we estimate the remaining amount at risk with a reliable degree of certainty. This is due in part to our lack of sufficient claims information (which has resulted from disputes among ceding reinsurers that have led to delayed processing, reporting blockages, and standstill agreements among reinsurers). However, it is our opinion based on current information that amounts included in our reserves as of December 31, 2004 are adequate with respect to the 1996 and 1997 contract year disputes. F-40 PART C PART C OTHER INFORMATION ITEM 26. EXHIBITS (a) BOARD OF DIRECTORS RESOLUTION Resolution of the Board of Directors of Phoenix Life Insurance Company (formerly Phoenix Home Life Mutual Insurance Company) establishing the Phoenix Mutual Variable Universal Life Account is incorporated by reference to Registrant's April 29, 1998 EDGAR filing on Form S-6 (File No. 033-06793). (b) CUSTODIAN AGREEMENTS Not applicable. (c) UNDERWRITING CONTRACTS (1) Master Service and Distribution Compliance Agreement between Depositor and Phoenix Equity Planning Corporation dated November 1, 2000, is incorporated by reference to Registrant's April 30, 2004 EDGAR filing on Form N-6 (File No. 033-23251). (2) Form of Broker Dealer Supervisory and Service Agreement between Phoenix Equity Planning Corporation and Independent Brokers with respect to the sale of Policies is filed herewith. (d) CONTRACTS ---------------------------------------------------------------------------------------------------------
Depositor Version Form Number Contract or Rider A B C -------------- ------------------------------------------------------------------- ------- ------ ------- 2667 Flex Edge - Flexible Premium Variable Universal Life Insurance |X| Policy is incorporated by reference to Registrant's February 13, 1996 EDGAR filing on Form S-6 (File No. 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- UR72 LifePlan Options Rider is filed herewith. |X| -------------- ------------------------------------------------------------------- ------- ------ ------- Joint Edge(R) - Flexible Premium Joint Variable Universal Life V601 Insurance Policy is incorporated by reference to Registrant's |X| February 13, 1996 EDGAR filing on Form S-6 (File No. 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Flex Edge Success(R) - Flexible Premium Variable Universal Life V603 Insurance Policy is incorporated by reference to Registrant's |X| February 13, 1996 EDGAR filing on Form S-6 (File No. 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Individual Edge(R) - Flexible Premium Variable Universal Life V603(PIE) Insurance Policy is incorporated by reference to Registrant's July 27, 1999 EDGAR filing on |X| Form S-6 (File No. 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Amendment Permitting Face Amount Increases, is incorporated by VR01 reference to Registrant's February 13, 1996 EDGAR filing on Form |X| S-6 (File No. 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Death Benefit Protection Rider, is incorporated by reference to VR02 Registrant's February 13, 1996 EDGAR filing on Form S-6 (File No. |X| |X| 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Survivor Insurance Purchase Option Rider, is incorporated by VR03 reference to Registrant's February 13, 1996 EDGAR filing on Form |X| S-6 (File No. 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Variable Joint Life Policy Exchange Option Rider, is incorporated VR04 by reference to Registrant's February 13, 1996 EDGAR filing on |X| Form S-6 (File No. 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Disability Benefit to Age 65 Rider, is incorporated by reference VR05 to Registrant's February 13, 1996 EDGAR filing on Form S-6 (File |X| No. 033-23251). ---------------------------------------------------------------------------------------------------------
C-1 ---------------------------------------------------------------------------------------------------------
Depositor Version Form Number Contract or Rider A B C -------------- ------------------------------------------------------------------- ------- ------ ------- Term Insurance Rider, is incorporated by reference to VR06 Registrant's February 13, 1996 EDGAR filing on Form S-6 (File No. |X| 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Whole Life Exchange Option Rider, is incorporated by reference to VR08 Registrant's February 13, 1996 EDGAR filing on Form S-6 (File No. |X| |X| |X| 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Cash Value Accumulation Test Rider, is incorporated by reference VR11 to Registrant's February 13, 1996 EDGAR filing on Form S-6 (File |X| |X| No. 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Temporary Money Market Allocation Amendment, is incorporated by VR130 reference to Registrant's February 13, 1996 EDGAR filing on Form |X| |X| |X| S-6 (File No. 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- VR147 Accidental Death Benefit Rider, is incorporated by reference to Registrant's February 13, 1996 EDGAR filing on Form S-6 (File No. |X| 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Disability Payment of Specified Annual Premium Amount Rider, is VR148 incorporated by reference to Registrant's February 13, 1996 EDGAR |X| |X| filing on Form S-6 (File No. 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Death Benefit Options - Policy Amendment is incorporated by VR149 reference to Registrant's February 13, 1996 EDGAR filing on Form |X| S-6 (File No. 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Purchase Protector Rider, is incorporated by reference to VR150 Registrant's February 13, 1996 EDGAR filing on Form S-6 (File No. |X| |X| |X| 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Living Benefit Rider, is incorporated by reference to VR162 Registrant's February 13, 1996 EDGAR filing on Form S-6 (File No. |X| |X| |X| 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Death Benefit Option - Policy Amendment, is incorporated by VR23 reference to Registrant's February 13, 1996 EDGAR filing on Form |X| S-6 (File No. 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- Death Benefit Protection Rider, is incorporated by reference to VR24 Registrant's February 13, 1996 EDGAR filing on Form S-6 (File No. |X| 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- VR27 Family Term Rider is filed herewith. |X| |X| -------------- ------------------------------------------------------------------- ------- ------ ------- VR28 Business Term Rider is filed herewith. |X| -------------- ------------------------------------------------------------------- ------- ------ ------- VR29 Child Term Rider is filed herewith. |X| |X| -------------- ------------------------------------------------------------------- ------- ------ ------- Individual Term Rider, is incorporated by reference to VR33 Registrant's July 27, 1999 EDGAR filing on Form S-6 (File No. |X| 033-23251). -------------- ------------------------------------------------------------------- ------- ------ ------- VR39 Age 100+ Rider is filed herewith. |X| ---------------------------------------------------------------------------------------------------------
C-2 (e) APPLICATIONS Version A: (1) Form of application for Flex Edge is incorporated by reference to Registrant's April 26, 1996 EDGAR filing on Form S-6 (File No. 033-23251). Version B: (1) Form of application for Joint Edge(R) is incorporated by reference to Registrant's April 26, 1996 EDGAR filing on Form S-6 (File No. 033-23251). (2) Form of application for Flex Edge Success(R) is incorporated by reference to Registrant's April 26, 1996 EDGAR filing on Form S-6 (File No. 033-23251). Version C: (1) Form of application for Individual Edge(R) is incorporated by reference to Registrant's July 27, 1999 EDGAR filing on Form S-6 (File No. 033-23251). (f) DEPOSITOR'S CERTIFICATE OF INCORPORATION AND BYLAWS (1) Amended and restated charter of Phoenix Life Insurance Company dated December 20, 2004, is filed herewith. (2) Amended and restated bylaws of Phoenix Life Insurance Company dated December 1, 2004, are filed herewith. (g) REINSURANCE CONTRACTS Not applicable. (h) PARTICIPATION AGREEMENTS (1) (a) Participation Agreement dated May 1, 2000 between Phoenix Home Life Mutual Insurance Company, PHL Variable Insurance Company, Franklin Templeton Variable Insurance Products Trust, and Franklin Templeton Distributors, Inc. is incorporated by reference to Registrant's April 29, 2002 EDGAR filing on form S-6 (File No. 033-06793). (b) Amendment dated May 1, 2000 to Participation Agreement between Phoenix Home Life Mutual Insurance Company, PHL Variable Insurance Company, Franklin Templeton Variable Insurance Products Trust, and Franklin Templeton Distributors, Inc. is incorporated by reference to Registrant's April 29, 2002 EDGAR filing on form S-6 (File No. 033-06793). (2) (a) Participation Agreement dated April 18, 1995 between Phoenix Home Life Mutual Insurance Company and Wanger Advisors Trust is incorporated by reference to Registrant's April 29, 2002 EDGAR filing on form S-6 (File No. 033-06793). (b) Amendment No. 1 dated December 16, 1996 to Participation Agreement between Phoenix Home Life Mutual Insurance Company and Wanger Advisors Trust is incorporated by reference to Registrant's April 29, 2002 EDGAR filing on form S-6 (File No. 033-06793). (3) Fund Participation Agreement dated July 15, 1999 among Phoenix Home Life Mutual Insurance Company, Insurance Series, and Federated Securities Corp. is incorporated by reference to Registrant's April 29, 2002 EDGAR filing on form S-6 (File No. 033-06793). (4) (a) Fund Participation Agreement dated July 19, 1999 among Phoenix Home Life Mutual Insurance Company, BT Insurance Funds Trust and Bankers Trust Company, is incorporated by reference to Registrant's April 29, 2002 EDGAR filing on form S-6 (File No. 033-06793). (b) Amendment No. 1 dated April 27, 2001 to the Fund Participation Agreement among Phoenix Home Life Mutual Insurance Company, Deutsche Asset Management VIT Funds and Bankers Trust Company, is incorporated by reference to Registrant's April 29, 2002 EDGAR filing on form S-6 (File No. 033-06793). (c) Amendment No. 2 dated October 29, 2001 to the Fund Participation Agreement among Phoenix Life Insurance Company, Deutsche Asset Management VIT Funds and Deutsche Asset Management, Inc. is incorporated by reference to Registrant's April 29, 2002 EDGAR filing on form S-6 (File No. 033-06793). C-3 (5) Participation Agreement dated December 17, 1999 among Phoenix Home Life Mutual Insurance Company, Morgan Stanley Dean Witter Universal Funds, Inc., Morgan Stanley Dean Witter Investment Management, Inc., and Miller Anderson & Sherrerd, LLP is incorporated by reference to Registrant's April 29, 2002 EDGAR filing on form S-6 (File No. 033-06793). (6) Participation Agreement dated June 1, 2000 among Phoenix Home Life Mutual Insurance Company, The Alger American Fund and Fred Alger & Company, Incorporated is incorporated by reference to Registrant's April 29, 2002 EDGAR filing on form S-6 (File No. 033-06793). (7) Participation Agreement dated June 1, 2000 among Phoenix Home Life Mutual Insurance Company, Variable Insurance Products Fund and Fidelity Distributors Corporation is incorporated by reference to Registrant's April 29, 2002 EDGAR filing on form S-6 (File No. 033-06793). (8) Participation Agreement dated March 29, 2001 among Phoenix Home Life Mutual Insurance Company, AIM Variable Insurance Funds, Phoenix Equity Planning Corporation and AIM Distributors, Inc. is incorporated by reference to Registrant's April 29, 2002 EDGAR filing on form S-6 (File No. 033-06793). (9) Participation Agreement dated May 30, 2003 among Phoenix Life Insurance Company, Rydex Variable Trust and Rydex Distributors, Inc., is incorporated by reference to Registrant's EDGAR filing on Form N-6 on April 30, 2004. (i) ADMINISTRATIVE CONTRACTS (1) Administrative Service Agreement dated January 1, 2003 between The Phoenix Edge Series Fund, Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company, is incorporated by reference to Registrant's EDGAR filing on Form N-6 (File No. 033-23251) on April 30, 2004. (2) First Amendment dated November 11, 2003 to Service Agreement between The Phoenix Edge Series Fund, Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company, is incorporated by reference to Registrant's EDGAR filing on Form N-6 (File No. 033-23251) on April 30, 2004. (3) Second Amendment dated February 27, 2004 to Service Agreement between The Phoenix Edge Series Fund, Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company, is filed herewith. (4) Third Amendment dated November 15, 2004 to Service Agreement between The Phoenix Edge Series Fund, Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company, is filed herewith. (j) OTHER MATERIAL CONTRACTS Not applicable. (k) LEGAL OPINION (1) Opinion and Consent of Counsel of Joseph P. DeCresce, Esq., is filed herewith. (l) ACTUARIAL OPINION Not applicable. (m) CALCULATION Not applicable. (n) OTHER OPINIONS (1) Consent of Independent Registered Public Accounting Firm, is filed herewith. (2) Consent of Brian A. Giantonio, Esq., is filed herewith. (o) OMITTED FINANCIAL STATEMENTS (1) Representation Letter regarding Separate Account Financial Statements of Phoenix Life Insurance Company, et al is filed herewith. C-4 (p) INITIAL CAPITAL AGREEMENTS Not applicable. (q) REDEEMABILITY EXEMPTION Not applicable. C-5 ITEM 27. DIRECTORS AND OFFICERS OF THE DEPOSITOR. ----------------------------------------------------------------------------------------------------------
Name and Principal Business Address Positions and Offices with Depositor ---------------------------------------------------------------------------------------------------------- Sal H. Alfiero Director Protective Industries, LLC Buffalo, NY ---------------------------------------------------------------------------------------------------------- Jean S. Blackwell Director Cummins Inc. 500 Jackson Street Columbus, IN 47202-3005 ---------------------------------------------------------------------------------------------------------- Peter C. Browning Director McColl School of Business Charlotte, NC ---------------------------------------------------------------------------------------------------------- Arthur P. Byrne Director J.W. Childs Associates Boston, MA ---------------------------------------------------------------------------------------------------------- Sanford Cloud, Jr. Director The National Conference for Community and Justice New York, NY ---------------------------------------------------------------------------------------------------------- Richard N. Cooper Director Center for International Affairs Harvard University Cambridge, MA ---------------------------------------------------------------------------------------------------------- Gordon J. Davis, Esq. Director LeBoeuf, Lamb, Greene & MacRae, LLP New York, NY ---------------------------------------------------------------------------------------------------------- Ann Maynard Gray* Director ---------------------------------------------------------------------------------------------------------- John E. Haire Director Time, Inc. New York, NY ---------------------------------------------------------------------------------------------------------- Jerry J. Jasinowski Director National Association of Manufacturers Washington, D.C. ---------------------------------------------------------------------------------------------------------- Thomas S. Johnson Director GreenPoint Financial Corporation New York, NY --------------------------------------------------------------------------------------------------------- Marilyn E. LaMarche Director Lazard Freres & Co. LLC New York, NY ---------------------------------------------------------------------------------------------------------- Dona D. Young* Director, Chairman of the Board, President and Chief Executive Officer ---------------------------------------------------------------------------------------------------------- Michael E. Haylon* Executive Vice President and Chief Financial Officer ---------------------------------------------------------------------------------------------------------- Philip K. Polkinghorn* Executive Vice President, Life and Annuity ---------------------------------------------------------------------------------------------------------- Tracy L. Rich* Executive Vice President, General Counsel and Assistant Secretary ---------------------------------------------------------------------------------------------------------- John H. Beers* Vice President and Secretary ---------------------------------------------------------------------------------------------------------- Katherine P. Cody* Vice President and Treasurer ---------------------------------------------------------------------------------------------------------- Nancy J. Engberg* Vice President and Chief Compliance Officer ---------------------------------------------------------------------------------------------------------- Scott R. Lindquist* Senior Vice President and Chief Accounting Officer ---------------------------------------------------------------------------------------------------------- James D. Wehr** Executive Vice President and Chief Investment Officer ----------------------------------------------------------------------------------------------------------
* The principal business address of this individual is One American Row, Hartford, CT 06102 ** The principal business address of this individual is 56 Prospect Street, Hartford, CT 06115 C-6 ITEM 28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT [GRAPHIC OMITTED]
------------------------------- The Phoenix Companies, Inc. (7) DE 100% Holding Company ------------------------------- | ----------------------------------------------------------------------------------------------------------- | | - --------------------- ------------------ Phoenix Life Phoenix Insurance Investment Company (1,2,3,7,8 +) Management NY 100% Company, Inc. (8) CT 100% Holding Company - --------------------- ------------------- | | - ------------------------------------------------------------ | | | | | --------------------------------------------------------------------------- | | | | | | | | ------------ ----------------- ----------------- ------------------ ------------------ ------------------ ------------------ PM Holdings, Phoenix Life Phoenix Life Home Life Phoenix Life Phoenix Life Phoenix Inc. (8) Variable Variable Insurance Co. Separate Separate Investment CT 100% Accumulation Universal Life Separate Account C (3 ++) Account D (3 ++) Partners, Ltd. (8) Holding Account (1 ++) Account (2 ++) Account B (3 ++) NY NY DE 100% Asset Company NY NY NY Management Company ------------ ----------------- ----------------- ------------------ ------------------ ------------------ ------------------- | | | | | ---------------------------------------------------------------------- | | | | |------------------------------------------------ | | | | | | | ----------------------- -------------------- --------------------- ----------------- | Phoenix PHL Variable Phoenix Life and The Phoenix | Variable Insurance Annuity Edge Series | Advisors, Inc. (8) Company (4,5,7,8 +) Company (6,7,8 +) Fund | DE Registered CT 100% CT 100% MA | Investment Advisor Mutual Fund | ----------------------- -------------------- --------------------- ----------------- | | | | | ------------------------| | | |----------------------| | | | | | | ----------------------- -------------------- --------------------- | ----------------- ------------------ PHL Variable PHLVIC Phoenix Life | Phoenix Equity Duff & Phelps Accumulation Variable and Annuity | Planning Investment Account (4 ++) Universal Life Variable | Corporation (7,8) Management CT Account (5 ++) Universal Life | CT 100% Co.(8) CT Account (6 ++) | Broker/Dealer IL Registered CT | Investment Adviser ----------------------- -------------------- --------------------- | ----------------- ------------------ | | | | | | | |----------------------| ----------------- | | | Phoenix ----------------------------------------------------------------------- Investment Counsel, Inc. (8) MA Registered Investment Adviser ------------------
- --------------------------- 1 - Depositor & Registrant 2 - Depositor & Registrant 3 - Depositor & Registrant 4 - Depositor & Registrant 5 - Depositor & Registrant 6 - Depositor & Registrant 7 - Files separate financial statements 8 - Files as part of consolidated statement + - Depositor ++ - Registrant C-7 ITEM 29. INDEMNIFICATION Section 722 of the New York Business Corporation Law, as made applicable to insurance companies by Section 108 of the New York Insurance Law, provides that a corporation may indemnify any director or officer of the corporation made, or threatened to be made, a party to an action or proceeding other than one by or in the right of the corporation to procure a judgment in its favor, whether civil or criminal, including an action by or in the right of any other corporation of any type or kind, by reason of the fact that he, his testator or intestate, served such other corporation in any capacity at the request of the indemnifying corporation. Article VI, Section 6.1 of the Bylaws of the Depositor (as amended and restated effective December 1, 2004) provides that: "To the full extent permitted by the laws of the State of New York, the Company shall indemnify any person made or threatened to be made a party to any action, proceeding or investigation, whether civil or criminal, by reason of the fact that such person, or such person's testator or intestate: (1) is or was a director, officer or employees of the Company; or (2) serves or served another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity at the request of the Company, and at the time of such services, was a director, officer or employee of the Company against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with or as a result of such action, proceeding or investigation, or any appeal therein. Subject to applicable law, the indemnification provided in this Article VI shall not be deemed to be exclusive of any other rights to which a director, officer or employee of the Company seeking indemnification may be entitled." Insofar as indemnification for liability arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ITEM 30. PRINCIPAL UNDERWRITER. 1. Phoenix Equity Planning Corporation ("PEPCO") (a) PEPCO serves as the principal underwriter for the following entities: Phoenix-Goodwin California Tax Exempt Bond Fund, Phoenix-Engemann Funds, Phoenix Equity Series Fund, Phoenix Equity Trust, Phoenix Institutional Mutual Funds, Phoenix Investment Series Fund, Phoenix Investment Trust 97, Phoenix-Kayne Funds, Phoenix Multi-Portfolio Fund, Phoenix Multi-Series Trust, Phoenix Strategic Allocation Fund, Phoenix Partner Select Funds, Phoenix Portfolios, Phoenix-Seneca Funds, Phoenix Series Fund, Phoenix Strategic Equity Series Fund, Phoenix Life Variable Accumulation Account, Phoenix Life Variable Universal Life Account, Phoenix Life and Annuity Variable Universal Life Account, PHL Variable Accumulation Account, PHLVIC Variable Universal Life Account and PHL Variable Separate Account MVA1. (b) Directors and Executive Officers of PEPCO.
