As filed with the Securities and Exchange Commission on October 12, 2000
File No. ___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. [ ]
(Check appropriate box or boxes.)
------------------------
PHL Variable Accumulation Account
(Exact Name of Registrant)
PHL Variable 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)
------------------------
Dona D. Young, Esq.
PHL Variable Insurance Company
One American Row
Hartford, Connecticut 06102-5056
(Name and Address of Agent for Service)
------------------------
Copy to:
Edwin L. Kerr, Esq.
PHL Variable Insurance Company
One American Row
Hartford, CT 06102-5056
------------------------
Approximate date of proposed public offering:
December 29, 2000 or as soon thereafter as possible
------------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
------------------------
================================================================================
<PAGE>
PHOENIX HOME LIFE VARIABLE ACCUMULATION ACCOUNT
REGISTRATION
STATEMENT ON FORM N-4
CROSS REFERENCE SHEET
SHOWING LOCATION IN PROSPECTUS
AND STATEMENT OF ADDITIONAL INFORMATION
AS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
PART A INFORMATION REQUIRED IN A PROSPECTUS
FORM N-4 ITEM PROSPECTUS CAPTION
------------- ------------------
<S> <C>
1. Cover Page Cover Page
2. Definitions ..................................................... Special Terms
3. Synopsis ..................................................... Summary of Expenses; Contract Summary
4. Condensed Financial Information ................................... Financial Highlights
5. General Description of Registrant, Depositor and Portfolio PHL Variable and the Account; Investments of the
Companies Account; Voting Rights
6. Deductions and Expenses ........................................... Deductions and Charges; Sales of Immediate Variable
Annuity Contracts
7. General Description of Variable Annuity Contracts.................. The Immediate Variable Annuity; Purchase of Contracts;
Miscellaneous Provisions
8. Annuity Period .................................................... The Annuity Period
9. Death Benefits..................................................... Payment Upon Death
10. Purchases and Contract Value ...................................... Purchase of Contracts; Sales of Immediate Variable
Annuity Contracts
11. Redemptions ..................................................... Surrender of Contract; Partial Withdrawals; Free Look
Period
12. Taxes ..................................................... Federal Income Taxes
13. Legal Proceedings.................................................. Legal Matters
14. Table of Contents of the Statement of Additional Information....... SAI
PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
FORM N-4 ITEM SAI CAPTION
------------- -----------
15. Cover Page ..................................................... Cover Page
16. Table of Contents ................................................. Table of Contents
17. General Information and History ................................... Not Applicable
18. Services ..................................................... Not Applicable
19. Purchase of Securities Being Offered............................... Appendix
20. Underwriters ..................................................... Underwriter
21. Calculation of Performance Data.................................... Calculation of Yield and Return
22. Annuity Payments................................................... Calculation of Annuity Payments
23. Financial Statements .............................................. Financial Statements
</TABLE>
<PAGE>
TBD
Issued by
PHL VARIABLE INSURANCE COMPANY
IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT:
[envelope] PHOENIX VARIABLE PRODUCTS MAIL OPERATIONS
PO Box 8027
Boston, MA 02266-8027
[telephone] Tel. 800/541-0171
PROSPECTUS
This prospectus describes a single premium immediate fixed and variable annuity
contract. The contract is designed to provide you with retirement income. The
contract offers a variety of variable and fixed payment options.
You may allocate your premium and contract value to one or more of the
subaccounts of the Account and the Fixed Income Allocation. The assets of each
subaccount will be used to purchase, at net asset value, shares of a series in
the following designated funds. The portion of your premium allocated to the
Fixed Income Allocation will purchase fixed annuity payments.
THE PHOENIX EDGE SERIES FUND
----------------------------
MANAGED BY PHOENIX INVESTMENT COUNSEL, INC.
[diamond] Phoenix-Aberdeen International Series
[diamond] Phoenix-Engemann Capital Growth Series
[diamond] Phoenix-Engemann Nifty Fifty Series
[diamond] Phoenix-Engemann Small & Mid-Cap Growth Series
[diamond] Phoenix-Goodwin Money Market Series
[diamond] Phoenix-Goodwin Multi-Sector Fixed Income Series
[diamond] Phoenix-Hollister Value Equity Series
[diamond] Phoenix-Oakhurst Balanced Series
[diamond] Phoenix-Oakhurst Growth and Income Series
[diamond] Phoenix-Oakhurst Strategic Allocation Series
[diamond] Phoenix-Seneca Mid-Cap Growth Series
[diamond] Phoenix-Seneca Strategic Theme Series
MANAGED BY PHOENIX-ABERDEEN INTERNATIONAL ADVISORS, LLC
[diamond] Phoenix-Aberdeen New Asia Series
MANAGED BY DUFF & PHELPS INVESTMENT MANAGEMENT CO.
[diamond] Phoenix-Duff & Phelps Real Estate Securities Series
MANAGED BY PHOENIX VARIABLE ADVISORS, INC.
[diamond] Phoenix-Bankers Trust Dow 30 Series
[diamond] Phoenix-Bankers Nasdaq 100-Indes Series
[diamond] Phoenix-Federated U.S. Government Bond Series
[diamond] Phoenix-J.P. Morgan Research Enhanced Index Series
[diamond] Phoenix-Janus Equity Income Series
[diamond] Phoenix-Janus Flexible Income Series
[diamond] Phoenix-Janus Growth Series
[diamond] Phoenix-Morgan Stanley Focus Equity Series
[diamond] Phoenix-Sanford Bernstein Global Value Series
[diamond] Phoenix-Sanford Bernstein Mid-Cap Value Series
[diamond] Phoenix-Sanford Bernstein Small-Cap Value Series
THE ALGER AMERICAN FUND
-----------------------
MANAGED BY FRED ALGER MANAGEMENT, INC.
[diamond] Alger American Leveraged AllCap Portfolio
DEUTSCHE ASSET MANAGEMENT VIT FUNDS
-----------------------------------
MANAGED BY BANKERS TRUST COMPANY
[diamond] EAFE(R) Equity Index FunD
FEDERATED INSURANCE SERIES
--------------------------
MANAGED BY FEDERATED INVESTMENT MANAGEMENT COMPANY
[diamond] Federated Fund for U.S. Government Securities II
[diamond] Federated High Income Bond Fund II
FIDELITY(R) VARIABLE INSURANCE PRODUCTS
---------------------------------------
MANAGED BY FIDELITY MANAGEMENT AND RESEARCH COMPANY
[diamond] VIP Contrafund Portfolio
[diamond] VIP Growth Opportunities Portfolio
[diamond] VIP Growth Portfolio
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
----------------------------------------------------
MANAGED BY TEMPLETON GLOBAL ADVISORS LIMITED
[diamond] Templeton Growth Securities Fund -- Class 2
MANAGED BY TEMPLETON INVESTMENT COUNSEL, INC.
[diamond] Templeton Asset Strategy Fund -- Class 2
[diamond] Templeton International Securities Fund -- Class 2
MANAGED BY TEMPLETON ASSET MANAGEMENT, LTD.
[diamond] Templeton Developing Markets Securities Fund -- Class 2
1
<PAGE>
MANAGED BY FRANKLIN MUTUAL ADVISORS, LLC
[diamond] Mutual Shares Securities Fund -- Class 2
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
---------------------------------------
MANAGED BY MORGAN STANLEY ASSET MANAGEMENT
[diamond] Technology Portfolio
WANGER ADVISORS TRUST
---------------------
MANAGED BY WANGER ASSET MANAGEMENT, L.P.
[diamond] Wanger Foreign Forty
[diamond] Wanger International Small Cap
[diamond] Wanger Twenty
[diamond] Wanger U.S. Small Cap
It may not be in your best interest to purchase a contract to replace an
existing annuity contract or life insurance policy. You must understand the
basic features of the proposed contract and your existing coverage before you
decide to replace your present coverage. You must also know if the replacement
will result in any tax liability.
This prospectus is valid only if accompanied or preceded by current prospectuses
for the funds.
The contract is not a deposit or obligation of, underwritten or guaranteed by,
any financial institution, credit union or affiliate. It is not federally
insured by the Federal Deposit Insurance Corporation or any other state or
federal agency. Contract investments are subject to risk, including the
fluctuation of contract values and possible loss of principal.
The Securities and Exchange Commission ("SEC") has not approved or 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 a prospective investor ought
to know before investing. These prospectuses should be kept for future
reference. A Statement of Additional Information ("SAI") has been filed with the
SEC and is available free of charge by calling Variable Annuity Operations at
800/541-0171.
2
<PAGE>
TABLE OF CONTENTS
Heading Page
------------------------------------------------------------------
SPECIAL TERMS............................................. 4
SUMMARY OF EXPENSES....................................... 5
CONTRACT SUMMARY.......................................... 11
FINANCIAL HIGHLIGHTS...................................... 12
PERFORMANCE HISTORY....................................... 12
THE IMMEDIATE VARIABLE ANNUITY............................ 12
PHL VARIABLE AND THE ACCOUNT ............................. 12
INVESTMENTS OF THE ACCOUNT................................ 12
The Phoenix Edge Series Fund.......................... 12
The Alger American Fund............................... 14
Deutsche Asset Management VIT Funds................... 14
Federated Insurance Series............................ 14
Fidelity Variable Insurance Products.................. 14
Franklin Templeton Variable Insurance
Products Trust........................................ 15
The Universal Institutional Funds, Inc................ 15
Wanger Advisors Trust................................. 15
Investment Advisors................................... 15
Services of the Advisors.............................. 15
FIA....................................................... 16
PURCHASE OF CONTRACTS..................................... 16
DEDUCTIONS AND CHARGES.................................... 16
Deductions from the Separate Account.................. 16
Tax................................................. 16
Surrender Charges................................... 16
Risk and Administrative Fee......................... 16
Payment Charge...................................... 16
Reduced Charges, Increased Bonus Payments and Enhanced
Guaranteed Interest Rates............................. 17
Other Charges......................................... 17
THE ANNUITY PERIOD........................................ 17
PAYMENT OPTIONS ...................................... 17
Option A--Single Life Annuity........................ 17
Option B--Single Life Annuity with Period Certain.. 17
Option C - Joint Survivor Life Annuity 17
Option D--Joint Survivor Life Annuity with Period 17
Certain.............................................
Option E--Annuity for a Specified Period............. 18
Option F--Life Expectancy Annuity ................... 18
Option G--Unit Refund Life Annuity................... 18
Other Options and Rates............................. 18
Other Conditions.................................... 18
Payment Upon Death.................................... 18
ADDITIONAL RIDER BENEFITS................................. 18
Guaranteed Minimum Payment Rider.................... 19
Optional Programs and Benefits........................ 19
Transfers........................................... 19
SURRENDER OF CONTRACT: PARTIAL WITHDRAWALS................ 20
LAPSE OF CONTRACT......................................... 21
MISCELLANEOUS PROVISIONS.................................. 21
Assignment............................................ 21
Deferment of Payment ................................. 21
Free Look Period...................................... 21
Amendments to Contracts............................... 21
Substitution of Fund Shares........................... 21
Ownership of the Contract............................. 21
FEDERAL INCOME TAXES...................................... 21
Introduction.......................................... 21
Income Tax Status..................................... 22
Taxation of Annuities in General--Non-Qualified Plans.. 22
Surrenders or Withdrawals........................... 22
Penalty Tax on Certain Surrenders and Withdrawals... 22
Additional Considerations............................. 22
Diversification Standards ............................ 23
Individual Retirement Annuity......................... 24
IRAs................................................ 24
Penalty Tax on Certain Surrenders and 24
Withdrawals from IRAs...............................
Seek Tax Advice..................................... 24
SALES OF CONTRACTS........................................ 25
STATE REGULATION.......................................... 25
REPORTS................................................... 25
VOTING RIGHTS............................................. 25
LEGAL MATTERS............................................. 25
SAI....................................................... 26
APPENDIX A--PERFORMANCE HISTORY........................... 27
APPENDIX B--DEDUCTIONS FOR PREMIUM TAXES.................. 29
APPENDIX C--ILLUSTRATION OF VALUES........................ 30
3
<PAGE>
SPECIAL TERMS
--------------------------------------------------------------------------------
The following is a list of terms and their meanings when used in this
prospectus.
ACCOUNT (VA ACCOUNT): PHL Variable Accumulation Account.
ACCUMULATION UNIT: A standard of measurement for the Phoenix-Goodwin Money
Market subaccount used to determine the value of a contract during the free
look period prior to the start of annuity payments.
ACCUMULATION UNIT VALUE: The value of one accumulation unit was set to 1.0000
on the date assets were first allocated to the Phoenix-Goodwin Money Market
subaccount. The value of one accumulation unit on any subsequent valuation
date is determined by multiplying the immediately preceding accumulation unit
value by the applicable net investment factor for the valuation period ending
on such valuation date.
ANNUITANT: The primary person whose life is used as the measuring life under the
contract. Also see Joint Annuitant.
ANNUITY DATE: The date we calculate and make the first annuity payment.
ANNUITY OPTION: The provisions under which we make a series of annuity payments
to the annuitant or other payee, such as Variable Payment Life Annuity. See
"Payment Options."
ANNUITY PAYMENT: The amount we pay on each payment calculation date. It is the
sum of the Fixed Annuity Payment and the variable annuity payment.
ANNUITY UNIT: A standard of measurement used in determining the amount of each
variable annuity payment.
ASSUMED INTEREST RATE: The rate used to determine the variable annuity payment.
COMMUTED VALUE: The present value of any remaining guaranteed annuity payments.
This amount is calculated using the Assumed Interest Rate for variable annuity
payments or the underlying interest rate for fixed annuity payments.
CONTRACT: The single premium variable immediate annuity contract described in
this prospectus.
CONTRACT OWNER (OWNER, YOU, YOUR): Usually the person or entity to whom we issue
the contract. The contract owner has the sole right to exercise all rights and
privileges under the contract as provided in the contract. The owner may be the
annuitant, an employer, a trust or any other individual or entity specified in
the contract application. However, under contracts used with certain
tax-qualified plans, the owner must be the annuitant. A husband and wife may be
designated as joint owners, and if such a joint owner dies, the other joint
owner becomes the sole owner of the contract. If no owner is named in the
application, the annuitant will be the owner.
CONTRACT VALUE: The total value of sum of the subaccounts and the Fixed Income
Allocation on any valuation date.
FIA: The Fixed Income Allocation which is an investment option within our
General Account.
FIXED ANNUITY PAYMENT: A benefit providing periodic payments of a fixed dollar
amount throughout the annuity period. This benefit does not vary with or reflect
the investment performance of any subaccount.
FUNDS: The Phoenix Edge Series Fund, The Alger American Fund, Deutsche Asset
Management VIT Funds, Federated Insurance Series, Fidelity Variable Insurance
Products, Franklin Templeton Variable Insurance Products Trust The Universal
Institutional Funds, Inc., and Wanger Advisors Trust.
JOINT ANNUITANT: A person other than the Annuitant on whose life annuity
payments may also be based.
ISSUE DATE: The date that the premium payment is invested under a contract.
NET ASSET VALUE: Net asset value of a series' shares is computed by dividing the
value of the net assets of the series by the total number of series outstanding
shares.
NET PREMIUM: The premium less any applicable tax.
PAYEE: The person you designate to receive annuity payments.
PAYMENT UPON DEATH: The obligation of PHL Variable under a contract to make a
payment on the death of annuitant.
PHL VARIABLE (OUR, US, WE, COMPANY): PHL Variable Insurance Company.
PREMIUM: The amount you pay when you purchase a contract. We require a minimum
premium of $35,000.
SERIES: A separate investment portfolio of a fund.
SURRENDER VALUE: The Commuted Value less any applicable surrender charge.
VAO: Variable Annuity Operations.
VALUATION DATE: A valuation date is every day the New York Stock Exchange
("NYSE") is open for trading.
VARIABLE ANNUITY PAYMENT: An annuity providing payments that vary in amounts,
according to the investment experience of the selected subaccounts.
VPMO: The Variable Products Mail Operations division of PHL Variable that
receives and processes incoming mail for Variable Annuity Operations.
4
<PAGE>
SUMMARY OF EXPENSES
CONTRACT OWNER TRANSACTION EXPENSES ALL SUBACCOUNTS
---------------
Surrender Charges (as a percentage of amount withdrawn):(1)
Age of Premium in Complete Years 0-1............................... 7%
Age of Premium in Complete Years 1-2............................... 6%
Age of Premium in Complete Years 2-3............................... 5%
Age of Premium in Complete Years 3-4............................... 4%
Age of Premium in Complete Years 4-5............................... 3%
Age of Premium in Complete Years 5-6............................... 2%
Age of Premium in Complete Years 6-7............................... 1%
Age of Premium in Complete Years 7 and thereafter ................. None
ANNUAL ADMINISTRATIVE CHARGE
Maximum............................................................ $24
ANNUAL SEPARATE ACCOUNT EXPENSES (as a percentage of average account value)
Risk and Administrative Fee........................................1.40%
(1) A surrender charge is taken from the proceeds when a contract is surrendered
or when an amount is withdrawn if the premium payment has not been held
under the contract for a certain period of time. See "Deductions and
Charges--Surrender Charges."
