As filed with the Securities and Exchange Commission on January 28, 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
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Approximate date of proposed public offering:
May 1, 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.
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================================================================================
<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>
FORM N-4 ITEM PROSPECTUS/SAI CAPTION
------------- ----------------------
PART A INFORMATION REQUIRED IN A PROSPECTUS
<S> <C> <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 Companies....................................... PHL Variable and the Account;
Investments of the Account; Voting Rights
6. Deductions and Expenses ..................................... Deductions and Charges; Sales of Variable
Accumulation Contracts
7. General Description of Variable Annuity Contracts............ The Variable Accumulation Annuity; Purchase of Contracts;
The Accumulation Period; Miscellaneous Provisions
8. Annuity Period .............................................. The Annuity Period
9. Death Benefits............................................... Payment Upon Death Before Maturity Date; Payment Upon
Death After Maturity Date
10. Purchases and Contract Value ................................ Purchase of Contracts; The Accumulation Period;
Variable Account Valuation Procedures; Sales of
Variable Accumulation Contracts
11. Redemptions.................................................. Surrender of Contracts; 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............................................... Statement of Additional Information
PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
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>
PHOENIX PREMIUM EDGE
Issued by
PHL VARIABLE INSURANCE COMPANY
IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT:
[envelope] PHOENIX VARIABLE ANNUITY MAIL OPERATIONS
PO Box 8027
Boston, MA 02266-8027
[telephone] Tel. 800/541-0171
PROSPECTUS MAY 1, 2000
This prospectus describes a variable accumulation deferred annuity contract. The
contract is designed to provide you with retirement income. The contract offers
a variety of variable and fixed investment options.
You may allocate payments and contract value to one or more of the subaccounts
of the VA Account, the MVA Account or the GIA ("GIA"). The assets of each
subaccount will be used to purchase, at net asset value, shares of a series in
the following designated funds.
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-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 Research Enhanced Index Series
[diamond] Phoenix-Bankers Trust Dow 30 Series
[diamond] Phoenix-Federated U.S. Government Bond 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-Schafer Mid-Cap Value Series
BT INSURANCE FUNDS TRUST
- ------------------------
MANAGED BY BANKERS TRUST COMPANY
[diamond] EAFE[registered trademark] 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
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
- ------------------------------------------------
MANAGED BY MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.
[diamond] Technology Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND
- ---------------------------------------
MANAGED BY TEMPLETON INVESTMENT COUNSEL, INC.
[diamond] Templeton Asset Allocation Fund -- Class 2
[diamond] Templeton International Fund -- Class 2
[diamond] Templeton Stock Fund -- Class 2
MANAGED BY TEMPLETON ASSET MANAGEMENT, LTD.
[diamond] Templeton Developing Markets Fund -- Class 2
MANAGED BY FRANKLIN MUTUAL ADVISERS, LLC
[diamond] Mutual Shares Investments Fund -- Class 2
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
1
<PAGE>
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 and MVA.
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....................................... 6
CONTRACT SUMMARY.......................................... 11
FINANCIAL HIGHLIGHTS...................................... 14
PERFORMANCE HISTORY....................................... 14
THE VARIABLE ACCUMULATION ANNUITY......................... 14
PHL VARIABLE AND THE ACCOUNT ............................. 14
INVESTMENTS OF THE ACCOUNT................................ 14
The Phoenix Edge Series Fund........................... 14
BT Insurance Funds Trust............................... 16
Federated Insurance Series............................. 16
Morgan Stanley Dean Witter Universal Funds, Inc........ 16
Templeton Variable Products Series Fund................ 16
Wanger Advisors Trust.................................. 16
Investment Advisors.................................... 17
Services of the Advisors............................... 18
MVA....................................................... 18
GIA....................................................... 18
PURCHASE OF CONTRACTS..................................... 18
DEDUCTIONS AND CHARGES.................................... 19
Deductions from the Separate Account................... 19
Premium Tax.......................................... 19
Surrender Charges.................................... 19
Mortality and Expense Risk Fee....................... 19
Administrative Fee................................... 20
Administrative Charge................................ 20
Reduced Charges, Increased Bonus Payments and
Enhanced Guaranteed Interest Rates................... 20
Market Value Adjustment................................ 20
Other Charges.......................................... 20
THE ACCUMULATION PERIOD................................... 20
Accumulation Units..................................... 20
Accumulation Unit Values............................... 21
Transfers ............................................. 21
Optional Programs and Benefits......................... 21
Dollar Cost Averaging Program........................ 21
Asset Rebalancing Program............................ 22
Surrender of Contract; Partial Withdrawals............. 22
Lapse of Contract...................................... 22
Payment Upon Death Before Maturity Date ............... 22
THE ANNUITY PERIOD........................................ 23
Variable Accumulation Annuity Contracts................ 23
Annuity Options ....................................... 24
Option A--Life Annuity with Specified Period Certain. 24
Option B--Non-Refund Life Annuity.................... 24
Option D--Joint and Survivor Life Annuity............ 24
Option E--Installment Refund Life Annuity............ 24
Option F--Joint and Survivor Life Annuity with
10-Year Period Certain ............................ 24
Option G--Payments for Specified Period.............. 24
Option H--Payments of Specified Amount............... 24
Option I--Variable Payment Life Annuity with
10-Year Period Certain ............................ 24
Option J--Joint Survivor Variable Payment Life
Annuity with 10-Year Period Certain ............... 25
Option K--Variable Payment Annuity for a
Specified Period .................................. 25
Option L--Variable Payment Life Expectancy
Annuity............................................ 25
Option M--Unit Refund Variable Payment Life
Annuity............................................ 25
Option N--Variable Payment Non-Refund Life
Annuity............................................ 25
Other Options and Rates.............................. 25
Other Conditions..................................... 25
Payment Upon Death After Maturity Date................. 25
VARIABLE ACCOUNT VALUATION PROCEDURES..................... 26
Valuation Date......................................... 26
Valuation Period....................................... 26
Accumulation Unit Value................................ 26
Net Investment Factor.................................. 26
MISCELLANEOUS PROVISIONS.................................. 26
Assignment............................................. 26
Deferment of Payment .................................. 26
Free Look Period....................................... 26
Amendments to Contracts................................ 27
Substitution of Fund Shares............................ 27
Ownership of the Contract.............................. 27
FEDERAL INCOME TAXES...................................... 27
Introduction........................................... 27
Tax Status............................................. 27
Taxation of Annuities in General--Non-Qualified Plans.. 27
Surrenders or Withdrawals Prior to the Contract
Maturity Date...................................... 27
Surrenders or Withdrawals On or After the
Contract Maturity Date............................. 28
Penalty Tax on Certain Surrenders and Withdrawals.... 28
Additional Considerations.............................. 28
Diversification Standards ............................. 29
Individual Retirement Annuity.......................... 30
IRAs................................................. 30
Penalty Tax on Certain Surrenders and
Withdrawals from IRAs.............................. 30
Seek Tax Advice...................................... 31
SALES OF VARIABLE ACCUMULATION CONTRACTS.................. 31
STATE REGULATION.......................................... 31
REPORTS................................................... 31
VOTING RIGHTS............................................. 31
LEGAL MATTERS............................................. 32
SAI....................................................... 32
APPENDIX A--PERFORMANCE HISTORY FOR CONTRACTS WITH:
BENEFIT OPTION 1..................................... 33
BENEFIT OPTION 2..................................... 36
APPENDIX B--DEDUCTIONS FOR STATE PREMIUM TAXES............ 39
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.
ACCOUNT VALUE: The value of all assets held in the Account.
ACCUMULATION UNIT: A standard of measurement for each subaccount used to
determine the value of a contract and the interest in the subaccounts prior to
the start of annuity payments.
ACCUMULATION UNIT VALUE: The value of one accumulation unit was set at $1.0000
on the date assets were first allocated to each 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.
ADJUSTED PARTIAL WITHDRAWALS: The result of multiplying the ratio of the partial
withdrawal to the contract value and the death benefit (prior to the withdrawal)
on the date of the withdrawal.
ANNUAL STEP-UP AMOUNT (STEP-UP AMOUNT): In the first contract year the step-up
amount is the greater of (1) 100% of purchase payments less adjusted partial
withdrawals; or (2) the contract value. After that, in any following contract
year the step-up amount equals the greater of (1) the step-up amount at the end
of the prior contract year, plus 100% of premium payments, less adjusted partial
withdrawals made since the end of the last contract year; or (2) the contract
value.
ANNUITANT: The person whose life is used as the measuring life under the
contract. The annuitant will be the primary annuitant as shown on the contract's
schedule page while that person is living, and will then be the contingent
annuitant, if that person is living at the death of the primary annuitant.
ANNUITY OPTION: The provisions under which we make a series of annuity payments
to the annuitant or other payee, such as Life Annuity with Ten Years Certain.
See "Annuity Options."
ANNUITY UNIT: A standard of measurement used in determining the amount of each
periodic payment under the variable payment Annuity Options I, J, K, M and N.
BONUS PAYMENT: An amount we add to your contract value when a payment is
received from you. Each bonus payment will be treated as earnings under your
contract.
CLAIM DATE: The valuation date following receipt of a certified copy of the
death certificate at VAMO.
CONTRACT: The deferred variable accumulation 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: Prior to the maturity date, the sum of all accumulation units
held in the subaccounts of the Account and the value held in the GIA and/or MVA.
FIXED PAYMENT ANNUITY: 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, BT Insurance Funds Trust, Federated
Insurance Series, Morgan Stanley Dean Witter Universal Funds, Inc., Templeton
Variable Products Series Fund and Wanger Advisors Trust.
GIA: An investment option under which premium amounts are guaranteed to earn a
fixed rate of interest.
ISSUE DATE: The date that the initial premium payment is invested under a
contract.
MVA: An account that pays interest at a guaranteed rate if held to maturity. If
amounts are withdrawn, transferred or applied to an annuity option before the
end of the guarantee period we will make a market adjustment to the value of
that account. Assets allocated to the MVA are not part of the assets allocated
to the Account or the general account of PHL Variable. The MVA is described in a
separate prospectus.
MATURITY DATE: The date elected by the owner as to when annuity payments will
begin. The maturity date will not be any earlier than the fifth contract
anniversary and no later than the annuitant's 95th birthday. The election is
subject to certain conditions described in "The Annuity Period."
MINIMUM INITIAL PAYMENT: The amount that you pay when you purchase a contract.
We require minimum initial payments of:
[diamond] Non-qualified plans--$10,000
[diamond] Individual Retirement Annuity (Rollover IRA only)--$2,000
MINIMUM SUBSEQUENT PAYMENT: The least amount that you may pay when you make any
subsequent
4
<PAGE>
payments, after the minimum initial payment (see above). The minimum
subsequent payment for all contracts is $25.
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.
PAYMENT UPON DEATH: The obligation of PHL Variable under a contract to make a
payment on the death of the owner or annuitant anytime: (a) before the maturity
date of a contract (see "Payment Upon Death Before Maturity Date") or (b) after
the maturity date of a contract (see "Payment Upon Death After Maturity Date").
PHL VARIABLE (OUR, US, WE, COMPANY): PHL Variable Insurance Company.
SERIES: A separate investment portfolio of a fund.
