As filed with the Securities and Exchange Commission on May 31, 1996
Registration No. [TBA]
File No. [TBA}
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No.
(Check appropriate box or boxes)
Phoenix-Aberdeen Series Fund
(Exact Name of Registrant as Specified in Charter)
101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices) (Zip Code)
(800) 243-1574
(Registrant's Telephone Number, including Area Code)
Philip R. McLoughlin
Vice Chairman and Chief Executive Officer
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115-0479
(name and address of Agent for Service)
Approximate Date of Proposed Public Offering: It is proposed that this filing
will become effective as soon as practicable after Registration Statement
becomes effective. Provided, however, the Registrant hereby amends this
Registration Statement on such date(s) 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 that the
Securities and Exchange Commission, acting pursuant to said Section 8(a), may
determine.
Declaration Pursuant to Rule 24f-2: Registrant hereby registers an indefinite
number of shares of beneficial interest, $1 par value, under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940
for the Registrant's fiscal year ended March 31, 1997.
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
Cross Reference Sheet Pursuant to Rule 495
Under the Securities Act of 1933
PART A
<TABLE>
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Form N-1A Item Prospectus Caption
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<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fund Expenses
3. Financial Highlights Not Applicable
4. General Description of Registrant Cover Page, Introduction, Investment Objective and
Policies, Investment Techniques and Related Risks,
Investment Restrictions, and Additional Information
5. Management of the Fund Fund Expenses and Management of the Fund
6. Capital Stock and Other Securities Distribution Plans, How to Buy Securities Shares,
Dividends, Distributions and Taxes and Additional
Information
7. Purchase of Securities Being Offered Fund Expenses, Distribution Plans, Being Offered
How to Buy Shares and Net Asset Value
8. Redemption or Repurchase Fund Expenses and How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
PART B
<TABLE>
<CAPTION>
Form N-1A Item SAI Caption
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<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History The Fund
13. Investment Objective and Policies Investment Objectives and Policies and Investment
Restrictions
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Holders
of Securities Trustees and Officers
16. Investment Advisory and Other Services of the Adviser, Distribution Plans and Other
Services Information
17. Brokerage Allocation Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities The Fund
19. Purchase, Redemption and Pricing of Net Asset Value, How to Buy Shares, Alternative
Securities Being Offered Purchase Arrangements, Exchange Privileges, Redemption
of Shares and Dividends, Distributions and Taxes
20. Tax Status Dividends, Distributions and Taxes
21. Underwriters The National Distributor
22. Calculation of Performance Data Performance Information
23. Financial Statements Not Applicable
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
<PAGE>
Subject to Completion--Dated May 31, 1996
PHOENIX-ABERDEEN SERIES FUND
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
[September 3], 1996
Phoenix-Aberdeen Series Fund (the "Fund") is an open-end management
investment company whose shares are offered in separate series. Each series
generally operates as a separate fund with its own investment objective and
policies designed to meet specific investment goals. There can be no
assurance that any series will achieve its investment objectives.
Phoenix-Aberdeen Asian Fund (the "Asian Series") seeks as its investment
objective long term capital appreciation consistent with reasonable risk. It
is intended that this Series will invest primarily in a diversified portfolio
of equity securities of issuers located in at least three different countries
throughout Asia other than Japan.
Phoenix-Aberdeen Global Small Cap Fund (the "Global Series") seeks as its
investment objective long-term capital appreciation consistent with
reasonable risk. It is intended that this Series will invest primarily in a
globally diversified portfolio of equity securities of small and medium sized
companies.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. No dealer, salesperson or
other person has been authorized to give any information or to make any
representation, other than those contained in this Prospectus, and, if given
or made, such other information or representations must not be relied upon as
having been authorized by the Fund, Adviser, or Distributor. This Prospectus
does not constitute an offer to sell or solicitation of an offer to buy any
of the securities offered hereby in any state in which, or to any person
whom, it is unlawful to make such offer. Neither the delivery of this
Prospectus nor any sale hereunder shall, under any circumstances, create any
implication that information herein is correct at any time subsequent to its
date. Investors should read and retain this Prospectus for future reference.
Additional information about the Fund is contained in the Statement of
Additional Information dated [September 3], 1996 which has been filed with
the Securities and Exchange Commission and is available at no charge by
calling (800) 243-4361 or by writing to Phoenix Equity Planning Corporation,
at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut
06083-2200. The Statement of Additional Information is incorporated herein by
reference.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union or affiliated entity and are not
federally insured or otherwise protected by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board or any other agency and involve
investment risk including the possible loss of principal.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMIS-SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS/EXCHANGE: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY) (800) 243-1926
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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INTRODUCTION 3
FUND EXPENSES 4
PERFORMANCE INFORMATION 5
INVESTMENT OBJECTIVES AND POLICIES 5
INVESTMENT TECHNIQUES AND RELATED RISKS 8
INVESTMENT RESTRICTIONS 11
MANAGEMENT OF THE FUND 11
DISTRIBUTION PLANS 12
HOW TO BUY SHARES 13
NET ASSET VALUE 19
HOW TO REDEEM SHARES 19
DIVIDENDS, DISTRIBUTIONS AND TAXES 20
ADDITIONAL INFORMATION 21
</TABLE>
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of
Phoenix-Aberdeen Series Fund (the "Fund"). The Fund is an open-end management
investment company established as a business trust under the laws of the
Commonwealth of Massachusetts by an Agreement and Declaration of Fund dated
May 31, 1996 (the "Declaration of Trust"). The Declaration of Trust
authorizes the assets and shares of the Fund to be divided into series (the
"Series"). Each Series has a different investment objective and invests
primarily in certain types of securities, as described on the cover page of
this Prospectus, and is designed to meet different investment needs.
Investment Adviser
The Fund is managed by Phoenix-Aberdeen International Advisors, LLC (the
"Adviser"). The Adviser is a joint venture between PM Holdings, Inc., a
direct subsidiary of Phoenix Home Life Mutual Insurance Company ("Phoenix
Home Life"), and Aberdeen Fund Managers, Inc., a wholly-owned subsidiary of
Aberdeen Trust plc. The Adviser is entitled to a monthly management fee at an
annual rate of 1.00% of the average aggregate daily net asset values of the
Asian Series and Global Series. See "Management of the Fund."
Distributor and Distribution Plans
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
serves as national distributor of the Fund's shares. See "Distribution Plans"
and the Statement of Additional Information. Equity Planning also acts as
financial agent of the Fund and as such receives a quarterly fee based on the
average of the aggregate daily net asset values of the Fund at an annual rate
of $300 per $1 million. Equity Planning also serves as the Fund's transfer
agent.
The Fund has adopted distribution plans pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act") for both classes
of each Series. Pursuant to the class A distribution plan, amounts not
exceeding 0.25% annually of the average daily net assets of Class A Shares of
each Series may be used to finance the distribution of Class A Shares and for
furnishing shareholder services. Pursuant to the class B distribution plan,
amounts not exceeding 1.00% annually of the average daily net assets of Class
B Shares of each Series may be used to finance the distribution of Class B
Shares and for furnishing shareholder services. See "Distribution Plans".
Purchase of Shares
The Fund offers two classes of shares of each Series which may be purchased
at a price equal to their net asset value per share, plus a sales charge
which, at the election of the purchaser, may be imposed (i) at the time of
purchase ("Class A Shares") or (ii) on a contingent deferred basis ("Class B
Shares"). Completed applications for the purchase of shares should be mailed
to the Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301.
Class A Shares are offered to the public at the next determined net asset
value after receipt of the order by State Street Bank and Trust Company, plus
a maximum sales charge of 4.75% of the offering price (4.99% of the amount
invested) on single purchases of less than $50,000. The sales charge for
Class A Shares is reduced on a graduated scale on single purchases of $50,000
or more and subject to other conditions stated below. See "How to Buy
Shares", "How to Obtain Reduced Sales Charges--Class A Shares" and "Net Asset
Value."
Class B Shares are offered to the public at the next determined net asset
value after receipt of an order by State Street Bank and Trust Company with
no sales charge. Class B Shares are subject to a sales charge if they are
redeemed within five years of purchase. See "How to Buy Shares" and "Deferred
Sales Charge Alternative--Class B Shares."
Shares of each class represent an identical interest in the investment
portfolio of that Series and have the same rights, except that Class B Shares
bear the cost of higher distribution fees and certain other expenses
resulting from the deferred sales charge arrangements, which cause Class B
Shares to have a higher expense ratio and to pay lower dividends than Class A
Shares. See "How to Buy Shares."
Minimum Initial and Subsequent Investments
The minimum initial investment is $500 ($25 if using the bank draft
investing program designated "Investo-Matic") and the minimum subsequent
investment is $25. Exceptions to the minimum and subsequent investment
amounts for a Series are available under specific circumstances. See "How to
Buy Shares".
Redemption Price
Class A Shares may be redeemed at any time at the net asset value per share
next computed after receipt of a redemption request by Equity Planning, the
Fund's transfer agent. Class B shareholders redeeming shares within five
years of the date of purchase will normally be assessed a contingent deferred
sales charge. See "How to Redeem Shares".