5
<PAGE>
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES (AS A PERCENTAGE OF FUND AVERAGE NET ASSETS)
====================================================================================================================================
OTHER EXPENSES TOTAL EXPENSES TOTAL EXPENSES
SERIES MANAGEMENT RULE 12B-1 BEFORE BEFORE AFTER
FEES FEES REIMBURSEMENT(1) REIMBURSEMENT REIMBURSEMENT(2)
------------------------------------------------------------------------------------------------------------------------------------
THE PHOENIX EDGE SERIES FUND
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Phoenix-Aberdeen International .75% N/A .26% 1.01% 1.01%
Phoenix-Aberdeen New Asia 1.00% N/A 1.39% 2.39% 1.25%
Phoenix-Bankers Trust Dow 30(4) .35% N/A 1.40%(4) 1.75%(4) .50%
Phoenix-Bankers Trust Nasdaq 100-Index(4) .35% N/A .30%(4) .65%(1) .50%
Phoenix-Duff & Phelps Real Estate Securities .75% N/A .56% 1.31% 1.00%
Phoenix-Engemann Capital Growth .62% N/A .06% .68% .68%
Phoenix-Engemann Nifty Fifty .90% N/A .53% 1.43% 1.05%
Phoenix-Engemann Small & Mid-Cap Growth(4) .90% N/A .53% 1.36%(1) 1.15%
Phoenix-Federated U.S. Government Bond .60% N/A 1.70%(4) 2.30%(4) .75%
Phoenix-Goodwin Money Market .40% N/A .17% .57% .55%
Phoenix-Goodwin Multi-Sector Fixed Income .50% N/A .21% .71% .65%
Phoenix-Hollister Value Equity .70% N/A 1.33% 2.03% .85%
Phoenix-J.P. Morgan Research Enhanced Index .45% N/A .30% .75% .55%
Phoenix-Janus Equity Income .85% N/A 1.40%(4) 2.25%(4) 1.00%
Phoenix-Janus Flexible Income .80% N/A 1.65%(4) 2.45%(4) .95%
Phoenix-Janus Growth .85% N/A 1.05%(4) 1.90%(4) 1.00%
Phoenix-Morgan Stanley Focus Equity .85% N/A 1.30%(4) 2.15%(4) 1.00%
Phoenix-Oakhurst Balanced .54% N/A .16% .70% .70%
Phoenix-Oakhurst Growth and Income .70% N/A .31% 1.01% .85%
Phoenix-Oakhurst Strategic Allocation .58% N/A .12% .70% .70%
Phoenix-Sanford Bernstein Global Value(12) 1.05% N/A 1.53% 2.58% 1.20%
Phoenix-Sanford Bernstein Mid-Cap Value(11) 1.05% N/A 1.53% 2.58% 1.20%
Phoenix-Sanford Bernstein Small-Cap Value(12) 1.05% N/A 1.53% 2.58% 1.20%
Phoenix-Seneca Mid-Cap Growth .80% N/A 1.24% 2.04% 1.05%
Phoenix-Seneca Strategic Theme .75% N/A .22% .97% .97%
THE ALGER AMERICAN FUND
------------------------------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap .85% N/A .08%(7) .93% .93%
DEUTSCHE ASSET MANAGEMENT VIT FUNDS
------------------------------------------------------------------------------------------------------------------------------------
EAFE(R) Equity Index Fund .45% N/A .69% 1.15% .65%
FEDERATED INSURANCE SERIES
------------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities II .60% N/A .24% .84% .84%
Federated High Income Bond Fund II .60% N/A .19% .79% .79%
FIDELITY(R) VARIABLE INSURANCE PRODUCTS
------------------------------------------------------------------------------------------------------------------------------------
VIP Contrafund Portfolio(8) .58% .10% .10% .78% .75%(10)
VIP Growth Opportunities Portfolio(9) .58% .10% .11% .79% .78%(10)
VIP Growth Portfolio(9) .58% .10% .09% .77% .75%(10)
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
------------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund--Class 2(6) .60% .25%(3) .19% 1.04% 1.04%
Templeton Asset Strategy Fund--Class 2(5,6) .60% .25%(3) .18% 1.03% 1.03%
Templeton Developing Markets Securities Fund--Class 2(5,6) 1.25% .25%(3) .31% 1.81% 1.81%
Templeton Growth Securities Fund--Class 2(6) .83% .25%(3) .05% 1.13% 1.13%
Templeton International Securities Fund--Class 2(5,6) .69% .25%(3) .19% 1.13% 1.13%
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
------------------------------------------------------------------------------------------------------------------------------------
Technology Portfolio .80% N/A 1.85%(4) 2.65%(4) 1.15%
WANGER ADVISORS TRUST
------------------------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty 1.00% N/A 2.45% 3.45% 1.45%
Wanger International Small Cap 1.25% N/A .24% 1.49% 1.49%
Wanger Twenty .95% N/A 1.17% 2.12% 1.35%
Wanger U.S. Small Cap .95% N/A .07% 1.02% 1.02%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Other expenses after reimbursements are as follows: The Phoenix-J.P. Morgan
Research Enhanced Index Series will pay up to .10%; the Phoenix-Engemann
Capital Growth, Phoenix-Goodwin Multi-Sector Fixed Income, Phoenix-Oakhurst
Strategic Allocation, Phoenix-Goodwin Money Market, Phoenix-Engemann Nifty
Fifty, Phoenix-Oakhurst Growth and Income, Phoenix-Hollister Value Equity,
Phoenix-Sanford Bernstein Mid-Cap Value, Phoenix-Bankers Trust Dow 30,
Phoenix-Federated U.S. Government, Phoenix-Janus Equity Income,
Phoenix-Janus Flexible Income, Phoenix-Janus Growth, Phoenix-Bankers Trust
Nasdaq-100 Index and Phoenix-Morgan Stanley Focus Equity Series will pay up
to .15%; the Phoenix-Duff & Phelps Real Estate Securities, Phoenix-Seneca
Strategic Theme, Phoenix-Aberdeen New Asia, Phoenix-Engemann Small &
Mid-Cap Growth and Phoenix-Seneca Mid-Cap Growth Series will pay up to
.25%; and the Phoenix-Aberdeen International Series will pay up to .40%.
The Wanger Foreign Forty will
6
<PAGE>
<TABLE>
<CAPTION>
pay up to .45%, the Wanger U.S. Small Cap Series will pay up to .50%, the Wanger International Small Cap will pay up to .60%,
and the Wanger Twenty will pay up to .40%.
2. Reflects the effect of any management fee waivers and reimbursement of expenses.
3. The fund's Class 2 distribution plan or "Rule 12b-1 Plan" is described in the fund's prospectus.
4. These figures are estimates: these series have been available for less than six months as of the date of this prospectus.
5. On 2/8/00, shareholders approved a merger and reorganization that combined the fund with a similar fund of the Franklin
Templeton Variable Insurance Products Trust, effective 5/1/00.
6. The table shows total expenses based on the new fees and assets as of
12/31/99 and not the assets of the combined funds. The following table
estimates what the total expenses would be based on the assets of the
combined funds as of 5/1/00:
-----------------------------------------------------------------------------------------------------------------------------
ESTIMATED ANNUAL EXPENSES FROM 5/1/00 MANAGEMENT FEES RULE 12B-1 FEES OTHER EXPENSES TOTAL OPERATING EXPENSES
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mutual Shares Securities Fund - Class 2 .60% .25% .19% 1.04%
Templeton Asset Strategy Fund - Class 2 .60% .25% .14% .99%
Templeton Developing Markets Securities 1.25% .25% .29% 1.79%
Fund - Class 2
Templeton Growth Securities Fund - Class 2 .80% .25% .05% 1.10%
Templeton International Securities .65% .25% .20% 1.10%
Fund - Class 2
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
7. Included in "Other Expenses" is 0.01% of interest expense.
8. Effective November 3, 1997, the advisor has voluntarily agreed to reimburse
the fund to the extent that total operating expenses (excluding interest,
taxes, certain securities lending costs, brokerage commissions, and
extraordinary expenses), as a percentage of its average net assets, exceed
1.10%. This arrangement can be discontinued at any time.
9. Effective November 3, 1997, the advisor has voluntarily agreed to reimburse
the fund to the extent that total operating expenses (excluding interest,
taxes, certain securities lending costs, brokerage commissions, and
extraordinary expenses), as a percentage of its average net assets, exceed
1.60%. This arrangement can be discontinued at any time.
10. A portion of the brokerage commissions that the fund pays is 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 custodian expenses.
11. Schafer Capital Management, Inc., was replaced as subadvisor to the series
at the close of business on September 30, 2000 by Sanford Bernstein & Co.,
Inc., The name was changed from Phoenix-Schafer Mid-Cap Value Series on or
about that date.
12. New Series as of December 4, 2000.
7
<PAGE>
SUMMARY OF EXPENSES (CONTINUED)
It is impossible to show you what expenses you would incur if you purchased a
contract because there are so many different factors that affect expenses.
However, the following three tables are meant to help demonstrate how certain
decisions or choices by you could result in different levels of expense.
If you surrender your contract at the end of one of these time periods, you
would pay the following expenses on a $1,000 investment. We have assumed a
constant 5% annual return on the invested assets for all of the series.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Phoenix-Aberdeen International Series $105 $155 $209 $373
Phoenix-Aberdeen New Asia Series $107 $163 $223 $405
Phoenix-Bankers Trust Dow 30 Series $99 $139 $179 $306
Phoenix-Bankers Trust Nasdaq 100-Index Series $99 $139 $179 $306
Phoenix-Duff & Phelps Real Estate Securities Series $105 $155 $208 $372
Phoenix-Engemann Capital Growth Series $101 $145 $189 $330
Phoenix-Engemann Nifty Fifty Series $105 $157 $211 $379
Phoenix-Engemann Small & Mid-Cap Growth Series $106 $160 $217 $392
Phoenix-Federated U.S. Government Bond Series $102 $147 $194 $339
Phoenix-Goodwin Money Market Series $100 $140 $182 $313
Phoenix-Goodwin Multi-Sector Fixed Income Series $101 $144 $188 $326
Phoenix-Hollister Value Equity Series $103 $150 $199 $352
Phoenix-J.P. Morgan Research Enhanced Index Series $100 $140 $182 $313
Phoenix-Janus Equity Income Series $105 $155 $208 $372
Phoenix-Janus Flexible Income Series $104 $153 $205 $365
Phoenix-Janus Growth Series $105 $155 $208 $372
Phoenix-Morgan Stanley Focus Equity Series $105 $155 $208 $372
Phoenix-Oakhurst Balanced Series $101 $145 $191 $332
Phoenix-Oakhurst Growth and Income Series $103 $150 $199 $352
Phoenix-Oakhurst Strategic Allocation Series $101 $145 $191 $332
Phoenix-Sanford Bernstein Global Value Series $107 $162 $220 $398
Phoenix-Sanford Bernstein Mid-Cap Value Series $107 $162 $220 $398
Phoenix-Sanford Bernstein Small-Cap Value Series $107 $162 $220 $398
Phoenix-Seneca Mid-Cap Growth Series $105 $157 $211 $379
Phoenix-Seneca Strategic Theme Series $104 $154 $206 $368
Alger American Leveraged AllCap $104 $153 $204 $363
EAFE(R) Equity Index Fund $101 $144 $188 $326
Federated Fund for U.S. Government Securities II $103 $150 $199 $351
Federated High Income Bond Fund II $102 $148 $196 $344
VIP Contrafund Portfolio $102 $147 $194 $339
VIP Growth Opportunities Portfolio $102 $148 $195 $343
VIP Growth Portfolio $102 $147 $194 $339
Mutual Shares Securities Fund-Class 2 $105 $156 $210 $377
Templeton Asset Strategy Fund-Class 2 $105 $156 $210 $376
Templeton Developing Markets Securities Fund-Class 2 $113 $182 $255 $479
Templeton Growth Securities Fund-Class 2 $106 $159 $216 $389
Templeton International Securities Fund-Class 2 $106 $159 $216 $389
Technology Portfolio $106 $160 $217 $392
Wanger Foreign Forty $109 $170 $234 $431
Wanger International Small Cap $110 $171 $236 $437
Wanger Twenty $108 $167 $228 $418
Wanger U.S. Small Cap $105 $156 $209 $375
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
SUMMARY OF EXPENSES (CONTINUED)
If you do not surrender your contract, after each of these time periods you will
have paid the following expenses on a $1,000 investment. We have assumed a
constant 5% annual return on the invested assets for all of the series..
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Phoenix-Aberdeen International Series $35 $105 $179 $373
Phoenix-Aberdeen New Asia Series $37 $113 $193 $405
Phoenix-Bankers Trust Dow 30 Series $29 $89 $149 $306
Phoenix-Bankers Trust Nasdaq 100-Index Series $29 $89 $149 $306
Phoenix-Duff & Phelps Real Estate Securities Series $35 $105 $178 $372
Phoenix-Engemann Capital Growth Series $31 $95 $159 $330
Phoenix-Engemann Nifty Fifty Series $35 $107 $181 $379
Phoenix-Engemann Small & Mid-Cap Growth Series $36 $110 $187 $392
Phoenix-Federated U.S. Government Bond Series $32 $97 $164 $339
Phoenix-Goodwin Money Market Series $30 $90 $152 $313
Phoenix-Goodwin Multi-Sector Fixed Income Series $31 $94 $158 $326
Phoenix-Hollister Value Equity Series $33 $100 $169 $352
Phoenix-J.P. Morgan Research Enhanced Index Series $30 $90 $152 $313
Phoenix-Janus Equity Income Series $35 $105 $178 $372
Phoenix-Janus Flexible Income Series $34 $103 $175 $365
Phoenix-Janus Growth Series $35 $105 $178 $372
Phoenix-Morgan Stanley Focus Equity Series $35 $105 $178 $372
Phoenix-Oakhurst Balanced Series $31 $95 $161 $332
Phoenix-Oakhurst Growth and Income Series $33 $100 $169 $352
Phoenix-Oakhurst Strategic Allocation Series $31 $95 $161 $332
Phoenix-Sanford Bernstein Global Value Series $37 $112 $190 $398
Phoenix-Sanford Bernstein Mid-Cap Value Series $37 $112 $190 $398
Phoenix-Sanford Bernstein Small-Cap Value Series $37 $112 $190 $398
Phoenix-Seneca Mid-Cap Growth Series $35 $107 $181 $379
Phoenix-Seneca Strategic Theme Series $34 $104 $176 $368
Alger American Leveraged AllCap $34 $103 $174 $363
EAFE(R) Equity Index Fund $31 $94 $158 $326
Federated Fund for U.S. Government Securities II $33 $100 $169 $351
Federated High Income Bond Fund II $32 $98 $166 $344
VIP Contrafund Portfolio $32 $97 $164 $339
VIP Growth Opportunities Portfolio $32 $98 $165 $343
VIP Growth Portfolio $32 $97 $164 $339
Mutual Shares Securities Fund-Class 2 $35 $106 $180 $377
Templeton Asset Strategy Fund-Class 2 $35 $106 $180 $376
Templeton Developing Markets Securities Fund-Class 2 $43 $132 $225 $479
Templeton Growth Securities Fund-Class 2 $36 $109 $186 $389
Templeton International Securities Fund-Class 2 $36 $109 $186 $389
Technology Portfolio $36 $110 $187 $392
Wanger Foreign Forty $39 $120 $204 $431
Wanger International Small Cap $40 $121 $206 $437
Wanger Twenty $38 $117 $198 $418
Wanger U.S. Small Cap $35 $106 $179 $375
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The purpose of the tables above is to assist you in understanding the various
costs and expenses that your contract will bear directly or indirectly. It is
based on historical fund expenses, as a percentage of net assets for the year
ended December 31, 1999, except as indicated. The tables reflect expenses of the
Account as well as the funds. See "Deductions and Charges" in this prospectus
and in the fund prospectuses.
Premium taxes, which are not reflected in the table above, may apply. We will
charge any premium or other taxes levied by any governmental entity with respect
to your contract against the contract values based on a percentage of premiums
paid. Certain states currently impose premium taxes on the contracts ranging
from 0% to 3.5% of premiums paid. See "Deductions and Charges--Premium Tax" and
Appendix B.
The examples should not be considered a representation of future expenses.
Actual expenses may be greater or less than those shown. See "Deductions and
Charges."
9
<PAGE>
CONTRACT SUMMARY
--------------------------------------------------------------------------------
This summary describes the general provisions of the contract.
Certain provisions of the contract described in this prospectus may differ in a
particular state because of specific state requirements.
If there is ever a difference between the provisions described within this
prospectus and the provisions of the contract, the contract provisions will
prevail.
OVERVIEW
The contract is designed to provide regular income payments from an annuity
contract. It offers a combination of variable and fixed payments. Investments in
the variable options provide results that vary and depend upon the performance
of the underlying funds.
INVESTMENT FEATURES
MINIMUM CONTRIBUTION
[diamond] Generally, the minimum premium is $35,000.
ALLOCATION OF PREMIUM AND CONTRACT VALUE
[diamond] You may choose where your premium is invested: in one or more of the
subaccounts or in the FIA.
[diamond] Transfers between the subaccounts and to the FIA can be made anytime.
[diamond] The contract value varies with the investment performance of the
subaccounts and is not guaranteed.
WITHDRAWALS
[diamond] Under Payment Options B, D, E and F, you may partially or fully
surrender the contract anytime for its commuted value less any
applicable surrender charge and tax. No withdrawals may be made under
any other payment options. Please refer to "Deductions and
Charges--Surrender Charges" for a complete description.
DEATH BENEFIT
The death benefit is calculated differently under each payment option and the
amount varies based on the option selected.