VALUATION DATE: A valuation date is every day the New York Stock Exchange
("NYSE") is open for trading.
VARIABLE PAYMENT ANNUITY: An annuity providing payments that vary in amounts,
according to the investment experience of the selected subaccounts.
VAMO: The Variable Annuity Mail Operations division of PHL Variable that
receives and processes incoming mail for Variable Annuity Operations.
VAO: Variable Annuity Operations.
5
<PAGE>
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
YOUR TRANSACTION EXPENSES ALL SUBACCOUNTS
---------------
Deferred Surrender Charges (as a percentage of amount withdrawn):(1)
<S> <C>
Age of Payment in Complete Years 0-1.................................................... 8%
Age of Payment in Complete Years 1-2.................................................... 8%
Age of Payment in Complete Years 2-3.................................................... 8%
Age of Payment in Complete Years 3-4.................................................... 7%
Age of Payment in Complete Years 4-5.................................................... 6%
Age of Payment in Complete Years 5-6.................................................... 5%
Age of Payment in Complete Years 6-7.................................................... 4%
Age of Payment in Complete Years 7-8 ................................................... 3%
Age of Payment in Complete Years 8 and thereafter....................................... None
ANNUAL ADMINISTRATIVE CHARGE
Maximum(2).............................................................................. $35
ANNUAL SEPARATE ACCOUNT EXPENSES (as a percentage of average account value)
Mortality and Expense Risk Fee.......................................................... 1.475%
Daily Administrative Fee................................................................ .125%
------
Total Separate Account Annual Expenses.................................................. 1.60%
</TABLE>
- ----------------
(1) A surrender charge is taken from the proceeds when a contract is surrendered
or when an amount is withdrawn if the payments have not been held under the
contract for a certain period of time. However, each year an amount up to
10% of the contract value as of the end of the previous contract year may be
withdrawn without a surrender charge. See "Deductions and Charges--Surrender
Charges."
(2) Waived if contract value is $50,000 or more.
6
<PAGE>
SUMMARY OF EXPENSES (CONTINUED)
ANNUAL FUND EXPENSES
(as a percentage of fund average net assets)
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
OTHER TOTAL TOTAL
EXPENSES EXPENSES EXPENSES
MANAGEMENT RULE 12B-1 BEFORE BEFORE AFTER
SERIES FEES FEES REIMBURSEMENT(1) REIMBURSEMENT REIMBURSEMENT(2)
- ---------------------------------------------------------------------------------------------------------------------------------
THE PHOENIX EDGE SERIES FUND
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index N/A
Phoenix-Aberdeen International N/A
Phoenix-Aberdeen New Asia N/A
Phoenix-Bankers Trust Dow 30 Index N/A
Phoenix-Duff & Phelps Real Estate Securities N/A
Phoenix-Engemann Capital Growth N/A
Phoenix-Engemann Nifty Fifty N/A
Phoenix-Federated U.S. Government Bond N/A
Phoenix-Goodwin Money Market N/A
Phoenix-Goodwin Multi-Sector Fixed Income N/A
Phoenix-Hollister Value Equity N/A
Phoenix-Janus Equity Income N/A
Phoenix-Janus Flexible Income N/A
Phoenix-Janus Growth N/A
Phoenix-Morgan Stanley Focus Equity N/A
Phoenix-Oakhurst Balanced N/A
Phoenix-Oakhurst Growth and Income N/A
Phoenix-Oakhurst Strategic Allocation N/A
Phoenix-Schafer Mid-Cap Value N/A
Phoenix-Seneca Mid-Cap Growth N/A
Phoenix-Seneca Strategic Theme N/A
BT INSURANCE FUNDS TRUST
- ---------------------------------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index Fund N/A
FEDERATED INSURANCE SERIES
- ---------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities II N/A
Federated High Income Bond Fund II N/A
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
- ---------------------------------------------------------------------------------------------------------------------------------
Technology Portfolio N/A
TEMPLETON VARIABLE PRODUCTS SERIES FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund -- Class 2(1,2) .25%
Templeton Asset Allocation Fund -- Class 2(1) .25%
Templeton Developing Markets Fund -- Class 2(1) .25%
Templeton International Fund -- Class 2(1) .25%
Templeton Stock Fund -- Class 2(1) .25%
WANGER ADVISORS TRUST
- ---------------------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A
Wanger International Small Cap N/A
Wanger Twenty N/A
Wanger U.S. Small Cap N/A
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Each series pays a portion or all of its expenses other than the management
fee. The Phoenix Research Enhanced Index Series will pay up to .10%; the
Phoenix-Bankers Trust Dow 30, Phoenix-Federated U.S. Government Bond,
Phoenix-Janus Equity Income, Phoenix-Janus Flexible Income, Phoenix-Janus
Growth, Phoenix-Morgan Stanley Focus Equity, Phoenix-Engemann Capital
Growth, Phoenix-Goodwin Multi-Sector Fixed Income, Phoenix-Oakhurst
Strategic Allocation, Phoenix-Goodwin Money Market, Phoenix-Oakhurst
Balanced, Phoenix-Engemann Nifty Fifty, Phoenix-Oakhurst Growth and Income,
Phoenix-Hollister Value Equity and Phoenix-Schafer Mid-Cap Value,
Phoenix-Bankers Trust Dow 30, Phoenix-Federated U.S. Government Bond,
Phoenix-Janus Equity Income, Phoenix-Janus Flexible Income, Phoenix-Janus
Growth 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, and Phoenix-Seneca Mid-Cap Growth Series
will pay up to .25%; and the Phoenix-Aberdeen International Series will pay
up to .40%. Expenses in excess of the stated amount are reimbursed by that
series' investment advisor.
(2) Reflects the effect of any management fee waivers and reimbursement of
expenses.
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 initial 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 Research Enhanced Index Series..........................
Phoenix-Aberdeen International Series...........................
Phoenix-Aberdeen New Asia Series................................
Phoenix-Bankers Trust Dow 30 Series.............................
Phoenix-Duff & Phelps Real Estate Securities Series.............
Phoenix-Engemann Capital Growth Series..........................
Phoenix-Engemann Nifty Fifty Series.............................
Phoenix-Federated U.S. Government Bond..........................
Phoenix-Goodwin Money Market Series.............................
Phoenix-Goodwin Multi-Sector Fixed Income Series................
Phoenix-Hollister Value Equity Series...........................
Phoenix-Janus Equity Income Series.............................. [To be filed with N-4/A filing]
Phoenix-Janus Flexible Income Series............................
Phoenix-Janus Growth Series.....................................
Phoenix-Morgan Stanley Focus Equity Series......................
Phoenix-Oakhurst Balanced Series................................
Phoenix-Oakhurst Growth and Income Series.......................
Phoenix-Oakhurst Strategic Allocation Series....................
Phoenix-Schafer Mid-Cap Value Series............................
Phoenix-Seneca Mid-Cap Growth Series............................
Phoenix-Seneca Strategic Theme Series...........................
EAFE[registered trademark] Equity Index Fund....................
Federated Fund for U.S. Government Securities II................
Federated High Income Bond Fund II..............................
Technology Portfolio............................................
Mutual Shares Investments Fund -- Class 2.......................
Templeton Asset Allocation Fund -- Class .......................
Templeton Developing Markets Fund -- Class 2....................
Templeton International Fund -- Class 2.........................
Templeton Stock Fund -- Class 2.................................
Wanger Foreign Forty............................................
Wanger International Small Cap..................................
Wanger Twenty...................................................
Wanger U.S. Small Cap...........................................
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
SUMMARY OF EXPENSES (CONTINUED)
If you annuitize your contract at the end of one of these time periods, you
would pay the following expenses on a $1,000 initial 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 Research Enhanced Index Series..........................
Phoenix-Aberdeen International Series...........................
Phoenix-Aberdeen New Asia Series................................
Phoenix-Bankers Trust Dow 30 Series.............................
Phoenix-Duff & Phelps Real Estate Securities Series.............
Phoenix-Engemann Capital Growth Series..........................
Phoenix-Engemann Nifty Fifty Series.............................
Phoenix-Federated U.S. Government Bond..........................
Phoenix-Goodwin Money Market Series.............................
Phoenix-Goodwin Multi-Sector Fixed Income Series................
Phoenix-Hollister Value Equity Series...........................
Phoenix-Janus Equity Income Series.............................. [To be filed with N-4/A filing]
Phoenix-Janus Flexible Income Series............................
Phoenix-Janus Growth Series.....................................
Phoenix-Morgan Stanley Focus Equity Series......................
Phoenix-Oakhurst Balanced Series................................
Phoenix-Oakhurst Growth and Income Series.......................
Phoenix-Oakhurst Strategic Allocation Series....................
Phoenix-Schafer Mid-Cap Value Series............................
Phoenix-Seneca Mid-Cap Growth Series............................
Phoenix-Seneca Strategic Theme Series...........................
EAFE[registered trademark] Equity Index Fund....................
Federated Fund for U.S. Government Securities II................
Federated High Income Bond Fund II..............................
Technology Portfolio............................................
Mutual Shares Investments Fund -- Class 2.......................
Templeton Asset Allocation Fund -- Class 2......................
Templeton Developing Markets Fund -- Class 2....................
Templeton International Fund -- Class 2.........................
Templeton Stock Fund -- Class 2.................................
Wanger Foreign Forty............................................
Wanger International Small Cap..................................
Wanger Twenty...................................................
Wanger U.S. Small Cap...........................................
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
SUMMARY OF EXPENSES (CONTINUED)
If you leave your premiums in the contract and you do not surrender or
annuitize it, after each of these time periods you will have paid the following
expenses on a $1,000 initial 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 Research Enhanced Index Series..........................
Phoenix-Aberdeen International Series...........................
Phoenix-Aberdeen New Asia Series................................
Phoenix-Bankers Trust Dow 30 Series.............................
Phoenix-Duff & Phelps Real Estate Securities Series.............
Phoenix-Engemann Capital Growth Series..........................
Phoenix-Engemann Nifty Fifty Series.............................
Phoenix-Federated U.S. Government Bond..........................
Phoenix-Goodwin Money Market Series.............................
Phoenix-Goodwin Multi-Sector Fixed Income Series................
Phoenix-Hollister Value Equity Series...........................
Phoenix-Janus Equity Income Series.............................. [To be filed with N-4/A filing]
Phoenix-Janus Flexible Income Series............................
Phoenix-Janus Growth Series.....................................
Phoenix-Morgan Stanley Focus Equity Series......................
Phoenix-Oakhurst Balanced Series................................
Phoenix-Oakhurst Growth and Income Series.......................
Phoenix-Oakhurst Strategic Allocation Series....................
Phoenix-Schafer Mid-Cap Value Series............................
Phoenix-Seneca Mid-Cap Growth Series............................
Phoenix-Seneca Strategic Theme Series...........................
EAFE[registered trademark] Equity Index Fund....................
Federated Fund for U.S. Government Securities II................
Federated High Income Bond Fund II..............................
Technology Portfolio............................................
Mutual Shares Investments Fund -- Class 2.......................
Templeton Asset Allocation Fund -- Class 2......................
Templeton Developing Markets Fund -- Class 2....................
Templeton International Fund -- Class 2.........................
Templeton Stock Fund -- Class 2.................................
Wanger Foreign Forty............................................