NAME POSITION ---- -------- Daniel T. Geraci* Director, Chairman of the Board and Chief Sales & Marketing Officer Michael E. Haylon* Director James D. Wehr** Director Nancy J. Engberg* Vice President, Chief Compliance Officer and Anti-Money Laundering Officer John H. Beers* Vice President and Secretary Glenn H. Pease** Vice President, Finance and Treasurer John F. Sharry** President, Sales Francis G. Waltman** Senior Vice President and Chief Administrative Officer
* The business address of this individual is One American Row, Hartford, CT 06102 ** The business address of this individual is 56 Prospect Street, Hartford, CT 06115 (c) PEPCO received no compensation from the Registrant during the last fiscal year for sales of the contract. C-8 ITEM 31. LOCATION OF ACCOUNTS AND RECORDS. The accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 are maintained at the administrative offices of Phoenix Life Insurance Company located at One American Row, Hartford, CT 06102. ITEM 32. MANAGEMENT SERVICES. Not applicable. ITEM 33. FEE REPRESENTATION. Pursuant to Section 26(f) of the Investment Company Act of 1940, as amended, Phoenix Life Insurance Company represents that the fees and charges deducted under the Policies, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred and the risks to be assumed thereunder by Phoenix Life Insurance Company. C-9 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this registration statement under rule 485(b) under the Securities Act and has caused this registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Hartford and State of Connecticut on this 22nd day of April, 2005. PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT (Registrant) By: -------------------------------------------- *Dona D. Young, Chair of the Board, President and Chief Executive Officer PHOENIX LIFE INSURANCE COMPANY (Depositor) By: -------------------------------------------- *Dona D. Young, Chair of the Board, President and Chief Executive Officer Pursuant to the requirements of the Securities Act, this Amendment to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE --------- ----- Director --------------------------- *Sal H. Alfiero Director --------------------------- *Jean S. Blackwell Director --------------------------- *Peter C. Browning Director --------------------------- *Arthur P. Byrne Director --------------------------- *Sanford Cloud, Jr. Director --------------------------- *Richard N. Cooper Director --------------------------- *Gordon J. Davis S-1 SIGNATURE TITLE --------- ----- Director --------------------------- *Ann Maynard Gray Director --------------------------- *John E. Haire Director --------------------------- *Jerry J. Jasinowski Director --------------------------- *Thomas S. Johnson Director --------------------------- *Marilyn E. LaMarche Director, Chairman of the Board, President and Chief Executive Officer --------------------------- *Dona D. Young By: /s/ John H. Beers -------------------------------- *John H. Beers, as Attorney-in-Fact pursuant to Powers of Attorney, on file with the Depositor. April 22, 2005 S-2 EX-99.26.C.2 4 fe_71146-ex26c2.txt FORM OF BROKER DEALER SUPERVISORY & SRVC. AGREE. EXHIBIT 26 (C)(2) FORM OF BROKER DEALER SUPERVISORY AND SERVICE AGREEMENT [logo]PHOENIX(R) BROKER-DEALER VARIABLE CONTRACT SUPERVISORY AND SERVICE AGREEMENT - -------------------------------------------------------------------------------- Phoenix Equity Planning Corporation ("PEPCO"), the master servicer and distributor for the Contracts hereunder described and the undersigned broker-dealer (the "Broker-Dealer"), enter into this Agreement as of the date indicated, for the purpose of appointing the Broker-Dealer to perform the services hereunder described, subject to the following provisions: 1. Except as provided below, PEPCO hereby appoints the Broker-Dealer to provide sales assistance with respect to, and to cause applications to be solicited for the purchase of variable annuity contracts and/or variable life policies issued by Phoenix Life Insurance Company, Phoenix Life and Annuity Company and/or PHL Variable Insurance Company (the "Insurer") through Separate Accounts including the Phoenix Life Variable Accumulation Account, Phoenix Life Variable Universal Life Account, Phoenix Life and Annuity Variable Universal Life Account and PHL Variable Accumulation Account and listed on Schedules A1, A2, B and C. Broker-Dealer accepts such appointment and agrees to use its best efforts to provide sales assistance to producers of the Insurer and to cause applications for the purchase of contracts and/or policies to be solicited by such producers. Broker-Dealer agrees to pay a commission to such producers. 2. The Broker-Dealer will promptly forward to the appropriate office of Phoenix, or its authorized designee, all contract and/or policy applications along with other documents, if any, and any payments received with such applications and will have no rights of set off for any reason. Any Contract application which is rejected, together with any payment made and other documents submitted, shall be returned to the Broker-Dealer. 3. PEPCO shall pay the Broker-Dealer service payments relating to applications submitted by Broker-Dealer. The amount to be paid by PEPCO is specified on Schedule A1, A2, B and C of this Agreement. The Broker-Dealer agrees to return promptly to PEPCO, all compensation received for any Contract returned within the "free look" period as specified in the Contract. 4. The Broker-Dealer represents that it is a registered broker-dealer under the Securities Exchange Act of 1934, a member in good standing of the National Association of Securities Dealers, Inc. ("NASD"), and is registered as a broker-dealer under state law to the extent required in order to provide the services described in this Agreement. Broker-Dealer agrees to abide by all rules and regulations of the NASD, including its Conduct Rules, and to comply with all applicable state and federal laws and the rules and regulations of authorized regulatory agencies affecting the sale of the contracts and/or policies, including the prospectus delivery requirements under the Securities Act of 1933 for the contracts and/or policies and any underlying mutual fund. The Broker-Dealer agrees to notify PEPCO promptly of any change, termination, or suspension of its status. Broker-Dealer shall immediately notify PEPCO with respect to: i) the initiation and disposition of any form of disciplinary action by the NASD or any other agency or instrumentality having jurisdiction with respect to the subject matter hereof against Broker-Dealer or any of its employees or agents; ii) the issuance of any form of deficiency notice by the NASD or any such agency regarding Broker-Dealer's training, supervision or sales practices; and/or iii) the effectuation of any consensual order with respect thereto. 5. In connection with the solicitation of applications for the purchase of contracts and/or policies, Broker-Dealer agrees to indemnify and hold harmless PEPCO and the Insurer from any damage or expense as a result of: (a) the negligence, misconduct or wrongful act of Broker-Dealer or any employee, representative or agent of the Broker-Dealer; and/or (b) any actual or alleged violation of any securities or insurance laws, regulations or orders. Any indebtedness or obligation of the Broker-Dealer to PEPCO or the Insurer, whether arising hereunder or otherwise, and any liabilities incurred or monies paid by PEPCO or the Insurer to any person as a result of any misrepresentation, wrongful or unauthorized act or omission, negligence of, or failure of Broker-Dealer or its employees, producers, and registered representatives to comply with this Agreement, shall be set off against any compensation payable under this Agreement. Notwithstanding the foregoing, Broker-Dealer shall not indemnify and hold harmless PEPCO and the Insurer from any damage or expense on account of the negligence, misconduct or wrongful act of Broker-Dealer or any employee, representative or producer of Broker-Dealer if such negligence, misconduct or wrongful act arises out of or is based upon any untrue statement or alleged untrue statement of material fact, or the omission or alleged omission of a material fact in: (i) any registration statement, including any HO3272 1 2-02 prospectus or any post-effective amendment thereto; or (ii) any material prepared and/or supplied by PEPCO or the Insurer for use in conjunction with the offer or sale of the contracts and/or policies; or (iii) any state registration or other document filed in any state or other jurisdiction in order to qualify any contract and/or policy under the securities laws of such state or jurisdiction. The terms of this provision shall not be impaired by termination of this Agreement. In connection with the solicitation of applications for the purchase of contracts and/or policies, PEPCO and the Insurer agree to indemnify and hold harmless Broker-Dealer from any damage or expense on account of the negligence, misconduct or wrongful act of PEPCO or the Insurer or any employee, representative or producer of PEPCO or the Insurer, including but not limited to, any damage or expense which arises out of or is based upon any untrue statement or alleged untrue statement of material fact, or the omission or alleged omission of a material fact in: (i) any registration statement, including any prospectus or any post-effective amendment thereto; or (ii) any material prepared and/or supplied by PEPCO or the Insurer for use in conjunction with the offer or sale of the contracts and/or policies; or (iii) any state registration or other document filed in any state or other jurisdiction in order to qualify any contract and/or policy under the securities laws of such state or jurisdiction. The terms of this provision shall not be impaired by termination of this Agreement. 6. The Broker-Dealer will itself be, or will select persons associated with it who are, trained and qualified to solicit applications for purchase of contracts and/or policies in conformance with applicable state and federal laws. Any such persons shall be registered representatives of the Broker-Dealer in accordance with the rules of the NASD, be licensed to offer the contract and/or policy in accordance with the insurance laws of any jurisdiction in which such persons solicits applications, be licensed with and appointed by the Insurer to solicit applications for the contracts and/or policies and have entered into the appropriate Independent Producer Variable Contract with the Insurer, if applicable. Under the Independent Producer Variable Contract, the Insurer will make payments to the Broker-Dealer. Broker-Dealer will train and supervise its representatives to insure that purchase of a contract and/or policy is not recommended to an applicant in the absence of reasonable grounds to believe that the purchase of a contract and/or policy is suitable for that applicant. Broker-Dealer shall pay fees to regulatory authorities in connection with obtaining necessary securities licenses and authorizations for registered representatives to solicit applications for the purchase of contracts and/or policies. Broker-Dealer is not responsible for fees in connection with the appointment of registered representatives as insurance agents of the Insurer. 7. The activities of all producers referred to in Paragraph 6 will be under the direct supervision and control of the Broker-Dealer. The right of such producers to solicit applications for the purchase of contracts and/or policies is subject to their continued compliance with the rules and procedures which may be established by the Broker-Dealer, PEPCO or the Insurer, including those set forth in this Agreement. 8. The Broker-Dealer shall ensure that applications for the purchase of contracts and/or policies are solicited only in the states where the contracts and/or policies are qualified for sale, and only in accordance with the terms and conditions of the then current prospectus applicable to the contracts and/or policies and will make no representations not included in the prospectus, Statement of Additional Information, or in any authorized supplemental material supplied by PEPCO. With regard to the contracts and/or policies, the Broker-Dealer shall not use or permit its producers to use any sales promotion materials or any form of advertising other than that supplied or approved by PEPCO. Broker-Dealer shall ensure that the prospectus delivery requirements under the Securities Act of 1933 and all other applicable securities and insurance laws, rules and regulations are met and that delivery of any prospectus for the contracts and/or policies will be accompanied by delivery of the prospectus for the underlying mutual funds. 9. The Broker-Dealer understands and agrees that in performing the services covered by this Agreement, it is acting in the capacity of an independent contractor and not as an agent or employee of PEPCO, and that it is not authorized to act for, or make any representation on behalf of, PEPCO or the Insurer except as specified herein. Broker-Dealer understands and agrees that PEPCO shall execute telephone transfer orders only in accordance with the terms and conditions of the then current prospectus applicable to the contracts and/or policies and agrees that, in consideration for the Broker-Dealer's right to exercise the telephone transfer privilege, neither PEPCO nor the Insurer will be liable for any loss, injury or damage incurred as a result of acting upon, nor will they be held responsible for the authenticity of, any telephone instructions containing unauthorized, incorrect or incomplete information. Broker-Dealer agrees to indemnify and hold harmless PEPCO and the Insurer against any loss, injury or damage resulting from any telephone exchange instruction containing unauthorized, incorrect or incomplete information received from Broker-Dealer or any of its registered representatives. (Telephone instructions are recorded on tape.) HO3272 2 2-02 10.This Agreement may not be assigned by the Broker-Dealer without the prior consent of PEPCO. Any party hereto may cancel this Agreement at any time upon written notice. This Agreement shall automatically terminate if the Broker-Dealer voluntarily or involuntarily ceases to be or is suspended from being, a member in good standing of the NASD. Provided further, PEPCO reserves the right to terminate this Agreement in the event that any employee or agent of Broker-Dealer is suspended, disciplined or found to be in violation of governing insurance or securities laws, rules or regulations. Furthermore, PEPCO reserves the right to revise the payments for services described in this Agreement as set forth in Paragraph 3 at any time upon the mailing of written notice to the Broker-Dealer. Failure of any party to terminate this Agreement for any of the causes set forth in this Agreement shall not constitute a waiver of the right to terminate this Agreement at a later time for any such causes. 11.This Agreement on the part of the Broker-Dealer runs to PEPCO and the Insurer and is for the benefit of and enforceable by each. This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut. This Agreement supersedes any agreement in effect prior to August 28, 2000. Your first contract/policy sale after receipt of this Agreement shall constitute your acceptance of its terms. If you do not wish to participate in soliciting applications for one of the available products, you must complete Section 12. 12.Applications for the following products will not be solicited by any representative, employee or agent of the Broker-Dealer: A. [ ] Phoenix Life Insurance Company [ ] Variable Annuities [ ] Variable Universal Life B. [ ] PHL Variable Insurance Company [ ] Variable Annuities C. [ ] Phoenix Life and Annuity Company [ ] Variable Universal Life 13.PEPCO agrees to comply with all laws, rules, regulations, and ordinances relating to privacy, confidentiality, security, data security, and the handling of customer information which may from time to time be established. PEPCO agrees not to disclose or use any consumer nonpublic personal information (including nonpublic personal financial information and nonpublic personal health information), which may be supplied by you to PEPCO in performance under this Agreement other than to: a) carry out the purpose for which the information was provided; and b) to use or disclose the information as otherwise permitted or required by law. You agree to comply with all laws, rules, regulations, and ordinances relating to privacy, confidentiality, security, data security, and the handling of customer information which may from time to time be established. You agree not to disclose or use any consumer nonpublic personal information (including nonpublic personal financial information and nonpublic personal health information), which may be supplied by PEPCO to you in performance under this Agreement other than to: a) carry out the purpose for which the information was provided; and b) to use or disclose the information as otherwise permitted or required by law. This provision will survive and continue in full force and effect after the termination of this Agreement. Broker-Dealer Firm: Name of Firm: __________________________________________________________ By: ____________________________________________________________________ Print Name & Title: ____________________________________________________ Date: ________________________ NASD CRD Number _________________________ Phoenix Equity Planning Corporation By: ____________________________________________________________________ Title: _________________________________________________________________ Date: __________________________________________________________________ HO3272 3 2-02 [logo]PHOENIX(R) Phoenix Life Insurance Company Phoenix Life and Annuity Company PHL Variable Insurance Company Phoenix Equity Planning Corporation Members of The Phoenix Companies, Inc MAIN ADMINISTRATIVE OFFICE: Hartford, Connecticut HO3272 4 2-02 PHOENIX LIFE INSURANCE COMPANY COMPENSATION SCHEDULE This Compensation Schedule and Footnotes form a part of the Contract and is subject to all terms and conditions thereof. The commission schedule may be modified in whole or in part from time to time through standard Company communication procedures and such modification shall have the same force and effect as if this Schedule had been physically amended.