Risk Factors
There can be no assurance that any Series will achieve its investment
objectives. In addition, special risks may be presented by the particular
types of securities in which a Series may invest. As a result of a Series'
investment in securities of foreign issuers, and, in particular, issuers
located in specific areas of the globe, Series assets may be highly
susceptible to economic, political and currency changes affecting securities
of such issuers. The securities markets of emerging market countries in which
certain issuers may be located are substantially smaller, less developed,
less liquid, and more volatile than the securities markets of the United
States and other more developed countries. The risk factors relevant to
investment in each Series should be reviewed and are set forth in the
"Investment Objectives and Policies" and "Investment Techniques and Related
Risks" sections of this Prospectus and Statement of Additional Information.
3
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
(the "Fund")
CLASS B SHARES
DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have
entered into a Distribution Agreement pursuant to which the Distributor will
act as principal underwriter of each class of shares of the Fund for sale to
the permissible purchasers. The Trustees of the Fund have determined to adopt
this Distribution Plan (the "Plan"), in accordance with the requirements of
Section 12b-1 of the Investment Company Act of 1940, as amended (the "Act")
with respect to Class B shares of the Fund and have determined that there is
a reasonable likelihood that the Plan will benefit the Fund and its Class B
shareholders.
2. Rule 12b-1 Fees
The Fund shall reimburse the Distributor, at the end of each month, up to a
maximum on an annual basis of 1.00% of the average daily value of the net
assets of the Fund's Class B shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by Distributor subsequent to the
effectiveness of this Plan, in connection with the sale and promotion of the
Class B shares of the Fund and the furnishing of services to Class B
shareholders of the Fund. Such expenditures shall consist of: (i) commissions
to sales personnel for selling Class Y shares of the Fund (including
underwriting commissions and finance charges related to the payment of
commissions); (ii) compensation, sales incentives and payments to sales,
marketing and service personnel; (iii) payments to broker-dealers and other
financial institutions which have entered into selling agreements with the
Distributor for services rendered in connection with the sale and
distribution of Class B shares of the Fund; (iv) payment of expenses incurred
in sales and promotional activities, including advertising expenditures
related to the Class B shares of the Fund; (v) the costs of preparing and
distributing promotional materials; (vi) the cost of printing the Fund's
Prospectus and Statement of Additional Information for distribution to
potential investors; and (vii) such other similar services that the Trustees
of the Fund determine are reasonably calculated to result in the sale of
Class B shares of the Fund; provided however, that all or a portion of such
amount paid to the Distributor, which sum shall be equal to or less than
0.25% annually of the average daily net assets of the Fund's Class B shares,
may be paid for reimbursing the costs of providing services to Class B
shareholders including assistance in connection with inquiries related to
shareholder accounts (the "Service Fee").
Amounts paid or payable by the Fund under this Plan or any agreement with any
person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall,
given all surrounding circumstances, represent charges within the range of
what would have been negotiated at arm's length as payment for the specific
sales or promotional services and activities to be financed hereunder and any
related agreement, as determined by the Trustees of the Fund, in the exercise
of reasonable business judgment, in light of fiduciary duties under state law
and Sections 36(a) and (b) of the Act and based upon appropriate business
estimates and projections.
3. Reports
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare
and furnish to the Trustees of the Fund for their review, and the Trustees
shall review, a written report complying with the requirements of Rule 12b-l
under the Act regarding the amounts expended under this Plan and the purposes
for which such expenditures were made.
4. Required Approval
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who
have no direct or indirect financial interest in the operation of this Plan
or in any related agreement (the "Disinterested Trustees"), cast in person at
a meeting called for the purpose of voting on this Plan or any related
agreement and this Plan shall not take effect with respect to the Fund until
it has been approved by a vote of at least a majority of the outstanding
voting Class B shares (as such phrase is defined in the Act).
3
<PAGE>
5. Term
This Plan shall remain in effect for one year from the date of its adoption
and may be continued thereafter if specifically approved at least annually by
a vote of at least a majority of the Trustees of the Fund as well as a
majority of the Disinterested Trustees. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the
amount of the distribution expenses provided in Paragraph 2 hereof (including
the Service Fee) without the approval of at least a majority of the
outstanding voting securities (as defined in the Act) of the Class B shares
of the Fund and (b) all material amendments to this Plan must be approved by
a majority vote of the Trustees of the Fund and of the Disinterested Trustees
cast in person at a meeting called for the purpose of such vote.
6. Selection of Disinterested Trustees
While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
Any related agreement shall be in writing and shall provide that (a) such
agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class B shares of the Fund on not more than 60 days' written notice to the
other party to the agreement and (b) such agreement shall terminate
automatically in the event of its assignment.
8. Termination
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class B shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
The Fund shall preserve copies of this Plan and any related agreements and
all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six
years from the date of this Plan, the agreement or report, as the case may
be, the first two years in an easily accessible place.
10. Non-Recourse
The Fund's Declaration of Trust dated May 31, 1996, a copy of which, together
with the amendments thereto ("Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, refers to the Trustees under
the Declaration of Trust collectively as Trustees, but not as individuals or
personally, and no Trustee, shareholder, officer, employee or agent of the
Fund may be held to any personal liability, nor may any resort be had to
their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of the Fund but the Fund property
only shall be liable.
4
<PAGE>
FUND EXPENSES
The following table illustrates all pro-forma expenses and fees that a
shareholder is expected to incur.
<TABLE>
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Asian Series Global Series
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Class A Class B Class A Class B
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Shareholder Transaction
Expenses
Maximum Sales Load Imposed
on Purchases (as a
percentage of offering
price) 4.75% None 4.75% None
Maximum Sales Load Imposed
on Reinvested Dividends None None None None
Deferred Sales Load (as a 5% during the first year, 5% during the first year,
percentage of original decreasing 1% annually to decreasing 1% annually to
purchase price or 2% during the fourth and 2% during the fourth and
redemption proceeds, as fifth years; dropping to fifth years; dropping to
applicable) None 0% after the fifth year None 0% after the fifth year
Redemption Fee None None None None
Exchange Fee None None None None
Annual Fund Operating
Expenses (a)
(as a percentage of
average net assets):
Management Fees 1.00% 1.00% 1.00% 1.00%
12b-1 Fees (b) 0.25% 1.00% 0.25% 1.00%
Other Operating Expenses
(After Reimbursement) 0.75%(c) 0.75%(c) 0.75%(d) 0.75%(d)
Total Fund Operating
Expenses 2.00% 2.75% 2.00% 2.75%
======== ========================== ======== ==========================
</TABLE>
(a) As of the date of this Prospectus, neither Series had commenced
investment operations. The percentages indicated are estimates and actual
expenses may be more or less than amounts shown.
(b) "Rule 12b-1 Fees" represent an asset based sales charge that, for a
long-term shareholder, may be higher than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers, Inc. ("NASD").
(c) The Adviser has agreed to reimburse the Asian Series' operating
expenses related to Class A Shares and Class B Shares for the amount, if any,
by which such other operating expenses for the fiscal year ended [March 31],
1997 exceed 0.75% of average net assets. Other Operating Expenses absent
expense reimbursement are estimated to equal approximately [ ]% and [ ]%,
respectively, of average net assets; Total Fund Operating Expenses are
estimated to be ____% and ____%, respectively, absent such reimbursement.
(d) The Adviser has agreed to reimburse the Global Series' operating
expenses related to Class A Shares and Class B Shares for the amount, if any,
by which such other operating expenses for the fiscal year ended [March 31],
1997 exceed 0.75% of average net assets. Other Operating Expenses absent
expense reimbursement are estimated to equal approximately [ ]% and [ ]%,
respectively, of average net assets; Total Fund Operating Expenses are
estimated to be ____% and ____%, respectively, absent such reimbursement.
<TABLE>
<CAPTION>
Asian Series Global Series
--------------- -----------------
1 3 1
Example* year years Year 3 Years
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a hypothetical
$1,000 investment assuming (i) a 5% annual return and (ii)
redemption at the end of each time period:
Class A Shares $67 $107 $67 $107
Class B Shares $78 $115 $78 $115
An investor would pay the following expenses on the same $1,000
investment assuming no redemption at the end of each time period:
Class A Shares $67 $107 $67 $107
Class B Shares $28 $ 85 $28 $ 85
</TABLE>
*The purpose of the table above is to help the investor understand the
various costs and expenses that the investor will bear directly or
indirectly. The example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown. For
additional information regarding various costs and expenses, see "Management
of the Fund," and "How to Buy Shares."
4
<PAGE>
PERFORMANCE INFORMATION
The Fund may, from time to time, include the performance history of any or
all of the Series in advertisements, sales literature or reports to current
or prospective shareholders. Both yield and total return are computed
separately for Class A Shares and Class B Shares of a Series in accordance
with formulas specified by the Securities and Exchange Commission. Yield and
total return are based on a Series' past performance only and are not an
indication of future performance. Performance information about each Series
is based on that Series' past performance only and is not an indication of
future performance. Performance information may be expressed as yield of any
Series or Class thereof, and as total return of any Series or Class thereof.