Wanger International Small Cap..................................
Wanger Twenty...................................................
Wanger U.S. Small Cap...........................................
- -----------------------------------------------------------------------------------------------------------------------------------
</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
and range from 0% to 3.5% of premiums paid. See "Deductions and Charges--Premium
Tax" and Appendix C.
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."
10
<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 within this prospectus
and the provisions of the contract, the contract provisions will prevail.
OVERVIEW
The contract offers a dynamic idea in retirement planning. It's designed to
give you maximum flexibility in obtaining your investment goals.
The contract offers a combination of investment options both variable and
fixed. Investments in the variable options provide results that vary and depend
upon the performance of the underlying fund, while investments in the GIA or MVA
provide guaranteed interest earnings subject to certain conditions. Please refer
to "Appendix B" for a detailed discussion of the GIA.
You also select a benefit option that is suitable in meeting your financial
objectives. Each benefit option differs in the amount of bonus payment you may
receive and in how the death benefit is calculated. See "The Accumulation
Period--Payment Upon Death Before the Maturity Date" for a complete description.
INVESTMENT FEATURES
FLEXIBLE PAYMENTS
[diamond] You may make payments anytime until the maturity date.
[diamond] You can vary the amount and frequency of your payments.
[diamond] Other than the minimum initial payment, there are no required
payments.
MINIMUM CONTRIBUTION
[diamond] Generally, the minimum initial payment is $10,000.
ALLOCATION OF PREMIUMS AND CONTRACT VALUE
[diamond] You may choose where your payments are invested in one or more of the
subaccounts, the GIA and the MVA.
[diamond] We add a bonus payment to each payment we receive from you. The amount
of the bonus payment we add to your payment varies based upon the
benefit option you select.
[diamond] Transfers between the subaccounts and into the GIA can be made
anytime. Transfers from the GIA are subject to rules discussed in
Appendix B and in "The Accumulation Period--Transfers."
[diamond] Transfers from the MVA may be subject to market value adjustments and
are subject to certain rules. See the MVA prospectus.
[diamond] The contract value varies with the investment performance of the funds
and is not guaranteed.
[diamond] The contract value allocated to the GIA will depend on deductions
taken from the GIA and interest accumulation at rates set by us
(minimum--3%).
WITHDRAWALS
[diamond] You may partially or fully surrender the contract anytime for its
contract value less any applicable surrender charge and premium tax.
[diamond] Each year you may withdraw part of your contract value free of any
surrender charges. During the first contract year, you may withdraw up
to 10% of the contract value as of the date of the first partial
withdrawal without surrender charges. After that, each year, 10% of
your contract value as of the last contract anniversary may be
withdrawn without surrender charges. Please refer to "Deductions and
Charges--Surrender Charges" for a complete description.
DEATH BENEFIT
The death benefit is calculated differently under each benefit option and
the amount varies based on the option selected.
DEDUCTIONS AND CHARGES
FROM THE CONTRACT VALUE
[diamond] No deductions are made from payments.
[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 or
owner before the maturity date.
[diamond] A declining surrender charge is assessed on withdrawals in excess of
the free withdrawal amount, based on the date the payments are
deposited:
--------------------------------------------------------------
Percent 8 8% 8% 7% 6% 5% 4% 3% 0%
--------------------------------------------------------------
Age of Payment in 0 1 2 3 4 5 6 7 8+
Complete Years
--------------------------------------------------------------
[bullet] The total deferred surrender charges on a contract will never
exceed 9% of total premium payments.
[diamond] Administrative Charge--maximum of $35 each year. Waived if contract
value is $50,000 or more.
FROM THE ACCOUNT
[diamond] Mortality and expense risk fee--1.475%. See "Charges for Mortality and
Expense Risks."
[diamond] The daily administrative fee--0.125% annually. See "Charges for
Administrative Services."
11
<PAGE>
OTHER CHARGES OR DEDUCTIONS
[diamond] Premium Taxes--taken from the contract value upon annuitization.
[bullet] PHL Variable will reimburse itself for such taxes on the date
of a partial withdrawal, surrender of the contract, maturity
date or payment of death proceeds. See "Premium Tax."
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.
BENEFIT OPTIONS
[diamond] The contract offers two benefit options. You select a benefit option
that best meets your financial needs. Each benefit option varies in
the method of death benefit calculation and in the amount of bonus
payment we add to your payment.
The components of each benefit option are on the Benefit Options chart on
the next page.
ADDITIONAL INFORMATION
FREE LOOK PERIOD
You have the right to review the contract. If you are not satisfied you may
return it within 10 days after you receive it and cancel the contract. You will
receive in cash the adjusted value of the initial payment, however, if
applicable state law requires, we will return the full amount of the payments
made during the Free Look Period. Note that the total amount returned to you
will not include the amount of the bonus payments we have added to payments made
by you.
See "Free Look Period" for a detailed discussion.
LAPSE
If on any valuation date the total contract value equals zero, or, the
premium tax reimbursement due on a surrender or partial withdrawal is greater
than or equal to the contract value, the contract will immediately terminate and
lapse without value.
12
<PAGE>
BENEFIT OPTIONS CHART
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
OPTION 1 OPTION 2
- --------------------------------------------------------------------------------------------------------------------------------
Return of Annual
Component Premium Step-up
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Death Benefit(1) on the date of death of The greater of: The greatest of:
the annuitant who has not yet attained
age 80 1. the sum of 100% of premium 1. the sum of 100% of premium payments
payments less adjusted partial less adjusted partial withdrawals on
withdrawals on the claim date; or the claim date; or
2. the contract value on the claim date. 2. the contract value on the claim
date; or
3. the annual step-up amount on the
claim date.
- --------------------------------------------------------------------------------------------------------------------------------
Death Benefit(1) on the date of death of The greater of: The greater of:
the annuitant who has attained age 80
1. the sum of 100% of premium payments 1. the death benefit in effect at the
less adjusted partial withdrawals on end of the immediately preceding
the claim date; or contract year prior to the annuitant
2. the contract value on the claim date. turning age 80, plus the sum of 100%
of premium payments less adjusted
partial withdrawals made since the
contract year that the annuitant
reached age 80; or
2. the contract value on the claim date.
- --------------------------------------------------------------------------------------------------------------------------------
Amount of bonus payment(2) 5% of each payment received from you. 4% of each payment received from you.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) See "The Accumulation Period--Payment Upon Death Before Maturity Date" for
complete details.
(2) See the "Purchase of Contracts--Bonus Payments" for complete details.
13
<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 VARIABLE ACCUMULATION ANNUITY
- --------------------------------------------------------------------------------
The individual deferred variable accumulation annuity contract issued by PHL
Variable is significantly different from a fixed annuity contract in that,
unless the GIA is selected, it is the owner and annuitant under a contract who
bear the risk of investment gain or loss rather than PHL Variable. To the extent
that payments are not allocated to the GIA or MVA, the amounts that will be
available for annuity payments under a contract will depend on the investment
performance of the amounts allocated to the subaccounts. Upon the maturity of a
contract, the amounts held under a contract will continue to be invested in the
Account or the GIA and monthly annuity payments will vary in accordance with the
investment experience of the investment options selected. However, a fixed
annuity may be elected, in which case PHL Variable will guarantee specified
monthly annuity payments.
You select the investment objective of each contract on a continuing basis
by directing the allocation of payments and the reallocation of the contract
value among the subaccounts, GIA or MVA.
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 06102 and our main administrative office is located at 100
Bright Meadow Boulevard, Enfield, Connecticut 06083-1900. 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 GIA 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 GIA, see Appendix A.
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 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-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
14
<PAGE>
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[servicemark] (the
"DJIA[servicemark]") before fund expenses.
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-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-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-SCHAFER 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-Schafer 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-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.
15
<PAGE>
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.
BT INSURANCE FUNDS TRUST
A certain subaccount invests in a corresponding series of the BT Insurance
Funds Trust. The following series is currently available:
EAFE[registered trademark] EQUITY INDEX FUND: The series seeks to match the
performance of the Morgan Stanley Capital International EAFE[registered
trademark] Index ("EAFE[registered trademark] Index"), which emphasizes major
market stock performance of companies in Europe, Australia and the Far East. The
series invests in a statistically selected sample of the securities found in the
EAFE[registered trademark] Index.
FEDERATED INSURANCE SERIES
Certain subaccounts invest in corresponding series of the Federated
Insurance Series. The following series are currently available:
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II: The investment objective
of the series 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 series
is to seek high current income by investing primarily in a diversified portfolio
of high-yield, lower-rated corporate bonds.
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
A certain subaccount invests in a corresponding series of the Morgan Stanley
Dean Witter Universal Funds, Inc. The following series is currently available:
TECHNOLOGY PORTFOLIO: The investment objective of the series 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.
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Certain subaccounts invest in Class 2 shares of the corresponding series of
the Templeton Variable Products Series Fund. The following series are currently
available:
MUTUAL SHARES INVESTMENTS FUND: The primary investment objective of the
series is capital appreciation with income as a secondary objective. The Mutual
Shares Investments Fund invests primarily in domestic equity securities that the
manager believes are significantly undervalued.
TEMPLETON ASSET ALLOCATION FUND: The investment objective of the series is a
high level of total return. The Templeton Asset Allocation 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 FUND: The investment objective of the series is
long-term capital appreciation. The Templeton Developing Markets Fund invests
primarily in emerging market equity securities.
TEMPLETON INTERNATIONAL FUND: The investment objective of the series is
long-term capital growth. The Templeton International Fund invests primarily in
stocks of companies located outside the United States, including emerging
markets.
TEMPLETON STOCK FUND: The investment objective of the series is long-term
capital growth. The Templeton Stock Fund invests primarily in common stocks
issued by companies in various nations throughout the world, including the U.S.
and emerging markets.
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.
16
<PAGE>
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.
INVESTMENT ADVISORS
Phoenix Investment Counsel, Inc. ("PIC") is an investment advisor to the
following series in The Phoenix Edge Series Fund:
[bullet] Phoenix-Goodwin Money Market Series
[bullet] Phoenix-Goodwin Multi-Sector Fixed Income Series
[bullet] Phoenix-Hollister Value Equity Series
[bullet] Phoenix-Oakhurst Balanced Series
[bullet] Phoenix-Oakhurst Growth and Income Series
[bullet] 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")
[bullet] Phoenix-Aberdeen International Series
[diamond] Roger Engemann & Associates, Inc. ("Engemann")
[bullet] Phoenix-Engemann Capital Growth Series
[bullet] Phoenix-Engemann Nifty Fifty Series
[diamond] Seneca Capital Management, LLC ("Seneca")
[bullet] Phoenix-Seneca Mid-Cap Growth Series
[bullet] 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
[bullet] Phoenix-Bankers Trust Dow 30 Series
[diamond] Federated Investment Management Company
[bullet] Phoenix-Federated U.S. Government Bond Series
[diamond] J.P. Morgan Investment Management, Inc.
[bullet] Phoenix Research Enhanced Index Series
[diamond] Janus Capital Corporation
[bullet] Phoenix-Janus Equity Income Series
[bullet] Phoenix-Janus Flexible Income Series
[bullet] Phoenix-Janus Growth Series
[diamond] Morgan Stanley Asset Management Inc.