- ---------------------------------------------------------------------------------------------------------------------------------- FIRST YEAR RENEWAL COMMISSIONS ON RENEWAL PREMIUMS OR CASH VALUE FOR TRAILS COMMISSIONS ON ------------------------ ------------------------ Vested Commissions Non Vested Commissions I. NON-REGISTERED PRODUCTS FIRST YEAR PREMIUMS Policy Years Policy Year (b) (a) 2nd-10th 11th and later - --------------------------------------------------- --------------------------- ------------------------ ------------------------- UNIVERSAL LIFE % % % Phoenix Protector UL II Up to Commission Target Premium 50 3 3 Excess of Commission Target Premium 3 3 3 Phoenix Accumulator UL II Up to Commission Target Premium 50 3 3 Excess of Commission Target Premium 3 3 3 Phoenix Estate Legacy III Up to Commission Target Premium 50 3 3 Excess of Commission Target Premium 3 3 3 Phoenix Executive UL (c) Up to Commission Target Premium 24 7 in years 2-7 2.5% in years 8+ 2.5 in yrs 8+ Excess of Commission Target Premium 2.5 2.5 2.5 Asset Based Trail N/A 0.10% per yr in yrs 6+ 0.10% per yr - --------------------------------------------------- --------------------------- ------------------------ ------------------------- TERM % Phoenix Protector Term-10 (PPT-10) 50 None None Phoenix Protector Term-20 (PPT-20) 50 None None Phoenix Protector Term-30 (PPT-30) 50 None None Phoenix Value Term-20 (PVT-20) 50 None None - --------------------------------------------------- --------------------------- ------------------------ ------------------------- FIXED ANNUITY % Phoenix Edge -- SPIA Options A, B, C, D, G, J Issue Age: 5-74 3.0 None None Issue Age: 75-90 1.5 None None Option E -- Annuity for a Specified Period: Period Certain: Less than 10 yrs 1.5 None None Period Certain: Greater than or 3.0 None None equal to 10 yrs) - ---------------------------------------------------------------------------------------------------------------------------------- OL4112 Page 1 of 8 12-04
- ---------------------------------------------------------------------------------------------------------------------------------- FIRST YEAR RENEWAL COMMISSIONS ON RENEWAL PREMIUMS ON CASH VALUE FOR TRAILS COMMISSIONS ON ------------------------ ------------------------ Non Vested Commissions Non Vested Commissions II. REGISTERED PRODUCTS FIRST YEAR Policy Year Policy Year A. LIFE INSURANCE PREMIUMS (b) (b) (a) 2nd-10th 11th and later - --------------------------------------------------- --------------------------- ------------------------ ------------------------- % % % Phoenix Individual Edge Up to Commission Target Premium 50 6.5 in yr 2, 0 in yrs 3+ 0 Excess of Commission Target Premium 6.5 6.5 in yr 2, 0 in yrs 3+ 0 Asset-based Trail N/A 0.25% per yr in yrs 3+ 0.25% per year - --------------------------------------------------- --------------------------- ------------------------ ------------------------- Estate Edge (g) (h) Up to Commission Target Premium 50 3 0 Excess of Commission Target Premium 3 3 0 Asset-based Trail N/A N/A 0.25% per year - --------------------------------------------------- --------------------------- ------------------------ ------------------------- Joint Edge Up to Commission Target Premium 50 3 3 Excess of Commission Target Premium 4 3 3 - --------------------------------------------------- --------------------------- ------------------------ ------------------------- Phoenix Executive VUL (c) Up to Commission Target Premium 24 7 in yrs 2-7 2.5 2.5 in yrs 8+ Excess of Commission Target Premium 2.5 2.5 2.5 Asset-based Trail N/A 0.10% per yr in yrs 6+ 0.10% per year - --------------------------------------------------- --------------------------- ------------------------ ------------------------- Phoenix Edge -- SPVL Issue ages: 30-80 7 N/A N/A Issue ages: 81-85 5 N/A N/A Asset-based Trail (all ages) None 0.25% in years 6+ 0.25% per year - ---------------------------------------------------------------------------------------------------------------------------------- OL4112 Page 2 of 8 12-04
- ------------------------------------------------------------------------------------------------------------------------------------ B. VARIABLE ANNUITIES OPTION NUMBER OPTION DESCRIPTION - ------------------------------------------------------------------------------------------------------------------------------------ Investor's Edge -- Individual Deferred [ ] OPTION 1 5.00% of premiums paid plus an annual trail commission Variable Annuity (d) of 1.00% of Contract Value beginning in the 4th year. [ ] OPTION 2 3.50% of premiums paid plus an annual trail commission of 1.00% of Contract Value beginning in the 2nd year. - ------------------------------------------------------------------------------------------------------------------------------------ Spectrum Edge -- Individual Deferred [ ] OPTION 1 6.00% of premiums paid plus an annual trail commission Variable Annuity (d) of .25% of Contract Value beginning in the 8th year. [ ] OPTION 2 4.50% of premiums paid plus an annual trail commission of .25% of Contract Value beginning in the 2nd year and increasing to 1.00% in the 8th year. [ ] OPTION 3 3.00% of premiums paid plus an annual trail commission of .50% of Contract Value beginning in the 2nd year and increasing to 1.00% in the 8th year. - ------------------------------------------------------------------------------------------------------------------------------------ Big Edge Choice -- Individual Deferred [ ] OPTION 1 6.00% of premiums paid plus an annual trail commission Variable Annuity (d) of .25% of Contract Value beginning in the 8th year. [ ] OPTION 2 5.00% of premiums paid plus an annual trail commission of .30% of Contract Value beginning in the 2nd year and increasing to .50% in the 8th year. [ ] OPTION 3 3.00% of premiums paid plus an annual trail commission of .50% of Contract Value beginning in the 2nd year and increasing to 1.00% in the 8th year. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix Freedom Edge -- Individual 1.00% of premiums paid plus an annual trail of 1.00% Deferred Variable Annuity of the Contract beginning in 2nd year. NOTE: Termination or surrender in the first year will result in a 100% charge back of all compensation on the amount surrendered. - ------------------------------------------------------------------------------------------------------------------------------------ Group Strategic Edge -- Allocated [ ] OPTION 1 5.00% of the first $20,000 of premiums paid, 4.00% of Group Deferred Variable Annuity (e) the next $30,000 of premiums paid, and 3.50% of such premiums paid over $50,000. [ ] OPTION 2 3.00% of the first $20,000 of premiums paid, 2.50% of such premium paid over $20,000 with an annual trail commission of .25% beginning in the 2nd year. [ ] OPTION 3 1.00% of premium paid plus a trail commission of 0.50% of the Contract Value beginning in the 2nd year. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix Income Choice -- Individual [ ] OPTION 1 5.50% of premiums paid. Sales of the contract to Single Premium Immediate Fixed applicants over age 74 will be paid at 4.50% of and Variable Annuity premiums paid. (ALL CHOICES EXCEPT OPTION E) [ ] OPTION 2 4.50% of premiums paid plus an annual trail commission of .25% of the Reserve beginning in the 2nd year. Sales of the contract to applicants over age 74 will be paid at 3.50% of premium paid plus an annual trail commission of .25% of the Reserve beginning in the 2nd year. [ ] OPTION 3 3.50% of premium paid plus an annual trail commission of .50% of the Reserve beginning in the 2nd year. Sales of the contract to applicants over age 74 will be paid at 2.50% of premium paid plus an annual trail commission of .50% beginning in the 2nd year. - ------------------------------------------------------------------------------------------------------------------------------------ OL4112 Page 3 of 8 12-04
- ------------------------------------------------------------------------------------------------------------------------------------ B. VARIABLE ANNUITIES (CONTINUED) OPTION NUMBER OPTION DESCRIPTION - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix Income Choice - Individual [ ] OPTION 4 Certain Period % of Trails Single Premium Immediate Fixed and (Years) Deposit (% of Reserve) Variable Annuity -- OPTION E (f) ------------------------------------------------------- 5-9 2.00% 0.00% ------------------------------------------------------- 10-14 3.50% 0.00% ------------------------------------------------------- 15-19 5.00% 0.00% ------------------------------------------------------- 20+ 5.50% 0.00% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix Income Choice - Individual [ ] OPTION 5 Certain Period % of Trails Single Premium Immediate Fixed and (Years) Deposit (% of Reserve) Variable Annuity -- OPTION E (f) ------------------------------------------------------- 5-9 1.25% 0.25% ------------------------------------------------------- 10-14 2.50% 0.25% ------------------------------------------------------- 15-19 4.00% 0.25% ------------------------------------------------------- 20+ 4.50% 0.25% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix Income Choice - Individual [ ] OPTION 6 Certain Period % of Trails Single Premium Immediate Fixed and (Years) Deposit (% of Reserve) Variable Annuity -- OPTION E (f) ------------------------------------------------------- 5-9 1.00% 0.50% ------------------------------------------------------- 10-14 1.75% 0.50% ------------------------------------------------------- 15-19 2.75% 0.50% ------------------------------------------------------- 20+ 3.00% 0.50% - ------------------------------------------------------------------------------------------------------------------------------------ FOOTNOTES: (a) First year commissions are NOT paid on premium charged for the following: 1. Temporary extras. 2. Aviation and other avocation hazards. (b) Non-vested commissions are payable in those years in accordance with the Compensation Provisions in you contract. (c) There will be a charge back of 100% of all compensation paid on full surrenders in the first policy year. If there is a partial withdrawal of policy value in the first policy year, compensation will be recalculated as if the policy had been issued with a new reduced face amount and any compensation actually paid on this policy in excess of the recalculated sum shall be returned to the Company. No compensation will be paid on premiums paid by existing loans or "carry over loans". If a policy loan is taken in the first policy year, compensation will be recalculated as if the policy had been issued with a "carry over loan" and any compensation actually paid on this policy in excess of the recalculated sum shall be returned to the Company. (d) Sales of the contract to applicants over age 80 will be paid at 50% of the Commission Option(s) chosen. Trail commissions will be paid at the full percentage amount as listed. If more than one option is chosen the Broker-Dealer agrees that its representatives may select from the specified Commissions Options at the time a Contact is purchased. (e) Sales of the contract to applicants over age 80 will be paid at 50% of the commission option selected. Trail commissions will be paid at the full percentage amounts listed. Banded compensation will be processed on a calendar year basis, based upon aggregate premiums paid under the contract in that calendar year. Trail commissions will be paid on the Contract Value on a calendar quarter basis on deposits held under the Contract for a year or more. (f) If the certain period is shortened under Payment Option E, the commission will be adjusted accordingly. (g) For Phoenix Estate Edge, qualified plans only, the first year commission rate will be 25% up to the commissionable target premium (CTP). Commission in excess of the CTP will be 3%. (h) For Phoenix Estate Edge, qualified plans only, a charge back of 10% of the CTP will be applied if the face amount is reduced below: o 40% of the initial base face amount in policy years 1 - 20 o 20% of the initial base face amount in policy years 21+ (i) NOTE: NOT ALL PRODUCTS ARE AUTHORIZED FOR ISSUANCE IN ALL JURISDICATIONS. OL4112 Page 4 of 8 12-04
PHL VARIABLE INSURANCE COMPANY COMPENSATION SCHEDULE This Compensation Schedule and Footnotes form a part of the Contract and is subject to all terms and conditions thereof. The commission schedule may be modified in whole or in part from time to time through standard Company communication procedures and such modification shall have the same force and effect as if this Schedule had been physically amended. - ---------------------------------------------------------------------------------------------------------------------------------- FIRST YEAR RENEWAL COMMISSIONS ON RENEWAL PREMIUMS OR CASH VALUE FOR TRAILS COMMISSIONS ON ------------------------------------------------- I. NON-REGISTERED PRODUCTS Vested Commissions Non Vested Commissions FIRST YEAR PREMIUMS Policy Years Policy Year (b) (b) (a) Years 2-10 Years 11 and later - ---------------------------------------------------------------------------------------------------------------------------------- UNIVERSAL LIFE % % % Phoenix Protector UL II Up to Commission Target Premium 50 3 3 Excess of Commission Target Premium 3 3 3 Phoenix Accumulator UL II Up to Commission Target Premium 50 3 3 Excess of Commission Target Premium 3 3 3 Phoenix Estate Legacy III Up to Commission Target Premium 50 3 3 Excess of Commission Target Premium 3 3 3 - ---------------------------------------------------------------------------------------------------------------------------------- Term % Phoenix Protector Term-10 (PPT-10) 90 None None Phoenix Protector Term-20 (PPT-20) 90 None None Phoenix Protector Term-30 (PPT-30) 100 None None Phoenix Value Term-20 (PVT-20) 90 None None - ---------------------------------------------------------------------------------------------------------------------------------- Fixed Annuity % Phoenix Edge -- SPIA Options A, B, C, D, G, J Issue Age: 5-74 3.0 None None Issue Age: 75-90 1.5 None None Option E -- Annuity for a Specified Period: Period Certain: Less than 10 yrs 1.5 None None Period Certain: Greater than or 3.0 None None equal to 10 yrs) - ---------------------------------------------------------------------------------------------------------------------------------- OL4112 Page 5 of 8 12-04
- ---------------------------------------------------------------------------------------------------------------------------------- FIRST YEAR Non Vested Commissions Non Vested Commissions II. REGISTERED PRODUCTS COMMISSIONS ON Policy Year Policy Year A. LIFE INSURANCE FIRST YEAR PREMIUMS (b) (b) -------------------------------------------------- (a) Years 2nd-10th Years 11th and later - ---------------------------------------------------------------------------------------------------------------------------------- % % % Phoenix Edge - VUL Policy Charge Option A Up to Commission Target Premium 90 3 in yr 2; 0 in yrs 3+ 0 Excess of Commission Target Premium 3 3 in yr 2; 0 in yrs 3+ 0 Asset Based Trail N/A 0.25% per yr in yrs 3+ 0.25% per year Policy Charge Option B Up to Commission Target Premium 75 6 0 Excess of Commission Target Premium 3 3 0 Asset Based Trail N/A 0.25% per yr in yrs 8+ 0.25% Policy Charge Option C Up to Commission Target Premium 50 0 0 Excess of Commission Target Premium 3 0 0 Asset Based Trail N/A 0.35% per yr 0.35% per yr in yrs 11-15 0.25% per yr in yrs 16+ - ---------------------------------------------------------------------------------------------------------------------------------- Phoenix Edge - SVUL (e) (f) Policy Charge Option A Up to Commission Target Premium 90 3 in yr 2; 0 in yrs 3+ 0 Excess of Commission Target Premium 3 3 in yr 2; 0 in yrs 3+ 0 Asset Based Trail N/A 0.25% per yr in yrs 3+ 0.25% per year Policy Charge Option B Up to Commission Target Premium 75 6.0 0 Excess of Commission Target Premium 3 3 0 Asset Based Trail N/A 0.25% per yr in yrs 8+ 0.25% Policy Charge Option C Up to Commission Target Premium 50 0.65 0 Excess of Commission Target Premium 3 0 0 Asset Based Trail N/A 0.65% per yr 0.65% per yr in yrs 11-15 0.25% per yr in yrs 16+ - ---------------------------------------------------------------------------------------------------------------------------------- OL4112 Page 6 of 8 12-04