The yield of each Series will be computed by dividing the Series' net
investment income over a 30-day period by an average value of invested assets
(using the average number of shares entitled to receive dividends and the
maximum offering price per share at the end of the period), all in accordance
with applicable regulatory requirements. Such amount will be compounded for
six months and then annualized for a twelve-month period to derive the
Series' yield.
Standardized quotations of average annual total return for Class A and Class
B Shares of each Series will be expressed in terms of the average annual
compounded rate of return of a hypothetical investment in either Class A or
Class B Shares of each Series over a period of 1, 5, and 10 years (or up to
the life of the class of shares). Standardized total return quotations
reflect the deduction of a proportional share of each Class' expenses of each
Series (on an annual basis), deduction of the maximum initial sales load in
the case of Class A Shares or the maximum contingent deferred sales charge
applicable to a complete redemption of the investment in the case of Class B
Shares, and assume that all dividends and distributions on Class A and Class
B Shares are reinvested when paid. It is expected that the performance of
Class A Shares will be better than that of Class B Shares as a result of
lower distribution fees and certain incrementally lower expenses paid by
Class A Shares. The Fund may also quote supplementally a rate of total return
over different periods of time by means of aggregate, average, and
year-by-year or other types of total return figures.
The Fund may also advertise performance relative to certain performance
rankings and indices compiled by independent organizations. The Fund may
include the ranking of these performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc., and Morningstar,
Inc. Additionally, the Fund may compare a Series' performance results to
other investment or savings vehicles (such as certificates of deposit) and
may refer to results published in various publications such as Changing
Times, Forbes, Fortune, Money, Barrons, Business Week and Investor's Daily,
Stanger's Mutual Fund Monitor, The Stanger Register, Stanger's Investment
Adviser, The Wall Street Journal, The New York Times, Consumer Reports,
Registered Representative, Financial Planning, Financial Services Weekly,
Financial World, U.S. News and World Report, Standard and Poors The Outlook
and Personal Investor. The Fund may from time to time illustrate the benefits
of tax deferral by comparing taxable investments to investments made through
tax-deferred retirement plans. The total return may also be used to compare
the performance of a Series with certain widely acknowledged outside
standards or indices for market performance, such as the Standard & Poor's
500 Stock Index ("S&P 500 Index"), Dow Jones Industrial Average, Europe
Australia Far East Index (EAFE), Consumer's Price Index, Shearson Lehman
Corporate Index, Shearson Lehman T-Bond Index and Morgan Stanley Capital
International ("MSCI") Developed Market Indices.
Advertisements, sales literature and other communications may contain
information about the Fund or Adviser's 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 Fund may
discuss specific portfolio holdings or industries in such communications. To
illustrate components of overall performance, the Fund may separate its
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 Index, Dow Jones Industrial Average, First Boston High Yield Index,
MSCI Developed Market Indices, and Solomon Brothers Corporate and Government
Bond Indices.
Performance information for a Series reflects only the performance of a
hypothetical investment in Class A or Class B Shares of a Series during the
particular time period on which the calculations are based. Performance
information should be considered in light of a particular Series' investment
objectives and policies, characteristics and qualities of the Series, and the
market conditions during the given time period, and should not be considered
as a representation of what may be achieved in the future. For a description
of the methods used to determine total return, see the Statement of
Additional Information.
The Fund's Annual Report, available upon request and without charge, will
contain a discussion of the performance of each Series and a comparison of
that performance to a securities market index.
INVESTMENT OBJECTIVES AND
POLICIES
Each Series has a different investment objective and is designed to meet
different investment needs. The differences in objectives and policies among
the Series can be expected to affect the investment return of each Series and
the degree of market and financial risk to which each Series is subject. The
investment objective of each Series is a fundamental policy which may not be
changed without the approval of a vote of a majority of the outstanding
shares of that Series. Since
5
<PAGE>
certain risks are inherent in the ownership of any security, there can be no
assurance that any Series will achieve its investment objective. The
investment policies of each Series will also affect the rate of portfolio
turnover. A high rate of portfolio turnover generally involves
correspondingly greater brokerage commissions, which are paid directly by the
Series. The rates for the Asian and Global Series are estimated to be 75% and
100%, respectively.
Asian Series
The investment objective of the Asian Series is to provide long term capital
appreciation consistent with reasonable risk. It is intended that this Series
will achieve its objective by investing under normal market conditions at
least 65% of its total assets in a diversified portfolio of equity securities
of issuers organized and principally operating (i.e., companies which derive
a significant proportion (at least 50%) of their revenues or profits from
goods produced or sold, investments made, or services performed in such
eponymous countries or which have at least 50% of their assets situated in
such countries) in countries throughout Asia (excluding Japan) and whose
principal securities are actively traded on recognized stock exchanges of
such countries. The Series does not intend to invest in securities which are
traded in markets in Japan or in countries organized under the laws of Japan.
The Series will invest in countries having more established markets in
regions of Asian countries. The Asian countries to be represented in the
Series will ordinarily consist of three or more of the following countries:
Australia, China, Hong Kong, India, Indonesia, South Korea, Malaysia,
Pakistan, the Philippines, Singapore, Sri Lanka, Taiwan and Thailand. There
is no requirement that the Series, at any given time, invest in any one
particular country or in all of the countries listed above or in any other
Asian countries or other developing markets that are open to foreign
investment. In determining the appropriate distribution of investments among
various countries and geographic regions, the Adviser ordinarily will
consider the following factors: prospects for relative economic growth among
Asian countries; expected levels of inflation; relative price levels of the
various capital markets; governmental policies influencing business
conditions; the outlook for currency relationships and the range of
individual investment opportunities available to the international investor.
Shareholders should be aware that the Series may make investments in
developing or emerging market countries, which involve exposure to economic
structures that are generally less diverse and mature than in the United
States, and to political systems which may be less stable. A developing
country can be considered to be a country which is in the initial stages of
its industrialization cycle. In the past, markets of developing countries
have been more volatile than the markets of developed countries; however,
such markets often have provided higher rates of return to investors.
In pursuing its objective, the Series may also invest in any other type of
security including, but not limited to, convertible securities, preferred
stocks, bonds, notes and other debt securities of companies (including
Euro-currency instruments and securities) or obligations of domestic or
foreign governments and their political subdivisions, and in foreign currency
transactions. Lower-rated and non-rated convertible securities are
predominantly speculative with respect to the issuer's capacity to repay
principal and pay interest. Investment in lower-rated and non-rated
convertible fixed-income securities normally involves a greater degree of
market and credit risk than does investment in securities having higher
ratings. The price of these fixed income securities will generally move in
inverse proportion to interest rates. In addition, non-rated securities are
often less marketable than rated securities. To the extent that the Series
holds any lower rated or non-rated securities, it may be negatively affected
by adverse economic developments, increased volatility and lack of liquidity.
In certain countries, investments may only be made by investing in other
investment companies that, in turn, are authorized to invest in the
securities that are issued in such countries. The Series may therefore invest
in the securities of other investment companies subject to the limitations
contained in the 1940 Act (see "Investment Restrictions" in the Statement of
Additional Information). Shareholders should recognize that the Series
purchase of the securities of other investment companies (and closed-end
companies) results in the layering of expenses such that shareholders
indirectly bear a proportionate part of the expenses for such investment
companies including operating costs, and investment advisory and
administrative fees.
The Series may establish and maintain reserves of up to 100% of its assets
for temporary defensive purposes under abnormal market or economic
conditions. The Series reserves may be invested in domestic as well as
foreign short-term money market instruments including, but not limited to,
government obligations, certificates of deposit, bankers' acceptances, time
deposits, commercial paper, short-term corporate debt securities and
repurchase agreements. When the Series assets are held in cash or cash
equivalents, it is not investing in securities intended to meet the Series'
investment objective.
Risk Considerations
There are substantial and different risks involved which should be carefully
considered by any investor considering foreign investments. For example,
there is generally less publicly available information about foreign
countries than is available about companies in the United States. Foreign
companies are generally not subject to uniform audit and financial reporting
standards, practices and requirements comparable to those in the United
States.
Foreign securities involve currency risks. The U.S. dollar value of a
foreign security tends to decrease when the value of the dollar rises against
the foreign currency in which the security is denominated and tends to
increase when the value of the dollar falls against such currency.
Fluctuations in exchange rates may also affect the earning power and asset
value of the foreign entity issuing the security. Dividend and interest
payments may be returned to the country of origin, based on the exchange rate
at the time of disbursement, and restrictions on capital flows may
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be imposed. Losses and other expenses may be incurred in converting between
various currencies in connection with purchases and sales of foreign
securities.
Foreign stock markets are generally not as developed or efficient as those
in United States. In most foreign markets volume and liquidity are less than
in the United States and, at times, volatility of price can be greater than
that in the United States. Fixed commissions on foreign stock exchanges are
generally higher than the negotiated commission on United States exchanges.
There is generally less government supervision and regulation of foreign
stock exchanges, brokers and companies than in the United States. There is
also the possibility of adverse changes in investment or exchange control
regulations, expropriation or confiscatory taxation, limitations on the
removal of funds or other assets, political or social instability, or
diplomatic developments which could adversely affect investments, assets or
securities transactions of the Series in some foreign countries.