[bullet] Phoenix-Morgan Stanley Focus Equity Series
[diamond] Schafer Capital Management, Inc.
[bullet] Phoenix-Schafer Mid-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. PAIA is jointly owned and managed by PM Holdings, Inc.,
a subsidiary of Phoenix 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] Bankers Trust Company
[bullet] EAFE[registered trademark] Equity Index Fund
[diamond] Federated Investment Management Company
[bullet] Federated Fund for U.S. Government Securities II
[bullet] Federated High Income Bond Fund II
[diamond] Franklin Mutual Advisers, LLC
[bullet] Mutual Shares Investments Fund
[diamond] Morgan Stanley Dean Witter Investment Management Inc.
[bullet] Technology Portfolio
[diamond] Templeton Asset Management, Ltd.
[bullet] Templeton Developing Markets Fund
[diamond] Templeton Investment Counsel, Inc.
[bullet] Templeton Asset Allocation Fund
[bullet] Templeton International Fund
[bullet] Templeton Stock Fund
[diamond] Wanger Asset Management, L.P.
[bullet] Wanger Foreign Forty
[bullet] Wanger International Small Cap
[bullet] Wanger Twenty
[bullet] Wanger U.S. Small Cap
17
<PAGE>
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.
MVA
- --------------------------------------------------------------------------------
The MVA is an account that pays interest at a guaranteed rate if held to
maturity. If amounts are withdrawn, transferred or applied to an annuity option
before the end of the guarantee period, a market value adjustment will be made.
Assets allocated to the MVA are not part of the assets allocated to the Account
or to the general account of PHL Variable. The MVA is more fully described in a
separate prospectus.
For additional information concerning the funds and the MVA, please see the
accompanying prospectuses, which should be read carefully before investing.
GIA
- --------------------------------------------------------------------------------
In addition to the Account, you may allocate premium or transfer policy
value to the GIA. Amounts you allocate or transfer to the GIA 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.
We reserve the right to limit total deposits to the GIA, including
transfers, to no more than $250,000 during any one-week period per policy.
In general, you can make only one transfer per year from the GIA. The amount
that can be transferred out is limited to the greater of $1,000 or 25% of the
contract value in the GIA as of the date of the transfer. If you elect the
Dollar Cost Averaging Program, approximately equal amounts may be transferred
out of the GIA. Also, the total policy value allocated to the GIA may be
transferred out to one or more of the subaccounts over a consecutive 4-year
period according to the following schedule:
[diamond] Year One: 25% of the total value
[diamond] Year Two: 33% of remaining value
[diamond] Year Three: 50% of remaining value
[diamond] Year Four: 100% of remaining value
Transfers into the GIA and among the subaccounts may be made at any time.
Transfers from the GIA are subject to the rules discussed above and in "The
Accumulation Period--Transfers and Dollar Cost Averaging Program."
PURCHASE OF CONTRACTS
- --------------------------------------------------------------------------------
MINIMUM PAYMENTS
Generally, we require minimum payments of:
- ------------------------ ------------------- -------------------
MINIMUM MINIMUM
PLAN TYPE INITIAL SUBSEQUENT
PAYMENT PAYMENT *
- ------------------------ ------------------- -------------------
Non-qualified
plans $10,000 $500
- ------------------------ ------------------- -------------------
Individual Retirement $2,000 $100
Annuity ("IRA")
- ------------------------ ------------------- -------------------
* You may authorize your bank to draw from your personal checking account
monthly to purchase units in any available subaccount, or for deposit in the
GIA or MVA. The amount you designate will be automatically invested on the
date the bank draws on your account. If you elect a bank draft program, the
minimum subsequent payment is $25.
In certain circumstances we may reduce the initial or subsequent premium
payment amount we accept for a contract. Factors in determining qualifications
for any such reduction includes:
(1) the make-up and size of the prospective group;
(2) the method and frequency of premium payments; 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 payment is received. We reserve the right to change these rules from
time to time.
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BONUS PAYMENT
We add a bonus payment to your contract value each time we receive a
purchase payment from you. The bonus payment is made from our general account.
The bonus payment is allocated among the subaccounts, MVA or GIA according to
the same allocation schedule in effect for purchase payments. If you return the
contract under the right to cancel provision (Free Look) the amount returned to
you will not include the amount of any bonus payments made by us.
The amount of the bonus payment varies depending upon which benefit option
you selected. The amount of bonus payment under the benefit option elected is a
percentage of each purchase payment and are as follows:
- -------------------------------- ------------------------------
OPTION 1 - RETURN OF PREMIUM OPTION 2 - ANNUAL
STEP-UP
- -------------------------------- ------------------------------
5% of purchase payment 4% of purchase payment
Bonus payments are treated as an increase in the "investment in the
contract" (gain) for tax purposes.
PAYMENT ALLOCATION
Payments received under the contracts will be allocated in any combination
to any subaccount, GIA or MVA, in the proportion specified in the application
for the contract or as otherwise indicated by you from time to time. Changes in
the allocation of payments will be effective as of receipt by VAMO of notice of
election in a form satisfactory to us (either in writing or by telephone) and
will apply to any payments accompanying such notice or made subsequent to the
receipt of the notice, unless otherwise requested by you.
GENERAL
Usually, a contract may not be purchased for a proposed annuitant who is 81
years of age or older. Total payments in excess of $1,000,000 cannot be made
without our permission. While the annuitant is living and the contract is in
force, payments may be made anytime before the maturity date of a contract.
We reserve the right not to accept future purchase payments. We will provide
you 60 days written notice if we choose not to accept a payment.
DEDUCTIONS AND CHARGES
- --------------------------------------------------------------------------------
DEDUCTIONS FROM THE SEPARATE ACCOUNT
PREMIUM TAX
Whether or not a premium 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. Premium
taxes on contracts currently range from 0% to 3.5%. We will pay any premium tax
due and will reimburse Phoenix only upon the earlier of either full or partial
surrender of the contract, the maturity date or payment of death proceeds. For a
list of states and premium taxes, see Appendix C 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 payments
are held under the contract for a certain period of time. The surrender charge
schedule is shown in the chart below. No surrender charge will be taken from
death proceeds. No surrender charge will be taken after the annuity period has
begun except with respect to unscheduled withdrawals under Annuity Option K or L
below. See "Annuity Options." Any surrender charge is imposed on a first-in,
first-out basis.
Each year you may withdraw part of your contract value free of any surrender
charges. During the first contract year, you may withdraw up to 10% of the
contract value as of the date of the first partial withdrawal without surrender
charges. After that, each year you may withdraw up to 10% of your contract value
as of the last contract anniversary without surrender charges.
The deduction for surrender charges, expressed as a percentage of the amount
withdrawn in excess of the 10% allowable amount, is as follows:
- ---------------------------------------------------------------
Percent 8% 8% 8% 7% 6% 5% 4% 3% 0%
- ---------------------------------------------------------------
Age of Payment in 0 1 2 3 4 5 6 7 8+
Complete Years
- ---------------------------------------------------------------
If the annuitant or owner dies before the maturity date of the contract, the
surrender charge described in the table above will not apply.
The total deferred surrender charges on a contract will never exceed 9% of
total payments, and the applicable level of surrender charge cannot be changed
with respect to outstanding contracts. Surrender charges imposed in connection
with partial surrenders will be deducted from the subaccounts, GIA and MVA on a
pro rata basis. Any distribution costs not paid for by surrender charges will be
paid by PHL Variable from the assets of the General Account.
MORTALITY AND EXPENSE RISK FEE
We make a daily deduction from each subaccount for the mortality and expense
risk charge. The fee is based on an annual rate of 1.475% and is taken against
the daily net assets of the subaccounts. Although you bear the investment risk
of the series in which you invest, once you begin receiving annuity payments
that carry life contingencies the annuity payments are guaranteed by us to
continue for as long as the annuitant lives. 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.
In assuming the mortality risk, we promise to make these lifetime annuity
payments to the owner or other payee
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for as long as the annuitant lives according to the annuity tables and other
provisions of the contract.
No mortality and expense risk charge is deducted from the GIA or MVA. 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.
ADMINISTRATIVE FEE
We make a daily deduction from account value to cover the costs of
administration. This fee is based on an annual rate of 0.125% and is taken
against the net assets of the subaccounts. It compensates the Company for
administrative expenses that exceed revenues from the Administrative Charge
described below. (This fee is not deducted from the GIA or MVA.)
ADMINISTRATIVE CHARGE
We deduct an administrative charge from the contract value. This charge is
used to reimburse us for some of the administrative expenses we incur in
establishing and maintaining the contracts.
The maximum administrative maintenance charge under a contract is $35. This
charge is deducted annually on the contract anniversary date. It is deducted on
a pro rata basis from the subaccounts, GIA or MVA in which you have an interest.
If you fully surrender your contract, the full administrative fee if applicable,
will be deducted at the time of withdrawal. The administrative charge will not
be deducted (either annually or upon withdrawal) if your contract value is
$50,000 or more on the day the administrative charge is due. This charge may be
decreased but will never increase. If you elect Payment Options I, J, K, M or N,
the annual administrative charge after the maturity date will be deducted from
each annuity payment in equal amounts.
REDUCED CHARGES, INCREASED BONUS PAYMENTS AND ENHANCED GUARANTEED INTEREST RATES
We may reduce or eliminate the mortality and expense risk fee and the
surrender or annual administrative charge, credit increased bonus payments, or
grant enhanced Guaranteed Interest Rates 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 or increases in bonus payments or
Guaranteed Interest Rate enhancements 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.
MARKET VALUE ADJUSTMENT
Any withdrawal from your MVA will be subject to a market value adjustment.
See the accompanying MVA prospectus for information relating to this option.
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 ACCUMULATION PERIOD
- --------------------------------------------------------------------------------
The accumulation period is that time before annuity payments begin during
which your payments into the contract remain invested.
ACCUMULATION UNITS
Your Initial payments will be applied within two days of our receipt if the
application for a contract is complete. If an incomplete application is
completed within five business days of receipt by VAMO, your payment will be
applied within two days of the completion of the application. If VAMO does not
accept the application within five business days or if an order form is not
completed within five business days of receipt by VAMO, then your payment will
be immediately returned unless you request us to hold it while the application
is completed. Additional payments allocated to the GIA or MVA are deposited on
the date of receipt of payment at VAMO. Additional payments allocated to
subaccounts are used to purchase accumulation units of the subaccount(s), at the
value of such units next determined after the receipt of the payment at VAMO.
The number of accumulation units of a subaccount purchased with a specific
payment will be determined by dividing the payment by the value of an
accumulation unit in that subaccount next determined after receipt of the
payment. The value of the accumulation units of a subaccount will
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vary depending upon the investment performance of the applicable series of the
funds, the expenses charged against the fund and the charges and deductions made
against the subaccount.
ACCUMULATION UNIT VALUES
On any date before the maturity date of the contract, the total value of the
accumulation units in a subaccount can be computed by multiplying the number of
such units by the value of an accumulation unit on that date. The value of an
accumulation unit on a day other than a valuation date is the value of the
accumulation unit on the next valuation date. The number of accumulation units
credited to you in each subaccount and their current value will be reported to
you at least annually.