- ------------------------------------------------------------------------------------------------------------------------------------ B. VARIABLE ANNUITIES OPTION NUMBER OPTION DESCRIPTION - ------------------------------------------------------------------------------------------------------------------------------------ Premium Edge -- Individual Deferred [ ] OPTION 1 5.00% of premiums paid. Variable Annuity (c) [ ] OPTION 2 4.00% of premiums paid plus an annual trail commission of .20% of Contract Value beginning in the 2nd year. [ ] OPTION 3 2.00% of premiums paid plus an annual trail commission of .55% of Contract Value beginning in the 2nd year. - ------------------------------------------------------------------------------------------------------------------------------------ Investors Edge -- Individual Deferred [ ] OPTION 1 5.00% of premiums paid plus an annual trail commission Variable Annuity (c) of 1.00% of Contract Value beginning in the 4th year. [ ] OPTION 2 3.50% of premiums paid plus an annual trail commission of 1.00% of Contract Value beginning in the 2nd year and beginning in the 2nd year. - ------------------------------------------------------------------------------------------------------------------------------------ Spectrum Edge -- Individual Deferred [ ] OPTION 1 6.00% of premiums paid plus an annual trail commission Variable Annuity (c) of .25% of Contract Value beginning in the 8th year. [ ] OPTION 2 4.50% of premiums paid plus an annual trail commission of .25% of Contract Value beginning in the 2nd year and increasing to 1.00% in the 8th year. [ ] OPTION 3 3.00% of premiums paid plus an annual trail commission of .50% of Contract Value beginning in the 2nd year and increasing to 1.00% in the 8th year. - ------------------------------------------------------------------------------------------------------------------------------------ Big Edge Choice -- Individual Deferred [ ] OPTION 1 6.00% of premiums paid plus an annual trail commission Variable Annuity (d) of .25% of Contract Value beginning in the 8th year. [ ] OPTION 2 5.00% of premiums paid plus an annual trail commission of .30% of Contract Value beginning in the 2nd year and increasing to .50% in the 8th year. [ ] OPTION 3 3.00% of premiums paid plus an annual trail commission of .50% of Contract Value beginning in the 2nd year and increasing to 1.00% in the 8th year. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix Freedom Edge -- Individual 1.00% of premiums paid plus an annual trail of 1.00% Deferred Variable Annuity of the Contract beginning in year 2. Termination or surrender in the first year will result in a 100% charge back of commissions on the amount surrendered. - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix Income Choice -- Individual [ ] OPTION 1 5.50% of premiums paid. Sales of the contract to Single Premium Immediate Fixed applicants over age 74 will be paid at 4.50% of and Variable Annuity premiums paid. (ALL CHOICES EXCEPT OPTION E) [ ] OPTION 2 4.50% of premiums paid plus an annual trail commission of .25% of the Reserve beginning in the 2nd year. Sales of the contract to applicants over age 74 will be paid at 3.50% of premium paid plus an annual trail commission of .25% of the Reserve beginning in the 2nd year. [ ] OPTION 3 3.50% of premium paid plus an annual trail commission of .50% of the reserve beginning in the 2nd year. Sales of the contract to applicants over age 74 will be paid at 2.50% of premium paid plus an annual trail commission of .50% beginning in the 2nd year. - ------------------------------------------------------------------------------------------------------------------------------------ OL4112 Page 7 of 8 12-04
- ------------------------------------------------------------------------------------------------------------------------------------ B. VARIABLE ANNUITIES (CONTINUED) OPTION NUMBER OPTION DESCRIPTION - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix Income Choice - Individual [ ] OPTION 4 Certain Period % of Trails Single Premium Immediate Fixed and (Years) Deposit (% of Reserve) Variable Annuity -- OPTION E (f) ------------------------------------------------------- 5-9 2.00% 0.00% ------------------------------------------------------- 10-14 3.50% 0.00% ------------------------------------------------------- 15-19 5.00% 0.00% ------------------------------------------------------- 20+ 5.50% 0.00% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix Income Choice - Individual [ ] OPTION 5 Certain Period % of Trails Single Premium Immediate Fixed and (Years) Deposit (% of Reserve) Variable Annuity -- OPTION E (f) ------------------------------------------------------- 5-9 1.25% 0.25% ------------------------------------------------------- 10-14 2.50% 0.25% ------------------------------------------------------- 15-19 4.00% 0.25% ------------------------------------------------------- 20+ 4.50% 0.25% - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix Income Choice - Individual [ ] OPTION 6 Certain Period % of Trails Single Premium Immediate Fixed and (Years) Deposit (% of Reserve) Variable Annuity -- OPTION E (f) ------------------------------------------------------- 5-9 1.00% 0.50% ------------------------------------------------------- 10-14 1.75% 0.50% ------------------------------------------------------- 15-19 2.75% 0.50% ------------------------------------------------------- 20+ 3.00% 0.50% - ------------------------------------------------------------------------------------------------------------------------------------ FOOTNOTES: (a) First year commissions are NOT paid on premium charged for the following: 1. Temporary extras. 2. Aviation and other avocation hazards. (b) Non-vested commissions are payable in those years in accordance with the Compensation Provisions in your contract. (c) Sales of the contract to applicants over age 80 will be paid at 50% of the Commission Option(s) chosen. Trail commissions will be paid at the full percentage amount as listed. If more than one option is chosen the Broker-Dealer agrees that its representatives may select from the specified Commissions Options at the time a Contact is purchased. (d) If the certain period is shortened under Payment Option E, the commission will be adjusted accordingly. (e) e) For Phoenix Edge SVUL Option A, qualified plans only, the first year commission rate will be 70% up to the CTP. Commissions in excess of the CTP will be 3 % (f) For Phoenix Edge SVUL Option A, qualified plans only, a charge back of 10 % of the CTP will be applied if the face amount is reduced below: o 40 % of the initial base face amount in policy years 1 - 20 o 20% of the initial base face amount in policy years 21+ (g) NOTE: NOT ALL PRODUCTS ARE AUTHORIZED FOR ISSUANCE IN ALL JURISDICATIONS. OL4112 Page 8 of 8 12-04
EX-99.26.D 5 fe_71146-ex26dur72.txt DEPOSITOR FORM NUMBER UR72 EXHIBIT 26 (d) DEPOSITOR FORM NUMBER UR72 LIFE PLAN OPTIONS RIDER This rider is part of the policy to which it is attached. Except as stated in this rider, it is subject to all of the provisions contained in the policy. DEFINITIONS Option Review Period - -------------------- The 90-day period immediately preceding the 5th, 10th and 15th Policy Anniversaries. Individual Term Life Rider - -------------------------- As used in this rider form "Individual Term Life Rider" refers to any of the following riders: Individual Term Rider, Individual Term Insurance Rider, Policy Term Rider, Policy Term Insurance Rider, Phoenix Individual Edge Term Rider, or the Variable Policy Term Rider. OPTION BENEFITS Increased Coverage Determination without Medical Exam - ----------------------------------------------------- Policies that include both this rider and the Individual Term Life Rider are eligible during each Option Review Period, while both such riders are in effect, for an increase in their term insurance rider amount up to a maximum lifetime increase of $1,000,000, with underwriting and our agreement to such increase determined without the inconvenience of an additional medical exam. Our other ordinary underwriting rules will continue to apply and thus the increase in coverage is still subject to our normal underwriting approval. Other conditions that apply to this option are as follows: o The basic policy face amount must be at least $1,000,000 at original issue of the basic policy. o The insured must be attained age 65 or younger on the last day of the Option Review Period. o The risk classification of the insured must be standard through Table D (200%) at original issue of the basic policy. o The insured must be alive and meet our underwriting requirements at the time of your request for the increase in term rider face amount. o The Individual Term Life Rider must either already be attached to the policy or then currently approved and available for sale in the state of applicable jurisdiction. o There is a maximum lifetime increase of $1,000,000 per insured life. Reduced Coverage without Surrender Charge - ----------------------------------------- During each Option Review Period you may request a decrease in the face amount of the policy without our assessment of the partial surrender charge that, under the terms of your basic policy, would otherwise apply. In such case the surrender charge remaining under the policy will continue to be calculated as if such decrease in face amount had not been made. Other conditions that apply to this option are as follows: - ---------------------------------------------------------- o The basic policy face amount must be at least $1,000,000 at original issue of the basic policy. o Total option reductions of the basic policy face amount may not exceed the lesser of 50% of the initial basic policy face amount or $5,000,000 in combined aggregate of all option reductions for all our policies on the same insured. Exchange for Annuity without Surrender Charge - --------------------------------------------- During each Option Review Period beginning with the 90-day period preceding the 10th policy anniversary, you may request that the policy be surrendered as part of an exchange request to an eligible annuity offered by us. In such an exchange, we would not assess the surrender charge that would otherwise apply. In such case, the new annuity will reflect the usual surrender charges that would ordinarily apply for new business. Other conditions that apply to this option are as follows: o The basic policy face amount must be at least $1,000,000 at original issue of the basic policy. TERMINATION OF THIS RIDER This rider will terminate on the first of any of the following events to occur: 1. exercise of the Exchange for Annuity without Surrender Charge Option; 2. the 15th policy anniversary; 3. termination of the basic policy. Phoenix Life Insurance Company /s/ Robertk W. Fiandella Chairperson of the Board and Chief Executive Officer EX-99.26.D 6 fe_71146-ex26dvr27.txt DEPOSITOR FORM NUMBER DR27 EXHIBIT 26 (d) DEPOSITOR FORM NUMBER VR27 TERM INSURANCE RIDER THIS RIDER IS A PART OF THE POLICY TO WHICH IT IS ATTACHED IF IT IS LISTED UNDER THE RIDER SCHEDULE ON THE SCHEDULE PAGES OF THE POLICY. EXCEPT AS OTHERWISE STATED IN THIS RIDER, IT IS SUBJECT TO ALL OF THE PROVISIONS OF THE POLICY. POLICY NUMBER: INSURED: RIDER INITIAL INSURANCE AMOUNT: RIDER TOTAL INSURANCE AMOUNT: (same as above line unless there has been an increase or decrease) EFFECTIVE DATE OF INCREASED RIDER TOTAL INSURANCE AMOUNT: (line appears only if there has been an increase) RIDER DATE: (date rider is attached to policy) RIDER EXPIRY DATE: (policy anniversary nearest Insured Person's 70th birthday) FINAL CONVERSION DATE: (policy anniversary nearest Insured Person's 65th birthday) DEFINITIONS INSURED PERSON. The person named as Insured above whose life is insured under this Rider. IN FORCE. The Rider has not terminated. MONTHLY CALCULATION DAY. The Monthly Calculation Day is defined in Part 1 of the policy. It is the day of the month on which the policy's Monthly Deduction is made as described in Part 4 of the Policy. POLICY. The Policy to which the Rider is attached. YOU. The policyowner of the Policy. RIDER DEATH BENEFIT If the Insured Person dies while this Rider is In Force we will pay the Rider Total Insurance Amount shown above to the Rider's Beneficiary as stated in the Policy application, or as later changed by You. If no Rider Beneficiary is stated in the application, the Rider's Beneficiary shall be the same as the Policy's Beneficiary. MONTHLY CHARGE The Monthly Charge for this Rider is equal to the monthly Cost of Insurance rate for the Insured Person multiplied by the Rider Total Insurance Amount. The monthly Cost of Insurance rate is based on the attained age, sex, and risk classification of the Insured Person. Such rate will not exceed the rates in the table attached to this Rider. The Monthly Charge for each month of the first year that this Rider is In Force is shown on the Policy's Schedule Pages. This Monthly Charge will increase each year thereafter. The Monthly Charge for the Rider is deducted from the Policy Value as part of the Monthly Deduction for the Policy. CONVERSION On any Monthly Calculation Date while this Rider is In Force and on or before the Final Conversion Date. You may convert the Rider Total Insurance Amount, without evidence of insurability, to a new insurance VR27 policy on the life of the Insured Person. The amount of insurance coverage of the new policy may be any amount that is not less than $25,000 or greater than the Rider Total Insurance Amount. The new policy may be any Whole Life or Variable Universal Life policy that we offer at the time of conversion. If the Insured Person is the same as the Policy's Insured person, You may, without evidence of insurability, convert the Rider Total Insurance Amount to increase the Face Amount of the Policy on a Policy anniversary instead of converting coverage to a separate policy. The amount of the increase of the Face Amount may be any amount that is not less than $25,000 or greater than the Rider Total Insurance Amount. In order to convert insurance coverage on the Insured Person You must submit to us a written release and surrender of all claims for that Insured Person under this Rider. The policy date of the new policy, or the issue date of the increase in Policy Face Amount, will be the Monthly Calculation Date on which the conversion of insurance occurs. This Rider will terminate on such date. CONVERSION ALLOWANCE We will apply a Conversion Allowance to pay a portion of the new policy's first year premium if the conversion is to a new policy. If the conversion is to an increase in Face Amount of the Policy, then we will apply the Conversion Allowance as a premium to the Policy. If the Face Amount of the new policy, or increase in Face Amount of the Policy, is equal to the Rider Total Insurance Amount, then the amount of Conversion Allowance is equal to the sum of the first twelve Monthly Charges for this Rider (or equal to the sum of all Monthly Charges for this Rider if less than twelve such charges have been charged). If the Face amount of the new policy, or increase in Face Amount of the Policy, is less than the Rider Total Insurance Amount a pro rata reduction will be made in the Conversion Allowance. REQUEST FOR AN INCREASE After the first Policy year, anytime that this Rider DECREASE IN is In Force, you may request an increase or OR INSURANCE AMOUNT decrease in the Rider Total Insurance Amount. Unless we agree otherwise the minimum such increase or decrease shall be $25,000. The increase or decrease shall be effective on the first Monthly Calculation Day on or following the date that we approve the request. However, any increase will not take effect unless the cash surrender value of the Policy at least equals the Monthly Deduction for the Policy. All requests to increase the Rider Total Insurance Amount must be applied for on a supplemental application and will be subject to evidence of the Insured Person's insurability satisfactory to us. The Insured Person must be alive on the effective date of the increased Rider Total Insurance Amount. We will send you a new Rider page showing the new Rider Total Insurance Amount. RIGHT TO CANCEL RIDER You have the right to cancel any increase in the INSURANCE AMOUNT Rider Total Insurance Amount pursuant to your INCREASES request, within a limited time as stated below. The increase in Rider Total Insurance Amount may be cancelled by returning the Rider to us at the following address: Phoenix Home Life Mutual Insurance Co. Variable and Universal Life Administration P. O. Box 942 Greenfield, MA 01302-0942 VR27 To cancel, You must return the Rider before the latest of: 1. 10 days after the new Rider page showing such increase in the Rider Total Insurance Amount is delivered to You: or 2. 10 days after a Notice of Right to Cancel is delivered to You: or 3. 