DEDUCTIONS AND CHARGES
FROM THE CONTRACT VALUE
[diamond] Taxes--taken from the premium.
[diamond] A deduction for surrender charges may occur when you surrender your
contract or request a withdrawal if the assets have not been held
under the contract for a specified period of time.
[diamond] If we impose a surrender charge, it is on a first-in, first-out basis.
[diamond] No surrender charges are taken upon the death of the annuitant.
[diamond] A declining surrender charge is assessed on withdrawals based on the
date the premium is deposited:
==============================================================
Percent 7% 6% 5% 4% 3% 2% 1% 0%
--------------------------------------------------------------
Age of Premium in
Complete Years 0 1 2 3 4 5 6 7+
==============================================================
o The total deferred surrender charges on a contract will never exceed
9% of the premium.
[diamond] Payment Charge--maximum of $24 each year.
FROM THE ACCOUNT
[diamond] Risk and Administrative Fee-- varies based on the election of the
Guaranteed Minimum Payment Rider. See "Charges for Risk and
Administrative Fee"
OTHER CHARGES OR DEDUCTIONS
See "Deductions and Charges" for a detailed description of contract charges.
In addition, certain charges are deducted from the assets of the funds for
investment management services. See the prospectuses for the funds for more
information.
ADDITIONAL INFORMATION
FREE LOOK PERIOD
You have the right to review the contract. If you are not satisfied you may
return it within 20 days after you receive it and cancel the contract. You will
receive the contract value in cash. However, if applicable state law requires,
we will return the premium paid less any partial withdrawals made during the
Free Look Period. See "Free Look Period" for a detailed discussion.
MINIMUM PAYMENT
If on any valuation date the annuity payment due is less than $20, we may make
such settlement as is equitable to the payee.
LAPSE
If on any valuation date the contract value is zero, the contract will
immediately terminate and lapse without value.
10
<PAGE>
PHL VARIABLE ACCUMULATION ACCOUNT
FINANCIAL HIGHLIGHTS
ACCUMULATION UNIT VALUES
(SELECTED DATA FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT
THE INDICATED PERIOD)
The subaccounts of this contract commenced operations as of the date of this
prospectus; therefore, data for these subaccounts are not yet available.
PERFORMANCE HISTORY
--------------------------------------------------------------------------------
We may include the performance history of the subaccounts in advertisements,
sales literature or reports. Performance information about each subaccount is
based on past performance only and is not an indication of future performance.
See Appendix A for more information.
THE IMMEDIATE FIXED AND VARIABLE ANNUITY
--------------------------------------------------------------------------------
The immediate fixed and variable annuity contract is issued by PHL Variable. The
amounts held under a contract will be invested in the Account and annuity
payments will vary in accordance with the investment experience of the
investment options selected. It is the owner and annuitant under a contract who
bear the risk of investment gain or loss rather than PHL Variable. However,
amounts may be allocated for fixed annuity payments, in which case PHL Variable
will guarantee specified monthly annuity payments.
You select the investment objective of the contract on a continuing basis by
directing the allocation of the premium and the reallocation of the contract
value among the subaccounts.
PHL VARIABLE AND THE ACCOUNT
--------------------------------------------------------------------------------
We are a wholly-owned indirect subsidiary of Phoenix Home Life Mutual Insurance
Company. Our executive office is located at One American Row, Hartford,
Connecticut and our main administrative office is located at 100 Bright Meadow
Boulevard, Enfield, Connecticut. PHL Variable is a Connecticut stock company
formed on April 24, 1981. PHL Variable sells variable annuity contracts through
its own field force of agents and through brokers.
On December 7, 1994, we established the Account, a separate account created
under the insurance laws of Connecticut. The Account is registered with the SEC
as a unit investment trust under the Investment Company Act of 1940 (the "1940
Act") and it meets the definition of a "separate account" under the 1940 Act.
Registration under the 1940 Act does not involve supervision by the SEC of the
management or investment practices or policies of the Account or of PHL
Variable.
Under Connecticut law, all income, gains or losses of the Account must be
credited to or charged against the amounts placed in the Account without regard
to the other income, gains and losses from any other business or activity of PHL
Variable. The assets of the Account may not be used to pay liabilities arising
out of any other business that we may conduct. Obligations under the contracts
are obligations of PHL Variable.
Contributions to the FIA are not invested in the Account; rather, they become
part of the general account of PHL Variable (the "General Account"). The General
Account supports all insurance and annuity obligations of PHL Variable and is
made up of all of its general assets other than those allocated to any separate
account such as the Account. For more complete information concerning the FIA,
see the "FIA" section of this prospectus.
INVESTMENTS OF THE ACCOUNT
--------------------------------------------------------------------------------
PARTICIPATING INVESTMENT FUNDS
THE PHOENIX EDGE SERIES FUND
Certain subaccounts invest in corresponding series of The Phoenix Edge Series
Fund. The following series are currently available:
PHOENIX-ABERDEEN INTERNATIONAL SERIES: The investment objective of the series is
to seek a high total return consistent with reasonable risk. The series invests
primarily in an internationally diversified portfolio of equity securities. It
intends to reduce its risk by engaging in hedging transactions involving
options, futures contracts and foreign currency transactions. The
Phoenix-Aberdeen International Series provides a means for investors to invest a
portion of their assets outside the United States.
PHOENIX-ABERDEEN NEW ASIA SERIES: The investment objective of the series is to
seek long-term capital appreciation. The series invests primarily in a
diversified portfolio of equity securities of issuers organized and principally
operating in Asia, excluding Japan.
PHOENIX-BANKERS TRUST DOW 30 SERIES: The series seeks to track the total return
of the Dow Jones Industrial Average[SM] (the "DJIA[SM]") before fund expenses.
PHOENIX-BANKERS TRUST NASDAQ-100 INDEX(R) SERIES: This non-diversified series
seeks to track the total return of the Nasdaq-100 Index(R) ("Index") before
fund expenses. The series is "passively" managed (it invests in the same
companies in the same proportions as the Index). The series
11
<PAGE>
may invest in equity equivalents in an attempt to improve cash flow and reduce
transaction costs, while replicating investments in the Index.
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES: The investment objective of
the series is to seek capital appreciation and income with approximately equal
emphasis. Under normal circumstances, it invests in marketable securities of
publicly traded real estate investment trusts (REITs) and companies that
operate, develop, manage and/or invest in real estate located primarily in the
United States.
PHOENIX-ENGEMANN CAPITAL GROWTH SERIES: The investment objective of the series
is to achieve intermediate and long-term growth of capital, with income as a
secondary consideration. The Phoenix-Engemann Capital Growth Series invests
principally in common stocks of corporations believed by management to offer
growth potential.
PHOENIX-ENGEMANN NIFTY FIFTY SERIES: The investment objective of the series is
to seek long-term capital appreciation by investing in approximately 50
different securities that offer the best potential for long-term growth of
capital. At least 75% of the series' assets will be invested in common stocks of
high quality growth companies. The remaining portion will be invested in common
stocks of small corporations with rapidly growing earnings per share or common
stocks believed to be undervalued.
PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH SERIES: The series seeks to achieve its
objective of long-term growth of capital by normally investing at least 65% of
assets in equities of "small-cap" and "mid-cap" companies (market capitalization
under $1.5 billion). Expected emphasis will be on investments in common stocks
of U.S. corporations that have rapidly growing earnings per share. Stocks are
generally sold when characteristics such as growth rate, competitive advantage,
or price, render the stock unattractive. The advisor may change the asset
allocation or temporarily take up a defensive investment strategy depending on
market conditions.
PHOENIX-FEDERATED U.S. GOVERNMENT BOND SERIES: The investment objective of the
series is to maximize total return by investing primarily in debt obligations of
the U.S. Government, its agencies and instrumentalities.
PHOENIX-GOODWIN MONEY MARKET SERIES: The investment objective of the series is
to provide maximum current income consistent with capital preservation and
liquidity. The Phoenix-Goodwin Money Market Series invests exclusively in high
quality money market instruments.
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES: The investment objective of
the series is to seek long-term total return. The Phoenix-Goodwin Multi-Sector
Fixed Income Series seeks to achieve its investment objective by investing in a
diversified portfolio of high yield and high quality fixed income securities.
PHOENIX-HOLLISTER VALUE EQUITY SERIES: The primary investment objective of the
series is long-term capital appreciation, with a secondary investment objective
of current income. The Phoenix-Hollister Value Equity Series seeks to achieve
its objective by investing in a diversified portfolio of common stocks that meet
certain quantitative standards that indicate above average financial soundness
and intrinsic value relative to price.
PHOENIX-J.P. MORGAN RESEARCH ENHANCED INDEX SERIES: The investment objective of
the series is to seek high total return by investing in a broadly diversified
portfolio of equity securities of large and medium capitalization companies
within market sectors reflected in the S&P 500. The series invests in a
portfolio of undervalued common stocks and other equity securities which appear
to offer growth potential and an overall volatility of return similar to that of
the S&P 500.
PHOENIX-JANUS EQUITY INCOME SERIES: The investment objective of the series is to
seek current income and long-term growth of capital.
PHOENIX-JANUS FLEXIBLE INCOME SERIES: The investment objective of the series is
to seek to obtain maximum total return, consistent with preservation of capital.
PHOENIX-JANUS GROWTH SERIES: The investment objective of the series is to seek
long-term growth of capital, in a manner consistent with the preservation of
capital.
PHOENIX-MORGAN STANLEY FOCUS EQUITY SERIES: The investment objective of the
series is to seek capital appreciation by investing primarily in equity
securities.
PHOENIX-OAKHURST BALANCED SERIES: The investment objective of the series is to
seek reasonable income, long-term capital growth and conservation of capital.
The Phoenix-Oakhurst Balanced Series invests based on combined considerations of
risk, income, capital enhancement and protection of capital value.
PHOENIX-OAKHURST GROWTH AND INCOME SERIES: The investment objective of the
series is to seek dividend growth, current income and capital appreciation by
investing in common stocks. The Phoenix-Oakhurst Growth and Income Series seeks
to achieve its objective by selecting securities primarily from equity
securities of the 1,000 largest companies traded in the United States, ranked by
market capitalization.
PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES: The investment objective of the
series is to realize as high a level of total return over an extended period of
time as is considered consistent with prudent investment risk. The
Phoenix-Oakhurst Strategic Allocation Series invests in stocks, bonds and money
market instruments in accordance with the investment advisor's appraisal of
investments most likely to achieve the highest total return.
PHOENIX-SANFORD BERNSTEIN GLOBAL VALUE SERIES seeks long-term capital
appreciation through investing in foreign
12
<PAGE>
and domestic equity securities. The advisor uses a value-oriented approach with
a focus on non-U.S. companies in developed countries in Europe and the Far East,
Australia and Canada. The advisor may invest a portion of the series' assets in
developing market companies.
PHOENIX-SANFORD BERNSTEIN MID-CAP VALUE SERIES: The primary investment objective
of the series is to seek long-term capital appreciation, with current income as
the secondary investment objective. The Phoenix-Sanford Bernstein Mid-Cap Value
Series will invest in common stocks of established companies having a strong
financial position and a low stock market valuation at the time of purchase,
which are believed to offer the possibility of increase in value.
PHOENIX-SANFORD BERNSTEIN SMALL-CAP VALUE SERIES seeks long-term capital
appreciation by investing primarily in small-capitalization stocks the advisor
believes are under-valued. The series will seek to outperform the Frank Russell
200, Frank Russell 2500 and Wilshire Next 1750 indices.
PHOENIX-SENECA MID-CAP GROWTH SERIES: The investment objective of the series is
to seek capital appreciation primarily through investments in equity securities
of companies that have the potential for above average market appreciation. The
series seeks to outperform the Standard & Poor's Mid-Cap 400 Index.
PHOENIX-SENECA STRATEGIC THEME SERIES: The investment objective of the series is
to seek long-term appreciation of capital by identifying securities benefiting
from long-term trends present in the United States and abroad. The
Phoenix-Seneca Strategic Theme Series invests primarily in common stocks
believed to have substantial potential for capital growth.
THE ALGER AMERICAN FUND
A certain subaccount invests in a corresponding portfolio of The Alger American
Fund. The following portfolio is currently available:
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO: The investment objective of the
portfolio is long-term capital appreciation. It invests primarily in equity
securities, such as common or preferred stocks, which are listed on U.S.
exchanges or in the over-the-counter market. The portfolio invests primarily in
"growth" stocks. Under normal circumstances, the portfolio invests in the equity
securities of companies of any size, which demonstrate promising growth
potential. The portfolio can leverage, that is, borrow money, up to one-third of
its total assets to buy additional securities.
DEUTSCHE ASSET MANAGEMENT VIT FUNDS
A certain subaccount invests in a corresponding fund of the Deutsche Asset
Management VIT Funds. The following fund is currently available:
EAFE(R) EQUITY INDEX FUND: The fund seeks to match the performance of the Morgan
Stanley Capital International EAFE(R) Index ("EAFE(R) Index"), which emphasizes
major market stock performance of companies in Europe, Australia and the Far
East. The fund invests in a statistically selected sample of the securities
found in the EAFE(R) Index.
FEDERATED INSURANCE SERIES
Certain subaccounts invest in a corresponding fund of the Federated Insurance
Series. The following funds are currently available:
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II: The investment objective of
the fund is to seek current income by investing primarily in U.S. government
securities, including mortgage-backed securities issued by U.S. government
agencies.
FEDERATED HIGH INCOME BOND FUND II: The investment objective of the fund is to
seek high current income by investing primarily in a diversified portfolio of
high-yield, lower-rated corporate bonds.
FIDELITY(R) VARIABLE INSURANCE PRODUCTS
Certain subaccounts invest in a corresponding portfolio of the Fidelity(R)
Variable Insurance Products. The following portfolios are currently available:
VIP CONTRAFUND(R) PORTFOLIO: The investment objective of the portfolio is to
seek long-term capital appreciation. Principal investment strategies include:
o Normally investing primarily in common stocks.
o Investing in securities of companies whose value it believes is not
fully recognized by the public
o Investing in domestic and foreign issuers.
o Investing in either "growth" stocks or "value" stocks or both.
o Using fundamental analysis of each issuer's financial condition and
industry position and market and economic conditions to select
investments.
VIP GROWTH OPPORTUNITIES PORTFOLIO: The investment objective of the portfolio is
to seek to provide capital growth. Principal investment strategies include:
o Normally investing primarily in common stocks.
o Potentially investing in other types of securities, including bonds
which may be lower-quality debt securities.
o Investing in domestic and foreign issuers.
o Investing in either "growth" stocks or "value" stocks or both.
o Using fundamental analysis of each issuer's financial condition and
industry position and market and economic conditions to select
investments.
VIP GROWTH PORTFOLIO: The investment objective of the portfolio is to seek to
achieve long-term capital appreciation. Principal investment strategies include:
o Normally investing primarily in common stocks.
13
<PAGE>
o Investing in companies that it believes have above-average growth
potential.
o Investing in securities of domestic and foreign issuers.
o Using fundamental analysis of each issuer's financial condition and
industry position and market and economic conditions to select
investments
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Certain subaccounts invest in Class 2 shares of the corresponding fund of the
Franklin Templeton Variable Insurance Products Trust. The following funds are
currently available:
MUTUAL SHARES SECURITIES FUND: The primary investment objective of the fund is
capital appreciation with income as a secondary objective. The Mutual Shares
Securities Fund invests primarily in domestic equity securities that the manager
believes are significantly undervalued.
TEMPLETON ASSET STRATEGY FUND: The investment objective of the fund is a high
level of total return. The Templeton Asset Strategy Fund invests in stocks of
companies of any nation, bonds of companies and governments of any nation and in
money market instruments. Changes in the asset mix will be made in an attempt to
capitalize on total return potential produced by changing economic conditions
throughout the world, including emerging market countries.
TEMPLETON DEVELOPING MARKETS SECURITIES FUND: The investment objective of the
fund is long-term capital appreciation. The Templeton Developing Markets
Securities Fund invests primarily in emerging market equity securities.
TEMPLETON INTERNATIONAL SECURITIES FUND: The investment objective of the fund is
long-term capital growth. The Templeton International Securities Fund invests
primarily in stocks of companies located outside the United States, including
emerging markets.
TEMPLETON GROWTH SECURITIES FUND: The investment objective of the fund is
long-term capital growth. The Templeton Growth Securities Fund invests primarily
in common stocks issued by companies in various nations throughout the world,
including the U.S. and emerging markets.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
A certain subaccount invests in a corresponding portfolio of The Universal
Institutional Funds, Inc. The following portfolio is currently available:
TECHNOLOGY PORTFOLIO: The investment objective of the portfolio is to seek
long-term capital appreciation by investing primarily in equity securities of
companies that the investment advisor expects to benefit from their involvement
in technology and technology-related industries.
WANGER ADVISORS TRUST
Certain subaccounts invest in corresponding series of the Wanger Advisors Trust.
The following series are currently available:
WANGER FOREIGN FORTY: The investment objective of the series is to seek
long-term capital growth. The Wanger Foreign Forty invests primarily in equity
securities of foreign companies with market capitalization of $1 billion to $10
billion and focuses its investments in 40 to 60 companies in the developed
markets.
WANGER INTERNATIONAL SMALL CAP: The investment objective of the series is to
seek long-term capital growth. The Wanger International Small Cap invests
primarily in securities of non-U.S. companies with total common stock market
capitalization of less than $1 billion.