TRANSFERS
You may at anytime prior to the maturity date of your contract, elect to
transfer all or any part of the contract value among one or more subaccounts,
the GIA or MVA. A transfer from a subaccount will result in the redemption of
accumulation units and, if another subaccount is selected, in the purchase of
accumulation units. The exchange will be based on the values of the accumulation
units next determined after the receipt by VAMO of written notice of election in
a form satisfactory to us. A transfer among subaccounts, the GIA or MVA does not
automatically change the payment allocation schedule of your contract.
You may also request transfers and changes in payment allocations among
available subaccounts, the GIA or MVA 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.
Unless we otherwise agree or unless the Dollar Cost Averaging Program has
been elected, (see below), you may make only one transfer per contract year from
the GIA. Nonsystematic transfers from the GIA and MVA will be made on the date
of receipt by VAMO except as you may otherwise request. For nonsystematic
transfers, the amount that may be transferred from the GIA at any one time
cannot exceed the greater of $1,000 or 25% of the contract value in the GIA at
the time of transfer. For nonsystematic transfers from the MVA, the market value
adjustment may be applied. See the accompanying MVA prospectus for more
information.
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 $10 per transfer after
the first two 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 contract
year. However, you will be permitted at least six transfers during each contract
year. There are additional restrictions on transfers from the GIA as described
above and in Appendix B. See the MVA prospectus for information regarding
transfers from the MVA.
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.
Currently, contracts in the annuity period are not able to make transfers
between subaccounts.
OPTIONAL PROGRAMS AND BENEFITS
DOLLAR COST AVERAGING PROGRAM
You also may elect to transfer funds automatically among the subaccounts or
GIA on a monthly, quarterly, semiannual or annual basis under the Dollar Cost
Averaging Program. Generally, the minimum initial and subsequent transfer
amounts are $25 monthly, $75 quarterly, $150 semiannually or $300 annually. You
must have an initial value of $2,000 in the GIA or in the subaccount from which
funds will be transferred (sending subaccount), and if the value in that
subaccount or the GIA drops below the amount to be transferred, the entire
remaining balance will be transferred and no more systematic transfers will be
processed. Also, payments of $1,000,000 or more require
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our approval before we will accept them for processing. Funds may be transferred
from only one sending subaccount or from the GIA but may be allocated to
multiple receiving subaccounts. Under the Dollar Cost Averaging Program, you may
transfer approximately equal amounts from the GIA over a period of 6 months or
longer. Transfers under the Dollar Cost Averaging Program are not subject to the
general restrictions on transfers from the GIA. This program is not available
for the MVA.
Upon completion of the Dollar Cost Averaging Program, you must notify VAO at
800/541-0171 or in writing to VAO to start another Dollar Cost Averaging
Program.
All transfers under the Dollar Cost Averaging Program will be executed on
the basis of values as of the first of the month rather than on the basis of
values next determined after receipt of the transfer request. If the first of
the month falls on a holiday or weekend, then the transfer will be processed on
the next succeeding business day.
The Dollar Cost Averaging Program is not available to individuals who invest
via a bank draft program or while the Asset Rebalancing Program is in effect.
Dollar Cost Averaging does not ensure a profit nor guarantee against a loss
in a declining market.
ASSET REBALANCING PROGRAM
Under the Asset Rebalancing Program, we transfer funds among the subaccounts
to maintain the percentage allocation you have selected among these subaccounts.
At your election, we will make these transfers on a monthly, quarterly,
semiannual or annual basis.
Asset Rebalancing does not permit transfers to or from the GIA or the MVA.
The Asset Rebalancing Program does not ensure a profit nor guarantee against
a loss in a declining market.
SURRENDER OF CONTRACT; PARTIAL WITHDRAWALS
If the annuitant is living, amounts held under the contract may be withdrawn
in whole or in part prior to the maturity date, or after the maturity date under
Annuity Options K or L. Prior to the maturity date, you may withdraw up to 10%
of the contract value in a contract year, either in a lump sum or by multiple
scheduled or unscheduled partial withdrawals, without the imposition of a
surrender charge. During the first contract year, the 10% withdrawal without a
surrender charge will be determined based on the contract value at the time of
the first partial withdrawal. In all subsequent years, the 10% will be based on
the previous contract anniversary value. A signed written request for withdrawal
must be sent to VAMO. 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 accumulation units of a subaccount will be redeemed at
their value next determined after the receipt by VAMO of a written notice in a
form satisfactory to us. accumulation units redeemed in a partial withdrawal
from multiple subaccounts will be redeemed on a pro rata basis unless you
designate otherwise. Contract values in the GIA or MVA will also be withdrawn on
a pro rata basis unless you designate otherwise. Withdrawals from the MVA may be
subject to the market value adjustment. See the accompanying MVA prospectus for
more information. 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 from, and 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 Annuity 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 annual Administrative Charge or premium tax reimbursement due on
either a full or partial surrender is greater than or equal to the
contract value (unless any contract value has been applied under one
of the variable payment options).
PHL Variable will notify you in writing that the contract has lapsed.
PAYMENT UPON DEATH BEFORE MATURITY DATE
WHO RECEIVES PAYMENT
[diamond] DEATH OF AN OWNER/ANNUITANT
If the owner/annuitant dies before the contract maturity date, the death
benefit will be paid under the contract to the annuitant's beneficiary.
[diamond] DEATH OF AN ANNUITANT WHO IS NOT THE OWNER
If the owner and the annuitant are not the same and the annuitant dies prior
to the maturity date, the contingent annuitant becomes the annuitant. If
there is no contingent annuitant, the death benefit will be paid to the
annuitant's beneficiary.
[diamond] DEATH OF AN OWNER WHO IS NOT THE ANNUITANT
Upon the death of an owner who is not the annuitant, provided that there is
no surviving joint owner, the death proceeds will be paid to the owner's
beneficiary.
[diamond] SPOUSAL BENEFICIARY CONTRACT CONTINUANCE
If the spousal beneficiary continues the contract at the death of the an
owner/annuitant or owner who is not
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also the annuitant, the spousal beneficiary becomes the annuitant. The
benefit option in effect at the death of an owner/annuitant or an owner
will also apply to the spousal beneficiary.
[diamond] CONTINGENT ANNUITANT CONTRACT CONTINUANCE
Upon the death of the annuitant who is not the owner provided a contingent
annuitant was named prior to the death of the annuitant the contract will
continue with the contingent annuitant becoming the annuitant. The benefit
option in effect at the death of the annuitant will also apply to the
contingent annuitant.
[diamond] OWNERSHIP OF THE CONTRACT BY A NON-NATURAL PERSON
If the owner is not an individual, the death of the annuitant is treated as
the death of the owner.
AMOUNT OF PAYMENT BEFORE AGE 80
Upon the death of the annuitant or owner/annuitant who has not yet reached
age 80.
[diamond] OPTION 1--RETURN OF PREMIUM The greater of:
a) 100% of payments, less adjusted partial withdrawals; and
b) the contract value on the claim date.
[diamond] OPTION 2--ANNUAL STEP-UP The greater of:
a) 100% of payments, less adjusted partial withdrawals; or
b) the contract value on the claim date; and
c) the annual step-up amount on the claim date.
AMOUNT OF PAYMENT AFTER AGE 80
After the annuitant's 80th birthday, the death benefit (less any deferred
premium tax) equals:
[diamond] OPTION 1--RETURN OF PREMIUM The greater of:
a) the sum of 100% of premium payments less adjusted partial withdrawals on
the claim date; or
b) the contract value on the claim date.
[diamond] OPTION 2--ANNUAL STEP-UP The greater of:
a) the death benefit in effect prior to the annuitant turning age 80, plus
the sum of 100% of premium payments less adjusted partial withdrawals
made since the contract year that the annuitant reached age 80; or
b) the contract value on the claim date.
[diamond] DEATH OF AN OWNER WHO IS NOT THE ANNUITANT
The amount of death benefit payable is equal to the greater of:
[bullet] 100% of payments, less withdrawals; and
[bullet] the contract value on the claim date.
BECAUSE THE DEATH BENEFIT IN THIS SITUATION EQUALS THE GREATER OF PREMIUMS
PAID AND THE CONTRACT VALUE, AN OWNER WHO IS NOT THE ANNUITANT SHOULD
SERIOUSLY CONSIDER WHETHER BENEFIT OPTION 2 IS SUITABLE FOR THEIR
CIRCUMSTANCES
Depending upon state law, the payment to the beneficiary may avoid probate
and the death benefit may be reduced by any premium tax due. See "Premium
Tax." See also "Distribution at Death" under "Federal Income Taxes."
We reserve the right to discontinue offering any one of the available death
benefit options in the future.
THE ANNUITY PERIOD
- --------------------------------------------------------------------------------
The annuity period is that period of time beginning after the end of the
accumulation period and during which payments to you are made.
VARIABLE ACCUMULATION ANNUITY CONTRACTS
Annuity payments will begin on the contract's maturity date if the annuitant
is alive and the contract is still in force. Beginning on the maturity date,
investment in the Account is continued unless a Fixed Payment Annuity is
elected. No surrender charge is taken. Each contract will provide, at the time
of its issuance, for a Variable Payment Life Expectancy Annuity (Option L)
unless you elect a different annuity option. See "Annuity Options." Under a
Variable Payment Life Expectancy Annuity, annuity payments are made on a monthly
basis over the annuitant's annually recalculated life expectancy or the annually
recalculated life expectancy of the annuitant and joint annuitant. A contract
owner may at anytime request unscheduled withdrawals representing part or all of
the remaining contract value. Upon the death of the annuitant (and joint
annuitant, if there is a joint annuitant), the remaining contract value will be
paid in a lump sum to the annuitant's beneficiary.
If the amount to be applied on the maturity date is less than $2,000, we may
pay such amount in one lump sum in lieu of providing an annuity. If the initial
monthly annuity payment under an Annuity Option would be less than $20, we may
make a single sum payment equal to the total contract value on the date the
initial payment would be payable, or make periodic payments quarterly,
semiannually or annually in place of monthly payments.
Each contract specifies a provisional maturity date at the time of its
issuance. You may subsequently elect a different maturity date. The maturity
date may not be earlier than the fifth contract anniversary or later than the
contract anniversary nearest the annuitant's 95th birthday unless the contract
is issued in connection with certain qualified plans. Generally, under
Individual Retirement Accounts, the maturity date must be such that
distributions begin no later
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than April 1st of the calendar year following the year in which the employee
attains age 70 1/2.
The maturity date election must be made by written notice and must be
received by VAMO 30 days before the provisional maturity date. If you do not
elect a maturity date, which is different from the provisional maturity date,
the provisional maturity date becomes the maturity date. Particular care should
be taken in electing the maturity date of a contract issued under an IRA plan.
See "Individual Retirement Accounts."
ANNUITY OPTIONS
You may choose among the available annuity options by written request. If
we do not receive written instruction satisfactory to us on or before the
maturity date, we will apply your contract value to Option L, described below.
The options allow you to choose:
[diamond] Fixed Payments (Options A, B, D, E, F, G, H): PHL Variable guarantees
a minimum rate of return for these options.
[diamond] Variable Payments (Options I, J, K, L, M, N): Payments under these
options depend on subaccount investment performance. There is no
guaranteed minimum payment or rate of return.
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 investment rate for variable options is 4.5% on an annual basis.