45 days after Part 1 of the supplemental application for such increased Rider Total Insurance Amount is signed by You. Upon such cancellation we will refund any Monthly Charges made under this Rider for the increase in Rider Total Insurance Amount. We will send You a new Rider page showing the former Rider Total Insurance Amount. GENERAL PROVISIONS CONTESTABILITY. We cannot contest the validity of this Rider after it has been In Force during the lifetime of the Insured Person for two years from the Rider Date. We cannot contest the validity of an increase in the Rider Total Insurance Amount after such increase has been in effect during the lifetime of the Insured Person for two years from the effective date of such increase. SUICIDE. If, within two years from the Rider Date the Insured Person dies by suicide, whether sane or insane, the Rider Death Benefit will be limited to the sum of the Monthly Charges paid for this Rider. In such event, this Rider will terminate. If, within two years from the effective date of an increase in Rider Total Insurance Amount the Insured Person dies by suicide, whether sane or insane, the amount we pay for the increase of the Rider Total Insurance Amount will be limited to the sum of the Monthly Charges paid for this Rider for the increase of the Rider Total Insurance Amount. In such event, the increase of the Rider Total Insurance Amount will be cancelled. TERMINATION OF This Rider and any insurance provided under this THIS RIDER Rider will terminate on the earliest of the following dates: (1) The Rider Expiry Date shown above; (2) The date of surrender or lapse of the Policy; (3) The date of payment of the Rider Death Benefit; (4) The date of payment of the Policy's Death Proceeds; (5) The date of conversion of this Rider; (6) The first Monthly Calculation Day following our receipt from you of a written request to cancel this Rider. VR27 EX-99.26.D 7 fe_71146-ex26dvr28.txt DEPOSITOR FORM NUMBER DR28 EXHIBIT 26 (d) DEPOSITOR FORM NUMBER VR28 BUSINESS TERM INSURANCE RIDER THIS RIDER IS A PART OF THE POLICY TO WHICH IT IS ATTACHED IF IT IS LISTED UNDER THE RIDER SCHEDULE ON THE SCHEDULE PAGES OF THE POLICY. EXCEPT AS OTHERWISE STATED IN THIS RIDER, IT IS SUBJECT TO ALL OF THE PROVISIONS OF THE POLICY. POLICY NUMBER: RIDER INITIAL INSURANCE AMOUNT: RIDER TOTAL INSURANCE AMOUNT: (this line is the same as above line unless there has been a requested increase) EFFECTIVE DATE OF INCREASED RIDER INSURANCE AMOUNT: (this line appears only if there has been a requested increase) RIDER DEATH BENEFIT OPTION: (1 or 2) PERCENTAGE INCREASE FOR OPTIONAL ANNUAL INSURANCE ADDITIONS: (None, 1%, 2%, 3%, 4%, or 5%) RIDER DATE: (Date rider is attached to policy) RIDER EXPIRY DATE: (Policy anniversary nearest Insured Person's 95th birthday) DEFINITIONS INSURED PERSON. The person named as Insured on the Policy's Schedule Pages. IN FORCE. The Rider has not terminated. MONTHLY CALCULATION DAY. The Monthly Calculation Day is defined in Part 1 of the Policy. It is the day of the month on which the policy's Monthly Deduction is made as described in Part 4 of the Policy. POLICY. The Policy to which this Rider is attached. YOU. The policyowner of the Policy. RIDER DEATH BENEFIT If the Insured Person dies while this Rider is In Force we will pay the Rider Death Benefit to the Beneficiary of the Policy. The Rider Death Benefit is as described below under Rider Death Benefit Option 1 or Rider Death Benefit Option 2, whichever you elect. RIDER DEATH BENEFIT While this Rider is In Force, and under the OPTIONS conditions stated below, you have the right to elect either of the two Rider Death Benefit Options as described below. The Rider Death Benefit Option shall be as elected (under the conditions stated below) in the application unless later changed as provided below. RIDER DEATH BENEFIT OPTION 1. If the Policy's Death Benefit Option is Option 1 you may elect this Rider Death Benefit Option 1. Under this option the Rider Death Benefit is equal to the lesser of (a) and (b) as defined below: (a) the Rider Total Insurance Amount plus the sum of any Optional Annual Insurance Additions (see Optional Annual Insurance Additions section below): (b) an amount, not less than zero, equal to the Policy Face Amount plus the Rider Total Insurance Amount plus the sum of any Optional Annual Insurance Additions minus the Policy's Death Benefit. (See Part 7 of the Policy for a description of the Policy's Death Benefit and Death Benefit Options.) VR28 If Optional Annual Insurance Additions are not elected, then this Rider Death Benefit Option 1 will provide a level death benefit equal to the Policy Face Amount plus the Rider Total Insurance Amount until the Rider Death Benefit has decreased to zero. On such date this Rider and any insurance provided under this Rider will terminate. If Optional Annual Insurance Additions are elected, then this Rider Death Benefit Option 1 will provide an annually increasing death benefit equal to the Policy Face Amount plus the Rider Total Insurance Amount plus the Optional Annual Insurance Additions until the Rider Death Benefit has decreased to zero. On such date this Rider and any insurance provided under this Rider will terminate. If the Policy's Death Benefit Option is Option 1 and you do not elect a Rider Death Benefit Option, the Rider Death Benefit Option shall be Option 1. This Rider Death Benefit Option 1 is not available if the Policy's Death Benefit Option is Option 2. RIDER DEATH BENEFIT OPTION 2. You may elect this Rider Death Benefit Option 2 if the Policy's Death Benefit Option is Option 1. If the Policy's Death Benefit Option is Option 2, the Rider Death Benefit Option must be Option 2. Under this option the Rider Death Benefit is equal to the Rider Total Insurance Amount plus the sum of any Optional Annual Insurance Additions (see Optional Annual Insurance Additions section below): CHANGING RIDER DEATH BENEFIT OPTIONS. If the Policy's Death Benefit Option is Option 1, while this Rider is In Force you may request, in writing, that the Rider Death Benefit Option be changed from Option 2 to Option 1, or from Option 1 to Option 2. If the change is from Option 1 to Option 2, the new Rider Total Insurance Amount will be set equal to the current Rider Death Benefit, and any existing Optional Annual Insurance Additions will be set equal to zero (having been absorbed into the new Rider Total Insurance Amount). If the change is from Option 2 to Option 1, the Rider Total Insurance Amount is unchanged. No evidence of insurability is required. Any such change will be effective on the Monthly Calculation Day coincident with or next following the date we approve the request. We will send you a new Rider page showing the new Rider Death Benefit Option. MONTHLY CHARGE The Monthly Charge for this Rider is equal to the monthly Cost of Insurance rate for the Insured Person multiplied by the Rider Death Benefit. Such rate is based on the issue age, sex, and risk classification of the Insured Person, and on the number of elapsed years from the Rider Date. The monthly Cost of Insurance rates will not exceed the rates in the Table of Guaranteed Maximum Cost of Insurance Rates shown in the Policy's Schedule Pages. The Monthly Charge for each month of the first year that this Rider is In Force is shown on the Policy's Schedule Pages. This Monthly Charge will generally increase each year thereafter. The Monthly Charge for the Rider is deducted from the Policy Value as part of the Monthly Deduction for the policy. VR28 OPTIONAL ANNUAL You have the right to elect in the Policy application INSURANCE ADDITIONS an optional annual increase in the Rider Death Benefit. These annual increases, called Optional Insurance Additions are equal to the annual percentage increase, stated above, multiplied by the sum of the Policy's Face Amount plus the Rider Total Insurance Amount. The amount of the annual percentage increase shall be either 1%, 2%, 3%, 4%, or 5%. The annual increase of the Rider Death Benefit shall be effective on the first policy anniversary and on each succeeding policy anniversary thereafter until the policy anniversary nearest the Insured Person's 65th birthday. At that time such annual increases will cease. The total amount of Optional Annual Insurance Additions shall not exceed the Policy's Face Amount plus the Rider Total Insurance Amount. You may request a decrease or cancellation, but not an increase, of the future annual percentage increases that you elected on the application. The new percentage increase, or cancellation of future increases will be effective on the Policy anniversary coincident with, or next following the date we receive your request. We will send you a new Rider page showing the change. REQUEST FOR AN INCREASE After the first Policy year, anytime that this Rider OR DECREASE IN INSURANCE is In Force, you may request an increase or decrease AMOUNT in the Rider Total Insurance Amount. Unless we agree otherwise the minimum such increase or decrease shall be $25,000. The increase or decrease shall be effective on the first Monthly Calculation Day on or following the date that we approve the request. However, any increase will not take effect unless the cash surrender value of the Policy at least equals the Monthly Deduction for the Policy. All requests to increase the Rider Total Insurance Amount must be applied for on a supplemental application and will be subject to evidence of the Insured Person's insurability satisfactory to us. The Insured Person must be alive on the effective date of the increased Rider Total Insurance Amount. We will send you a new Rider page showing the new Rider Total Insurance Amount RIGHT TO CANCEL RIDER You have the right to cancel any increase in the INSURANCE AMOUNT Rider Total Insurance Amount pursuant to your request, within a limited time as stated below. The increase in Rider Total Insurance Amount may be cancelled INCREASES by returning the Rider to us at the following address: Phoenix Home Life Mutual Insurance Co. Variable and Universal Life Administration P. O. Box 942 Greenfield, MA 01302-0942 To cancel, you must return the Rider before the latest of: 1. 10 days after the new Rider page showing such increase in the Rider Total Insurance Amount is delivered to you: or 2. 10 days after a Notice of Right to Cancel is delivered to you: or 3. 45 days after Part 1 of the supplemental application for such increased Rider Total Insurance Amount is signed by you. VR28 Upon such cancellation we will refund any Cost of Insurance made under this Rider for the increase in Rider Total Insurance Amount. We will send you a new Rider page showing the former Rider Total Insurance Amount. GENERAL PROVISIONS CONTESTABILITY. We cannot contest the validity of this Rider after it has been In Force during the lifetime of the Insured Person for two years from the Rider Date. We cannot contest the validity of an increase in the Rider Total Insurance Amount after such increase has been in effect during the lifetime of the Insured Person for two years from the effective date of such increase. SUICIDE. If, within two years from the Rider Date the Insured Person dies by suicide, whether sane or insane, the Rider Death Benefit will be limited to the sum of the Cost of Insurance paid under this Rider. In such event, this Rider will terminate. If, within two years from the effective date of an increase in Rider Total Insurance Amount the Insured Person dies by suicide, whether sane or insane, the amount we pay for the increase of the Rider Total Insurance Amount will be limited to the sum of the Cost of Insurance paid under this Rider for the increase of the Rider Total Insurance Amount. In such event, the increase of the Rider Total Insurance Amount will be cancelled. TERMINATION OF This Rider and any insurance provided under this THIS RIDER Rider will terminate on the earliest of the following dates: (1) The Rider Expiry Date shown above; (2) The date of surrender or lapse of the policy; (3) The date of payment of the Rider Death Benefit; (4) The first Monthly Calculation Day following our receipt from you of a written request to cancel this Rider; (5) Under Death Benefit Option 1, the date on which the Rider Death Benefit has decreased to zero. VR28 EX-99.26.D 8 fe_71146-ex26dvr29.txt DEPOSITOR FORM NUMBER DR29 EXHIBIT 26 (d) DEPOSITOR FORM NUMBER VR29 CHILD TERM RIDER THIS RIDER IS A PART OF THE POLICY TO WHICH IT IS ATTACHED IF IT IS LISTED UNDER THE RIDER SCHEDULE ON THE SCHEDULE PAGES OF THE POLICY. EXCEPT AS OTHERWISE STATED IN THIS RIDER, IT IS SUBJECT TO ALL OF THE PROVISIONS OF THE POLICY. POLICY NUMBER: INSURED CHILD: RIDER INSURANCE AMOUNT: RIDER DATE: (Date rider is attached to the policy) RIDER EXPIRY DATE: (Policy anniversary nearest to Insured Child's 25th birthday) FINAL RIDER CONVERSION DATE: (Policy anniversary nearest insured Child's 25th birthday.) DEFINITIONS: ELIGIBLE CHILD. An eligible Child is any child who is born to or legally adopted by the Insured person under the Policy, who is at least 14 days of age and less than 25 years of age. INSURED CHILD. An Insured Child is any Eligible Child named on this Rider as an Insured Child. INSURED PERSON UNDER THE POLICY. The person named as Insured in the Policy. IN FORCE. The Rider has not terminated. MONTHLY CALCULATION DAY. The Monthly Calculation Day is defined in Part 1 of the policy. It is the day of the month on which the policy's Monthly Deduction is made as described in Part 4 of the Policy. POLICY. The Policy to which this Rider is attached. YOU. The policyowner named above on this rider. RIDER DEATH BENEFIT If the Insured Child dies while this Rider is In Force we will pay the Rider Total Insurance Amount shown above to the Rider's Beneficiary as stated in the Policy application, or as later changed by You. If no Rider Beneficiary is stated in the application, the Rider's Beneficiary shall be the same as the Policy's Beneficiary. AUTOMATIC INSURANCE Any child who is born to the Insured Person Under The COVERAGE Policy after the Rider Date will be automatically covered for the Rider Insurance Amount from age 14 days to age 45 days. Any child legally adopted by the Insured Person Under The Policy will automatically be covered for the Rider Insurance Amount for a 31 day period following the date of adoption (and provided the child is at least 14 days old). In order to continue insurance coverage after the end of this automatic coverage period You must notify us, and submit to us such evidence of insurability for the child as we may require before the end of the automatic VR29 coverage period. If the evidence of insurability is satisfactory to us we will send You an additional Rider having the same Rider Insurance Amount as this Rider which will list the additional child as the Insured Child. MONTHLY CHARGE The Monthly Charge for this Rider is equal to the monthly Cost of Insurance rate for the Insured Child multiplied by the Rider Total Insurance Amount. The monthly Cost of Insurance rate is based on the issue age, sex, and risk classification of the Insured Child, and on the number of elapsed years from the Policy Date. Such rate will not exceed the rates in the table attached to this Rider. The Monthly Charge for each month of the first year that this Rider is In Force is shown on the Policy's Schedule Pages. This Monthly Charge will increase each year thereafter. The Monthly Charge for the Rider is deducted from the Policy Value as part of the Monthly Deduction for the Policy. CONVERSION On any Monthly Calculation Date while this Rider is In Force and on or before the Final Conversion Date, You may convert the Rider Total Insurance Amount, without evidence of insurability, to a new insurance policy on the life of the Insured Person. The amount of insurance coverage of the new policy must equal $25,000. The new policy may be any Whole Life or Variable Universal Life policy that we offer at the time of conversion. In order to convert insurance coverage on the Insured Child you must submit to us a written release and surrender of all claims for that Insured Child under this Rider. The policy date of the new policy will be the date on which the conversion of insurance occurs. This Rider will terminate on such date. CONVERSION ALLOWANCE We will apply a Conversion Allowance to pay a portion of the new policy's first year premium. The amount of Conversion Allowance is equal to the sum of the first twelve Monthly Charges for this Rider (or equal to the sum of all Monthly Charges for this Rider if less than twelve such charges have been charged). GENERAL PROVISIONS CONTESTABILITY. We cannot contest the validity of this rider after it has been In Force during the lifetime of the Insured Child for two years from the Rider Date. SUICIDE. If, within two years from the Rider Date the Insured Child dies by suicide, whether sane or insane, the Rider Death Benefit will be limited to the sum of the Monthly Charges paid for this Rider. In such event, this Rider will terminate. TERMINATION OF This Rider and any insurance provided under this THIS RIDER Rider will terminate on the earliest of the following dates: (1) The Rider Expiry Date shown above; (2) The date of surrender or lapse of the policy; (3) The date of payment of the Rider Death Benefit; (4) The date of payment of the Policy's Death Proceeds; (5) The date of conversion of this Rider; (6) The first Monthly Calculation Day following our receipt from You of a written request to cancel this Rider. VR29 EX-99.26.D 9 fe_71146-ex26dvr39.txt DEPOSITOR FORM NUMBER VR39 EXHIBIT 26 (d) DEPOSITOR FORM NUMBER VR39 AGE 100+ RIDER This rider is part of the policy to which it is attached. Except as stated in this rider, it is subject to all of the provisions contained in the policy. RIDER DATE OF ISSUE The date of this rider is shown on the policy's Schedule Pages. DEFINITIONS AGE 100 The Policy Anniversary nearest the Insured's ANNIVERSARY 100th birthday. DEATH BENEFIT AFTER AGE 100 While this rider is in effect, the provision ANNIVERSARY entitled Death Benefit Following Insured's Age 100 of the policy is replaced by the following: After the Age 100 Anniversary, the death benefit will equal either (a) or (b), whichever is greater. (a) and (b) are defined below as follows: a) the policy's Face Amount at the Age 100 Anniversary, plus the Total Rider Insurance Amount of the Policy Term Rider, provided the Policy Term Rider is part of the policy and has not terminated prior to the Age 100 Anniversary. b) the policy value. The monthly deduction, as described in the Monthly Deduction provision of the policy, will be zero after the Age 100 Anniversary