WANGER TWENTY: The investment objective of the series is to seek long-term
capital growth. The Wanger Twenty invests primarily in the stocks of U.S.
companies with market capitalization of $1 billion to $10 billion and ordinarily
focuses its investments in 20 to 25 U.S. companies.
WANGER U.S. SMALL CAP: The investment objective of the series is to seek
long-term capital growth. The Wanger U.S. Small Cap invests primarily in
securities of U.S. companies with total common stock market capitalization of
less than $1 billion.
Each series will be subject to market fluctuations and the risks that come with
the ownership of any security, and there can be no assurance that any series
will achieve its stated investment objective.
In addition to being sold to the Account, shares of the funds also may be sold
to other separate accounts of Phoenix or its affiliates or to the separate
accounts of other insurance companies.
It is possible that in the future it may be disadvantageous for variable life
insurance separate accounts and variable annuity separate accounts to invest in
the fund(s) simultaneously. Although neither we nor the fund(s) trustees
currently foresee any such disadvantages either to variable life insurance
policyowners or to variable annuity contract owners, the funds' trustees intend
to monitor events in order to identify any material conflicts between variable
life insurance policyowners and variable annuity contract owners and to
determine what action, if any, should be taken in response to such conflicts.
Material conflicts could, for example, result from (1) changes in state
insurance laws, (2) changes in federal income tax laws, (3) changes in the
investment management of any portfolio of the fund(s) or (4) differences in
voting instructions between those given by variable life insurance policyowners
and those given by variable annuity contract owners. We will, at our own
expense, remedy such material conflicts, including, if necessary, segregating
the assets underlying the variable life insurance policies and the variable
annuity contracts and establishing a new registered investment company.
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<PAGE>
INVESTMENT ADVISORS
Phoenix Investment Counsel, Inc. ("PIC") is an investment advisor to the
following series in The Phoenix Edge Series Fund:
o Phoenix-Goodwin Money Market Series
o Phoenix-Goodwin Multi-Sector Fixed Income Series
o Phoenix-Hollister Value Equity Series
o Phoenix-Oakhurst Balanced Series
o Phoenix-Oakhurst Growth and Income Series
o Phoenix-Oakhurst Strategic Allocation Series
Based on subadvisory agreements with the fund, PIC as an investment advisor
delegates certain investment decisions and research functions to subadvisors for
the following series:
[diamond] Phoenix-Aberdeen International Advisors, LLC ("PAIA")
o Phoenix-Aberdeen International Series
[diamond] Roger Engemann & Associates, Inc. ("Engemann")
o Phoenix-Engemann Capital Growth Series
o Phoenix-Engemann Nifty Fifty Series
o Phoenix-Engemann Small & Mid-Cap Growth Series
[diamond] Seneca Capital Management, LLC ("Seneca")
o Phoenix-Seneca Mid-Cap Growth Series
o Phoenix-Seneca Strategic Theme Series
Phoenix Variable Advisors, Inc. ("PVA") is also an investment advisor to The
Phoenix Edge Series Fund. Based on subadvisory agreements with the fund, PVA
delegates certain investment decisions and research functions to the following
subadvisors for the series listed:
[diamond] Bankers Trust Company
o Phoenix-Bankers Trust Dow 30 Series
o Phoenix-Bankers Nasdaq-100 Index Series
[diamond] Federated Investment Management Company
o Phoenix-Federated U.S. Government Bond Series
[diamond] J.P. Morgan Investment Management, Inc.
o Phoenix-J.P. Morgan Research Enhanced Index
Series
[diamond] Janus Capital Corporation
o Phoenix-Janus Equity Income Series
o Phoenix-Janus Flexible Income Series
o Phoenix-Janus Growth Series
[diamond] Morgan Stanley Asset Management
o Phoenix-Morgan Stanley Focus Equity Series
[diamond] Sanford C. Bernstein & Co., Inc.
o Phoenix-Sanford Bernstein Global Value Series
o Phoenix-Sanford Bernstein Mid-Cap Value Series
o Phoenix-Sanford Bernstein Small-Cap Value Series
The investment advisor to the Phoenix-Duff & Phelps Real Estate Securities
Series is Duff & Phelps Investment Management Co. ("DPIM").
The investment advisor to the Phoenix-Aberdeen New Asia Series is PAIA. Pursuant
to subadvisory agreements with the fund, PAIA delegates certain investment
decisions and research functions with respect to the Phoenix-Aberdeen New Asia
Series to PIC and Aberdeen Fund Managers, Inc.
PIC, DPIM, Engemann and Seneca are indirect less than wholly owned subsidiaries
of Phoenix Home Life Mutual Insurance Company. PAIA is jointly owned and managed
by PM Holdings, Inc., a subsidiary of Phoenix Home Life Mutual Insurance Company
and by Aberdeen Fund Managers, Inc. PVA is a wholly owned subsidiary of PM
Holdings, Inc.
The additional investment advisors and their respective funds are:
[diamond] Fred Alger Management, Inc.
o Alger American AllCap Portfolio
[diamond] Bankers Trust Company
o EAFE(R) Equity Index Fund
[diamond] Federated Investment Management Company
o Federated Fund for U.S. Government Securities II
o Federated High Income Bond Fund II
[diamond] Fidelity(R) Management & Research Company
o VIP Contrafund(R) Portfolio
o VIP Growth Opportunities Portfolio
o VIP Growth Portfolio
[diamond] Franklin Mutual Advisers, LLC
o Mutual Shares Securities Fund
[diamond] Morgan Stanley Asset Management
o Technology Portfolio
[diamond] Templeton Asset Management, Ltd.
o Templeton Developing Markets Securities Fund
[diamond] Templeton Global Advisors Limited
o Templeton Growth Securities Fund
[diamond] Templeton Investment Counsel, Inc.
o Templeton Asset Strategy Fund
o Templeton International Securities Fund
[diamond] Wanger Asset Management, L.P.
o Wanger Foreign Forty
o Wanger International Small Cap
o Wanger Twenty
o Wanger U.S. Small Cap
SERVICES OF THE ADVISORS
The advisors continually furnish an investment program for each series and
manage the investment and reinvestment of the assets of each series subject at
all times to the authority and supervision of the Trustees. A detailed
discussion of the investment advisors and subadvisors, and the investment
advisory and subadvisory agreements, is contained in the accompanying prospectus
for the funds.
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FIA
--------------------------------------------------------------------------------
In addition to the Account, you may allocate the premium to the FIA. The amount
of premium you allocate to the FIA will become part of PHL Variable's general
account assets. You do not share in the investment experience of those assets.
Rather, we guarantee a 3% rate of return on your allocated amount. 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.
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 Securities and Exchange
Commission 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.
PURCHASE OF CONTRACTS
--------------------------------------------------------------------------------
MINIMUM PREMIUM
Generally, we require a minimum premium of $35,000:
In certain circumstances we may reduce premium amount we accept for a contract.
Factors in determining qualifications for any such reduction include:
(1) the make-up and size of the prospective group;
(2) the method and frequency of premiums; and
(3) the amount of compensation to be paid to Registered Representatives on
each premium payment.
Any reduction will not unfairly discriminate against any person. We will make
any such reduction according to our own rules in effect at the time the premium
is received. We reserve the right to change these rules from time to time.
PREMIUM ALLOCATION
The net premium received under the contract will be allocated in any combination
to any subaccount or FIA in the proportion specified when you purchased the
contract or as otherwise indicated by you from time to time. Changes in the
allocation of premium will be effective as of receipt by VPMO of notice of
election in a form satisfactory to us (either in writing or by telephone).
GENERAL
Usually, a contract may not be purchased for a proposed annuitant who is 90
years of age or older. A premium in excess of $1,000,000 cannot be made without
our permission.
DEDUCTIONS AND CHARGES
--------------------------------------------------------------------------------
DEDUCTIONS FROM THE SEPARATE ACCOUNT
TAX
Whether or not a tax is imposed will depend upon, among other things, the
owner's state of residence, the annuitant's state of residence, our status
within those states and the insurance tax laws of those states. Taxes on premium
in contracts currently range from 0% to 3.5%. We will pay any tax due upon the
receipt of the premium. For a list of states and premium taxes, see Appendix B
to this prospectus.
SURRENDER CHARGES
A deduction for surrender charges for this contract may be taken from proceeds
of partial withdrawals from, or complete surrender of the contract. The amount
(if any) of a surrender charge depends on whether your premium is held under the
contract for a certain period of time. No surrender charge will be taken from
death proceeds. Any surrender charge is imposed on a first-in, first-out basis.
The deduction for surrender charges is as follows:
===============================================================
Percent 7% 6% 5% 4% 3% 2% 1% 0%
---------------------------------------------------------------
Age of Premium in
Complete Years 0 1 2 3 4 5 6 7+
===============================================================
The total surrender charges on a contract will never exceed 9% of the premium,
and the applicable level of surrender charge cannot be changed with respect to
outstanding contracts. Any distribution costs not paid for by surrender charges
will be paid by PHL Variable from the assets of the General Account.
RISK AND ADMINISTRATIVE FEE
We make a daily deduction from each subaccount for the risk and administrative
fee. The fee is based on an annual rate of up to 1.40% for the base contract
plus up to 1.00% for the Guaranteed Minimum Payment Rider if elected. It is
taken against the daily net assets of the subaccounts. Although you bear the
investment risk of the series in which you invest, we assume the risk that
annuitants as a class may live longer than expected (requiring a greater number
of annuity payments) and that our actual expenses may be higher than the expense
charges provided for in the contract.
No risk and administrative fee is deducted from the FIA. If the charges prove
insufficient to cover actual administrative costs, then the loss will be borne
by us; conversely, if the amount deducted proves more than sufficient, the
excess will be a profit to us. Any such profit may be used, as part of our
General Account assets, to meet sales expenses, if any, which are in excess of
sales commission revenue generated from any surrender charges.
PAYMENT CHARGE
We deduct a payment charge from each annuity payment. This charge is used to
reimburse us for some of the
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administrative expenses we incur in establishing and maintaining the contracts.
The maximum payment charge under a contract is $24 each year. It is deducted
from each annuity payment in equal amounts. If you fully surrender your
contract, the full payment charge if applicable, will be deducted at the time of
withdrawal.
REDUCED CHARGES, INCREASED BONUS PAYMENTS AND
ENHANCED GUARANTEED INTEREST RATES
We may reduce or eliminate the risk and administrative fee and the surrender or
payment charge when sales of the contracts are made to certain individuals or
groups of individuals that result in savings of sales expenses. We will consider
the following characteristics:
(1) the size and type of the group of individuals to whom the contract is
offered;
(2) the amount of anticipated premium payments;
(3) whether there is a preexisting relationship with the Company such as being
an employee of the Company or its affiliates and their spouses; or to
employees or agents who retire from the Company or its affiliates or Phoenix
Equity Planning Corporation ("PEPCO"), or its affiliates or to registered
representatives of the principal underwriter and registered representatives
of broker-dealers with whom PEPCO has selling agreements;
(4) internal transfers from other 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
(5) the amount of compensation to be paid to Registered Representatives on each
purchase payment.
Any reduction or elimination of charges will not be unfairly discriminatory
against any person. We will make any such adjustment according to our own rules
in effect at the time the contract is issued. We reserve the right to change
these rules from time to time.
OTHER CHARGES
As compensation for investment management services, the Advisors are entitled to
a fee, payable monthly and based on an annual percentage of the average daily
net asset values of each series. These fund charges and other fund expenses are
described more fully in the accompanying fund prospectuses.
THE ANNUITY PERIOD
--------------------------------------------------------------------------------
The annuity period is that period of time beginning after the end of the free
look period and during which payments to you are made.
PAYMENT OPTIONS
When you purchase the contract, you must choose among the available payment
options. The options allow you to choose:
[diamond] Payments Options A, B, C, D, E, F, and G. Variable Annuity Payments
attributed to premium allocated to the subaccounts depend on
subaccount investment performance. Any payments attributed to premium
allocated to the FIA will provide Fixed Annuity Payments while either
the annuitant or joint annuity is living. The minimum payment due must
be at least $20.
The annuity payments begin on the annuity date. The level of annuity payments
will depend on the option selected and such factors as the age of the annuitant,
the form of annuity, annuity payment rates, and the frequency of payments. The
contract and the SAI provide additional information on the methods used for
calculating annuity payments.
The assumed interest rate for the variable annuity payments is 3.0% or 6.0% on
an annual basis. The assumed rate is selected when you purchase the contract. It
is used to calculate the first variable annuity payment.
We make daily deductions from contract values held in subaccounts for the risk
and administrative fee. These charges affect all variable annuity payments.
The following descriptions should allow you to compare the basic differences of
the currently available payment options.
OPTION A--SINGLE LIFE ANNUITY
Provides annuity payments based on the life of the annuitant. No income or
payment to a beneficiary is paid after the death of the annuitant.
OPTION B--SINGLE LIFE ANNUITY WITH PERIOD CERTAIN
Provides annuity payments based on the life of the annuitant. In the event of
the death of the annuitant, the annuity payments are made to the annuitant's
beneficiary until the end of the 10, 15, or 20-year period selected.
OPTION C--JOINT SURVIVOR LIFE ANNUITY
Provides annuity payments while the annuitant and the designated joint annuitant
are living and continues thereafter during the lifetime of the survivor at a
level of 100% or 50% of the original level elected when you purchased your
contract. The joint annuitant must be named at the time the option is elected
and cannot be changed. The joint annuitant must have reached an adjusted age of
40, as defined in the contract.
OPTION D--JOINT SURVIVOR LIFE ANNUITY WITH PERIOD CERTAIN
Provides annuity payments while the annuitant and the designated joint annuitant
are living and continues thereafter during the lifetime of the survivor or, if
later, until the end of the 10, 15 or 20-year period certain at a level of 100%
or 50% of the original level elected when you purchased your contract. The joint
annuitant must be named at the time the option is elected and cannot be changed.
The joint annuitant must have reached an adjusted age of 40, as defined in the
contract.
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OPTION E--ANNUITY FOR SPECIFIED PERIOD
Provides annuity payments for a specified period of time, whether the annuitant
lives or dies. The period certain specified must be in whole numbers of years
from 5 to 30, but may not be greater than 100 minus the age of the annuitant.
However, the period certain selected by the beneficiary of any death benefit
under the contract may not extend beyond the life expectancy of such
beneficiary.
OPTION F--LIFE EXPECTANCY ANNUITY
Provides annuity payments over the annuitant's annually recalculated life
expectancy. A contract owner may at anytime request withdrawals representing
part or all of the remaining contract value less any applicable surrender
charge. Upon the death of the annuitant, the remaining contract value will be
paid in a lump sum to the annuitant's beneficiary. This option is available only
if 100% of the Net Premium is allocated to the FIA.
OPTION G--UNIT REFUND LIFE ANNUITY
Provides annuity payments as long as the annuitant lives. If the annuitant dies,
the annuitant's beneficiary will receive the value of the remaining Annuity
units in the subaccounts plus the total amount applied to the FIA, less the sum
of any Fixed annuity Payments made.
OTHER OPTIONS AND RATES
We may offer other payment options at the time of application. In addition, in
the event that annuity payment rates for contracts are at that time more
favorable than the applicable rates guaranteed under the contract, the then
current settlement rates shall be used in determining the amount of any annuity
payment under the Payment Options above.
OTHER CONDITIONS
Federal income tax requirements also provide that participants in regular or
SIMPLE IRAs must begin minimum distributions by April 1 of the year following
the year in which they attain age 70 1/2. Minimum distribution requirements do
not apply to Roth IRAs. Any required minimum distributions must be such that the
full amount in the contract will be distributed over a period not greater than
the participant's life expectancy or the combined life expectancy of the
participant and his or her spouse or designated beneficiary. Distributions made
under this method are generally referred to as Life Expectancy Distributions
("LEDs"). An LED program is available to IRA participants. Any payment options
elected under regular or Simple IRA contracts must also meet federal income tax
distribution requirements. Requests to elect this program must be made in
writing.
Under the LED program, regardless of contract year, amounts up to the required
minimum distribution may be withdrawn without a deduction for surrender charges,
even if the minimum distribution exceeds the 10% allowable amount. See
"Surrender Charges." Any amounts withdrawn that have not been held under a
contract for at least six years and are in excess of both the minimum
distribution and the 10% free available amount will be subject to any applicable
surrender charge.
If the monthly annuity payment under an Annuity Option would be less than $20,
we may make a single sum payment equal to the contract value on the date the
initial payment would be payable, in place of all other benefits provided by the
contract, or, may make periodic payments quarterly, semiannually or annually in
place of monthly payments.
PAYMENT UPON DEATH
DEATH BEFORE THE ANNUITY DATE
-----------------------------
On the death of any Owner, Annuitant or Joint Annuitant before the Annuity Date,
the death benefit equals the Contract Value on the date We receive due proof of
death.
Death of Owner
--------------
If the contract is held by a single Owner who dies before the Annuity Date, we
will pay the death benefit to the Beneficiary. If the Beneficiary has
predeceased the Owner, the Owner's estate will be the Beneficiary. If the
Beneficiary is the spouse of the sole Owner, the Beneficiary may elect to
continue the contract and exercise the rights of the Owner.
If the contract is held by multiple Owners and one or more Owners die before the
Annuity Date, we will pay the death benefit to the surviving Owner(s), if any,
who will be deemed to be the Beneficiary(ies). If the only Owners of the
contract are spouses of each other, the surviving spouse may elect to continue
the contract.