The assumed rate is used to calculate the first annuity payment under variable
payment options I, J, K, M and N.
We make daily deductions from contract values held in subaccounts for
mortality and expense risk charges and an administrative fee. These charges
affect all the variable payment options. Note that even though PHL Variable
assumes no mortality risk under Option K, a mortality charge is still deducted.
The following descriptions should allow you to compare the basic differences
of the currently available annuity options. You should contact VAMO well in
advance of the date you wish to elect an option for payment estimates under each
option.
OPTION A--LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN
Provides a monthly income for the life of the annuitant. In the event of
death of the annuitant, the annuity income will be paid to the beneficiary until
the end of the specified period certain. For example, a 10-year period certain
will provide a total of 120 monthly payments. The certain period may be 5, 10 or
20 years.
OPTION B--NON-REFUND LIFE ANNUITY
Provides a monthly income for the lifetime of the annuitant. No income is
payable after the death of the annuitant.
OPTION C--DISCONTINUED
OPTION D--JOINT AND SURVIVOR LIFE ANNUITY
Provides a monthly income for the lifetimes of both the annuitant and a
joint annuitant as long as either is living. In the event of the death of the
annuitant or joint annuitant, the annuity income will continue for the life of
the survivor. The amount to be paid to the survivor is 100% of the amount of the
joint annuity payment, as elected at the time the annuity option is chosen. No
income is payable after the death of the surviving annuitant.
Under Option D, 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 E--INSTALLMENT REFUND LIFE ANNUITY
Provides a monthly income for the life of the annuitant. In the event of the
annuitant's death, the annuity income will continue to the annuitant's
beneficiary until the amount applied to purchase the annuity has been
distributed.
OPTION F--JOINT AND SURVIVOR LIFE ANNUITY WITH 10-YEAR PERIOD CERTAIN
Provides a monthly income for the lifetime of both the Annuitant and a joint
annuitant as long as either is living. In the event of the death of the
annuitant or joint annuitant, the annuity income will continue for the life of
the survivor. If the survivor dies prior to the end of the 10-year period, the
annuity income will continue to the named beneficiary until the end of the
10-year period certain.
Under Option F, 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 G--PAYMENTS FOR SPECIFIED PERIOD
Provides equal income installments for a specified period of years whether
the annuitant lives or dies. Any specified whole number of years from 5 to 30
years may be elected.
OPTION H--PAYMENTS OF SPECIFIED AMOUNT
Provides equal installments of a specified amount over a period of at least
five years. The specified amount may not be greater than the total annuity
amount divided by five annual installment payments. If the annuitant dies prior
to the end of the elected period certain, annuity payments will continue to the
annuitant's beneficiary until the end of the elected period certain.
OPTION I--VARIABLE PAYMENT LIFE ANNUITY WITH 10-YEAR PERIOD CERTAIN
It provides a variable payout monthly annuity 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
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beneficiary until the end of the 10-year period. The 10-year period provides a
total of 120 monthly payments. Payments will vary as to dollar amount, based on
the investment experience of the subaccounts in which proceeds are invested.
OPTION J--JOINT SURVIVOR VARIABLE PAYMENT LIFE ANNUITY WITH 10-YEAR PERIOD
CERTAIN
Provides a variable payout monthly annuity 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 a 10-year period
certain. Payments will vary as to dollar amount, based on the investment
experience of the subaccounts in which proceeds are invested. 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. This option is not available for payment of any death benefit under
the contract.
OPTION K--VARIABLE PAYMENT ANNUITY FOR A SPECIFIED PERIOD
Provides variable payout monthly income installments 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. 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. A contract owner may at anytime request
unscheduled withdrawals representing part or all of the remaining contract value
less any applicable contingent deferred surrender charge.
OPTION L--VARIABLE PAYMENT LIFE EXPECTANCY ANNUITY
Unless another annuity option has been elected, this option will
automatically apply to any contract proceeds payable on the maturity date. It
provides a variable payout monthly income payable over the annuitant's annually
recalculated life expectancy or the annually recalculated life expectancy of the
annuitant and joint annuitant. A contract owner may at anytime request
unscheduled withdrawals representing part or all of the remaining contract value
less any applicable contingent deferred surrender charge. Upon the death of the
annuitant (and joint annuitant, if there is a joint annuitant), the remaining
contract value will be paid in a lump sum to the annuitant's beneficiary.
OPTION M--UNIT REFUND VARIABLE PAYMENT LIFE ANNUITY
Provides variable monthly 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 a lump sum.
OPTION N--VARIABLE PAYMENT NON-REFUND LIFE ANNUITY
Provides a variable monthly income for the life of the annuitant. No income
or payment to a beneficiary is paid after the death of the annuitant.
OTHER OPTIONS AND RATES
We may offer other annuity options at the time a contract reaches its
maturity date. 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 Annuity 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 annuity 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 initial 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.
Currently, transfers between subaccounts are not available for amounts
allocated to any of the variable payment annuity options.
PAYMENT UPON DEATH AFTER MATURITY DATE
If an owner who is also the annuitant dies on or after the maturity date,
except as may otherwise be provided under any supplementary contract between the
owner and us, we will pay to the owner/annuitant's beneficiary any annuity
payments due during any applicable period certain under the Annuity Option in
effect on the annuitant's death. If the annuitant who is not the owner dies on
or after the maturity date, we will pay any remaining annuity payments to the
annuitant's beneficiary according to the payment option in effect at the time of
the annuitant's death. If an owner who is not the annuitant dies on or after the
maturity date, we will pay any remaining annuity
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payments to the owner's beneficiary according to the payment option in effect at
the time of the owner's death.
VARIABLE ACCOUNT VALUATION PROCEDURES
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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.
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 of
the valuation period for mortality and expense risk charges and daily
administration 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
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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 VAMO before it will be
honored.
A pledge or assignment of a contract is treated as payment received on
account of a partial surrender of a contract. See "Surrenders or Withdrawals
Prior to the contract Maturity Date."
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 withdrawal from, or
complete surrender of, a contract will ordinarily be made within seven days
after receipt of the written request by VAMO. However, we may postpone payment
of the value of any accumulation 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 10 days after you receive it and
receive in cash the adjusted value of your initial payment calculated without
regard to any bonus payment. (A longer Free Look Period may be required by your
state.) You may receive more or less than your initial payment depending on
investment experience within the subaccounts during the Free Look Period. If a
portion or all of your initial payment has been allocated to the GIA, we also
will refund any earned interest. If a portion or all of your initial payment has
been allocated to the MVA, we will apply the market value adjustment that can
increase or decrease your initial payment. If applicable state law requires, we
will return the full amount of any payments we received from you or on your
behalf.
If you return the contract under the right to cancel provision (Free Look)
the amount returned to you will be determined as if there had been no bonus
payments made by us.
During periods of extreme market volatility, we reserve the right to make
the Temporary Money Market Allocation Amendment available. In states that
require return of premium during the Free Look Period, we will allocate those
portions of your initial payment designated for the
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subaccounts to the Phoenix-Goodwin Money Market subaccount and those portions
designated for the GIA and MVA will be allocated to those Accounts. At the
expiration of the Free Look Period, the value of the accumulation units held in
the Phoenix-Goodwin Money Market subaccount will be allocated among the
available subaccounts in accordance with your allocation instructions on the
application.
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
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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 tax rules are complicated and this discussion can only make you
aware of the issues. Each person concerned should consult a competent tax
adviser. 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.
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 PRIOR TO THE CONTRACT MATURITY DATE
Code Section 72 provides that a total or partial surrender from a contract
prior to the contract maturity date will be treated as taxable income to the
extent the amounts held under the contract exceed the "investment in the
contract." The "investment in the contract" is that portion, if any, of payments
(premiums paid) by or on behalf of an individual under a contract that have not
been excluded from the individual's gross income. However, under most regular
and all Simple IRAs there will be no investment in the contract within the
meaning of Code Section 72, so that the total amount of all payments received
will be taxable. For Roth IRAs, there will generally be no taxable amount on
distributions made after age 59 1/2
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and after five years from the contract issue date. The taxable portion is taxed
as ordinary income in an amount equal to the value of the amount received on
account of a total or partial surrender of a contract. For purposes of this
rule, a pledge or assignment of a contract is treated as a payment received on
account of a partial surrender of a contract.
SURRENDERS OR WITHDRAWALS ON OR AFTER THE CONTRACT MATURITY DATE
Upon receipt of a lump sum payment under the contract, the recipient is
taxed on the portion of the payment that exceeds the investment in the contract.
Ordinarily, such taxable portion is taxed as ordinary income.
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 VAMO 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
DISTRIBUTION-AT-DEATH RULES
In order to be treated as an annuity contract for federal income tax
purposes, a contract must provide the following two distribution rules: (a) if
the contract owner dies on or after the contract maturity date, and before the
entire interest in the contract has been distributed, the remainder of the
contract owner's interest will be distributed at least as quickly as the method
in effect on the contract owner's death; and (b) if a contract owner dies before
the contract maturity date, the contract owner's entire interest generally must
be distributed within five (5) years after the date of death, or if payable to a
designated beneficiary, may be annuitized over the life or life expectancy of
that beneficiary and payments must begin within one (1) year after the contract
owner's date of death. If the beneficiary is the spouse of the contract owner,
the contract (together with the deferral of tax on the accrued and future income
thereunder) may be continued in the name of the spouse as contract owner.
Similar distribution requirements apply to annuity contracts under IRAs (other
than Roth IRAs). However, a number of restrictions, limitations and special
rules apply to IRAs and contract owners should consult with their tax adviser.
If the annuitant, who is not the contract owner, dies before the maturity
date and there is no Contingent annuitant, the annuitant's beneficiary must
elect within 60 days whether to receive the death benefit in a lump sum or in
periodic payments commencing within one (1) year.
If the contract owner is not an individual, the death of the primary
annuitant is treated as the death of the contract owner. In addition, when the
contract owner is not an individual, a change in the primary annuitant is
treated as the death of the contract owner. Finally, in the case of
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non-spousal joint contract owners, distribution will be required at the death of
the first of the contract owners.
If the contract owner or a joint contract owner dies on or after the
maturity date, the remaining payments, if any, under the Annuity Option selected
will be made at least as rapidly as under the method of distribution in effect
at the time of death.
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 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 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.
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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 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 contracts 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
30
<PAGE>
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
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 VARIABLE ACCUMULATION 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.
31
<PAGE>
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, Phoenix Home Life Mutual Insurance Company, has
provided advice on certain matters relating to the federal 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 Annuity Mail Operations at P.O. Box 8027, Boston,
Massachusetts 02266-8027, or by calling VAO at 800/541-0171.
32
<PAGE>
APPENDIX A-1
PERFORMANCE HISTORY FOR CONTRACTS WITH BENEFIT OPTION 1(1)
- --------------------------------------------------------------------------------
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 premium 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.