so long as this rider remains in effect. TERMINATION This rider will terminate upon: 1. Our receipt of Your Written Request to cancel this rider, which shall be effective as of the next Monthly Calculation Day; or 2. Termination of the policy due to a surrender of the policy for its Cash Surrender Value, lapse of the policy, or payment of the death proceeds of the policy. Phoenix Home Life Mutual Insurance Company /s/ John H. Beers Secretary EX-99.26.F.1 10 fe_71146-ex26f1.txt AMENDED/RESTATED CHARTER OF PHOENIX LIFE INS. CO. EXHIBIT 26 (f)(1) AMENDED AND RESTATED CHARTER OF PHOENIX LIFE INSURANCE COMPANY AMENDED AND RESTATED CHARTER PHOENIX LIFE INSURANCE COMPANY CORPORATE NAME ARTICLE I. The name of the Corporation shall hereafter be "Phoenix Life Insurance Company". The Corporation shall be a continuation of the corporate existence of Phoenix Home Life Mutual Insurance Company, which, simultaneously with the adoption of these bylaws, converted from a mutual life insurance company to a stock insurance company pursuant to Section 7312 of the Insurance Law of the State of New York. All references herein to the Insurance Law of the State of New York shall, to the extent applicable, be deemed to include any regulations promulgated thereunder. PRINCIPAL OFFICE ARTICLE II. The Corporation shall have a principal office in the County of Rensselaer in the State of New York. MEETINGS OF THE SHAREHOLDERS ARTICLE III. The Annual Meeting of the shareholders of the Company for the transaction of such business as the Board of Directors shall from time to time prescribe, shall be held on the third Monday of April or within sixty (60) days thereafter, as the Board of Directors may determine, either within or without the State of New York, as may be fixed from time to time by resolution of the Board of Directors and set forth in the notice or waiver of notice of the meeting. If the Board of Directors determines that the Annual Meeting shall be held on a date other than the third Monday of April, it shall notify the Superintendent of Insurance of the State of New York of the date of the Annual Meeting at least 60 days prior to the meeting. Special meetings of shareholders may be called at any time at the direction of the Chairperson or, in the event of his or her absence or disability, the Vice Chairperson or, in the event of his or her absence or disability, the Chief Executive Officer and shall be called at any time in accordance with the vote of the Directors, or at the written request of any three (3) of them. BUSINESS OF THE CORPORATION ARTICLE IV. The business of the Corporation and the kinds of insurance to be undertaken by it are: (1) "life insurance" meaning every insurance upon the lives of human beings, and every insurance appertaining thereto, including the granting of endowment benefits, additional benefits in the event of death by accident, additional benefits to safeguard the contract from lapse, accelerated payments of part or all of the death benefit or a special surrender value upon diagnosis (a) of terminal illness defined as a life expectancy of twelve months or less, or (b) of a medical condition requiring extraordinary medical care or treatment regardless of life expectancy, or upon (c) certification by a licensed health care practitioner of any condition which requires continuous care for the remainder of the insured's life in an eligible facility or at home when the insured is chronically ill as defined by Section 7702(B) of the Internal Revenue Code and regulations thereunder, provided the accelerated payments qualify under Section 101(g)(3) of the Internal Revenue Code and all other applicable sections of federal law in order to maintain favorable tax treatment or provide a special surrender value, upon total and permanent disability of the insured, and optional modes of settlement of proceeds. "Life insurance" also includes additional benefits to safeguard the contract against lapse in the event of unemployment of the insured. Amounts paid the insurer for life insurance and proceeds applied under optional modes of settlement or under dividend options may be allocated by the insurer to one or more separate accounts pursuant to Section 4240 of the Insurance Law; (2) "annuities" meaning all agreements to make periodical payments for a period certain or where the making or continuance of all or some of a series of such payments, or the amount of any such payment, depending upon the continuance of human life, except payments made under the authority of paragraph one hereof. Amounts paid to the insurer to provide annuities and proceeds applied under optional modes of settlement or under dividend options may be allocated by the insurer to one or more separate accounts pursuant to Section 4240 of the Insurance Law; and (3) "accidental and health insurance" meaning (a) insurance against death or personal injury by accident or by any specified kind or kinds of accident and insurance against sickness, ailment or bodily injury, including insurance providing disability benefits pursuant to article nine of the workers' compensation law, except as specified in item (b) hereof; and (b) non-cancelable disability insurance, meaning insurance against disability resulting from sickness, ailment or bodily injury (but excluding insurance solely against accidental injury) under any contract which does not give the insurer the option to cancel or otherwise terminate the contract at or after one year from its effective date or renewal date; as authorized by and under Charter and Paragraphs 1, 2 and 3 of Section 1113(a) of the Insurance Law of the State of New York; and the Corporation is specifically empowered to accept and to cede reinsurance of any such risks or hazards. The Corporation may undertake such other reinsurance business as may be permitted to it by Section 1114 of said Insurance Law and such other kinds of business as permitted under Section 4205 of said Insurance Law. The Corporation shall also have the power and authority to provide general investment advisory and financial management services and to conduct and carry on any other kind or kinds of business permitted to be conducted by stock life insurance companies under the Insurance Law of the State of New 2 York, and to invest in affiliated entities to the extent permitted by said Insurance Law, as well as the general rights, powers and privileges now or hereafter granted by the Insurance Law of the State of New York or any other law applicable to stock life insurance companies having power to do the kinds of business herein above referred to and any and all other rights, powers and privileges of the Corporation as the same may now or hereafter be declared by applicable law. The Corporation may exercise such powers outside New York to the extent permitted by the laws of the particular jurisdiction. Policies or other contracts may be issued stipulated to be participating or non-participating; and they may be with or without seal. ARTICLE V. The amount of capital of the Corporation shall be TEN MILLION DOLLARS ($10,000,000.00), consisting of 10,000 shares of common stock with a par value of ONE THOUSAND DOLLARS ($1,000.00) per share. BOARD OF DIRECTORS ARTICLE VI. The care and direction of the affairs, business and property of the Corporation shall be vested in a Board of Directors consisting of not fewer than thirteen (13) nor more than thirty (30) directors, as may be determined from time to time by the Board of Directors. In no case, shall a decrease in the number of Directors shorten the term of any incumbent Director. Each Director shall be at least eighteen (18) years of age and at all times the majority shall be citizens and residents of the United States. Not fewer than two (2) Directors shall be residents of the State of New York. The Board of Directors will have the power to make from time to time such bylaws, rules and regulations for the transaction of business of the Corporation and the conduct of its affairs, not inconsistent with this Charter and the laws of the State of New York, as may be deemed expedient, and to amend or repeal such bylaws, rules and regulations. ELECTION OF DIRECTORS ARTICLE VII. The Directors of the Corporation shall be elected by the shareholders as prescribed by law and the bylaws of the Corporation. The officers of the Corporation shall be elected or appointed by the Board of Directors. An annual election of Directors shall be held on such date and at such time each year as the Board of Directors may from time to time determine, which election shall be at the home office of the Corporation in the manner prescribed by law, and the Directors so elected shall hold office for one year and until their respective successors shall have been elected and qualified. The Directors shall be chosen and elected by the plurality of the whole number of shares voted. 3 Vacancies on the Board of Directors, including vacancies resulting from any increase in the authorized number of directors, shall be filled by the Board of Directors. PERPETUAL DURATION ARTICLE VIII. The duration of the Corporation shall be perpetual. LIMITATION OF LIABILITY ARTICLE IX. No Director shall be personally liable to the Corporation or any of its shareholders or any of its policyholders for damages for any breach of duty as a Director, provided, however, that the foregoing provision shall not eliminate or limit (i) the liability of a Director if judgment or other final adjudication adverse to the Director establishes that the Director personally gained in fact a financial profit or other advantage to which he or she was not legally entitled or that the Director's acts or omissions were in bad faith or involved intentional misconduct or were acts or omissions (a) which the Director knew or reasonably should have known violated the Insurance Law of the State of New York, or (b) which violated a specific standard of care impose on Directors directly, and not by reference, by a provision of the Insurance Law of the State of New York, or (c) which constituted a knowing violation of any other law; or (ii) the liability of a Director for any act or omission prior to the adoption of this Article IX. 4 EX-99.26.F.2 11 fe_71146-ex26f2.txt BYLAWS OF PHOENIX LIFE INSURANCE COMPANY EXHIBIT 26 (f)(2) BYLAWS OF PHOENIX LIFE INSURANCE COMPANY AMENDED AND RESTATED BYLAWS PHOENIX LIFE INSURANCE COMPANY EFFECTIVE: DECEMBER 1, 2004 ARTICLE I Meetings of the Shareholders ---------------------------- ANNUAL MEETINGS AND SPECIAL MEETINGS SECTION 1.1 The Annual Meeting of the shareholders of the Company for the transaction of such business as the Board of Directors shall from time to time prescribe, shall be held on the third Monday of April or within sixty (60) days thereafter, as the Board of Directors may determine, either within or without the State of New York, as may be fixed from time to time by resolution of the Board of Directors and set forth in the notice or waiver of notice of the meeting. If the Board of Directors determines that the Annual Meeting shall be held on a date other than the third Monday of April, it shall notify the Superintendent of Insurance of the State of New York of the date of the Annual Meeting at least 60 days prior to the meeting. Special meetings of shareholders may be called at any time at the direction of the Chairperson or, in the event of his or her absence or disability, the Vice Chairperson or, in the event of his or her absence or disability, the Chief Executive Officer and shall be called at any time in accordance with the vote of the Directors, or at the written request of any three (3) of them. CHAIRPERSON, VICE CHAIRPERSON OR SECRETARY OF MEETINGS SECTION 1.2 The person designated pursuant to Section 2.10 hereof to preside at meetings of the Board of Directors shall act as Chairperson or, in the event of his or her absence or disability, as Vice Chairperson, of the meeting. The Secretary of the Board of Directors, unless he or she is absent or elects not to serve, shall act as the secretary of the meeting. Unless otherwise voted, the order of business at the meeting shall be as prescribed by the Chief Executive Officer or by such other person as may be presiding. ARTICLE II Board of Directors ------------------ NUMBER, QUORUM AND ADJOURNMENTS SECTION 2.1 The authorized number of Directors of the Company shall be such number, not fewer than thirteen (13) nor more than thirty (30), as may be determined by a majority of the authorized number of Directors immediately prior to any such determination. No decrease in the authorized number of Directors shall shorten the term of any incumbent Director. The number of officers and salaried employees who are Directors shall at all times be less than a quorum of the Board of Directors. A majority of the authorized number of Directors, at least one (1) of whom shall be a person as described in Section 1202(b)(1) of the New York Insurance law (hereinafter referred to in these Bylaws as "Independent Director(s)"), shall constitute a quorum for the transaction of business. Except as otherwise provided by law or these Bylaws, the vote of a majority of the Directors present at the time of the vote, if a quorum is present at such time, shall be the act of the Board of Directors. A majority of the Directors present, whether or not a quorum shall be present, may adjourn any meeting. Notice of the time and place of an adjourned meeting of the Board of Directors shall be given if and as determined by a majority of the Directors present at the time of the adjournment. REGULAR BOARD OF DIRECTORS MEETINGS SECTION 2.2 The Board of Directors shall hold at least such number of meetings in each calendar year as may be required by law, but in any event, no fewer than four (4) regular meetings each year. Provided that at least one (1) of the regular meetings of the Board of Directors in a calendar year is or will be held within the State of New York, the other meetings of the Board in such calendar year may be held at such place within the United States or Canada in a jurisdiction in which the Company is licensed to do business on such dates and at such hours as the Board of Directors may from time to time determine. Except as otherwise required by law or these Bylaws, notice of regular meetings need not be given. SPECIAL BOARD MEETINGS AND WAIVER OF NOTICE SECTION 2.3 Special meetings of the Board of Directors shall be held whenever called by the Chief Executive Officer or by any three (3) Directors. Notice of each such special meeting shall be mailed to each Director at such Director's residence or usual place of business or other address filed with the Secretary of the Board of Directors for such purpose, or shall be sent to such Director by any form of telecommunication, or be delivered or given to such Director personally or by telephone, not later than the second day preceding the day on which such meeting is to be held. Notice of any meeting of the Board of Directors need not, however, be given to any Director who submits a signed waiver of notice, whether before or after the meeting, or who attend the meeting without protesting, prior thereto or at its commencement, the lack of notice. Every such notice shall state the time and place but, except as otherwise required by law or these Bylaws, need not state the purpose of the meeting. ELECTION OF DIRECTORS SECTION 2.4 The annual election of Directors shall be held at the Annual Meeting described in Section 1.1. The Directors of the Company shall be elected by the shareholders as prescribed by law. QUALIFICATION OF DIRECTORS AND TERM SECTION 2.5 No person may stand for election or re-election or be appointed as a Director after attaining the age of seventy (70) years and the term of office of each Director who attains the age of seventy (70) years shall expire on the date of the annual election next occurring after such Director has attained such age, provided, however, that with the exception of the Chief Executive Officer, the term of a Director who is an Officer of the Company shall expire on the date that such Director retires or resigns as an Officer of the Company. Directors shall be elected 2 by a plurality of the votes cast and shall hold office until the next annual election of Directors and until the election and qualification of their respective successors. The foregoing notwithstanding, to the extent any Director fails to conduct himself or herself in accordance with such written standards as may be established from time to time by the Board of Directors, then such Director may be removed through affirmative vote of at least two-thirds of the remaining Directors. ORGANIZATION MEETING OF DIRECTORS SECTION 2.6 As soon as practicable following the Annual Meeting of the Company, the Directors shall commence a regular meeting of the Board of Directors which shall be the Organization Meeting of the Board of Directors. At such meeting, the Board of Directors shall elect Officers to take such other actions as they deem appropriate, including reviewing the annual report, appointing an auditor, and appointing Directors to the Board of Directors committees. PARTICIPATION BY TELEPHONE SECTION 2.7 Any one (1) or more members of the Board of Directors or any committee thereof may participate in any meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting of the Board of Directors or such committee for quorum and voting purposes. ACTION WITHOUT A BOARD OF DIRECTORS MEETING SECTION 2.8 If in the opinion of the Chief Executive Officer circumstances exist which require the immediate taking of any action which is required or permitted to be taken by the Board of Directors or any committee thereof, such action may be taken without a meeting if all members of the Board of Directors or such committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the Board of Directors or such committee shall be filed with the minutes of the proceedings of the Board of Directors or committee. BOARD OF DIRECTORS VACANCIES SECTION 2.9 Any vacancy in the Board of Directors, including any vacancy resulting from an increase in the authorized number of Directors, may be filled, until the next annual election of Directors, at any regular or special meeting of the Board of Directors by the affirmative vote of a majority of the remaining Directors. 