Distribution on Death of Owner
------------------------------
Any Beneficiary who is a natural person, may, within one year after we receive
due proof of death, elect to receive a Payment Option. The Payment Option
selected may not extend beyond such Beneficiary's life or life expectancy and
the payments must begin within one year after death. If a Payment Option is not
elected or the Beneficiary is a non-natural person, the entire Contract Value
will be distributed in a lump sum no later than five years after the date of
death.
Death of Annuitant or Joint Annuitant
-------------------------------------
If the Annuitant or Joint Annuitant die before the Annuity Date, we will pay the
death benefit to the Owner(s) who will be deemed to be the Beneficiary(ies). If
there is no surviving Owner(s), we will pay the death benefit to the
Beneficiary(ies). Payment will be made as described above in "Distribution on
Death of Owner".
ADDITIONAL RIDER BENEFITS
--------------------------------------------------------------------------------
You may elect additional benefits that are available under your contract. A
charge may be deducted from your contract value for each additional rider
benefit chosen.
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More details will be included in the form of a rider to your contract if any of
these benefits is chosen. The following benefits are currently available (if
approved in your state). Additional riders also may be available as described in
your policy.
GUARANTEED MINIMUM PAYMENT RIDER
This rider is only available if you elect it when you purchase your contract. It
guarantees that the each annuity payment will never be less than the initial
annuity payment as long as no partial withdrawals are taken. If a partial
withdrawal is taken, then the annuity payment will be reduced proportionately by
the withdrawal amount.
The charge for this rider is taken in the form of an additional risk and
administrative fee of up to 1.00%. We reserve the right to limit the subaccounts
available when this rider is elected.
OPTIONAL PROGRAMS AND BENEFITS
TRANSFERS
You may transfer all or a portion of the Annuity Units of this contract among
one or more of the Subaccounts. No transfers may be made from the Fixed Income
Allocation to the Subaccounts. Transfers may be made by telephone or Written
Request. We reserve the right to limit the number of transfers you may make each
Contract Year. However, You may make up to at least twelve transfers per
Contract Year among the Subaccounts. Once per Contract Year You may transfer all
or a portion of the Annuity Units from the Subaccounts to the Fixed Income
Allocation. Transfers from the Subaccounts to the Fixed Income Allocation will
affect the amount of future Fixed Annuity Payments. Following a transfer from
the Subaccounts to the Fixed Income Allocation, We will calculate the Commuted
Value of remaining Fixed Annuity Payments using the underlying interest rate.
The amount of future Fixed Annuity Payments will be determined by the Commuted
Value of remaining Fixed Annuity Payments, the amount transferred to the Fixed
Income Allocation and the purchase rate in effect on the date of the Transfer
for the Annuity Payment Option chosen.
Any transfer charge will be deducted from the Subaccounts from which the amounts
are to be transferred with each such Subaccount bearing a pro rata share of the
transfer charge. The value of each Subaccount will be determined on the
Valuation Date that coincides with the date of transfer. Any Annuity Units held
under a Subaccount of the Separate Account as the result of any transfer shall
retain its original Premium Payment Date.
You may also request transfers and changes in payment allocations among
available subaccounts or from the subaccounts to the FIA by calling VAO at
800/541-0171 between the hours of 8:30 a.m. and 4:00 p.m. Eastern Time on any
valuation date. Unless you elect in writing not to authorize telephone transfers
or allocation changes, telephone transfer orders and allocation changes will
also be accepted on your behalf from your registered representative. We will
employ reasonable procedures to confirm that telephone instructions are genuine.
We will require verification of account information and will record telephone
instructions on tape. All telephone transfers and allocation changes will be
confirmed in writing to you. To the extent that procedures reasonably designed
to prevent unauthorized transfers are not followed, we may be liable for
following telephone instructions for transfers that prove to be fraudulent.
However, you will bear the risk of loss resulting from instructions entered by
an unauthorized third party we reasonably believe to be genuine. These telephone
exchange and allocation change privileges may be modified or terminated at any
time. In particular, during times of extreme market volatility, telephone
privileges may be difficult to exercise. In such cases you should submit written
instructions.
Because excessive trading can hurt fund performance and harm all contract
owners, we reserve the right to temporarily or permanently terminate exchange
privileges or reject any specific order from anyone whose transactions seem to
follow a timing pattern, including those who request more than one exchange out
of a subaccount within any 30-day period. We will not accept batch transfer
instructions from registered representatives (acting under powers of attorney
for multiple contract owners), unless we have entered into a third-party
transfer service agreement with the registered representative's broker-dealer
firm.
No surrender charge will be assessed when a transfer is made. The date a payment
was originally credited for the purpose of calculating the surrender charge will
remain the same. Currently, there is no charge for transfers; however, we
reserve the right to charge a transfer fee of up to $20 per transfer after the
first ten transfers in each contract year to defray administrative costs.
Currently, unlimited transfers are permitted; however, we reserve the right to
change our policy to limit the number of transfers made during each
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contract year. However, you will be permitted at least twelve transfers during
each contract year.
No transfers may be made from the FIA.
We reserve the right to limit the number of subaccounts you may elect to a total
of 18 over the life of the contract unless changes in federal and/or state
regulation, including tax, securities and insurance law require us to impose a
lower limit.
SURRENDER OF CONTRACT; PARTIAL WITHDRAWALS
If the annuitant is living, withdrawals may be made from amounts held under
Payment Options B, D, E or F. A signed written request for withdrawal must be
sent to VPMO. If you have not yet reached age 59 1/2, a 10% penalty tax may
apply on taxable income withdrawn. See "Federal Income Taxes." The appropriate
number of annuity units of a subaccount will be redeemed at their value next
determined after the receipt by VPMO of a written notice in a form satisfactory
to us. Annuity units redeemed in a partial withdrawal from multiple subaccounts
will be redeemed on a pro rata basis unless you designate otherwise.
Under payment options B or D, you may withdraw, less any surrender charge,
amounts equal to the commuted value of the payments that would have been made
during the certain period you chose under the annuity payout option.
If you withdraw the entire commuted value of the annuity payments we would have
made during the certain period, we will not make any annuity payments during the
years remaining in the certain period. If you withdraw only a portion of the
commuted value of the annuity payments we would have made during the certain
period, we will reduce the remaining annuity payments during the years remaining
in the certain period. The remaining annuity payments are reduced by the same
percentage as the percentage of the commuted value surrendered. Variable
payments will be commuted at the assumed interest rate. Fixed annuity payments
will be commuted using the underlying interest rate.
Annuity payments that are to be made after the certain period is over will not
change.
Under payment options E and F, you may take withdrawals of annuity units,
subject to any applicable surrender charges. Withdrawals under payment options E
and F will reduce the number of remaining annuity units and affect the amount of
future payments.
The resulting cash payment will be made in a single sum, ordinarily within seven
days after receipt of such notice. However, redemption and payment may be
delayed under certain circumstances. See "Deferment of Payment." There may be
adverse tax consequences to certain surrenders and partial withdrawals. See
"Surrenders or Withdrawals Prior to the contract Maturity Date." A deduction for
surrender charges may be imposed on partial withdrawals or complete surrender of
a contract. See "Surrender Charges." Any surrender charge is imposed on a
first-in, first-out basis.
Any request for a withdrawal from, or complete surrender of, a contract should
be mailed to Phoenix Variable Products Mail Operations, PO Box 8027, Boston,
Massachusetts 02266-8027.
LAPSE OF CONTRACT
The contract will terminate and lapse without value, if on any valuation date:
[diamond] The contract value is zero; or
[diamond] The minimum payment due is less than $20.
PHL Variable will notify you in writing that the contract has lapsed.
VARIABLE ACCOUNT VALUATION PROCEDURES
--------------------------------------------------------------------------------
VALUATION DATE
A valuation date is every day the NYSE is open for trading. The NYSE is
scheduled to be closed on the following days: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. The Board of Directors of the
NYSE reserves the right to change this schedule as conditions warrant. On each
valuation date, the value of the Account is determined at the close of the NYSE
(currently 4:00 p.m. Eastern Time).
VALUATION PERIOD
Valuation period is that period of time from the beginning of the day following
a valuation date to the end of the next following valuation date.
ACCUMULATION UNIT VALUE
The value of one accumulation unit was set at $1.0000 on the date assets were
first allocated to a subaccount. The value of one accumulation unit on any
subsequent valuation date is determined by multiplying the immediately
preceding accumulation unit value by the applicable net investment factor for
the valuation period ending on such valuation date. After the first valuation
period, the accumulation unit value reflects the cumulative investment
experience of that subaccount.
ANNUITY UNIT VALUE
The value of one annuity unit was set at $1.0000 on the date assets were first
allocated to a subaccount. The value of one annuity unit on any subsequent
valuation date is determined by multiplying the immediately preceding annuity
unit value by the applicable net investment factor for the valuation period
ending on such valuation date divided by 1.000000 plus the rate of interest
for the number of days in the valuation period based on the assumed interest
rate.
NET INVESTMENT FACTOR
The net investment factor for any valuation period is equal to 1.000000 plus the
applicable net investment rate for such valuation period. A net investment
factor may be more or less than 1.000000 depending on whether the assets gained
or lost value that day. To determine the net investment rate for any valuation
period for the funds allocated to each subaccount, the following steps are
taken: (a) the aggregate accrued investment income and capital gains and losses,
whether realized or unrealized, of the subaccount for such valuation period is
computed, (b) the amount in (a) is then adjusted by the sum of the charges and
credits for any applicable income taxes and the deductions at the beginning
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of the valuation period for risk and administrative fee, and (c) the results of
(a) as adjusted by (b) are divided by the aggregate unit values in the
subaccount at the beginning of the valuation period.
MISCELLANEOUS PROVISIONS
--------------------------------------------------------------------------------
ASSIGNMENT
Owners of contracts issued in connection with non-tax qualified plans may assign
their interest in the contract without the consent of the beneficiary. A written
notice of such assignment must be filed with VPMO before it will be honored.
A pledge or assignment of a contract is treated as payment received on account
of a partial withdrawal of a contract. See "Surrenders of Contracts; Partial
Withdrawals."
In order to qualify for favorable tax treatment, contracts issued in connection
with tax qualified plans may not be sold, assigned, discounted or pledged as
collateral for a loan or as security for the performance of an obligation, or
for any other purpose, to any person other than to us.
DEFERMENT OF PAYMENT
Payment of the contract value in a single sum upon a partial withdrawal or
complete surrender of a contract will ordinarily be made within seven days after
receipt of the written request by VPMO. However, we may postpone payment of the
value of any annuity units at times (a) when the NYSE is closed, other than
customary weekend and holiday closings, (b) when trading on the NYSE is
restricted, (c) when an emergency exists as a result of which disposal of
securities in the fund is not reasonably practicable or it is not reasonably
practicable to determine the contract value or (d) when a governmental body
having jurisdiction over us by order permits such suspension. Rules and
regulations of the SEC, if any, are applicable and will govern as to whether
conditions described in (b), (c) or (d) exist.
FREE LOOK PERIOD
We may mail the contract to you or we may deliver it to you in person. You may
surrender a contract for any reason within 20 days and receive, in cash, the
adjusted value of your premium. If applicable state law requires, we will
return the full amount of the premium we received. (A longer Free Look Period
may be required by your state.)
You may receive more or less than your premium depending on investment
experience of the Phoenix-Goodwin Money Market subaccount during the Free Look
Period. If applicable state law requires, we will return the full amount of the
premium we received.
Your premium will temporarily be applied to the Phoenix-Goodwin Money Market
subaccount until the end of the Free Look Period. At the expiration of the Free
Look Period, the value of the annuity units held in the Phoenix-Goodwin Money
Market subaccount will be allocated among the available subaccounts and the FIA
in accordance with your allocation when you purchased the contract.
AMENDMENTS TO CONTRACTS
Contracts may be amended to conform to changes in applicable law or
interpretations of applicable law, or to accommodate design changes. Changes in
the contract may need to be approved by contract owners and state insurance
departments. A change in the contract that necessitates a corresponding change
in the prospectus or the SAI must be filed with the SEC.
SUBSTITUTION OF FUND SHARES
Although we believe it to be highly unlikely, it is possible that in the
judgment of our management, one or more of the series of the funds may become
unsuitable for investment by contract owners because of a change in investment
policy, or a change in the tax laws, or because the shares are no longer
available for investment. In that event, we may seek to substitute the shares of
another series or the shares of an entirely different fund. Before this can be
done, the approval of the SEC, and possibly one or more state insurance
departments, will be required.
OWNERSHIP OF THE CONTRACT
Ordinarily, the purchaser of a contract is both the owner and the annuitant and
is entitled to exercise all the rights under the contract. However, the owner
may be an individual or entity other than the annuitant. Spouses may own a
contract as joint owners. Transfer of the ownership of a contract may involve
federal income tax consequences, and a qualified advisor should be consulted
before any such transfer is attempted.
FEDERAL INCOME TAXES
--------------------------------------------------------------------------------
INTRODUCTION
The contracts are designed for use with retirement plans which may or may not be
tax-qualified plans under the provisions of the Internal Revenue Code of 1986,
(the "Code"). The contracts may be used to establish regular, Simple and Roth
IRAs. The contracts will not be issued in connection with other tax-qualified
plans such as employer-sponsored or tax-sheltered annuity plans. The ultimate
effect of federal income taxes on the amounts held under a contract, on annuity
payments and on the economic benefits of the contract owner, annuitant or
beneficiary depends on our tax status, on the type of retirement plan for which
the contract is purchased, and upon the tax and employment status of the
individual concerned.
The following discussion is general in nature and is not intended as tax advice.
The income tax rules are
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complicated and this discussion can only make you aware of the issues. Each
person concerned should consult a professional tax advisor. No attempt is made
to consider any estate or inheritance taxes or any applicable state, local or
other tax laws. Moreover, the discussion is based upon our understanding of the
federal income tax laws as they are currently interpreted. No representation is
made regarding the likelihood of continuation of the federal income tax laws or
the current interpretations by the Internal Revenue Service (the "IRS"). We do
not guarantee the tax status of the contracts. Purchasers bear the complete risk
that the contracts may not be treated as "annuity contracts" under federal
income tax laws. For a discussion of federal income taxes as they relate to the
funds, please see the accompanying prospectuses for the funds.
INCOME TAX STATUS
We are taxed as a life insurance company under Part 1 of Subchapter L of the
Code. Since the Account is not a separate entity from PHL Variable and its
operations form a part of PHL Variable, it will not be taxed separately as a
"regulated investment company" under Subchapter M of the Code. Investment income
and realized capital gains on the assets of the Account are reinvested and taken
into account in determining the contract value. Under existing federal income
tax law, the Account's investment income, including realized net capital gains,
is not taxed to us. We reserve the right to make a deduction for taxes should
they be imposed on us with respect to such items in the future.
TAXATION OF ANNUITIES IN GENERAL--NON-QUALIFIED PLANS
Section 72 of the Code governs taxation of annuities. In general, a contract
owner is not taxed on increases in value of the units held under a contract
until some form of distribution is made. However, in certain cases the increase
in value may be subject to tax currently. In the case of contracts not owned by
natural persons, see "Contracts Owned by Non-Natural Persons." In the case of
contracts not meeting the diversification requirements, see "Diversification
Standards."
SURRENDERS OR WITHDRAWALS
For fixed annuity payments, the taxable portion of each payment is determined by
using a formula known as the "exclusion ratio," which establishes the ratio that
the investment in the contract bears to the total expected amount of annuity
payments for the term of the contract. That ratio is then applied to each
payment to determine the non-taxable portion of the payment. The remaining
portion of each payment is taxed as ordinary income. For variable annuity
payments, the taxable portion is determined by a formula that establishes a
specific dollar amount of each payment that is not taxed. The dollar amount is
determined by dividing the investment in the contract by the total number of
expected periodic payments. The remaining portion of each payment is taxed as
ordinary income. Once the excludable portion of annuity payments equals the
investment in the contract, the balance of the annuity payments will be fully
taxable. For certain regular IRAs and all Simple IRAs, there may be no
investment in the contract resulting in the full amount of the payments being
taxable. A simplified method of determining the exclusion ratio is effective
with respect to qualified plan annuities starting after November 18, 1996.
Withholding of federal income taxes on all distributions may be required unless
the recipient elects not to have any amounts withheld and properly notifies VPMO
of that election.
PENALTY TAX ON CERTAIN SURRENDERS AND WITHDRAWALS
Amounts surrendered or distributed before the taxpayer reaches age 59 1/2 are
subject to a penalty tax equal to ten percent (10%) of the portion of such
amount that is includable in gross income. However, the penalty tax will not
apply to withdrawals: (i) made on or after the death of the contract owner (or
where the contract owner is not an individual, the death of the "Primary
Annuitant," who is defined as the individual the events in whose life are of
primary importance in affecting the timing and amount of the payout under the
contract); (ii) attributable to the taxpayer's becoming totally disabled within
the meaning of Code Section 72(m)(7); (iii) which are part of a series of
substantially equal periodic payments made (not less frequently than annually)
for the life (or life expectancy) of the taxpayer, or the joint lives (or joint
life expectancies) of the taxpayer and his or her beneficiary; (iv) allocable to
investment in the contract before August 14, 1982; (v) under a qualified funding
asset (as defined in Code Section 130(d)); (vi) under an immediate annuity
contract (as defined in Code Section 72(u)(4)); or (vii) that are purchased by
an employer on termination of certain types of qualified plans and which are
held by the employer until the employee separates from service.