For many foreign securities, there are U.S. dollar-denominated American
Depository Receipts ("ADRs"), which are traded in the United States on
exchanges or over the counter and are sponsored and issued by domestic banks.
ADRs represent the right to receive securities for foreign issuers deposited
in a domestic bank or a correspondent bank. ADRs do not eliminate all the
risk inherent in investing in the securities for foreign issuers. However, by
investing in ADRs rather than directly in foreign issuers' stock, the Series
can avoid currency risks during the settlement period for either purchases or
sales. In general, there is a large, liquid market in the United States for
many ADRs. The information available for ADRs is subject to accounting,
auditing and financial reporting standards of the domestic market or exchange
on which they are traded, which standards are more uniform and more exacting
than those to which many foreign issuers may be subject. The Series may also
invest in ADRs which are not sponsored by domestic banks and present the
risks of foreign investments noted above. The Series may also invest in
European Depository Receipts ("EDRs"), which are receipts evidencing an
arrangement with a European bank similar to that for ADRs and are designed
for use in the European securities markets. EDRs are not necessarily
denominated in the currency of the underlying security.
Global Series
The investment objective of the Global Series is long-term capital
appreciation consistent with reasonable risk. It is intended that this Series
will achieve its objective by investing at least 65% of its total assets in a
globally diversified portfolio of equity securities of small and medium sized
companies.
Companies are selected on the basis of the Adviser's assessment of their
long-term potential to grow rapidly through a variety of factors including the
expansion of existing product lines, introduction of new products, geographic
expansion, market share gains, improved operating efficiency, unexploited
themes, or acquisitions. The Adviser seeks those small and emerging companies
which can show significant and sustained increases in earnings over an extended
period of time. It is presently intended that the total market capitalization of
companies considered for investment shall be approximately US$750 million or
less at the time of acquisition. A strong financial structure and strong
fundamental prospects will be sought, but given the limited operating history of
smaller companies, in certain situations some of the above factors will not be
available or remain to be proven. Full development of these companies frequently
takes time and, for this reason, the Series should be considered as a long-term
investment and not as a vehicle for seeking short-term profits.
Under normal circumstances, business activities in a number of different
foreign countries will be represented in the Series' investments. The Series
may, from time to time, have more than 25% of its assets invested in any major
industrial or developed country which in the view of the Adviser poses no unique
investment risk. The Series may purchase securities of companies, wherever
organized, which have their principal activities and interests outside the
United States. The Series may also invest its reserves in domestic short-term
money-market instruments. In determining the appropriate distribution of
investments among various countries and geographic regions, the Adviser
ordinarily will consider the following factors: prospects for relative economic
growth among foreign countries; expected levels of inflation; relative price
levels of the various capital markets; governmental policies influencing
business conditions; the outlook for currency relationships and the range of
individual investment opportunities available to the international investor.
The Series may invest in stocks of all types and, subject to investment
restrictions limiting concentration, is not restricted as to industry in its
investments. Under exceptional economic or market conditions abroad, the
Series may invest all or a major portion of its assets in U.S. government
obligations or securities of companies incorporated in and having their
principal activities in the United States. During adverse economic or market
conditions, any part of the Series' assets may be held in cash or money
market instruments including U.S. Government obligations maturing within one
year from the date of purchase when the Adviser deems a temporary defensive
position to be prudent. When the Series' assets are held in cash or cash
equivalents, it is not investing in securities intended to meet the Series'
investment objective.
Risk Considerations
Many of the risks associated with investments in foreign issuers are
described above. Smaller capitalization companies are often companies with
limited operating history as a public company or companies within industries
which have recently emerged due to cultural, economic, regulatory or
technological developments. Given the limited operating history and rapidly
changing fundamental prospects, investment returns from smaller
capitalization companies are highly volatile. Smaller companies may at times
find their ability to raise capital impaired by their size or lack of
operating history. Product
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lines are often less diversified and subject to competitive threats. Smaller
capitalization stocks are subject to varying patterns of trading volume
creating points in time when the securities are illiquid.
Other factors influencing the performance and volatility of small
capitalization stocks include industry developments within major markets,
major economic trends and developments and general market movements in both
the equity and fixed income markets. Investment in equity securities of
foreign small capitalization companies may involve special risks,
particularly from political and economic developments abroad and differences
between foreign and U.S. regulatory systems. Foreign small capitalization
companies may be less liquid and their prices more volatile than comparable
domestic securities issuers.
The Fund commenced operations on [September 3], 1996 based upon an initial
capitalization of $3 million provided by Phoenix Home Life Mutual Insurance
Company. The ability of each Series to raise additional capital for
investment purposes may directly affect the spectrum of portfolio holdings
and performance. Additional discussion regarding risks involved in investing
in each Series are described in the "Investment Techniques and Related Risks"
section below.
INVESTMENT TECHNIQUES AND
RELATED RISKS
Foreign Securities. Each Series may purchase foreign securities, including
emerging market securities and those issued by foreign branches of U.S.
banks. The Fund may invest in a broad range of foreign securities including
equity, debt and convertible securities and foreign government securities. In
connection with investments in foreign securities, the Fund may enter into
forward foreign currency exchange contracts for the purpose of protecting
against losses resulting from fluctuations in exchange rates between the U.S.
dollar and a particular foreign currency denominating a security which the
Fund holds or intends to acquire. The Fund will not speculate in forward
foreign currency exchange contracts.
Investing in the securities of foreign companies involves special risks and
considerations not typically associated with investing in U.S. companies.
These include differences in accounting, auditing and financial reporting
standards, generally higher commission rates on foreign portfolio
transactions, the possibility of expropriation or confiscatory taxation,
adverse changes in investment or exchange control regulations, political
instability which could affect U.S. investments in foreign countries,
difficulty in invoking legal process abroad and potential restrictions on the
flow of international capital. Additionally, dividends payable on foreign
securities may be subject to foreign taxes withheld prior to distribution.
Foreign securities often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility. Changes in
foreign exchange rates will affect the value of those securities which are
denominated or quoted in currencies other than the U.S. dollar. Many of the
foreign securities held by the Fund will not be registered with the
Securities and Exchange Commission and many of the issuers of foreign
securities will not be subject to the Commission's reporting requirements.
Accordingly, there may be less publicly available information about the
securities and about the foreign company or government issuing them than is
available about a domestic company or government entity. Moreover, individual
foreign economies may compare favorably or unfavorably with the United States
economy with respect to such factors as rate of growth, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payment
positions, and economic trends in foreign countries may be difficult to
assess.
Particular risks are posed by investments in third world countries or
so-called "emerging markets." These securities may be especially volatile
based on relative economic, political and market conditions present in these
countries. These and other relevant conditions vary widely between emerging
market countries. For instance, certain emerging market countries are either
comparatively undeveloped or are in the process of becoming developed and may
consequently be economically based on a relatively few or closely
interdependent industries. A high proportion of the shares of many emerging
market issuers may also be held by a limited number of large investors
trading significant blocks of securities. While the Fund will strive to be
sensitive to publicized reversals of economic conditions, political unrest
and adverse changes in trading status, unanticipated political and social
developments may affect the values of a Series' investments in such countries
and the availability of additional investments in such countries.
The Fund may use a foreign custodian in connection with its purchases of
foreign securities and may maintain cash and cash equivalents in the care of
a foreign custodian. The amount of cash or cash equivalents maintained in the
care of eligible foreign custodians will be limited to an amount reasonably
necessary to effect the Fund's foreign securities transactions. The use of a
foreign custodian invokes considerations which are not ordinarily associated
with domestic custodians. These considerations include the possibility of
expropriation, restricted access to books and records of the foreign
custodian, inability to recover assets that are lost while under the control
of the foreign custodian, and the impact of political, social or diplomatic
developments.
The Fund will calculate its net asset value and complete orders to purchase,
exchange or redeem shares only on a Monday-Friday basis (excluding holidays
on which the New York Stock Exchange is closed). Foreign securities in which
the Fund may invest may be primarily listed on foreign stock exchanges which
may trade on other days (such as Saturdays). As a result, the net asset value
of a Series' portfolio may be affected by such trading on days when a
shareholder has no access to the Fund. See "Net Asset Value".
Financial Futures and Related Options. Each Series may enter into financial
contracts and related options as a hedge against anticipated changes in the
market value of their portfolio securities or securities which they intend to
purchase
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or in the exchange rate of foreign currencies. Hedging is the initiation of
an offsetting position in the futures market which is intended to minimize
the risk associated with a position's underlying securities in the cash
market. Investment techniques related to financial futures and options are
summarized below and are described more fully in the Statement of Additional
Information.
Financial futures contracts consist of interest rate futures contracts,
foreign currency futures contracts and securities index futures contracts. An
interest rate futures contract obligates the seller of the contract to
deliver, and the purchaser to take delivery of, the interest rate securities
called for in the contract at a specified future time and at a specified
price. A foreign currency futures contract obligates the seller of the
contract to deliver, the purchaser to take delivery of, the foreign currency
called for in the contract at a specified future time and at a specified
price. See "Foreign Currency Transactions". A securities index assigns
relative values to the securities included in the index, and the index
fluctuates with changes in the market values of the securities so included. A
securities index futures contract is a bilateral agreement pursuant to which
two parties agree to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the index value at the
close of the last trading day of the contract and the price at which the
futures contract is originally struck. An option on a financial futures
contract gives the purchaser the right to assume a position in the contract
(a long position if the option is a call and a short position if the option
is a put) at a specific exercise price at any time during the period of the
option.