3 CHAIRPERSON OF THE BOARD OF DIRECTORS, VICE CHAIRPERSON AND SECRETARY SECTION 2.10 At the Organization Meeting, the Board of Directors may elect a Chairperson of the Board of Directors, who shall be an officer of the Company and who shall discharge such duties as may be assigned from time to time by the Directors. The Board of Directors also may elect a Vice Chairperson of the Board of Directors, who shall be an officer of the Company and who shall discharge such duties as may be assigned from time to time by the Directors. The Chairperson or, in the event of his or her absence or disability, the Vice Chairperson, shall preside at all the meetings of the Board of Directors and, in his or her absence or disability, the President of the Company shall preside. In the absence of the persons above designated to preside at a meeting, the Board of Directors shall appoint a Chairperson pro tem. At the Organization Meeting, the Board of Directors shall elect a Secretary of the Board of Directors, who shall attend the meetings of the Board of Directors, shall keep the minutes of such meetings, shall send notice thereof, if any, and shall perform such other duties as may be attendant to such office. The Secretary of the Board of Directors need not be a member of the Board of Directors. If at any time the Secretary is absent or unable to discharge such duties, the Board of Directors shall appoint a Secretary pro tem. ARTICLE III Committees ---------- STANDING COMMITTEES SECTION 3.1 The Board of Directors shall have the following standing committees, each consisting of not fewer than five (5) Directors, as shall be determined by the Board of Directors: Audit Committee Executive Committee Human Resources Committee Investment Committee Nominating Policyholder Affairs Committee All members of the Audit Committee, the Human Resources Committee and the Nominating Committee shall be Independent Directors. At least one-third of the members of each other standing committee shall be Independent Directors. DESIGNATION OF MEMBERS AND CHAIRPERSONS OF STANDING COMMITTEES SECTION 3.2 At its Organization Meeting each year, the Board of Directors, by resolution adopted by a majority of the then authorized number of Directors, shall designate from among 4 the Directors the members of the standing committees and from among the members of each such committee a chairperson thereof, each of whom shall serve as such, at the pleasure of the Board of Directors, so long as they shall continue in office as Directors, and through the next succeeding Annual Meeting of the Company. The Board of Directors may by similar resolution designate one (1) or more Directors as alternate members of such committees, who may replace any absent member or members at any meeting of such committees, but only an Independent Director may be designated as an alternate member to the Audit Committee, the Human Resources Committee or the Nominating Committee. Vacancies in the membership or chairperson of any standing committee may be filled in the same manner as the original designations at any regular or special meeting of the Board of Directors, and the Chief Executive Officer may designate from among the remaining members of any standing committee whose chairperson is vacant a chairperson who shall serve until a successor is designated by the Board of Directors. NOTICES OF TIMES OF MEETING OF STANDING COMMITTEES AND PRESIDING MEMBERS SECTION 3.3 Meetings of each standing committee shall be held upon call of the Chief Executive Officer, or upon call of the chairperson of such standing committee or of two members of such standing committee. Meetings of each standing committee may also be held at such other times as such committee may determine. Meetings of a standing committee shall be held at such places and upon such notice as such committee may determine or as may be specified in the calls of such meetings. Any such chairperson, if present, or such member or members of each committee may be designated by the Chief Executive Officer, shall preside at meetings thereof or, in the event of the absence or disability of any thereof or failing such designation, the committee shall select from among its members present a presiding Member. QUORUM SECTION 3.4 At each meeting of any committee there shall be present to constitute a quorum for the transaction of business at least a majority of the members of such committee, at least one (1) of whom is an Independent Director. Any alternate member who is replacing an absent member shall be counted in determining whether a quorum is present. The vote of a majority of the members present at a meeting of any standing committee at the time of the vote, if a quorum is present at such time, shall be the act of such committee. STANDING COMMITTEE MINUTES SECTION 3.5 Each of the standing committees shall keep minutes of its meetings, which shall be reported to the Board of Directors at its regular meetings and, if called for by the Board of Directors, at any special meeting. EXECUTIVE COMMITTEE SECTION 3.6 The Executive Committee shall consist of five (5) or more Directors, as the Board of Directors may determine from time to time, a majority of whom shall be Independent 5 Directors. This Committee shall have general power to act for the Board of Directors in the intervals between meetings of the Board of Directors on all matters of policy and direction relating to the conduct of the affairs of the Company, subject to such limitations as the Board may from time to time impose. INVESTMENT COMMITTEE SECTION 3.7 The Investment Committee shall consist of five (5) or more Directors, as the Board of Directors may determine from time to time, a majority of whom shall be Independent Directors. This Committee shall review the investment policies and programs of the Company, including, but not limited to, the purchase and sale of bonds, stocks, other securities, real estate, mortgages and all other investments. The Investment Committee shall supervise the financial affairs of the Company. Except as otherwise ordered by the Board of Directors (i) no investment or loan, other than a policy loan and no sale, assignment, exchange, extension or transfer thereof, shall be made unless the same has been authorized or approved by the Investment Committee; and (ii) the Investment Committee shall designate from time to time depositories of the Company's funds. AUDIT COMMITTEE SECTION 3.8 The Audit Committee shall consist of five (5) or more Directors, as the Board of Directors may determine from time to time, all of whom shall be Independent Directors. The Audit Committee shall, prior to the last meeting of the Board of Directors in each calendar year, recommend to the Board of Directors the selection of independent certified public accountants for the ensuing fiscal year. This Committee shall engage such independent certified public accountants selected by the Board of Directors to audit and examine the financial position of the Company and shall prescribe the scope of such audit and of any internal audit. It shall review the Company's financial condition, and the scope and results of the independent audit and any internal audit, and shall from time to time confer with such independent certified public accounts and with management and review recommendations of such independent accountants and management with respect to the business of the Company and the business of any majority-owned subsidiary of the Company. The Audit Committee shall report to the Board of Directors upon the annual report of such independent certified public accountants and at such other times as the Audit Committee may deem necessary. HUMAN RESOURCES COMMITTEE SECTION 3.9 The Human Resources Committee shall consist of five (5) or more Directors, as the Board of Directors may determine from time to time, all of whom shall be Independent Directors. This Committee shall exercise general supervision of compensation and personnel administration and all activities conducted by the Company in the interest of the health, welfare and safety of Company personnel, shall evaluate the performance of officers deemed by such Committee to be principal officers, and shall make recommendations to the Board of Directors as to the selection of and compensation payable to such principal officers. 6 POLICYHOLDER AFFAIRS COMMITTEE SECTION 3.10 The Policyholder Affairs Committee shall consist of five (5) or more Directors as the Board of Directors may determine from time to time, a majority of whom shall be Independent Directors. This Committee shall be responsible for matters relating to the interests of the policyholders and customers of the Company and shall exercise general supervision over the Company's policies and practices with respect to its insurance contracts, including both those pertaining to policyholder dividends and surplus generally and those pertaining to the insurance contracts in the closed block of contracts created pursuant to the Company's conversion from a mutual life insurance company to a stock insurance company. Annually the Committee shall make a written report to the Board of Directors recommending for the ensuing year the interest rates payable in funds held by the Company under policies or other contracts entitled by their terms to such interest. NOMINATING COMMITTEE SECTION 3.11 The Nominating Committee shall consist of five (5) or more Directors, as the Board of Directors may determine from time to time, all of whom shall be Independent Directors. This Committee shall have responsibility for nominating candidates for Director for election by shareholders and shall make recommendations to the Board of Directors with respect to the filling of vacancies on the Board of Directors. SPECIAL COMMITTEES SECTION 3.12 The Board of Directors may from time to time, by resolution adopted by a majority of the entire Board of Directors, designate one (1) or more Directors to serve as a special committee of the Board of Directors to act upon such matters permitted by law as the Board of Directors shall specify in such resolution. Each special committee, except as otherwise prescribed by law, shall have or may exercise the authority of the Board of Directors to the extent provided in the resolution establishing such committee. The members of the committee shall serve at the pleasure of the Board of Directors. The Board of Directors shall designate one (1) of the members of each special committee to serve as chairperson thereof. All provisions of Sections 3.3, 3.4 and 3.5 of these Bylaws shall apply to special committees. Nothing herein shall be deemed to prevent the Chief Executive Officer from appointing one (1) or more special committees of directors to advise him or her on any matter, provided that no such committee shall have or exercise any authority of the Board of Directors. ARTICLE IV Officers -------- PRINCIPAL OFFICERS SECTION 4.1 The Board of Directors shall determine who shall act as Chief Executive Officer of the Company. In its discretion, the Board of Directors may also designate a Chief 7 Operating Officer. The Board of Directors in its discretion may also from time to time designate one or more other officers as principal officers. CHIEF EXECUTIVE OFFICER SECTION 4.2 The Chief Executive Officer of the Company shall have the general executive management of its affairs, and may decide upon and execute all matters not otherwise covered by action of the Board of Directors or Executive Committee or more specifically provided for in the Bylaws. In the absence of action by the Board of Directors, the Chief Executive Officer may from time to time prescribe and assign such duties, functions and authority among officers or other employees and representatives as he or she shall determine are necessary or desirable for the proper conduct of the business of the Company. CHIEF OPERATING OFFICER SECTION 4.3 The Chief Operating Officer, if any, shall assist the Chief Executive Officer in the execution of his or her duties and shall have such other duties as the Board of Directors or the Chief Executive Officer may from time to time determine. PRESIDENT AND OTHER OFFICERS SECTION 4.4 At each Organization Meeting, the Board of Directors shall elect a President, who shall hold office until the next Organization Meeting and until the election of a successor or until his or her earlier death, removal or resignation. The President may also serve as the Chief Executive Officer or Chief Operating Officer. If a vacancy occurs in the office of President for any reason, such vacancy shall be filled by the Board of Directors at any regular or special meeting of the Board of Directors. In addition to the President, the Board of Directors shall elect or appoint such other officers, including a Secretary, one (1) or more Assistant Secretaries and one (1) or more Vice Presidents as it may determine for the conduct of the business of the Company. Any two (2) or more offices may be held by the same person, except the offices of President and Secretary. Officers other than the Chief Executive Officer shall have such powers and perform such duties as may be assigned to them by these Bylaws or by or pursuant to authorization of the Board of Directors or the Chief Executive Officer. The Board of Directors may, in its discretion, delegate to the Chief Executive Officer authority appoint and discharge any officers other than principal officers. Notwithstanding any such delegation to the Chief Executive Officer, all officers shall hold office at the pleasure of the Board of Directors, which retains authority to terminate any officer at any time. A vacancy in any office may be filled by the Board of Directors at any meeting. 8 ARTICLE V Execution of Paper ------------------ INSTRUMENTS SECTION 5.1 Subject to such limitations as the Board of Directors may by resolution establish, any employee or officer designated for such purpose by the Chief Executive Officer or the Board of Directors, shall have power to execute all instruments in writing necessary or desirable for the Company to execute in the transaction and management of its business and affairs and to affix the corporate seal thereto. DISPOSITION OF FUNDS SECTION 5.2 All funds of the Company deposited in its name shall be subject to disposition by check or other means, in such manner as the Board of Directors may from time to time determine. CAPTION SIGNATURES ON POLICIES AND CERTAIN OTHER CONTRACTS SECTION 5.3 All policies of insurance, annuity contracts, policy endorsements and modifications (other than endorsement of the exercise of a right or option provided for in a policy) and all contracts incident, related or supplementary to policies of insurance and annuity contracts shall be signed by the Chairperson or, in his or her absence or disability, the Vice Chairperson, of the Board of Directors (if any), the President, a Vice President, the Secretary or an Assistant Secretary. Such signatures may be in facsimile. ARTICLE VI General ------- INDEMNIFICATION OF DIRECTORS AND OFFICERS SECTION 6.1 To the full extent permitted by the laws of the State of New York, the Company shall indemnify any person made or threatened to be made a party to any action, proceeding or investigation, whether civil or criminal, by reason of the fact that such person, or such person's testator or intestate: (1) is or was a Director, officer or employees of the Company; or (2) serves or served another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity at the request of the Company, and at the time of such services, was a director, officer or employee of the Company 9 against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with or as a result of such action, proceeding or investigation, or any appeal therein. Subject to applicable law, the indemnification provided in this Article VI shall not be deemed to be exclusive of any other rights to which a director, officer or employee of the Company seeking indemnification may be entitled. ARTICLE VII Amendment of Bylaws ------------------- SECTION 7.1 These Bylaws or any of them may be amended, altered or repealed by a vote of two-thirds of the Directors present at any regular or special meeting, provided that any such proposed amendment, alteration or repeal shall have been submitted in writing and filed with the Secretary of the Board of Directors at least thirty (30) days before being presented at such a meeting. The notice of the meeting at which action may be taken upon such proposal to amend, change or repeal these Bylaws shall contain a statement in general terms that such action has been proposed. Notwithstanding the foregoing, Section 6.1 of these Bylaws may not be amended, altered or repealed by the Board of Directors so as to affect adversely any then existing rights of any director, officer or other person designated therein. 