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED DECEMBER 31, 1999(1,3)
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INCEPTION DATE 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series 7/15/97
Phoenix-Aberdeen International Series 5/1/90
Phoenix-Aberdeen New Asia Series 9/17/96
Phoenix-Duff & Phelps Real Estate Securities Series 5/1/95
Phoenix-Engemann Capital Growth Series 12/31/82
Phoenix-Engemann Nifty Fifty Series 3/2/98
Phoenix-Goodwin Money Market Series 10/8/82
Phoenix-Goodwin Multi-Sector Fixed Income Series 12/31/82
Phoenix-Hollister Value Equity Series 3/2/98
Phoenix-Oakhurst Balanced Series 5/1/92
Phoenix-Oakhurst Growth and Income Series 3/2/98
Phoenix-Oakhurst Strategic Allocation Series 9/17/84
Phoenix-Schafer Mid-Cap Value Series 3/2/98
Phoenix-Seneca Mid-Cap Growth Series 3/2/98
Phoenix-Seneca Strategic Theme Series 1/29/96
EAFE[registered trademark] Equity Index Fund Series 8/22/97
Federated Fund for U.S. Government Securities II 3/28/94
Federated High Income Bond Fund II 3/1/95
Mutual Shares Investments Fund -- Class 2(2) 11/2/98
Templeton Asset Allocation Fund -- Class 2(2) 11/28/88
Templeton Developing Markets Fund -- Class 2(2) 9/27/96
Templeton International Fund -- Class 2(2) 5/11/92
Templeton Stock Fund -- Class 2(2) 11/3/88
Wanger Foreign Forty 2/1/99
Wanger International Small Cap 5/1/95
Wanger Twenty 2/1/99
Wanger U.S. Small Cap 5/1/95
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The average annual total return is the annual compound return that results
from holding an initial investment of $1,000 for the time period indicated.
Returns are net of investment management fees, daily and annual
administrative fees, and mortality and expense risk charges and deferred
sales charges of 7% and 4% deducted from redemptions after 1 and 5 years,
respectively. Surrender charges are based on the age of the deposit. The
investment return and principal value of the variable contract will
fluctuate so that the accumulated value, when redeemed, may be worth more or
less than the original cost.
(2) Because Class 2 shares were not offered until May 1, 1997 (November 10, 1998
for Mutual Shares Investments), performance shown for periods prior to that
date represents the historical results of Class 1 shares. Performance since
that date reflects Class 2's high annual fees and expenses resulting from
its Rule 12b-1 plan. Maximum annual plan expenses are 0.25%.
(3) Performance data quoted represents the investment return of the appropriate
series adjusted for the Phoenix Premium Edge-VA with Benefit Option 1
charges had the subaccount started on the inception date of the appropriate
series.
33
<PAGE>
ANNUAL TOTAL RETURN(1,3)
<TABLE>
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
1983 1984 1985 1986 1987 1988 1989 1990 1991
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series N/A N/A N/A N/A N/A N/A N/A N/A 18.60%
- -------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate
Securities Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series 31.64% 9.62% 33.65% 19.33% 5.92% 2.93% 34.91% 3.06% 41.40%
- -------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 7.35% 9.18% 7.01% 5.50% 5.50% 6.44% 8.17% 7.20% 4.98%
- -------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income
Series 5.00% 10.29% 19.47% 18.16% 0.13% 9.44% 7.21% 4.22% 18.46%
- -------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation
Series N/A N/A 26.14% 14.59% 11.49% 1.37% 18.77% 4.76% 28.10%
- -------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index
Fund N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government
Securities II N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund --
Class 2(2) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund --
Class 2(2) N/A N/A N/A N/A N/A N/A 11.96% -9.08% 26.23%
- -------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund --
Class 2(2) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(2) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(2) N/A N/A N/A N/A N/A N/A 13.31%-12.12% 26.03%
- -------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
</TABLE>
ANNUAL TOTAL RETURN(1,3) (continued)
<TABLE>
- ---------------------------------------------------------------------------------------------------------
<CAPTION>
1992 1993 1994 1995 1996 1997 1998 1999
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A N/A N/A 30.45%
- ---------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series -13.66% 37.16% -0.89% 8.56% 17.53% 10.99% 26.73%
- ---------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A N/A N/A -33.05% -5.35%
- ---------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate
Securities Series N/A N/A N/A N/A 31.86% 20.91% -21.95%
- ---------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series 9.25% 18.57% 0.51% 29.65% 11.52% 19.94% 28.79%
- ---------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 2.59% 1.90% 2.86% 4.70% 4.03% 4.19% 4.10%
- ---------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income
Series 9.03% 14.83% -6.38% 22.38% 11.35% 10.04% -5.06%
- ---------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series N/A 7.59% -3.76% 22.18% 9.52% 16.83% 17.90%
- ---------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation
Series 9.61% 9.96% -2.33% 17.09% 8.02% 19.60% 19.66%
- ---------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series N/A N/A N/A N/A N/A 16.06% 43.35%
- ---------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index
Fund N/A N/A N/A N/A N/A N/A 20.46%
- ---------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government
Securities II N/A N/A 0.00% 7.74% 3.21% 7.55% 6.64%
- ---------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A N/A 0.00% 19.24% 13.22% 12.76% 1.73%
- ---------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund --
Class 2(2) N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund --
Class 2(2) 6.81% 24.68% -4.14% 21.11% 17.46% 14.18% 5.10%
- ---------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund --
Class 2(2) N/A N/A N/A N/A N/A -30.06% -21.79%
- ---------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(2) N/A 45.08% -3.78% 13.97% 22.12% 12.44% 8.05%
- ---------------------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(2) 5.86% 32.48% -3.39% 23.78% 20.98% 10.54% 0.03%
- ---------------------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A N/A N/A 30.78% -2.39% 15.24%
- ---------------------------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A N/A N/A 45.23% 28.20% 7.66%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Rates are net of the investment management fee, daily administrative fees,
and mortality and expense risk charges of the subaccounts. Percent change
doesn't include the effect of the surrender charges or the annual
administrative fees.
(2) Because Class 2 shares were not offered until May 1, 1997 (November 10, 1998
for Mutual Shares Investments), performance shown for periods prior to that
date represents the historical results of Class 1 shares. Performance since
that date reflects Class 2's high annual fees and expenses resulting from
its Rule 12b-1 plan. Maximum annual plan expenses are 0.25%.
(3) Performance data quoted represents the investment return of the appropriate
series adjusted for the Phoenix Premium Edge-VA with Benefit Option 1
charges had the subaccount started on the inception date of the appropriate
series.
THESE RATES OF RETURN ARE NOT AN ESTIMATE OR GUARANTEE OF FUTURE PERFORMANCE.
34
<PAGE>
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 this yield quotation for the
Phoenix-Goodwin Money Market Subaccount based on a 7-day period ending December
31, 1999.
Example:
Value of hypothetical pre-existing account with exactly one
unit at the beginning of the period:......................
Value of the same account (excluding capital changes) at the
end of the 7-day period:..................................
Calculation: [To be
Ending account value...................................... filed by
Less beginning account value.............................. amendment]
Net change in account value...............................
Base period return:
(adjusted change/beginning account value).................
Current yield = return x (365/7) =..........................
Effective yield = [(1 + return)(365/7)] -1 =................
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[servicemark], 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 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[servicemark], 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.
35
<PAGE>
APPENDIX A-2
PERFORMANCE HISTORY FOR CONTRACTS WITH BENEFIT OPTION 2(1)
- --------------------------------------------------------------------------------
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 premium 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.
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED DECEMBER 31, 1999(1,3)
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INCEPTION DATE 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series 7/15/97
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series 5/1/90
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series 9/17/96
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate Securities Series 5/1/95
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series 12/31/82
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series 3/2/98
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 10/8/82
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income Series 12/31/82
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series 3/2/98
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series 5/1/92
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series 3/2/98
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation Series 9/17/84
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series 3/2/98
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series 3/2/98
- ----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series 1/29/96
- ----------------------------------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index Fund Series 8/22/97
- ----------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities II 3/28/94
- ----------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II 3/1/94
- ----------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund -- Class 2(2) 11/2/98
- ----------------------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund -- Class 2(2) 11/28/88
- ----------------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund -- Class 2(2) 9/27/96
- ----------------------------------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(2) 5/11/92
- ----------------------------------------------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(2) 11/3/88
- ----------------------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty 2/1/99
- ----------------------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap 5/1/95
- ----------------------------------------------------------------------------------------------------------------------------------
Wanger Twenty 2/1/99
- ----------------------------------------------------------------------------------------------------------------------------------
Wanger U.S. Small Cap 5/1/95
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The average annual total return is the annual compound return that results
from holding an initial investment of $1,000 for the time period indicated.
Returns are net of investment management fees, daily and annual
administrative fees, and mortality and expense risk charges and deferred
sales charges of 7% and 4% deducted from redemptions after 1 and 5 years,
respectively. Surrender charges are based on the age of the deposit. The
investment return and principal value of the variable contract will
fluctuate so that the accumulated value, when redeemed, may be worth more or
less than the original cost.
(2) Because Class 2 shares were not offered until May 1, 1997 (November 10, 1998
for Mutual Shares Investments), performance shown for periods prior to that
date represents the historical results of Class 1 shares. Performance since
that date reflects Class 2's high annual fees and expenses resulting from
its Rule 12b-1 plan. Maximum annual plan expenses are 0.25%.
(3) Performance data quoted represents the investment return of the appropriate
series adjusted for the Phoenix Premium Edge-VA with Benefit Option 2
charges had the subaccount started on the inception date of the appropriate
series.
36
<PAGE>
ANNUAL TOTAL RETURN(1,3)
<TABLE>
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
1983 1984 1985 1986 1987 1988 1989 1990 1991
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series N/A N/A N/A N/A N/A N/A N/A N/A 18.19%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate
Securities Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series 31.19% 9.24% 33.18% 18.92% 5.55% 2.57% 34.44% 2.70% 40.90%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 6.97% 8.80% 6.63% 5.13% 5.13% 6.06% 7.79% 6.82% 4.61%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income
Series 4.64% 9.90% 19.05% 17.75% -0.22% 9.06% 6.84% 3.86% 18.05%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation
Series N/A N/A 25.70% 14.19% 11.10% 1.02% 18.36% 4.40% 27.65%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index
Fund N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government N/A N/A N/A N/A N/A N/A N/A N/A N/A
Securities II
- --------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund --
Class 2(2) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund --
Class 2(2) N/A N/A N/A N/A N/A N/A 11.57% -9.40% 25.79%
- --------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund --
Class 2(2) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(2) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(2) N/A N/A N/A N/A N/A N/A 12.92%-12.43% 25.59%
- --------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
</TABLE>
ANNUAL TOTAL RETURN(1,3) (continued)
<TABLE>
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
1992 1993 1994 1995 1996 1997 1998 1999
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A N/A N/A 29.99%
- ----------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series -13.96% 36.68% -1.23% 8.18% 17.12% 10.60% 26.29%
- ----------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A N/A N/A -33.28% -5.68%
- ----------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate
Securities Series N/A N/A N/A N/A 31.39% 20.49% -22.22%
- ----------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series 8.87% 18.16% 0.16% 29.20% 11.13% 19.53% 28.34%
- ----------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 2.23% 1.55% 2.50% 4.34% 3.66% 3.83% 3.74%
- ----------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income
Series 8.65% 14.43%-6.71% 21.95% 10.96% 9.65% -5.39%
- ----------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series N/A 7.21% -4.09% 21.76% 9.13% 16.42% 17.48%
- ----------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation
Series 9.23% 9.58% -2.68% 16.68% 7.64% 19.18% 19.24%
- ----------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series N/A N/A N/A N/A N/A 15.66% 42.85%
- ----------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index
Fund N/A N/A N/A N/A N/A N/A 20.04%
- ----------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government N/A N/A 0.00% 7.37% 2.85% 7.18% 6.27%
Securities II
- ----------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A N/A 0.00% 18.83% 12.83% 12.36% 1.37%
- ----------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund --
Class 2(2) N/A N/A N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund --
Class 2(2) 6.44% 24.24%-4.48% 20.69% 17.05% 13.78% 4.73%
- ----------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund --
Class 2(2) N/A N/A N/A N/A N/A -30.31%-22.07%
- ----------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(2) N/A 44.58%-4.11% 13.57% 21.69% 12.05% 7.67%
- ----------------------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(2) 5.49% 32.02%-3.73% 23.35% 20.56% 10.16% -0.32%
- ----------------------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A N/A N/A 30.32% -2.74% 14.83%
- ----------------------------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A N/A N/A 44.72% 27.76% 7.29%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Rates are net of the investment management fee, daily administrative fees,
and mortality and expense risk charges of the subaccounts. Percent change
doesn't include the effect of the surrender charges or the annual
administrative fees.