If the penalty tax does not apply to a withdrawal as a result of the application
of item (iii) above, and the series of payments are subsequently modified (other
than by reason of death or disability), the tax for the first year when the
modification occurs will be increased by an amount (determined by the Treasury
regulations) equal to the tax that would have been imposed but for item (iii)
above, plus interest for the deferral period, but only if the modification takes
place: (a) within 5 years from the date of the first payment, or (b) before the
taxpayer reaches age 59 1/2.
Separate tax withdrawal penalties apply to IRAs. See "Penalty Tax on
Surrenders and Withdrawals from IRAs."
ADDITIONAL CONSIDERATIONS
TRANSFER OF ANNUITY CONTRACTS
Transfers of non-qualified contracts prior to the maturity date for less than
full and adequate consideration to the contract owner at the time of such
transfer, will trigger tax on the gain in the contract, with the transferee
getting a step-up in basis for the amount included in the contract
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owner's income. This provision does not apply to transfers between spouses or
incident to a divorce.
CONTRACTS OWNED BY NON-NATURAL PERSONS
If a non-natural person (for example, a corporation) holds the contract the
income on that contract (generally the increase in the net surrender value less
the premium paid) is includable in income each year. The rule does not apply
where the non-natural person is the nominal owner of a contract and the
beneficial owner is a natural person. The rule also does not apply where the
annuity contract is acquired by the estate of a decedent, where the contract is
held under an IRA, where the contract is a qualified funding asset for
structured settlements, or where the contract is purchased on behalf of an
employee upon termination of a qualified plan, and nor if the annuity contract
is an immediate annuity.
SECTION 1035 EXCHANGES
Code Section 1035 provides, in general, that no gain or loss shall be recognized
on the exchange of one annuity contract for another. A replacement contract
obtained in a tax-free exchange of contracts generally succeeds to the status of
the surrendered contract. If the surrendered contract was issued prior to August
14, 1982, the tax rules that formerly provided that the surrender was taxable
only to the extent the amount received exceeds the contract owner's investment
in the contract will continue to apply. In contrast, contracts issued on or
after January 19, 1985 are, in a Code Section 1035 exchange, treated as new
contracts for purposes of the distribution-at-death rules. Special rules and
procedures apply to Code Section 1035 transactions. Prospective contract owners
wishing to take advantage of Code Section 1035 should consult their tax
advisers.
MULTIPLE CONTRACTS
Code Section 72(e)(11)(A)(ii) provides that for contracts entered into after
October 21, 1988, for purposes of determining the amount of any distribution
under Code Section 72(e) (amounts not received as annuities) that is includable
in gross income, all non-qualified deferred annuity contracts issued by the same
insurer (or affiliate) to the same contract owner during any calendar year are
to be aggregated and treated as one contract. Thus, any amount received under
any such contract prior to the contract maturity date, such as a withdrawal,
dividend or loan, will be taxable (and possibly subject to the 10% penalty tax)
to the extent of the combined income in all such contracts.
The Treasury Department has specific authority to issue regulations that prevent
the avoidance of Code Section 72(e) through the serial purchase of annuity
contracts or otherwise. In addition, there may be situations where the Treasury
may conclude that it would be appropriate to aggregate two or more contracts
purchased by the same contract owner. Accordingly, a contract owner should
consult a competent tax adviser before purchasing more than one contract or
other annuity contracts.
DIVERSIFICATION STANDARDS
DIVERSIFICATION REGULATIONS
To comply with the diversification regulations under Code Section 817(h)
("Diversification Regulations"), after a start-up period, each series of the
funds will be required to diversify its investments. The Diversification
Regulations generally require that, on the last day of each calendar quarter
that the series' assets be invested in no more than:
[diamond] 55% in any 1 investment
[diamond] 70% in any 2 investments
[diamond] 80% in any 3 investments
[diamond] 90% in any 4 investments
A "look-through" rule applies to treat a pro rata portion of each asset of a
series as an asset of the Account, and each series of the funds are tested for
compliance with the percentage limitations. All securities of the same issuer
are treated as a single investment. As a result of the 1988 Act, each government
agency or instrumentality will be treated as a separate issuer for purposes of
these limitations.
The U.S. Treasury Department has indicated that the Diversification Regulations
do not provide guidance regarding the circumstances in which contract owner
control of the investments of the Account will cause the contract owner to be
treated as the owner of the assets of the Account, thereby resulting in the loss
of favorable tax treatment for the contract. At this time, it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance. The amount of contract owner control which may be
exercised under the contract is different in some respects from the situations
addressed in published rulings issued by the IRS in which was held that the
policyowner was not the owner of the assets of the separate account. It is
unknown whether these differences, such as the contract owner's ability to
transfer among investment choices or the number and type of investment choices
available, would cause the contract owner to be considered as the owner of the
assets of the Account resulting in the imposition of federal income tax to the
contract owner with respect to earnings allocable to the contract prior to
receipt of payments under the contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling generally will be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the contract owner being
retroactively determined to be the owner of the assets of the Account.
Due to the uncertainty in this area, we reserve the right to modify the contract
in an attempt to maintain favorable tax treatment.
We represent that we intend to comply with the Diversification Regulations to
assure that the contracts
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continue to be treated as annuity contracts for federal income tax purposes.
DIVERSIFICATION REGULATIONS AND QUALIFIED PLANS
Code Section 817(h) applies to a variable annuity contract other than a pension
plan contract. The Diversification Regulations reiterate that the
diversification requirements do not apply to a pension plan contract. The IRAs
(described below) are defined as "pension plan contracts" for these purposes.
Notwithstanding the exception of IRA contracts from application of the
diversification rules, all investments of the PHL Variable IRA contracts (i.e.,
the funds) will be structured to comply with the diversification standards
because the funds serve as the investment vehicle for non-qualified contracts as
well as IRA contracts.
INDIVIDUAL RETIREMENT ANNUITY
The contract may be used with several types of IRAs. The tax rules applicable to
IRAs vary according to the type of IRAs. No attempt is made here to provide more
than general information about the use of the contracts with the various types
of IRAs.
On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE V.
NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The contracts sold by PHL Variable in connection
with certain IRAs which are considered sponsored by an employer for its
employees will utilize annuity tables which do not differentiate on the basis of
sex. Such annuity tables also will be available for use in connection with
certain non-qualified deferred compensation plans.
IRAS
Code Sections 408 and 408A permit eligible individuals to contribute to an
individual retirement program known as an "IRA." These IRAs are subject to
limitations on the amount which may be contributed, the persons who may be
eligible and on the time when distributions may commence. In addition,
distributions from certain other types of qualified plans may be placed on a
tax-deferred basis into an IRA. Effective January 1, 1997, employers may
establish a new type of IRA called SIMPLE (Savings Incentive Match Plan for
Employees). Special rules apply to participants' contributions to and
withdrawals from SIMPLE IRAs. Also effective January 1, 1997, salary reduction
IRAs (SARSEP) no longer may be established. Effective January 1, 1998,
individuals may establish Roth IRAs. Special rules also apply to contributions
to and withdrawals from Roth IRAs.
PENALTY TAX ON CERTAIN SURRENDERS AND WITHDRAWALS
FROM IRAS
Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion of
certain early distribution from IRAs qualified under Code The penalty is
increased to 25% instead of 10% for SIMPLE IRAs if distribution occurs within
the first two years of the contract owner's participation in the SIMPLE IRA. To
the extent amounts are not includable in gross income because they have been
properly rolled over to an IRA or to another eligible IRA or qualified plan, no
tax penalty will be imposed. The tax penalty will not apply to the following
distributions: (a) if distribution is made on or after the date on which the
contract owner or annuitant (as applicable) reaches age 59 1/2; (b)
distributions following the death or disability of the contract owner or
annuitant (as applicable) (for this purpose disability is as defined in Section
72(m)(7) of the Code); (c) distributions that are part of substantially equal
periodic payments made not less frequently than annually for the life (or life
expectancy) of the contract owner or annuitant (as applicable) or the joint
lives (or joint life expectancies) of such contract owner or annuitant (as
applicable) and his or her designated beneficiary; (d) distributions made to the
contract owner or annuitant (as applicable) to the extent such distributions do
not exceed the amount allowable as a deduction under Code Section 213 to the
contract owner or annuitant (as applicable) for amounts paid during the taxable
year for medical care; (e) distributions from an IRA for the purchase of medical
insurance (as described in Section 213(d)(1)(D) of the Code) for the contract
owner and his or her spouse and dependents if the contract owner has received
unemployment compensation for at least 12 weeks. This exception will no longer
apply after the contract owner has been reemployed for at least 60 days and (f)
distributions for first-time home purchase expenses (maximum $10,000) or certain
qualified educational expenses of the contract owner, spouse, children or
grandchildren of the contract owner.
Roth IRAs are subject to the early distribution penalties described above. In
addition, Roth IRAs, which contain amounts converted from regular or Simple
IRAs, are subject to a 10% penalty if made prior to the expiration of the
five-year holding period beginning with the year of the conversion.
Generally, distributions from regular and Simple IRAs must commence no later
than April 1 of the calendar year following the year in which the contract owner
attains age 70 1/2. The required distribution rules do not apply to Roth IRAs
provided Roth IRA rules regarding age and holding periods have been met.
Required distributions must be over a period not exceeding the life expectancy
of the individual or the joint lives or life expectancies of the individual and
his or her designated beneficiary. If the required minimum distributions are not
made, a 50% penalty tax is imposed as to the amount not distributed.
SEEK TAX ADVICE
The above description of federal income tax consequences of the different types
of IRAs which may be funded by the contracts offered by this prospectus is only
a brief summary meant to alert you to the issues and is not intended as tax
advice. The rules governing the provisions of IRAs are extremely complex and
often difficult to comprehend. Anything less than full compliance with the
applicable rules, all of which are subject to change, may have adverse tax
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consequences. A prospective contract owner considering adoption of an IRA and
purchase of a contract in connection therewith should first consult a qualified
tax adviser, with regard to the suitability of the contract as an investment
vehicle for the IRA.
SALES OF CONTRACTS
--------------------------------------------------------------------------------
The principal underwriter of the contracts is PEPCO. Contracts may be purchased
through registered representatives of W.S. Griffith & Company, Inc. ("WSG") who
are licensed to sell PHL Variable annuity contracts. WSG is an indirect
wholly-owned subsidiary of Phoenix Home Life Mutual Insurance Company. PEPCO is
an indirect, majority owned subsidiary of Phoenix Home Life Mutual Insurance
Company. contracts also may be purchased through other broker-dealers or
entities registered under or exempt under the Securities Exchange Act of 1934,
whose representatives are authorized by applicable law to sell contracts under
terms of agreement provided by PEPCO and terms of agreement provided by PHL
Variable.
In addition to reimbursing PEPCO for its expenses, we pay PEPCO an amount equal
to up to 7.25% of the payments made under the contract. PEPCO pays any qualified
distribution organization an amount, which may not exceed 7.25% of the payments
under the contract. We will pay any such amount paid with respect to contracts
sold through other broker-dealers to or through PEPCO. The amounts paid are not
deducted from the payments. Deductions for surrender charges (as described under
"Surrender Charges") may be used as reimbursement for commission payments.
Although the Glass-Steagall Act prohibits banks and bank affiliates from
engaging in the business of underwriting securities, banking regulators have not
indicated that such institutions are prohibited from purchasing variable annuity
contracts upon the order and for the account of their customers.
STATE REGULATION
--------------------------------------------------------------------------------
We are subject to the provisions of the Connecticut insurance laws applicable to
life insurance companies and to regulation and supervision by the Connecticut
Superintendent of Insurance. We also are subject to the applicable insurance
laws of all the other states and jurisdictions in which it does an insurance
business.
State regulation of PHL Variable includes certain limitations on the investments
that may be made for its General Account and separate accounts, including the
Account. It does not include, however, any supervision over the investment
policies of the Account.
REPORTS
--------------------------------------------------------------------------------
Reports showing the contract value and containing the financial statements of
the Account will be furnished to you at least annually.
VOTING RIGHTS
--------------------------------------------------------------------------------
As stated above, all of the assets held in an available subaccount will be
invested in shares of a corresponding series of the funds. We are the legal
owner of those shares and as such has the right to vote to elect the Board of
Trustees of the funds, to vote upon certain matters that are required by the
Investment Company Act of 1940 ("1940 Act") to be approved or ratified by the
shareholders of a mutual fund and to vote upon any other matter that may be
voted upon at a shareholder' meeting. However, we intend to vote the shares of
the funds at regular and special meetings of the shareholders of the funds in
accordance with instructions received from owners of the contracts.
We currently intend to vote fund shares attributable to any of our assets and
fund shares held in each subaccount for which no timely instructions from owners
are received in the same proportion as those shares in that subaccount for which
instructions are received. In the future, to the extent applicable federal
securities laws or regulations permit us to vote some or all shares of the fund
in its own right, it may elect to do so.
Matters on which owners may give voting instructions may include the following:
(1) election of the Board of Trustees of a fund; (2) ratification of the
independent accountant for a fund; (3) approval or amendment of the investment
advisory agreement for the series of the fund corresponding to the owner's
selected subaccount(s); (4) any change in the fundamental investment policies or
restrictions of each such series; and (5) any other matter requiring a vote of
the Shareholders of a fund. With respect to amendment of any investment advisory
agreement or any change in a series' fundamental investment policy, owners
participating in such series will vote separately on the matter.
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. The number of votes for which you may give us
instructions will be determined as of the record date for fund shareholders
chosen by the Board of Trustees of a fund. We will furnish you with proper forms
and proxies to enable them to give these instructions.
LEGAL MATTERS
--------------------------------------------------------------------------------
Edwin L. Kerr, Counsel, and Brian A. Giontonio, Counsel, Phoenix Home Life
Mutual Insurance Company, have provided advice on certain matters relating to
the federal
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securities and income tax laws in connection with the contracts described in
this prospectus.
SAI
--------------------------------------------------------------------------------
The SAI contains more specific information and financial statements relating to
the Account and PHL Variable. The Table of Contents of the SAI is set forth
below:
Underwriter
Calculation of Yield and Return
Calculation of Annuity Payments
Experts
Financial Statements
Contract owner inquiries and requests for a SAI should be directed, in writing,
to Phoenix Variable Products Mail Operations at P.O. Box 8027, Boston,
Massachusetts 02266-8027, or by calling VAO at 800/541-0171.
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APPENDIX A-1
PERFORMANCE HISTORY FOR CONTRACTS
--------------------------------------------------------------------------------
From time to time, the Account may include the performance history of any or all
subaccounts in advertisements, sales literature or reports. Performance
information about each subaccount is based on past performance only and is not
an indication of future performance. Performance information may be expressed as
yield and effective yield of the Phoenix-Goodwin Money Market Subaccount, as
yield of the Phoenix-Goodwin Multi-Sector Fixed Income Subaccount and as total
return of any subaccount. For the Phoenix-Goodwin Multi-Sector Fixed Income
Subaccount, quotations of yield will be based on all investment income per unit
earned during a given 30-day period (including dividends and interest), less
expenses accrued during the period ("net investment income") and are computed by
dividing the net investment income by the maximum offering price per unit on the
last day of the period.
When a subaccount advertises its total return, it usually will be calculated for
1 year, 5 years and 10 years or since inception if the subaccount has not been
in existence for at least 10 years. Total return is measured by comparing the
value of a hypothetical $1,000 investment in the subaccount at the beginning of
the relevant period to the value of the investment at the end of the period,
assuming the reinvestment of all distributions at net asset value and the
deduction of all applicable contract charges except for taxes (which vary by
state) at the beginning of the relevant period.
For those subaccounts within the Account that have not been available for one of
the quoted periods, the standardized average annual total return quotations may
show the investment performance such subaccount would have achieved (reduced by
the applicable charges) had it been available to invest in shares of the fund
for the period quoted.
THE SUBACCOUNTS FOR "TBD" COMMENCED OPERATIONS AS OF THE DATE OF THIS
PROSPECTUS, THEREFORE, TOTAL RETURN DATA ARE NOT AVAILABLE.
Current yield for the Phoenix-Goodwin Money Market Subaccount is based upon the
income earned by the subaccount over a 7-day period and then annualized, i.e.,
the income earned in the period is assumed to be earned every 7 days over a
52-week period and stated as a percentage of the investment. Effective yield is
calculated similarly but when annualized, the income earned by the investment is
assumed to be reinvested in subaccount units and thus compounded in the course
of a 52-week period. Yield and effective yield reflect the recurring charges on
the Account level excluding the annual administrative fee.
Yield calculations of the Phoenix-Goodwin Money Market subaccount used for
illustration purposes are based on the consideration of a hypothetical contract
owner's account having a balance of exactly 1 unit at the beginning of a 7-day
period, which period will end on the date of the most recent financial
statements. The yield for the subaccount during this 7-day period will be the
change in the value of the hypothetical contract owner's account's original
unit. The following is an example of how these yield quotations are calculated.
Example:
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:.......................... 1.001003
Calculation:
Ending account value.............................. 1.001003
Less beginning account value...................... 1.000000
Net change in account value....................... 0.001003
Base period return:
(adjusted change/beginning account value)......... 0.001003
Current yield = return x (365/7) =.................. 5.23%
Effective yield = [(1 + return)(365/7)]-1 =.......... 5.37%
The current yield and effective yield information will fluctuate, and
publication of yield information may not provide a basis for comparison with
bank deposits, 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 Account level.