10 EX-99.26.I.3 12 fe_71146-ex26i3.txt SECOND AMENDMENT TO SERVICE AGREEMENT EXHIBIT 26 (i)(3) SECOND AMENDMENT TO SERVICE AGREEMENT E> SECOND AMENDMENT TO ------------------- SERVICE AGREEMENT ----------------- THIS SECOND AMENDMENT is made by and among THE PHOENIX EDGE SERIES FUND, a Massachusetts business trust having a principal place of business located at 101 Munson Street, Greenfield, Massachusetts (hereinafter referred to as the "Fund"), and PHOENIX LIFE INSURANCE COMPANY, an insurance company domiciled in the State of New York and having a place of business located at One American Row, Hartford, Connecticut (hereinafter referred to as "PLIC"); PHL VARIABLE INSURANCE COMPANY, an insurance company domiciled in the State of Connecticut and having a place of business located at One American Row, Hartford, Connecticut; and PHOENIX LIFE AND ANNUITY COMPANY, an insurance company domiciled in the State of Connecticut and having a place of business located at One American Row, Hartford, Connecticut (for the purposes hereof, the immediately preceding insurance companies shall hereinafter be collectively referred to as the "Insurance Company") amends that certain Service Agreement between the Fund and Insurance Company dated January 1, 2003, as amended (the "Agreement") as follows: 1. Article 1, Section 1.02(a) is hereby amended by adding the following clauses thereto: (v) Cooperate with the Fund and facilitate the filing by the Fund and/or their respective officers and auditors of any and all certifications or attestations as required by the Sarbanes-Oxley Act of 2002, including, without limitation, furnishing such sub-certifications from relevant officers of the Insurance Company with respect to the services and record-keeping performed by the Insurance Company under the Agreement as the Fund shall reasonably request from time to time. (vi) Upon request, provide its written policies and procedures pursuant to Rule 38a-1 under the Investment Company Act of 1940 (the "1940 Act"), as amended, to the Fund's chief compliance officer for review and the Fund's board of trustees' approval. The Insurance Company further agrees to cooperate with the Fund in their review of such written policies and procedures, including without limitation furnishing such certifications and sub-certifications as the Fund shall reasonably request from time to time. (vii) Promptly notify the Fund in the event that a "material compliance matter" (as such term is defined pursuant to Rule 38a-1 under the 1940 Act) arises with respect the services it provides under the Agreement. 2. Except as herein above and hereinbefore modified, all provisions of the Agreement remain in full force and effect and are unchanged in all other respects. All initial capitalized terms used but not defined herein shall have such meaning as ascribed thereto in the Agreement, as amended. 3. This Amendment shall become effective as of the execution date set forth below. 4. This Amendment may be executed in one or more counterparts, each of which shall be deemed to be an original and, all of which, when taken together, shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto intending to be legally bound have caused this Amendment to be executed by their duly authorized officers or other representatives as of this 27th day of February, 2004. THE PHOENIX EDGE SERIES FUND By: /s/ Michael J. Gilotti --------------------------------------------- Name: Michael J. Gilotti Title: Executive Vice President PHOENIX LIFE INSURANCE COMPANY on behalf of the Variable Products division thereof By: /s/ John H. Beers ------------------------------------ Name: John H. Beers Title: Vice President PHL VARIABLE INSURANCE COMPANY By: /s/ John H. Beers ------------------------------------ Name: John H. Beers Title: Vice President PHOENIX LIFE AND ANNUITY COMPANY By: /s/ John H. Beers ------------------------------------ Name: John H. Beers Title: Vice President EX-99.26.I.4 13 fe_71146-ex26i4.txt THIRD AMENDMENT TO SERVICE AGREEMENT EXHIBIT 26 (i)(4) THIRD AMENDMENT TO SERVICE AGREEMENT THIS THIRD AMENDMENT TO SERVICE AGREEMENT ----------------------------------------- AMENDMENT made as of the 15th of November, 2004 amends that certain AGREEMENT (the "Agreement") dated January 1, 2003, amended November 11, 2003 and February 27, 2004, respectively, by and among THE PHOENIX EDGE SERIES FUND, a Massachusetts business trust having a principal place of business located at 101 Munson Street, Greenfield, Massachusetts, and PHOENIX LIFE INSURANCE COMPANY, an insurance company domiciled in the State of New York and having a place of business located at One American Row, Hartford, Connecticut; PHL VARIABLE INSURANCE COMPANY, an insurance company domiciled in the State of Connecticut and having a place of business located at One American Row, Hartford, Connecticut; and PHOENIX LIFE AND ANNUITY COMPANY, an insurance company domiciled in the State of Connecticut and having a place of business located at One American Row, Hartford, Connecticut as follows: 1. Schedule A is hereby deleted and Revised Schedule A attached hereto and made part hereof is substituted in lieu thereof. 2. Except as hereinabove modified, all other terms and conditions set forth in the Agreement shall be, and remain, in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be executed in their names and on their behalf under their seals by and through their duly authorized officers, as of the day and year first above written. ATTEST: THE PHOENIX EDGE SERIES FUND By: /s/ Matthew A. Swendiman By: /s/ Philip K. Polkinghorn -------------------------------- -------------------------------- Name: Matthew A. Swendiman Name: Philip K. Polkinghorn Title:Secretary Title:Executive Vice President
ATTEST: PHOENIX LIFE INSURANCE COMPANY ON BEHALF OF THE VARIABLE PRODUCTS DIVISION THEREOF By: /s/ John H. Beers By: /s/ Gina C. O'Connell -------------------------------- ------------------------------- Name: John H. Beers Name: Gina C. O'Connell Title:Secretary Title:Senior Vice President
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ATTEST: PHL VARIABLE INSURANCE COMPANY ON BEHALF OF THE VARIABLE PRODUCTS DIVISION THEREOF By: /s/ John H. Beers By: /s/ Gina C. O'Connell -------------------------------- ------------------------------- Name: John H. Beers Name: Gina C. O'Connell Title:Secretary Title:Senior Vice President ATTEST: PHOENIX LIFE AND ANNUITY COMPANY ON BEHALF OF THE VARIABLE PRODUCTS DIVISION THEREOF By: /s/ John H. Beers By: /s/ Gina C. O'Connell -------------------------------- ------------------------------- Name: John H. Beers Name: Gina C. O'Connell Title:Secretary Title:Senior Vice President
-2- REVISED SCHEDULE A (AS AMENDED NOVEMBER 2004) --------------------------------------------- FEE SCHEDULE The Administrative Service Fee will be based on the average daily net assets of the Fund, commencing on January 1, 2005 and shall be payable by the Fund within five (5) business days following the end of each month thereafter. For fiscal year 2005, the annual fee shall be 0.073%. The annual Administrative Service Fee shall be based on the following formula: ASFSeries = ICF divided by AUM where, ASFSeries refers to the annual Administrative Service Fee levied with respect to each respective Series, AUM refers to the average assets under management during the term hereof. ICF refers to the internal costs factor determined from year to year based upon such items as proportionate investor inquiry support; shareholder trading; subsequent deposits; transfer and surrender support; confirmation activities; quarterly statement processing; and internal support. -3- EX-99.26.K 14 fe_71146-ex26k.txt OPINION AND CONSENT OF JOSEPH P. DECRESCE EXHIBIT 26 (k) OPINION AND CONSENT OF JOSEPH P. DECRESCE, ESQ. To Whom It May Concern: I hereby consent to the reference to my name under the caption "Experts" in the Statement of Additional Information contained in Post-effective Amendment No. 29 to the Registration Statement on Form N-6 (File No. 033-23251) filed by Phoenix Life Variable Universal Life Account with the Securities and Exchange Commission under the Securities Act of 1933. As Counsel to the depositor, I am familiar with the variable life policies, which are the subject of this Form N-6 registration statement. In connection with this opinion, I have reviewed the contracts, the registration statement, the charter and by-laws of the company, relevant proceedings of the Board of Directors, and the provisions of New York insurance law relevant to the issuance of the Contracts. Based upon this review, I am of the opinion that the contracts, when issued, will be validly issued, and will constitute a legal and binding obligation of Phoenix Life Insurance Company. Very truly yours, /s/ Joseph P. DeCresce ---------------------- Joseph P. DeCresce Counsel Phoenix Life Insurance Company Dated: April 19, 2005 EX-99.26.N.1 15 fe_71146-ex26n1.txt INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM EXHIBIT 26 (n) (1) CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -------------------------------------------------------- We hereby consent to the use in this Post-Effective Amendment No. 29 under the Securities Act of 1933 and Amendment No. 18 under the Investment Company Act of 1940 to the registration statement on Form N-6 ("Registration Statement") of our reports dated March 31, 2005 and March 8, 2005, relating to the financial statements of Phoenix Life Variable Universal Life Account (Flex Edge, Flex Edge Success(R), Joint Edge(R) and Individual Edge(R)) and the consolidated financial statements of Phoenix Life Insurance Company, respectively, which appear in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement. /s/ PricewaterhouseCoopers LLP - ------------------------------ Hartford, Connecticut April 19, 2005 EX-99.26.N.2 16 fe_71146-ex26n2.txt OPINION AND CONSENT OF BRIAN A. GIANTONIO, ESQ. EXHIBIT 26 (n) (2) OPINION OF BRIAN A. GIANTONIO, ESQ. To Whom It May Concern: I hereby consent to the reference to my name under the caption "Experts" in the Statement of Additional Information contained in Post-effective Amendment No. 29 to the Registration Statement on Form N-6 (File No. 033-23251) filed by Phoenix Life Variable Universal Life Account with the Securities and Exchange Commission under the Securities Act of 1933. Very truly yours, /s/ Brian A. Giantonio ---------------------- Brian A. Giantonio, Vice President, Tax and ERISA Counsel Phoenix Life Insurance Company Dated: April 19, 2005 EX-99.26.O.1 17 fe_71146-ex26o1.txt REPRESENTATION LETTER EXHIBIT 26 (o)(1) REPRESENTATION LETTER REGARDING SEPARATE ACCOUNT FINANCIAL STATEMENTS OF PHOENIX LIFE INSURANCE COMPANY, ET AL March 18, 2005 Mr. Richard Sennett Office of the Chief Accountant Division of Investment Management Securities & Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 RE: SEPARATE ACCOUNT FINANCIAL STATEMENTS OF PHOENIX LIFE INSURANCE COMPANY, ET AL. Dear Mr. Sennett: As per your request, and as a follow-up to our recent conversations, this letter confirms our understanding that the Staff of the Division of Investment Management (the "Division") of the Securities and Exchange Commission (the "Commission") will not object if during the period from the date of this letter to May 1, 2006, and subject to the facts, conditions, and representations set forth below, separate account financial statements prepared in the manner described herein are included in (i) registration statements and pre-effective amendments for new variable annuity contracts and variable life insurance policies (the "variable contracts") issued by Phoenix Life Insurance Company and its affiliates (collectively, "Phoenix Life" or the "Company") and (ii) post-effective amendments for existing variable contracts. BACKGROUND In response to recent comments from the Staff in connection with the Staff's review of a pre-effective amendment on Form N-6 filed by Phoenix Life for a new variable life insurance policy, we provided the Staff with an explanation as to why the Company prepares a different set of financial statements for the separate account assets and liabilities pertaining to each variable contract the Company issues, rather than one set of financial statements pertaining to the assets and liabilities of the entire separate account. We have also discussed with you and your colleagues on the Staff your concern as to whether the financial statements Phoenix Life prepares pertaining to its separate accounts comply with the requirements of Item 23(a) of Form N-4 and Item 24(a) of Form N-6. In this regard, we understand that the Staff of the Division has taken the position that that the applicable items of Forms N-4 and N-6 require financial statements to be presented with respect to all of the assets and liabilities of a separate account rather than separately for the assets and liabilities of different variable contracts issued through the separate account. As we have discussed, we believe that the applicable items of Forms N-4 and N-6 are open to different interpretations. Phoenix Life has already begun an extensive conversion project that will permit it, as of May 1, 2006, to present separate account financial statements in accordance with the Staff's interpretation of Forms N-4 and N-6 described above. The conversion has been structured with specific milestones that the Company is confident will enable separate account financial statements to be presented in the new format no later than May 1, 2006 for inclusion in the Company's post-effective amendments going forward. As we have discussed, we do not believe it is feasible or prudent to attempt to complete the conversion before that time. Accordingly, we appreciate the Staff's determination not to object to the completion of the conversion project on the timetable originally established. This letter sets forth certain conditions and representations that the Staff has asked for in connection with this matter. Enclosed with this letter is a description of the timetable for the conversion project, including specific significant milestones. The Company has 5 separate accounts (811-03488; 811-08914; 811-04721; 811-09065; and 811-07835) and 36 products under those separate accounts. In addition, 45 financial statements are generated for these products. CONDITIONS AND REPRESENTATIONS 1. Phoenix Life represents that it has undertaken and is currently in the process of a conversion project to permit financial statements to be prepared for each of its separate accounts; 2. Phoenix Life represents that it will be converting to separate account financial statements in this new format as of 12/31/05; 3. Phoenix Life represents that it will be able to provide audited separate account financial statements in the new format for the May 1, 2006 update season; 4. Phoenix Life undertakes to file post-effective amendments by May 1, 2006 as necessary to add separate account financial statements in the new format to any registration statements and post-effective amendments that become effective on or after January 1, 2006 and prior to May 1, 2006; 5. Phoenix Life has provided the Staff with a timetable giving completed and estimated milestones of the conversion process. The Company represents that this timetable reflects the Company's best estimates and that the date for the final deliverable, that is, financial statements prepared in the new format, is May 1, 2006; 6. The Company undertakes to file this letter as an exhibit to each registration statement, pre-effective amendment, and post-effective amendment filed during the period from the date of this letter to May 1, 2006, that does not include separate account financial statements in the new format; and 7. The Company undertakes to file as EDGAR correspondence with each registration statement, pre-effective amendment, and post-effective amendment (i.e.as part of the EDGAR submission) filed during the period from the date of this letter to May 1, 2006 that does not include separate account financial statements in the new format, a "Tandy" letter stating that the Company acknowledges and agrees that the actions of the Staff in not objecting to the inclusion of separate account financial statements in the filing: (i) shall not foreclose the Commission from taking any action with respect to the matters set forth in this representation letter; (ii) do not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and (iii) may not be asserted by the Company as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. * * * If you have any questions or comments regarding this letter, please call the undersigned at 860.403.5862. Sincerely, /s/ Joseph DeCresce Joseph DeCresce cc: Sonny Oh W. Thomas Conner -----END PRIVACY-ENHANCED MESSAGE-----