Each Series may purchase and sell financial futures contracts which are
traded on a recognized exchange or board of trade and may purchase exchange-
or board-traded put and call options on financial futures contracts and may
enter into financial futures contracts on foreign currencies. A Series will
engage in transactions in financial futures contracts and related options
only for hedging purposes and not for speculation. In addition, a Series will
not purchase or sell any financial futures contract or related option if,
immediately thereafter, the sum of the cash or U.S. Treasury bills committed
with respect to the Series' existing futures and related options positions
and the premiums paid for related options would exceed 5% of the market value
of the Series' total assets. At the time of purchase of a futures contract or
a call option on a futures contract, an amount of cash, U. S. Government
securities or other appropriate high-grade debt obligations equal to the
market value of the futures contract minus the Series' initial margin deposit
with respect thereto, will be deposited in a segregated account with the
Fund's custodian bank to collateralize fully the position and thereby ensure
that it is not leveraged. The extent to which a Series may enter into
financial futures contracts and related options may also be limited by
requirements of the Internal Revenue Code for qualification as a regulated
investment company.
Engaging in transactions in financial futures contracts involves certain
risks, such as the possibility of an imperfect correlation between futures
market prices and cash market prices and the possibility that the Adviser
could be incorrect in its expectations as to the direction or extent of
various interest rate movements or foreign currency exchange rates, in which
case a Series' return might have been greater had hedging not taken place.
There is also the risk that a liquid secondary market may not exist, and the
loss from investing in futures contracts is potentially unlimited because the
Series may be unable to close its position. The risk in purchasing an option
on a financial futures contract is that a Series will lose the premium it
paid. Also, there may be circumstances when the purchase of an option on a
financial futures contract would result in a loss to a Series while the
purchase or sale of the contract would not have resulted in a loss.
Foreign Currency Transactions. The value of the assets of a Series as
measured in United States dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control regulations,
and each Series may incur costs in connection with conversions between
various currencies. Each Series will conduct its foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency exchange market, or through forward contracts to
purchase or sell foreign currencies. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded directly between currency traders
(usually large commercial banks and their customers. At the time of the
purchase of a forward foreign currency exchange contract, an amount of cash,
U.S. Government securities or other appropriate high-grade debt obligations
equal to the market value of the contract, minus the Series' initial margin
deposit with respect thereto, will be deposited in a segregated account with
the Fund's custodian bank to collateralize fully the position and thereby
ensure that it is not leveraged.
When a Series enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may want to establish the United States
dollar cost or proceeds, as the case may be. By entering into a forward
contract in United States dollars for the purchase or sale of the amount of
foreign currency involved in the underlying security transaction, a Series is
able to protect itself against a possible loss between trade and settlement
dates resulting from an adverse change in the relationship between the United
States dollar and such foreign currency. However, this tends to limit
potential gains which might result from a positive change in such currency
relationships. A Series utilizing this investment technique may also hedge
its foreign currency exchange rate risk by engaging in currency financial
futures and options transactions.
When the Adviser believes that the currency of a particular foreign country
may suffer a substantial decline against the United States dollar, it may
enter into a forward contract to sell an amount of foreign currency
approximating the value of some or all of a Series' portfolio securities
denominated in such foreign currency. The forecasting of short-term currency
market
9
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movement is extremely difficult and whether such a short-term hedging
strategy will be successful is highly uncertain.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a contract. Accordingly, it may be necessary
for a Series utilizing this investment technique to purchase additional
currency on the spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign currency the
Series is obligated to deliver when a decision is made to sell the security
and make delivery of the foreign currency in settlement of a forward
contract. Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio security if its
market value exceeds the amount of foreign currency the Series is obligated
to deliver.
If a Series utilizing this investment technique retains the portfolio
security and engages in an offsetting transaction, the Series will incur a
gain or a loss (as described below) to the extent that there has been
movement in forward contract prices. If a Series engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell
the foreign currency. Should forward prices decline during the period between
the Series' entering into a forward contract for the sale of a foreign
currency and the date it enters into an offsetting contract for the purchase
of the foreign currency, the Series would realize gains to the extent the
price of the currency it has agreed to sell exceeds the price of the currency
it has agreed to purchase. Should forward prices increase, the Series would
suffer a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell. Although
such contracts tend to minimize the risk of loss due to a deadline in the
value of the hedged currency, they also tend to limit any potential gain
which might result should the value of such currency increase. A Series will
have to convert its holdings of foreign currencies into United States dollars
from time to time. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Repurchase Agreements. Each Series may invest in repurchase agreements,
either for temporary defensive purposes necessitated by adverse market
conditions or to generate income from its excess cash balances, provided that
no more than 15% of a Series' total assets may be invested in the aggregate
in repurchase agreements having maturities of more than seven days and in all
other illiquid securities. A repurchase agreement is an agreement under which
the Series acquires a money market instrument (generally a security issued by
the U.S. Government or an agency thereof, a banker's acceptance or a
certificate of deposit) from a commercial bank, a broker or a dealer, subject
to resale to the seller at an agreed upon price and date (normally the next
business day). The resale price reflects an agreed upon interest rate
effective for the period the instrument is held by the Series and is
unrelated to the interest rate on the underlying instrument. A repurchase
agreement acquired by a Series will always be fully collateralized by the
underlying instrument, which will be marked to market every business day. The
underlying instrument will be held for the Fund's account by the Fund's
custodian bank until repurchased. The use of repurchase agreements involves
certain risks such as default by or the insolvency of the other party to the
repurchase agreement. Repurchase agreements will be entered into only with
commercial banks, brokers and dealers considered by the Fund to be
creditworthy.
Lending Portfolio Securities. Each Series may lend its securities to
brokers, dealers and financial institutions provided that the market value of
the securities subject to any such loans does not exceed 25% of the value of
the total assets (taken at market value) of such Series; and receive, as
collateral, cash or cash equivalents which at all times while the loan is
outstanding, will be maintained in amounts equal to at least 102% of the
current market value of the loaned securities. Any cash collateral will be
invested in short-term securities. All fees or charges earned from securities
lending will inure to the benefit of the Series. A Series will have the right
to regain record ownership of loaned securities within six business days and
to exercise beneficial rights such as voting rights and subscription rights.
While a securities loan is outstanding, the Series will receive amounts equal
to any interest or other distributions with respect to the loaned securities.
Any agreement to lend securities shall provide that borrowers are obligated
to return the identical securities or their equivalent at termination of the
loan and, that the Series shall have the right to retain any collateral or
use the same to purchase equivalent securities should the borrower fail to
return securities as required.
Warrants and Stock Rights. A Series may invest up to 5% of its net assets in
warrants or stock rights valued at the lower of cost or market, but no more
than 2% of its net assets may be invested in warrants or stock rights not
listed on the New York Stock Exchange or American Stock Exchange.
Illiquid Securities. Subject to limitations under governing law, a Series
may invest up to 15% of its net assets (taken at market value at the time of
the investment) in "illiquid securities." For this purpose, illiquid
securities include securities the disposition of which is subject to legal or
contractual restrictions on resale; certain restricted securities salable
among qualified institutional buyers without restriction pursuant to Rule
144A under the Securities Act of 1933 determined by the Adviser to be
illiquid under guidelines adopted by the Board of Trustees of the Fund.
Liquidity relates to the ability of a Series to sell a security in a timely
manner at a price which reflects the value of that security. Although it is
generally the Series' policy to hold securities until their maturity, the
relative illiquidity of some of the Series' portfo-lio securities may
adversely affect the ability of the Series to dispose of such securities in a
timely manner and at a fair price at times when it might be necessary or
advantageous for the Series to liquidate portfolio securities. The market for
less liquid securities tends to be more volatile than the market for more
liquid securities, and market values of relatively illiquid securities may be
more susceptible to change as a result of adverse publicity and investor
perceptions than are the market values of more liquid securities.
10
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INVESTMENT RESTRICTIONS
The investment restrictions to which the Series are subject, together with
the investment objectives of each Series, are fundamental policies of each
Series which may not be changed without the approval of the Series'
shareholders. A detailed description of each Series' investment restrictions
is contained in the Statement of Additional Information.
MANAGEMENT OF THE FUND
The Fund is a mutual fund, technically known as an open-end, management
investment company. The Board of Trustees ("Trustees") supervises the
business affairs and investments of the Fund, which is managed on a daily
basis by the Fund's investment adviser. The Fund was organized as a
Massachusetts business trust on May [31], 1996. The Fund is a series fund
currently issuing two series of shares of beneficial interest. Two classes of
shares are offered by each Series.