A subaccount's performance may be compared to that of the Consumer Price Index
or various unmanaged equity or bond indices such as the Dow Jones Industrial
Average[SM], the Standard & Poor's 500 Composite Stock Price Index ("S&P 500"),
and the Europe Australia Far East Index, and also may be compared to the
performance of the other variable annuity accounts as reported by services such
as Lipper Analytical Services, Inc. ("Lipper"), CDA Investment Technologies,
Inc. ("CDA") and Morningstar, Inc. or in other various publications. Lipper and
CDA are widely recognized independent rating/ranking services. A subaccount's
performance also may be compared to that of other investment or savings
vehicles.
Advertisements, sales literature and other communications may contain
information about any series' or advisors' current investment strategies and
management style. Current strategies and style may change to respond to a
changing market and
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<PAGE>
economic conditions. From time to time, the Series may discuss specific
portfolio holdings or industries in such communications. To illustrate
components of overall performance, the series may separate their cumulative and
average annual returns into income results and capital gains or losses; or cite
separately as a return figure the equity or bond portion of a series' portfolio;
or compare a series' equity or bond return figure to well-known indices of
market performance including, but not limited to, the S&P 500, Dow Jones
Industrial Average[SM], First Boston High Yield Index and Solomon Brothers
Corporate and Government Bond Indices.
EACH FUND'S ANNUAL REPORT, AVAILABLE UPON REQUEST AND WITHOUT CHARGE, CONTAINS A
DISCUSSION OF THE PERFORMANCE OF THE FUNDS AND A COMPARISON OF THAT PERFORMANCE
TO A SECURITIES MARKET INDEX.
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APPENDIX B
DEDUCTIONS FOR PREMIUM TAXES
QUALIFIED AND NON-QUALIFIED ANNUITY CONTRACTS
--------------------------------------------------------------------------------
STATE NON-QUALIFIED QUALIFIED
----- ------------- ---------
California ................................ 2.35% 0.50%
Kentucky(1)................................
Maine...................................... 2.00
Nevada..................................... 3.50
South Dakota............................... 1.25
West Virginia.............................. 1.00 1.00
Wyoming.................................... 1.00
Commonwealth of Puerto Rico................ 1.00% 1.00%
NOTE: The above premium tax deduction rates are as of January 1, 2000. No
premium tax deductions are made for states not listed above. However,
premium tax statutes are subject to amendment by legislative act and to
judicial and administrative interpretation, which may affect both the
above list of states and the applicable tax rates. Consequently, we
reserve the right to deduct premium tax when necessary to reflect changes
in state tax laws or interpretation.
For a more detailed explanation of the assessment of Taxes, see "Deductions and
Charges--Tax."
(1)Effective January 1, 2000, Kentucky no longer imposes Premium Tax on variable
annuities.
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<PAGE>
APPENDIX C
ILLUSTRATION OF VALUES
--------------------------------------------------------------------------------
ILLUSTRATIONS OF ANNUITY PAYMENTS USING HISTORICAL RATES OF RETURN
The following graphs have been prepared to show how investment performance
affects Variable Annuity Payments over time. These graphs illustrate the
performance of a Non-Qualified contract under which Variable Annuity Payments
begin on the same date as the fund inception date of the subaccount being
illustrated. PHL Variable did not sell contracts prior to the date of this
prospectus (i.e., during any of the time periods shown) and therefore the
illustrations merely represent what Variable Annuity Payments might have been
under a hypothetical contract.
WHAT THE GRAPHS ILLUSTRATE
Each graph illustrates the value of variable annuity payments based on the
performance of particular subaccount for a hypothetical non-qualified contract
by plotting one point for each calendar year since the subaccount inception
date. Each point represents the monthly Variable Annuity Payment made on each
policy anniversary under the hypothetical contract. Each graph assumes that the
initial Variable Annuity Payment under the hypothetical contract is $1,000. All
the graphs end on 1/1/2000.
Monthly Variable Annuity Payments reflect the actual past investment return
after all expenses of the subaccounts over the periods shown in the graph. THE
MONTHLY VARIABLE ANNUITY PAYMENTS SHOWN IN THE GRAPHS ARE BASED ON A
HYPOTHETICAL CONTRACT AND PAST INVESTMENT RESULTS AND ARE NOT PROJECTIONS OR
INDICATIONS OR FUTURE RESULTS. PHL VARIABLE INSURANCE COMPANY DOES NOT GUARANTEE
OR SUGGEST THAT ANY CONTRACT ISSUED BY IT WOULD GENERATE THESE OR SIMILAR
VARIABLE ANNUITY PAYMENTS FOR ANY PERIOD OF TIME. THE GRAPHS ARE FOR
ILLUSTRATION PURPOSES ONLY AND DO NOT REPRESENT FUTURE VARIABLE ANNUITY PAYMENTS
OR FUTURE INVESTMENT RETURNS. Variable Annuity Payments under a real contract
may be more or less than those shown in these illustrations if the actual
returns of the subaccount selected by the contract owner are different than the
past returns of the subaccounts. Because it is very likely that a subaccount's
investment returns will fluctuate over time, one can expect variable annuity
payments under a real contract to fluctuate. Under a real contract, the total
amount of variable annuity payments ultimately received by the payee depends
upon which annuity payment option is chosen and, for life contingent options,
how long the annuitant lives. (See "Payment Options. ")
ASSUMPTIONS ON WHICH THE HYPOTHETICAL CONTRACT IS BASED
In order to illustrate a hypothetical contract, PHL Variable Insurance Company
had to make several assumptions about the contract. These assumptions are that:
(1) the hypothetical contract is a Non-Qualified contract, (2) the entire Net
Premium is allocated to the subaccount being illustrated, (3) the contract owner
selected an Assumed Interest Rate of 3%, (4) the contract owner elects to
receive monthly Variable Annuity Payments, (5) the entire value of the Annuity
Units on the Annuity Date under the Payment Option selected results in an
initial Variable Annuity Payment of $1,000, and (6) the Annuity Date is the same
as the fund inception date of the subaccount being illustrated. TO THE EXTENT
THE A REAL CONTRACT IS ISSUED UNDER ANY OTHER ASSUMPTIONS, THAT REAL CONTRACT
WOULD HAVE VARIABLE ANNUITY PAYMENTS DIFFERENT FROM THOSE ILLUSTRATED EVEN
DURING THE PERIOD ILLUSTRATED.
ASSUMED INTEREST RATE - Among the most important factors that determine the
amount of Variable Annuity Payments is the Assumed Interest Rate selected by the
contract owner. The hypothetical contract has an Assumed Interest Rate of 3%.
Subject to state approval, the contract owner may select an Assumed Interest
Rate of 3% or 6%. Generally, Variable Annuity Payments will increase from one
payment date to the next if the annualized net rate of return during that time
is greater than the Assumed Interest Rate. Standardized and non-standardized
average annual total returns as well as the subaccount annual return column
reflect the performance of the subaccount being illustrated without adjustment
for the Assumed Interest Rate.
THE $1,000 INITIAL ANNUITY PAYMENT - The hypothetical contract has an initial
Variable Annuity Payment of $1,000. The dollar amount of the first Variable
Annuity Payment under a real contract generally depends upon the Payment Option
selected, the value of the Annuity Units used to purchase the Variable Annuity
Payments, the annuity purchase rates in the contract on the Annuity Date, the
age of the annuitant, and in most cases, the sex of the annuitant. For each of
these illustrations, the entire Net Premium is allocated to the subaccount shown
in the illustrations.
30
<PAGE>
HISTORICAL ILLUSTRATIONS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
PHOENIX-GOODWIN MONEY MARKET
--------------------------------------------------------------------------------
TBD
Non-Standardized Average Annual Returns
FUND INCEPTION DATE/INITIAL ANNUITY DATE: 1/1/95 For the Periods Ended 12/31/1999**
-----------------------------
INITIAL VARIABLE ANNUITY PAYMENT AMOUNT: $1,000 <S> <C>
ANNUITY PAYMENT OPTION: 20 YEAR SPECIFIED PERIOD 1 Year xx.xx%
FREQUENCY OF ANNUITY INCOME: MONTHLY
ASSUMED INTEREST RATE: 3.0% 5 Year xx.xx%
AVERAGE MGMT FEE: 0.83%
RISK AND ADMINISTRATIVE: 1.25% 10 Year xx.xx%
Since Inception xx.xx%
--------------------------------------------------------------------------------
ANNUAL
PAYMENT CALCULATION DATE: MONTHLY PAYMENTS SUBACCOUNT RETURN
--------------------------------------------------------------------------------
July 3, 1995* $1,000 xx.xx% Standardized Average Annual Returns
July 3, 1996 $XXXX xx.xx% For the Periods Ended 12/31/1999**
July 3, 1997 $XXXX xx.xx% -----------------------------
July 3, 1998 $XXXX xx.xx% 1 Year xx.xx%
July 3, 1999 $XXXX xx.xx%
July 3, 2000 $XXXX xx.xx% 5 Year xx.xx%
10 Year xx.xx%
Since Inception xx.xx%
--------------------------------------------------------------------------------
</TABLE>
[GRAPHIC OMITTED]
CALENDAR YEAR VARIABLE ANNUITY PAYMENTS
*Fund Inception Date was xx/xx/xxxx. The monthly payment represents the monthly
payments if the first payment date was 7/31/1995. The Annual Subaccount Return
is based on the period from 7/31/1995 to 12/31/1995.
**Standardized Average Annual Total Returns differ from the Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
contingent deferred sales charge and the latter do not.
31
<PAGE>
ILLUSTRATIONS OF ANNUITY PAYMENTS ASSUMING HYPOTHETICAL
RATES OF RETURN.
The following tables have been prepared to show how investment performance
affects variable annuity payments over time. The monthly annuity payments
reflect three different assumptions for a constant investment return before all
expenses: 0%, 6%, and 12%. These are hypothetical rates of return and We do not
guarantee that the contract would earn these returns for any one year or
sustained period of time. The tables are for illustrative purposes only and do
not represent past or future investment returns.
The monthly annuity payments may be more or less than shown if the actual
returns of the subaccounts are different than those illustrated. Since it is
very likely that investment returns will fluctuate over time, the amount of
variable annuity payments will fluctuate also. The total amount of annuity
payments ultimately received will depend on cumulative investments returns and
how long the Annuitant lives and Option chosen.
The Assumed Interest Rate will also affect the amount of variable annuity
payments. Payments will increase from one payment calculation date to the next
if the net investment factor is greater than the Assumed Interest Rate, and will
decrease if the net investment factor is less than the Assumed Interest Rate.
Two illustrations follow. The first is based on an Assumed Interest Rate of 3%
and the second is based on an Assumed Interest Rate of 6%.
The monthly annuity payment reflect the deduction of all fees and expenses.
Actual Fund fees and expenses will vary from year to year and may be higher or
lower than the assumed rate. The illustrations assume that each Fund will incur
expenses at an average annual rate of 0.83% of the average daily net assets.
This is a weighted average of the Fund expenses shown in the Fund Annual Expense
table on page 6. The Risk and Administrative Fee is calculated in aggregate, at
an annual rate of 1.25% of the average daily net assets of the Subaccounts.
After taking these fees and expenses into account, the illustrated gross
investment returns of 05, 6% and 12% are approximately equal to net rates of
-2.08%, 3.92% and 9.92%, respectively. The $24 Annual Administraive Charge is
taken as a $2 deduction from each variable annuity payment.
32
<PAGE>
--------------------------------------------------------------------------------
TBD
INITIAL ANNUITY DATE: 1/1/01
INITIAL VARIABLE ANNUITY PAYMENT AMOUNT: $1,000
ANNUITY PAYMENT OPTION: 20 YEAR SPECIFIED PERIOD
FREQUENCY OF ANNUITY INCOME: MONTHLY
ASSUMED INTEREST RATE: 3.0%
AVERAGE MGMT FEE: 0.83%
RISK AND ADMINISTRATIVE: 1.25%
--------------------------------------------------------------------------------
ANNUAL RATE OF INTEREST BEFORE EXPENSES: 0.00% 6.00% 12.00%
ANNUAL RATE OF INTEREST AFTER EXPENSES: -2.08% 3.92% 9.92%
PAYMENT CALCULATION DATE: MONTHLY PAYMENTS
--------------------------------------------------------------------------------
January 1, 2001 $1,000 $1,000 $1,000
January 1, 2002 $951 $1,008 $1,065
January 1, 2003 $904 $1,016 $1,134
January 1, 2004 $860 $1,024 $1,208
January 1, 2005 $817 $1,032 $1,287
January 1, 2006 $777 $1,040 $1,371
January 1, 2007 $739 $1,049 $1,460
January 1, 2008 $702 $1,057 $1,555
January 1, 2009 $668 $1,065 $1,656
January 1, 2010 $635 $1,074 $1,764
January 1, 2011 $604 $1,082 $1,879
January 1, 2012 $574 $1,091 $2,001
January 1, 2013 $546 $1,100 $2,131
January 1, 2014 $519 $1,109 $2,270
January 1, 2015 $493 $1,117 $2,418
January 1, 2016 $469 $1,126 $2,575
January 1, 2017 $446 $1,135 $2,742
January 1, 2018 $424 $1,144 $2,921
January 1, 2019 $403 $1,153 $3,111
January 1, 2020 $383 $1,162 $3,313
--------------------------------------------------------------------------------
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ARE ILLUSTRATIVE ONLY AND
SHOULD NOT BE DEEMED TO REPRESENT PAST OR FUTURE INVESTMENT PERFORMANCE. ACTUAL
RATES OF RETURN MAY BE MORE OR LESS THAN SHOWN AND ARE BASED ON MANY FACTORS.
33
<PAGE>
--------------------------------------------------------------------------------
TBD
INITIAL ANNUITY DATE: 1/1/01
INITIAL VARIABLE ANNUITY PAYMENT AMOUNT: $1,000
ANNUITY PAYMENT OPTION: 20 YEAR SPECIFIED PERIOD
FREQUENCY OF ANNUITY INCOME: MONTHLY
ASSUMED INTEREST RATE: 6.0%
AVERAGE MGMT FEE: 0.83%
RISK AND ADMINISTRATIVE: 1.25%
--------------------------------------------------------------------------------
ANNUAL RATE OF INTEREST BEFORE EXPENSES: 0.00% 6.00% 12.00%
ANNUAL RATE OF INTEREST AFTER EXPENSES: -2.08% 3.92% 9.92%
PAYMENT CALCULATION DATE: MONTHLY PAYMENTS
--------------------------------------------------------------------------------
January 1, 2001 $1,000 $1,000 $1,000
January 1, 2002 $924 $979 $1,035
January 1, 2003 $853 $959 $1,071
January 1, 2004 $788 $939 $1,108
January 1, 2005 $728 $920 $1,147
January 1, 2006 $673 $901 $1,187
January 1, 2007 $621 $882 $1,229
January 1, 2008 $574 $864 $1,272
January 1, 2009 $530 $846 $1,316
January 1, 2010 $490 $829 $1,362
January 1, 2011 $452 $812 $1,409
January 1, 2012 $418 $795 $1,459
January 1, 2013 $386 $779 $1,510
January 1, 2014 $356 $763 $1,562
January 1, 2015 $329 $747 $1,617
January 1, 2016 $304 $731 $1,673
January 1, 2017 $281 $716 $1,732
January 1, 2018 $259 $702 $1,792
January 1, 2019 $239 $687 $1,854
January 1, 2020 $221 $673 $1,919
------------------------------------------------------------------------------
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ARE ILLUSTRATIVE ONLY AND
SHOULD NOT BE DEEMED TO REPRESENT PAST OR FUTURE INVESTMENT PERFORMANCE. ACTUAL
RATES OF RETURN MAY BE MORE OR LESS THAN SHOWN AND ARE BASED ON MANY FACTORS.
34
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
TBD
HOME OFFICE: PHOENIX VARIABLE PRODUCTS
One American Row MAIL OPERATIONS ("VPMO")
Hartford, Connecticut P.O. Box 8027
Boston, Massachusetts 02266-8027
PHL VARIABLE INSURANCE COMPANY
PHL VARIABLE ACCUMULATION ACCOUNT
SINGLE PREMIUM IMMEDIATE FIXED AND VARIABLE ANNUITY CONTRACT
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus, dated ____________________. You may obtain a
copy of the prospectus without charge by contacting PHL Variable Insurance
Company at the above address and telephone number.
-----------------
TABLE OF CONTENTS
PAGE
----
Underwriter.......................................................... B-2
Calculation of Yield and Return...................................... B-2
Calculation of Annuity Payments ..................................... B-3
Experts ............................................................. B-4
Financial Statements................................................. B-5
B-1
<PAGE>
UNDERWRITER
--------------------------------------------------------------------------------
PEPCO, an affiliate of PHL Variable, offers these contracts on a continuous
basis. No contracts were sold during the fiscal years ended December 31, 1997,
1998 and 1999; therefore PEPCO was not paid for sales of these contracts and
retained $0.
CALCULATION OF YIELD AND RETURN
--------------------------------------------------------------------------------
Yield of the Phoenix-Goodwin Money Market Subaccount. We summarize the following
information in the prospectus under the heading "Performance History." We
calculate the yield of the Phoenix-Goodwin Money Market Subaccount 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 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. 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.