(2) Because Class 2 shares were not offered until May 1, 1997 (November 10, 1998
for Mutual Shares Investments), performance shown for periods prior to that
date represents the historical results of Class 1 shares. Performance since
that date reflects Class 2's high annual fees and expenses resulting from
its Rule 12b-1 plan. Maximum annual plan expenses are 0.25%.
(3) Performance data quoted represents the investment return of the appropriate
series adjusted for the Phoenix Premium Edge-VA with Benefit Option 2
charges had the subaccount started on the inception date of the appropriate
series.
37
<PAGE>
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 this yield quotation for the
Phoenix-Goodwin Money Market Subaccount based on a 7-day period ending December
31, 1999.
Example:
Value of hypothetical pre-existing account with exactly one
unit at the beginning of the period:......................
Value of the same account (excluding capital changes) at the
end of the 7-day period:..................................
Calculation:
Ending account value...................................... [To be
Less beginning account value.............................. filed 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 =................
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[servicemark], 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 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[servicemark], 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.
THESE RATES OF RETURN ARE NOT AN ESTIMATE OR GUARANTEE OF FUTURE PERFORMANCE.
38
<PAGE>
APPENDIX B
DEDUCTIONS FOR STATE PREMIUM TAXES
QUALIFIED AND NON-QUALIFIED ANNUITY CONTRACTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UPON UPON
STATE PURCHASE(1) ANNUITIZATION NON-QUALIFIED QUALIFIED
- ----- -------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
California .......................................... X 2.35% 0.50%
Kentucky............................................. X 2.00 2.00
Maine................................................ X 2.00
Nevada............................................... X 3.50
South Dakota......................................... X 1.25
West Virginia........................................ X 1.00 1.00
Wyoming.............................................. X 1.00
</TABLE>
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 Premium Taxes, see
"Deductions and Charges--Premium Tax."
(1) "Purchase" in this chart refers to the earlier of partial withdrawal,
surrender of the contract, payment of death proceeds or maturity date.
39
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
PHL VARIABLE INSURANCE COMPANY
HOME OFFICE: PHOENIX VARIABLE ANNUITY
One American Row MAIL OPERATIONS ("VAMO")
Hartford, Connecticut P.O. Box 8027
Boston, Massachusetts 02266-8027
PHL VARIABLE ACCUMULATION ACCOUNT
VARIABLE ACCUMULATION DEFERRED ANNUITY CONTRACT
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2000
This Statement of Additional Information (SAI) is not a prospectus and should be
read in conjunction with the prospectus, dated May 1, 2000. 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 period (the "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 period. We then determine
what the value of the hypothetical account would have been at the end of the
7-day 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 resulting in 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 mortality and expense risk charge
equal to 1.475% on an annual basis, and a daily administrative fee equal to
0.125% 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:
The following example of a return/yield calculation for the Phoenix-Goodwin
Money Market Subaccount was based on the 7-day period ending December 31, 1999:
Value of hypothetical pre-existing account with
exactly one Unit at the beginning of the period:.. To be filed
Value of the same account (excluding capital by Amendment
changes) at the end of the 7-day period:..........
Calculation:
Ending account value..............................
Less beginning account value......................
Net change in account value.......................
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) exp (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 any 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
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[servicemark](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 [servicemark](1)
First Boston High Yield Index
Salomon Brothers Corporate Index
Salomon Brothers Government Bond Index
The S&P 500(2)
CALCULATION OF ANNUITY PAYMENTS
- -------------------------------------------------------------------------------
See your prospectus in the section titled "The Annuity Period" for a
description of the annuity options.
You may elect a payment option by written request. If you do not elect an
option, amounts held under the contract will be applied to provide a Variable
Payment Life Expectancy Annuity (Option L) on the maturity date. You may not
change your election after the first annuity payment.
FIXED ANNUITY PAYMENTS
Fixed annuity payments are determined by the total dollar value for all
subaccounts' accumulation units, all amounts held in the GIA and the MVA
Account. For each contract the resulting dollar value is then multiplied by the
applicable annuity purchase rate, which reflects the age (and sex for
nontax-qualified plans) of the annuitant or annuitants, for the fixed payment
annuity option selected. The guaranteed annuity payment rates will be no less
favorable than the following:
Under Options A, B, D, E and F rates are based on the a-49 Annuity Table(4)
projected to 1985 with Projection Scale B. We use an interest rate of 3-3/8% for
5- and 10-year certain periods under Option A, for the 10-year certain period
under Option F, and for Option E; an interest rate of 3-1/4% for the 20-year
certain period under Options A and F; an interest rate of 3-1/2% under Options B
and D. Under Options G and H the guaranteed interest rate is 3%.
It is possible that we may have more favorable rates in effect on the
settlement date.
B-3
<PAGE>
VARIABLE ANNUITY PAYMENTS
Under all variable options except Option L, the first payment is based on an
assumed annual investment rate of 4-1/2%. All subsequent payments may be higher
or lower depending on investment experience of the subaccounts.
Under Options I, J, K, M and N, we determine the first payment by
multiplying the amounts held under the selected option in each subaccount by the
applicable payment option rate, which reflects the age (and sex for nontax-
qualified plans) of the annuitant or annuitants. 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 L, we determine the amount of the annual distribution by
dividing the amount of contract value held under this option on December 31 of
the previous year by the life expectancy of the annuitant or the joint life
expectancy of the annuitant and joint annuitant at that time.
Under Options I, J, M and N, the applicable options rate used to determine
the first 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 investment rate. Under
Option K, the rate will be based on the number of payments to be made during the
specified period and the assumed investment rate.
We deduct a daily charge for mortality and expense risks and a daily
administrative fee from contract values held in the subaccounts. See your
prospectus in the section titled "Deductions and Charges." Electing Option K
will result in a mortality risk deduction being made even though we assume no
mortality risk under that option.
EXPERTS
- -------------------------------------------------------------------------------
The financial statements of PHL Variable Insurance Company have been audited
by PricewaterhouseCoopers LLP, independent accountants, whose report is set
forth herein, and the financial statements have been included upon the authority
of said firm as experts in accounting and auditing.
PricewaterhouseCoopers LLP, whose address is One Financial Plaza, Hartford,
Connecticut, also provides other accounting and tax-related services as
requested by PHL Variable from time to time.
Edwin L. Kerr, Counsel, Phoenix Home Life Mutual Insurance Company, has
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 [servicemark] (DJIA [servicemark]) 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[servicemark] 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 [servicemark].
(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 [servicemark]) 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 OF THIS CONTRACT 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 (Premium Edge) to be
filed with the N-4/A filing.
(5) (a) Form of Application (Premium Edge) 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 filed via
Edgar herewith.
(14) Not Applicable.
(15) (a) Powers of Attorney of Messrs. Booth, Chipkin, Fiondella,
Kelleher, McLoughlin, Paydos, 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. 33-87376) 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 06102-5056.
** The principal business address of each of these individuals is PHL Variable
Insurance Company, 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200.
ITEM 26. NOT APPLICABLE
ITEM 27. NUMBER OF CONTRACT OWNERS
As of January 28, 2000, no Contracts have been sold.
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>
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
* The principal business address of each of these individuals is 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200.
** The principal business address of each of these individuals is 56 Prospect Street, Hartford, Connecticut 06115-0480.
</TABLE>
(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
- --------------------- ------------------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
PEPCO [to be filed with 0 0 0
N-4/A filing]
</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.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
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<PAGE>
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 28th day of January, 2000.
PHL VARIABLE INSURANCE COMPANY
By: *Robert W. Fiondella
---------------------------
Robert W. Fiondella
President
PHL VARIABLE ACCUMULATION ACCOUNT
By: *Robert W. Fiondella
---------------------------
Robert W. Fiondella
President
of PHL Variable Insurance Company
Pursuant to the requirements of by the Securities Act of 1933, this
Pre-Effective Amendment No. 1 to the Registration Statement has been signed by
the following persons in the capacities indicated with PHL Variable Insurance
Company on this 28th day of January, 2000.
SIGNATURE TITLE
--------- -----
Director
- ---------------------------
*Carl T. Chadburn
Director and Chairman
(Principal Executive Officer)
- ---------------------------
*Robert W. Fiondella
Director
- ---------------------------
*Joseph E. Kelleher
Director
- ---------------------------
*Philip R. McLoughlin
Director
- ---------------------------
*David W. Searfoss
Director
- ---------------------------
*Simon Y. Tan
/s/ Dona D. Young Director
- ---------------------------
*Dona D. Young
By: /s/ Dona D. Young
------------------------------
*Dona D. Young, as Attorney in Fact pursuant to Powers of Attorney, copies of
which were previously filed.
S-1
Exhibit 13(b)
Explanation of Total Return Calculation
<PAGE>
<TABLE>
<CAPTION>
EXPLANATION OF TOTAL RETURN CALCULATION
TOTAL RETURN SUBACCOUNT
NUMBER OF UNITS WITHDRAWN ENDING AVERAGE
BEGINNING INITIAL OFFERING UNITS PER TO PAY ANNUAL 12/31/95 12/31/95 SURRENDER REAR END REDEMPTION CUM ANNUAL
DATE INVESTMENT PRICE INITIAL PMT POLICY FEE(a) TOTAL SHARES NAV VALUE LOAD(b) VALUE RETURN RETURN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 1,000.00 0.602591 1,659.500 10.43803 1,649.062 1.042018 1,718.35 30.93 1,687.42 68.74% 11.03%
</TABLE>
Computation of Average annual return:
R = ((ERV/II) exp (1/n))-1 where,
R = average annual total return
ERV = ending redeemable value
II = initial investment
N = number of years
(a) Represents the average charge for administrative fees per $1,000 invested.
For this example, the administrative fee is $1.75 which equals the $35
annual fee divided by average account dollars x $1,000. Fees are paid
each year through the redemption of units.
(b) Assumes rear end load of 2% in year five. For this example, the year 5
load is $30.93 or 2% on 90% of the surrender value. See "Sales Charges"
section in the prospectus.