The Adviser
The Fund's investment adviser is Phoenix-Aberdeen International Advisors,
LLC (the "Adviser"), which is Delaware limited liability company formed in
1996 and having a place of business located at One American Row, Hartford,
Connecticut 06102. The Adviser is jointly owned and managed by PM Holdings,
Inc., a direct subsidiary of Phoenix Home Life Mutual Insurance Company
("Phoenix Home Life"), and Aberdeen Fund Managers, Inc., a wholly-owned
subsidiary of Aberdeen Trust plc. While many of the officers and directors of
the Adviser have extensive experience as investment professionals, due to its
recent formation, the Adviser has no prior operating history.
Phoenix Home Life was founded in 1851 and is currently in the business of
writing individual and group life and health insurance and annuities. Phoenix
Home Life's principal offices are located in Hartford, Connecticut. Its
affiliate, Phoenix Duff & Phelps Corporation, a New York Stock Exchange
traded company, provides various financial advisory services to institutional
investors, corporations and individuals through its operating subsidiaries.
As of December 31, 1995, Phoenix Duff & Phelps Corporation, and its advisory
subsidiaries, had approximately $35 billion in assets under management.
Aberdeen Trust was founded in 1983 and through subsidiaries operating from
offices in Aberdeen, Scotland; London, England; Singapore and Fort
Lauderdale, Florida, provides investment management services to unit and
investment trusts, segregated pension funds and other institutional and
private portfolios. As of September 30, 1995, Aberdeen Trust, and its
advisory subsidiaries, had approximately $4 billion in assets under
management.
The Adviser continuously furnishes an investment program for each Series and
manages the investment and reinvestment of the assets of each Series subject at
all times to the supervision of the Trustees. The Adviser, at its expense,
furnishes to the Fund adequate office space and facilities and certain
administrative services, including the services of any member of its staff who
serves as an officer or trustee of the Fund. Based upon the diverse range of
portfolio holdings contemplated and the expertise available through certain
affiliates, the Adviser presently intends to engage Phoenix Duff & Phelps
Corporation and Aberdeen Fund Managers, Inc. as sub-advisers. Phoenix Duff &
Phelps Corporation's principal offices are located at 56 Prospect Street,
Hartford, Connecticut 06115. Aberdeen Fund Managers Inc. is a direct subsidiary
of Aberdeen Trust plc, and co-owner of the Adviser. Its principal offices are
located at 1 Financial Plaza, Suite 2210, Nations Bank Tower, Fort Lauderdale,
Florida 33394.
As compensation for its services to each Series, the Adviser is entitled to a
fee, payable monthly, at an annual rate of 1.00% of the average daily net assets
of each Series. The Investment Advisory Agreement with the Fund provides that
the Adviser will reimburse the Fund for the amount, if any, by which the total
operating expenses of any Series (including the Adviser's compensation, but
excluding interest, taxes, brokerage fees and commissions and extraordinary
expenses) for any fiscal year exceed the level of expenses which such Series is
permitted to bear under the most restrictive expense limitation (which has not
been waived) imposed on mutual funds by any state in which shares of the Series
are then qualified for sale. For providing research and other domestic advisory
services to each Series, the Adviser pays a monthly subadvisory fee to Phoenix
Duff & Phelps Corporation equivalent to 0.30% of the average aggregate daily net
asset value of each Series. For implementing certain portfolio transactions and
providing research and other services to each Series, the Adviser also pays a
monthly subadvisory fee to Aberdeen Fund Managers Inc. equivalent to 0.40% of
the average aggregate daily net asset value of each Series. For implementing
certain portfolio transactions, providing research and other services to each
Series with regard to investments in particular geographic areas, the Aberdeen
Fund Managers Inc. shall engage the services of its affiliates Abtrust Fund
Managers Ltd. and Abtrust Fund Managers (Singapore) Limited for which such
entities shall be paid a fee by Aberdeen Fund Managers Inc. The total advisory
fee of 1.00% of the average daily net assets of each Series is greater than that
for other types of mutual funds; however, the Trustees have determined that it
is similar to fees charged by other mutual funds whose investments are similar
to those of each Series.
The Portfolio Managers
Asian Series
Mr. Hugh Young is the portfolio manager of the Asian Series and as such is
primarily responsible for the day-to-day management of the portfolio. Mr.
Young has been employed as an investment director for Abtrust Fund Managers
(Singapore) Limited since 1988. From 1985 to 1988, Mr. Young was the Far East
investment director for Sentinel Funds Management Ltd. From 1984 to 1985, he
was investment manager with Fidelity International Ltd. From 1981 to 1984, he
served as investment analyst-overseas investment manager with MGM Assurance;
and from 1980 to 1981, he was an investment analyst with Beardsley Bishop
Escombe, Stockbrokers.
11
<PAGE>
Global Series
The Global Series is managed by an investment committee which is primarily
responsible for the day-to-day management of the portfolio.
The Financial Agent
Phoenix Equity Planning Corporation ("Equity Planning") serves as financial
agent of the Fund and, as such, performs administrative, bookkeeping and
pricing services and certain other administrative functions for the Fund. As
compensation, Equity Planning receives a quarterly fee based on the average
of the aggregate daily net asset values of the Fund at an annual rate of $300
per $1 million which is expected to equal approximately the cost to Equity
Planning of providing such services.
The Custodian and Transfer Agent
The custodian of the assets of the Fund is Brown Brothers Harriman & Co., 40
Water Street, Boston, Massachusetts 02109. The Fund has authorized the
custodian to appoint one or more subcustodians for the assets of the Fund
held outside the United States. The securities and other assets of each
Series of the Fund are held by the Custodian or any subcustodian(s) separate
from the securities and assets of each other series.
Pursuant to a Transfer Agent and Service Agreement with the Fund, Equity
Planning acts as transfer agent for the Fund (the "Transfer Agent") for which
it is paid $14.95 for each designated Class A shareholder account and $19.95
for each designated Class B shareholder account, plus out-of-pocket expenses,
subject to prescribed minimum charges. The Transfer Agent is authorized to
engage sub-agents to perform certain shareholder servicing functions from
time to time for which such agents shall be paid a fee by the Transfer Agent.
Brokerage Commissions
Although the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. prohibit its members from seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such Rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Fund.
DISTRIBUTION PLANS
Equity Planning is the national distributor of the Fund's shares. Equity
Planning is an indirect, majority-owned subsidiary of Phoenix Home Life. The
offices of Equity Planning are located at 100 Bright Meadow Boulevard, P.O.
Box 2200, Enfield, Connecticut 06083-2200. Philip R. McLoughlin is a Trustee
and President of the Fund and a director and officer of Equity Planning. G.
Jeffrey Bohne, James M. Dolan, William R. Moyer, Leonard J. Saltiel, Thomas
N. Steenburg and Nancy G. Curtiss are officers of the Fund and officers of
Equity Planning.
Equity Planning and the Fund have entered into distribution agreements under
which Equity Planning has agreed to use its best efforts to find purchasers
for Fund shares sold subject to an initial sales charge and those sold
subject to a contingent deferred sales charge. The Fund has granted Equity
Planning the exclusive right to purchase from the Fund and resell, as
principal, shares needed to fill unconditional orders for Fund shares. Equity
Planning may sell Fund shares through its registered representatives or
through securities dealers with whom it has sales agreements. Equity Planning
may also sell Fund shares pursuant to sales agreements entered into with
banks or bank affiliated securities brokers who, acting as agent for their
customers, place orders for Fund shares with Equity Planning. Although the
Glass-Steagall Act prohibits banks and bank affiliates from engaging in the
business of underwriting, distributing or selling securities (including
mutual fund shares), banking regulators have not indicated that such
institutions are prohibited from purchasing mutual fund shares upon the order
and for the account of their customers. If, because of changes in law or
regulations, or because of new interpretations of existing law, it is
determined that agency transactions of banks or bank affiliated securities
brokers are not permitted under the Glass-Steagall Act, the Trustees will
consider what action, if any, is appropriate. It is not anticipated that
termination of sales agreements with banks or bank affiliated securities
brokers would result in a loss to their customers or a change in the net
asset value per share of a Series of the Fund.
The sale of Fund shares through a bank or a securities broker affiliated
with a bank is not expected to preclude the Fund from borrowing from such
bank or from availing itself of custodial or transfer agency services offered
by such bank.
The Fund has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each Series and each class of shares of the Fund (the plans for
Class A Shares of each Series are referred to as the "Class A Plans", the
plans for Class B Shares of each Series are referred to as the "Class B
Plans" and collectively the "Plans"). The Plans authorize a Series to
reimburse Equity Planning for expenses in connection with the sale and
promotion of such Series' shares and the furnishing of shareholder services.
Pursuant to the Class A Plan, a Series is authorized to reimburse Equity
Planning up to 0.25% annually for the average daily net assets of Class A
Shares of such Series. Pursuant to the Class B Plans, a Series is authorized
to reimburse Equity Planning monthly for actual expenses of Equity Planning
up to 1.00% annually for the average daily net assets of Class B Shares of
such Series.