The net change in value of the hypothetical account includes the daily net
investment income of the account (after expenses), but does not include realized
gains or losses or unrealized appreciation or depreciation on the underlying
fund shares.
The yield/return calculations include a risk and administrative fee equal to
1.40% on an annual basis.
The Phoenix-Goodwin Money Market Subaccount return and effective yield will vary
in response to fluctuations in interest rates and in the expenses of the
subaccount.
We do not include the maximum annual administrative fee in calculating the
current return and effective yield. Should such a fee apply to your account,
current return and/or effective yield for your account could be reduced.
Example Calculation:
The following is an example of how return/yield calculations for the
Phoenix-Goodwin Money Market Subaccount are calculated:
Value of hypothetical pre-existing account with exactly one
Unit at $1.000000
the beginning of the period:
Value of the same account (excluding capital
changes) at the end of the 7-day period:...... To
Calculation: Be
Ending account value.......................... Filed
Less beginning account value.................. By
Net change in account value................... Amendment
Base period return:
(adjusted change/beginning account value).....
Current yield = return x (365/7) =...............
Effective yield = [(1 + return)(365/7)]-1 =.......
Yields and total returns may be higher or lower than in the past and there is no
assurance that any historical results will continue.
Calculation of Total Return. We summarize the following information in the
prospectus under the heading, "Performance History." Total return measures the
change in value of a subaccount investment over a stated period. We compute
total returns by finding the average annual compounded rates of return over the
1-, 5- and 10-year periods that would equate the initial amount invested to the
ending redeemable value according to a formula. The formula for total return
includes the following steps:
(1) We assume a hypothetical $1,000 initial investment in the subaccount;
(2) We determine the value the hypothetical initial investment would have were
it redeemed at the end of each period. All recurring fees and any applicable
contingent deferred sales charge are deducted. This figure is the ending
redeemable value (ERV in the formula given below);
(3) We divide this value by the initial $1,000 investment, resulting in ratio of
the ending redeemable value to the initial value for that period;
(4) To get the average annual total return we take the n(th) root of the ratio
from step (3), where n equals the number of years in that period (e.g. 1, 5,
10), and subtract one.
B-2
<PAGE>
The formula in mathematical terms is:
R = ((ERV / II)(1/n)) - 1
Where:
II = a hypothetical initial payment of $1,000
R = average annual total return for the period
n = number of years in the period
ERV = ending redeemable value of the hypothetical
$1,000 for the period [see (2) and (3) above]
We normally calculate total return for 1-year, 5-year and 10-year periods for
each subaccount. If a subaccount has not been available for at least 10 years,
we will provide total returns for other relevant periods.
PERFORMANCE INFORMATION
Advertisements, sale literature and other communications may contain information
about series' or advisor's current investment strategies and management style.
An advisor may alter investment strategies and style in response to changing
market and economic conditions. A fund may wish to make known a series' specific
portfolio holdings or holdings in specific industries. A fund may also
separately illustrate the income and capital gain portions of a series' total
return. Performance might also be advertised by breaking down returns into
equity and debt components. A series may compare its equity or bond return
figure to any of a number of well-known benchmarks of market performance,
including, but not limited to:
The Dow Jones Industrial Average[SM](1)
First Boston High Yield Index
Salomon Brothers Corporate Index
Salomon Brothers Government Bond Index
The Standard & Poor's 500 Index (S&P 500)(2)
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:
Barrons
Business Week
Changing Times
Forbes
Fortune
Consumer Reports
Investor's Business Daily
Financial Planning
Financial Services Weekly
Financial World
Money
The New York Times
Personal Investor
Registered Representative
Stanger's Investment Adviser
The Stanger Register
U.S. News and World Report
The Wall Street Journal
A fund may also illustrate the benefits of tax deferral by comparing taxable
investments with investments through tax-deferred retirement plans.
The total return and yield may be used to compare the performance of the
subaccounts with certain commonly used standards for stock and bond market
performance. Such indexes include, but are not limited to:
The Dow Jones Industrial Average[SM] (1)
First Boston High Yield Index
Salomon Brothers Corporate Index
Salomon Brothers Government Bond Index
The S&P 500(2)
We may use historical performance of the subaccounts, the S&P 500, or other
recognized investment benchmark portfolio to illustrate periodic annuity income
amounts. We will reflect the 1.40% Risk and Administrative Fee and actual or
assumed subaccount expenses in all illustrations.
CALCULATION OF ANNUITY PAYMENTS
--------------------------------------------------------------------------------
See your prospectus in the section titled "The Annuity Period" for a description
of the payment options.
You elect a payment option when you purchase your contract as described in your
prospectus. You may not change the payment option you elect.
FIXED ANNUITY PAYMENTS
On the Annuity Date, a stream of Annuity Payments is purchased. The amount of
the Fixed Annuity Payment will be the value in the Contract allocated to the
Fixed Income Allocation, divided by $1,000, then multiplied by the appropriate
factor for the Payment Option selected.
Under Options A-E, guaranteed rates are based on the a-49 Annuity Table(4)
projected to 1985 with Projection Scale B. We use the minimum assumed interest
rate of 3%. If our rates in effect on the annuity date are more favorable (i.e.
higher-paying), we will use those rates.
B-3
<PAGE>
VARIABLE ANNUITY PAYMENTS
Variable Annuity Payments after the first payment will vary with the investment
experience of the Subaccounts. Payments may be either higher or lower than the
first payment.
Under Payment Options A, B, C, D, E and G, We determine the first payment by
multiplying the value in the contract held under the selected option in each
Subaccount by the applicable Payment Option rate. The first payment equals the
total of such amounts determined for each Subaccount. We determine future
payments under these options by multiplying the number of Annuity Units in each
Subaccount by the Annuity Unit Value for each Subaccount on the Payment
Calculation Date. The payment will equal the sum of the amounts provided by each
Subaccount.
Under Option F, We determine the amount of the initial distribution by dividing
the amount of value in the contract held under this option by the life
expectancy of the Annuitant.
Under all payment options, the first payment is based on an assumed interest
rate of either 3% or 6%. All subsequent payments may be higher or lower
depending on investment experience of the subaccounts.
The applicable rate used to determine the first variable annuity payment amount
will not be less than the rate based on the 1983 Table A (1983 IAM)(4) projected
with Projection Scale G to the year 2040, and with continued projection
thereafter, and on the assumed interest rate. If our rates in effect on the
annuity date are more favorable (i.e. higher-paying), we will use those
rates.
We deduct a daily charge for risk and administrative fee from contract
values held in the subaccounts. See your prospectus in the section titled
"Deductions and Charges".
EXPERTS
--------------------------------------------------------------------------------
The financial statements of PHL Variable Insurance Company as of December 31,
1999 and 1998 and for each of the three years in the period ended December 31,
1999 included herein have been so included in reliance on the respective report
of PricewaterhouseCoopers LLP, independent accountants, given on authority of
said firm as experts in auditing and accounting.
PricewaterhouseCoopers LLP, whose address is 100 Pearl Street, Hartford,
Connecticut 06103, also provides other accounting and tax-related services as
requested by PHL Variable from time to time.
Edwin L. Kerr, Counsel, and Brian Giantonio, Counsel, Phoenix Home Life Mutual
Insurance Company, have provided advice on certain matters relating to the
federal securities and income tax laws in connection with the contracts
described in this prospectus.
(1)The Dow Jones Industrial Average[SM] (DJIA[SM]) is an unweighted(3) 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[SM] 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[SM].
(2)The S&P 500 is a market-value weighted(3) 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. As of
December 31, 1999 it contained 376 industrial, 41 utility, 72 financial and
11 transportation issues. 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.
(3)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 Dow
Jones Industrial Average[SM]) uses stock price alone to determine the index
value. A company's relative size has no bearing on its impact on the index.
(4)The Society of Actuaries developed these tables to provide payment rates for
annuities based on a set of mortality tables acceptable to most regulating
authorities.
B-4
<PAGE>
PHL VARIABLE
ACCUMULATION ACCOUNT
FINANCIAL STATEMENTS
THE SUBACCOUNTS COMMENCED OPERATIONS AS OF THE DATE OF THIS PROSPECTUS;
THEREFORE, DATA FOR THESE SUBACCOUNTS ARE NOT YET AVAILABLE.
B-5
<PAGE>
PHL VARIABLE
INSURANCE COMPANY
FINANCIAL STATEMENTS
DECEMBER 31, 1999
To be filed with the N-4/A filing
B-6
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
PART C
OTHER INFORMATION
Registrant hereby represents that, in imposing certain restrictions upon
withdrawals from some annuity contracts, it is relying upon the no-action letter
given to the American Council of Life Insurance (publicly available November 28,
1988) (Ref. No. 1P-6-88) regarding compliance with Section 403(b) (ii) of the
Internal Revenue Code and that it is in compliance with the conditions for
reliance upon that letter set forth therein.
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The financial statements are included in Part B and condensed
financial information is included in Part A.
(b) Exhibits
(1) Resolution of the Board of Directors of PHL Variable
Insurance Company establishing the PHL Variable Accumulation
Account is incorporated by reference to Registrant's
Registration Statement (No. 33-87376) on Form N-4 dated
December 14, 1994.
(2) Not Applicable.
(3) Distribution of Policies
(a) Master Service and Distribution Compliance Agreement
between Registrant and Phoenix Equity Planning
Corporation dated December 31, 1996 is incorporated by
reference to Registrant's Form N-4 (File No. 33-87376)
Post-Effective Amendment No. 3, filed via Edgar on
April 30, 1997.
(b) Form of Agreement between Phoenix Equity Planning
Corporation and Registered Broker-Dealers with respect
to the sale of Contracts is incorporated by reference
to Registrant's Pre-Effective Amendment No. 1 to its
Form N-4 Registration Statement (File No. 33-87376)
dated July 20, 1995.
(4) (a) Form of Variable Annuity Contract to be filed with the
N-4/A filing.
(5) (a) Form of Application to be filed with the N-4/A filing.
(6) (a) Charter of PHL Variable Insurance Company is
incorporated by reference to Registrant's Registration
Statement (File No. 33-87376) on Form N-4 dated
December 14, 1994.
(b) By-laws of PHL Variable Insurance Company is
incorporated by reference to Registrant's Registration
Statement (File No. 33-87376) on Form N-4 dated
December 14, 1994.
(7) Not Applicable.
(8) Not Applicable.
(9) Written Opinion of Edwin L. Kerr, Esq., to be filed with the
N-4/A filing.
(10) (a) Written Consent of Edwin L. Kerr, Esq. to be filed with
the N-4/A filing.
(b) Written Consent of PricewaterhouseCoopers LLP to be
filed with the N-4/A filing.
(11) Not Applicable.
(12) Not Applicable.
(13) (a) Explanation of Yield and Effective Yield Calculation is
incorporated by reference to Registrant's Post-Effective
Amendment No. 1 to its Form N-4 Registration Statement
(File No. 33-87376) filed via Edgar on April 19, 1996.
(b) Explanation of Total Return Calculation is incorporated
by reference to Registrant's N-4 Registration Statement
(File No. 333-95611) filed via Edgar on January 29, 2000
(Accession Number 0000949377-00-000035).
Powers of Attorney of Messrs. Fiondella, Kelleher, McLoughlin,
Searfoss and Tan, and Ms. Young are incorporated by reference to
Registrant's Post-Effective Amendment No. 5 to its Form N-4
Registration Statement (File No. 033-87376) filed via Edgar on
April 30, 1998.
C-1
<PAGE>
ITEM 25. DIRECTORS AND EXECUTIVE OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME PRINCIPAL BUSINESS ADDRESS POSITION WITH DEPOSITOR
---- -------------------------- -----------------------
<S> <C> <C>
Carl T. Chadburn* Director
Robert W. Fiondella* Director and Chairman
Michael J. Gilotti* Executive Vice President
Joseph E. Kelleher** Director and Senior
Vice President
Philip R. McLoughlin* Director, Executive Vice President
and Chief Investment Officer
David W. Searfoss* Director, Executive Vice President
and Chief Financial Officer
Simon Y. Tan* Director and President
Dona D. Young* Director and Executive
Vice President
Robert G. Lautensack, Jr.* Senior Vice President
</TABLE>
----------
* The principal business address of each of these individuals is PHL Variable
Insurance Company, One American Row, Hartford, Connecticut.
** The principal business address of each of these individuals is PHL Variable
Insurance Company, 100 Bright Meadow Boulevard, Enfield, Connecticut.
ITEM 26. NOT APPLICABLE
ITEM 27. NUMBER OF CONTRACT OWNERS
No contracts have been sold to date.
ITEM 28. INDEMNIFICATION
Section 5.9 of the Connecticut Corporation Law & Practice, 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 III Section 14 of the By-laws of the Company provides: "Each
Director, officer or employee of the Company, and his heirs, executors or
administrators, shall be indemnified or reimbursed by the Company for all
expenses necessarily incurred by him in connection with the defense or
reasonable settlement of any action, suit or proceeding in which he is made
a party by reason of his being or having been a Director, officer or
employee of the Company, or of any other company which he was serving as a
Director or officer at the request of the Company, except in relation to
matters as to which such Director, officer or employee is finally adjudged
in such action, suit or proceeding to be liable for negligence or misconduct
in the performance of his
C-2
<PAGE>
duties as such Director, officer or employee. The foregoing right of
indemnification or reimbursement shall not be exclusive of any other rights
to which he may be entitled under any statute, by-law, agreement, vote of
shareholders or otherwise."
Insofar as indemnification for liability arising under the Securities Act of
1933 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 29. PRINCIPAL UNDERWRITER
1. Phoenix Equity Planning Corporation ("PEPCO")
(a) PEPCO currently distributes securities of the Phoenix Duff &
Phelps Funds, Phoenix Funds, and Phoenix Home Life Variable
Universal Life Account, Phoenix Home Life Variable Accumulation
Account and Phoenix Life and Annuity Variable Universal Life
Account in addition to those of the Registrant.
(b) Directors and Executive Officers of PEPCO
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER
---------------- ----------------
<S> <C> <C>
Michael E. Haylon** Director
Philip R. McLoughlin** Director, President and Chairman
William R. Moyer* Director, Executive Vice President, Chief Financial Officer
and Treasurer
John F. Sharry* Executive Vice President, Retail Distribution
Paul A. Atkins** Senior Vice President
Nancy G. Curtiss** Vice President and Treasurer, Fund Accounting
Nancy J. Engberg** Vice President, Counsel and Secretary
Michael Kearney* Senior Vice President, Operations and Service
Robert R. Tousignant* Senior Vice President and National Sales Manager
</TABLE>
----------
* The principal business address of each of these individuals is 100 Bright
Meadow Boulevard, Enfield, Connecticut.
** The principal business address of each of these individuals is 56 Prospect
Street, Hartford, Connecticut.
(c) Compensation received by PEPCO during Registrant's last fiscal year:
<TABLE>
<CAPTION>
NAME OF NET UNDERWRITING COMPENSATION BROKERAGE
PRINCIPAL UNDERWRITER DISCOUNTS AND COMMISSIONS ON REDEMPTION COMMISSIONS COMPENSATION
--------------------- ------------------------- ------------- ----------- ------------
[to be filed with
<S> <C> <C> <C> <C>
PEPCO N-4/A filing] 0 0 0
</TABLE>
ITEM 30. 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 PHL Variable Insurance Company located at 100
Bright Meadow Boulevard, Enfield, Connecticut 06083-2200 and 101 Munson
Street, Greenfield, Massachusetts 01302-0810.
C-3
<PAGE>
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements contained therein are never more than 16 months old for so
long as payments under the Contracts may be accepted;
(b) to include as part of any application to purchase a Contract offered
by the Prospectus, a space that an applicant can check to request a
Statement of Additional Information;
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this form promptly
upon written or oral request.
Pursuant to Section 26(e)(2)(A) of the Investment Company Act of 1940, as
amended, PHL Variable Insurance Company represents that the fees and charges
deducted under the Contracts, 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 PHL Variable Insurance Company.
C-4
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, PHL Variable Accumulation Account has duly caused this
Registration Statement to be signed on its behalf, in the City of Hartford,
State of Connecticut on this 12th day of October, 2000.
PHL VARIABLE INSURANCE COMPANY
By: *Simon Tan
-------------------------------
Simon Tan
President
PHL VARIABLE ACCUMULATION ACCOUNT
By: *Simon Tan
-------------------------------
Simon Tan
President
PHL Variable Insurance Company
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
with PHL Variable Insurance Company on this 12th day of October, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
----------------------------------------------------------- Director
<S> <C>
Carl T. Chadburn
Director and Chairman
(Principal Executive Officer)
-----------------------------------------------------------
*Robert W. Fiondella
Director and Senior Vice President
----------------------------------------------------------
*Joseph E. Kelleher
Director, Executive Vice President and
---------------------------------------------------------- Chief Investment Officer
*Philip R. McLoughlin
Director, Executive Vice President and
---------------------------------------------------------- Chief Financial Officer
*David W. Searfoss
Director and President
----------------------------------------------------------
*Simon Y. Tan
/s/ Dona D. Young Director and Executive Vice President
--------------------------------------------
*Dona D. Young
</TABLE>
By:/s/ Dona D. Young
------------------------------------------------------------
*Dona D. Young, as Attorney in Fact pursuant to Powers of Attorney, copies of
which were previously filed.