Although under no contractual obligation to do so, the Fund intends to make
such payments to Equity Planning (i) as commissions for shares of the Series
sold, all or any part of which commissions will be paid by Equity Planning
upon receipt from the Fund to others (who may be other dealers or registered
representatives of Equity Planning), (ii) to enable Equity Planning to pay to
such others maintenance or other fees in respect of the Series' shares sold
by them and remaining outstanding on the Fund's books during the period in
respect of which the fee is paid (the "Service Fee"); and (iii) to enable
Equity Planning to pay to bank affiliated securities brokers maintenance or
other fees in respect of shares of the Series
12
<PAGE>
purchased by their customers and remaining outstanding on the Fund's books
during the period in respect of which the fee is paid. The portion of the
above fees paid by the Fund to Equity Planning as "Service Fees" shall not
exceed 0.25% annually of the average daily net assets of the class to which
such fee relates. Payments, less the portion thereof paid by Equity Planning
to others, will be used by Equity Planning for its expenses of distribution
of shares of the Series. If expenses of distribution of shares of a Series or
a Class of a Series exceed payments and any sales charges retained by Equity
Planning, the Fund is not required to reimburse Equity Planning for excess
expenses; and conversely, if payments and any sales charges retained by
Equity Planning exceed expenses of distribution of shares of the Series or a
Class of a Series, Equity Planning may realize a profit.
Each Plan requires that at least quarterly the Trustees of the Fund review a
written report with respect to the amounts expended under each Plan and the
purposes for which such expenditures were made. While each Plan is in effect,
the Fund will be required to commit the selection and nomination of
candidates for Trustees who are not interested persons of the Fund to the
discretion of other Trustees who are not interested persons.
The National Association of Securities Dealers, Inc. ("NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend either or both Plans.
HOW TO BUY SHARES
To purchase shares of any Series, the minimum initial investment is $500 and
the minimum subsequent investment is $25. However, both the minimum initial
and subsequent investment amounts are $25 for investments pursuant to the
"Investo-Matic" plan, a bank draft investing program administered by Equity
Planning, or pursuant to the Systematic Exchange privilege. Completed
applications for the purchase of shares should be mailed to: Phoenix Funds,
c/o State Street Bank and Trust Company, P.O. Box 8301, Boston, MA
02266-8301.
For investments in connection with a pension, profit sharing or other
employee benefit plan whether or not qualified under Section 401 of the
Internal Revenue Code, including any plan established under the Self Employed
Individuals Tax Retirement Act of 1962 (HR-10) or a program providing for the
concurrent purchase of insurance using a loan secured by shares, the minimum
initial and subsequent investment amounts for any Series are waived provided
that the monthly contribution for each participant is at least $25 per month
per participant. There is a minimum initial investment of $25 for an
individual retirement account (IRA).
In addition, there are no minimum initial and subsequent investment amounts
in connection with the dividends or other distributions from units of a
limited partnership sold by or through Equity Planning to an Individual
Retirement Account (IRA), or in connection with dividends or other
distributions by a Series under certain conditions, which have been directed
to any Series for investment. (See the Statement of Additional Information.)
The Fund offers combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange
privileges. Certain privileges may not be available in connection with Class
B Shares. Under certain circumstances, shares of any other Phoenix Fund
(except shares of the Phoenix Series Fund: Money Market Series Class A Shares
and Phoenix Multi-Sector Short Term Bond Fund Class A Shares held less than 6
months), may be exchanged for shares of the same class on the basis of the
relative net asset values per share at the time of the exchange. Exchanges
are subject to the minimum initial investment requirement of the designated
Series, Fund, or Portfolio, except if made in connection with the Systematic
Exchange privilege. Class A shareholders may exchange shares held in book-
entry form for an equivalent number (value) of Class A Shares of any other
Phoenix Fund. On Class B Share exchanges, the contingent deferred sales
charge schedule of the original shares purchased continues to apply.
Alternative Sales Arrangements
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Fund, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the
Fund, the accumulated continuing distribution service fee and contingent
deferred sales charges on Class B Shares prior to conversion would be less
than the initial sales charge and accumulated distribution fee on Class A
Shares purchased at the same time, and to what extent such differential would
be offset by the higher yield of Class A Shares. In this regard, Class A
Shares will normally be more beneficial to the investor who qualifies for
certain reduced initial sales charges. For this reason, the Equity Planning
intends to limit sales of Class B Shares sold to any shareholder to a maximum
total value of $250,000. Class B Shares sold to unallocated qualified
employer sponsored plans will be limited to a total value of $1,000,000.
Class B Shares sold to allocated qualified employer sponsored plans,
including 401(k) plans, will be limited to a maximum total value of $250,000
for each participant provided such plans utilize an approved participant
tracking system. In addition, Class B Shares will not be sold to any
qualified employee benefit plan, endowment fund or foundation if, on the date
of the initial investment, the plan, fund or foundation has assets of
$10,000,000 or more or at least 200 participant employees. Class B Shares
will also not be sold to investors who have reached the age of 85 because of
such persons' expected distribution requirements.
Class A Shares are subject to a lower distribution fee and, accordingly,
pay correspondingly higher dividends per share. However, because initial
sales charges are deducted at the
13
<PAGE>
time of purchase, Class A investors would not have all their funds invested
initially and, therefore, would initially own fewer shares. Investors not
qualifying for reduced initial sales charges who expect to maintain their
investment for an extended period of time might consider purchasing Class A
Shares because the accumulated continuing distribution charges on Class B
Shares may exceed the initial sales charge on Class A Shares during the life
of the investment. Again, however, such investors must weigh this
consideration against the fact that, because of such initial sales charge,
not all their funds will be invested initially. However, other investors
might determine that it would be more advantageous to purchase Class B Shares
to have all their funds invested initially, although remaining subject to
higher continuing distribution charges and, for a five-year period, being
subject to a contingent deferred sales charge.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A Shares is the net asset value plus a
sales charge, as set forth below. Offering prices become effective at the
close of the general trading session of the New York Stock Exchange. Orders
received by dealers prior to such time are confirmed at the offering price
effective at that time, provided the order is received by Equity Planning
prior to its close of business.
The sales charge varies with the size of the purchase and reduced charges
apply to the aggregate of purchases of the Fund made at one time by "any
person," which term includes an individual, an individual and his/her spouse
and their children under the age of 21, or a trustee or other fiduciary
purchasing shares for a single trust, estate or fiduciary account although
more than one beneficiary is involved.
Class A Shares of the Fund are offered to the public at the net asset
value next computed after the purchase order is received by State Street Bank
and Trust Company plus a maximum sales charge of 4.75% of the offering price
(4.99% of the amount invested) on single purchases of less than $50,000. The
sales charge is reduced on a graduated scale on single purchases of $50,000
or more as shown below.
<TABLE>
<CAPTION>
Sales Charge Sales Charge
Amount of as Percentage as Percentage Dealer Discount
Transaction of Offering of Amount as Percentage of
at Offering Price Price Invested Offering Price*
-------------------- --------------- --------------- ----------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under $100,000 4.50 4.71 4.00
$100,000 but under
$250,000 3.50 3.63 3.00
$250,000 but under
$500,000 3.00 3.09 2.75
$500,000 but under
$1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None**
</TABLE>
*Equity Planning will sponsor sales contests, training and educational
meetings and provide to all qualifying dealers, from its own profits and
resources, additional compensation in the form of trips, merchandise or
expense reimbursement. Brokers or dealers other than Equity Planning may also
make customary additional charges for their services in effecting purchases,
if they notify the Fund of their intention to do so. Equity Planning shall
also pay service and retention fees, from its own profits and resources, to
qualified wholesalers in connection with the sale of shares of funds within
the Phoenix family of funds, as defined by the 1940 Act (collectively, the
"Phoenix Funds") (exclusive of Class A Shares of Phoenix Money Market Series)
by registered financial institutions and third party marketers.
**In connection with Class A Share purchases by an account held in the name
of a qualified employee benefit plan with at least 100 eligible employees,
Equity Planning may pay broker/ dealers, from its own resources, an amount
equal to 1% of the first $3 million of purchases, 0.50% on the next $3
million, plus 0.25% on the amount in excess of $6 million.
In connection with purchases of Class A Shares of $1,000,000 or more (or
subsequent purchases in any amount), excluding purchases by qualified
employee benefit plans as described above, Equity Planning may pay
broker-dealers, from its own profits and resources, a percentage of the net
asset value of any shares sold as set forth below:
<TABLE>
<CAPTION>
Purchase Amount Payment to Broker/Dealer
- ------------------------ ---------------------------
<S> <C>
$1,000,000-$3,000,000 1%
$3,000,001-$6,000,000 .50 of 1%
$6,000,001 or more .25 of 1%
</TABLE>
If part or all of such an investment, including investments by qualified
employee benefit plans, is subsequently redeemed within one year of the
investment date, the broker/dealer will refund to Equity Planning any such
amounts paid with respect to the investment.
How To Obtain Reduced Sales Charges--Class A Shares
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
Qualified Purchasers. No sales charge will be imposed on sales of shares
to (1) any Phoenix Fund trustee, director or officer; (2) any director or
officer, or any full-time employee or sales representative (who has acted as
such for at least 90 days), of the Adviser, or of Equity Planning; (3)
registered representatives and employees of securities dealers with whom
Equity Planning has sales agreements; (4) any qualified retirement plan
exclusively for persons described above; (5) any officer, director or
employee of a corporate affiliate of the Adviser or Equity Planning; (6) any
spouse, child, parent, grandparent, brother or sister of any person named in
(1), (2), (3) or (5) above; (7) employee benefit plans for employees of the
Adviser, Equity Planning and/or their corporate affiliates; (8) any employee
or agent who retires from Phoenix Home Life, Equity Planning and/or their
corporate affiliates; (9) any account held in the name of a qualified
employee benefit plan, endowment fund or foundation if, on the date of the
initial investment, the plan, fund or foundation has assets of
14
<PAGE>
$10,000,000 or more or at least 100 eligible employees; (10) any person with
a direct rollover transfer of shares from an established Phoenix Fund
qualified plan; (11) any Phoenix Home Life separate account which funds group
annuity contracts offered to qualified employee benefit plans; (12) any
state, county, city, department, authority or similar agency prohibited by
law from paying a sales charge; (13) any fully matriculated student in any
U.S. service academy; (14) any unallocated account held by a third party
administrator, registered investment adviser, trust company, or bank trust
department which exercises discretionary authority and holds the account in a
fiduciary, agency, custodial or similar capacity, if in the aggregate such
accounts held by such entity equal or exceed $1,000,000; (15) any person who
is investing redemption proceeds from investment companies other than the
Phoenix Funds if, in connection with the purchases or redemption of the
redeemed shares, the investor paid a prior sales charge provided such
investor supplies verification that the redemption occurred within 90 days of
the Phoenix Fund purchase and that a sales charge was paid; (16) any accounts
established by financial institutions, broker/dealers or registered
investment advisers that charge an account management fee or transaction fee,
provided such entity has entered into an agreement for such program with
Equity Planning; or (17) any deferred compensation plan established for the
benefit of any Phoenix Fund trustee or director; provided that sales to
persons listed in (1) through (15) above are made upon the written assurance
of the purchaser that the purchase is made for investment purposes and that
the shares so acquired will not be resold except to the Fund.
Shares issued pursuant to the automatic reinvestment of income dividends
or capital gains distributions are not subject to any sales charges. The Fund
receives the entire net asset value of its Class A Shares sold to investors.
Equity Planning's commission is the sales charge shown above less any
applicable discount or commission "re-allowed" to selected dealers and
agents. Equity Planning will re-allow discounts to selected dealers and
agents in the amounts indicated in the table above. In this regard, Equity
Planning may elect to re-allow the entire sales charge to selected dealers
and agents for all sales with respect to which orders are placed with Equity
Planning. A selected dealer who receives re-allowance in excess of 90% of
such a sales charge may be deemed to be an "underwriter" under the Securities
Act of 1933.
Combination Purchase Privilege. Purchases, either singly or in any
combination, of shares of the Fund or shares of any other Phoenix Fund
(including Class B Shares but excluding Phoenix Money Market Fund Series), if
made at a single time by a single purchaser, will be combined for the purpose
of determining whether the total dollar amount of such purchases entitles the
purchaser to a reduced sales charge on any purchases of Class A Shares. Each
purchase of Class A Shares will then be made at the public offering price, as
described in the then current Prospectus relating to such shares, which at
the time of such purchase is applicable to a single transaction of the total
dollar amount of all such purchases. The term "single purchaser" includes an
individual, or an individual, his spouse and their children under the age of
majority purchasing for his or their own account (including an IRA account)
including his or their own trust, commonly known as a living trust; a trustee
or other fiduciary purchasing for a single trust, estate or single fiduciary
account, although more than one beneficiary is involved; multiple trusts or
403(b) plans for the same employer; multiple accounts (up to 200) under a
qualified employee benefit plan or administered by a third party
administrator; or trust companies, bank trust departments, registered
investment advisers, and similar entities placing orders or providing
administrative services with respect to funds over which they exercise
discretionary investment authority and which are held in a fiduciary, agency,
custodial or similar capacity, provided all shares are held in record in the
name, or nominee name, of the entity placing the order.
Letter of Intent. Class A Shares or shares of any other Phoenix Fund
(including Class B Shares but excluding Class A Shares of the Phoenix Money
Market Fund Series) may be purchased by a "single purchaser" (as defined
above) within a period of thirteen months pursuant to a Letter of Intent, in
the form provided by Equity Planning, stating the investor's intention to
invest in such shares during such period an amount which, together with the
value (at their maximum offering prices on the date of the Letter) of the
shares of the Fund or shares of any other Phoenix Fund then owned by such
investor, equals a specified dollar amount. Each purchase of shares made
pursuant to a Letter of Intent will be made at the public offering price, as
described in the then current Prospectus relating to such shares, which at
the time of purchase is applicable to a single transaction of the total
dollar amount specified in the Letter of Intent.
An investor's Letter of Intent is not a binding commitment of the investor
to purchase or a binding obligation of the Fund or Equity Planning to sell a
specified dollar amount of shares qualifying for a reduced sales charge.
Accordingly, out of his initial purchase (and subsequent purchases if
necessary), 5% of the dollar amount of purchases required to complete his
investment is held in escrow in the form of shares (valued at the purchase
price thereof) registered in the investor's name until he completes his
investment, at which time escrowed shares are deposited to his account. If
the investor does not complete his investment and does not within 20 days
after written request by Equity Planning or his dealer pay the difference
between the sales charge on the dollar amount specified in his Letter of
Intent and the sales charge on the dollar amount of actual purchases, the
difference will be realized through the redemption of an appropriate number
of the escrowed shares and any remaining escrowed shares will be deposited to
his account.
Right of Accumulation. "Single purchasers" (as defined above) may also
qualify for reduced sales charges based on the combined value of purchases of
either class of shares of the Fund, or any other Phoenix Fund, made over
time. Reduced sales charges are offered to investors whose shares, in the
aggregate, are valued (i.e., the dollar amount of such purchases plus the
then current value (at the public offering price as
15
<PAGE>
described in the then current prospectus relating to such shares) of shares
of all Phoenix Funds owned) in excess of the threshold amounts described in
the section entitled "Initial Sales Charge Alternative--Class A Shares". To
use this option, the investor must supply sufficient account information to
Equity Planning to permit verification that one or more purchases qualify for
a reduced sales charge.
Associations. A group or association may be treated as a "single
purchaser" and qualify for reduced initial sales charges under the
Combination Privilege and Right of Accumulation if the group or association
(1) has been in existence for at least six months; (2) has a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge;
(3) facilitates solicitation of the membership by the investment dealer, thus
assisting in effecting economies of sales effort; and (4) is not a group
whose sole organizational nexus is that the members are credit card holders
of a company, policyholders of an insurance company, customers of a bank or a
broker-dealer or clients of an investment adviser.
Deferred Sales Charge Alternative--Class B Shares
Investors choosing the deferred sales charge alternative purchase Class B
Shares at net asset value per share without the imposition of a sales charge
at the time of purchase. The Class B Shares are subject to a sales charge if
redeemed within five years of purchase.
The contingent deferred sales charge will be imposed on most Class B Share
redemptions made within five years of purchase. The contingent deferred sales
charge alternative permits an investor to choose the method of purchasing
shares that is most beneficial given the amount of the purchase, the length
of time he or she expects to hold the shares and other circumstances. Each
class of shares pays ongoing distribution and service fees at an annual rate
(i) for Class A Shares, of up to .25% of the Series aggregate average daily
net assets attributable to the Class A Shares, and (ii) for Class B Shares,
of up to 1.00% of the Series aggregate average daily net assets attributable
to the Class B Shares. Investors should understand that the purpose and
function of the deferred sales charge and distribution and service fees with
respect to Class B Shares are the same as those of the initial sales charge
and distribution service fees with respect to Class A Shares.
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time he or she expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of a Series, and other circumstances. Investors should
consider whether, during the anticipated term of their investment in a
Series, the accumulated continuing distribution and service fees and
contingent deferred sales charges on Class B Shares prior to conversion would
be more than the initial sales charge and accumulated distribution and
service fees on Class A Shares purchased at the same time. In this regard,
Class A Shares will normally be more beneficial to the investor who qualifies
for reduced initial sales charges or who maintains a large account size. For
this reason, Equity Planning intends to limit sales of Class B Shares sold to
any shareholder to a maximum total value of $250,000. Class B Shares sold to
unallocated qualified employer sponsored plans will be limited to a total
value of $1,000,000. Class B Shares sold to allocated qualified employer
sponsored plans, including 401(k) plans, will be limited to a total value of
$250,000 for each participant provided such plans utilize an approved
participant tracking system. In addition, Class B Shares will not be sold to
any qualified employee benefit plan, endowment fund or foundation if, on the
date of the initial investment, the plan, fund or foundation has assets of
$10,000,000 or more or at least 200 participant employees. Class B Shares
will also not be sold to investors who have reached the age of 85, because of
such persons' expected distribution requirements.
Class A Shares are subject to a lower distribution fee and, accordingly,
pay correspondingly higher dividends per share. However, because initial
sales charges are deducted at the time of purchase, such investors do not
have all their funds invested initially and, therefore, initially own fewer
shares. Investors not qualifying for reduced initial sales charges who expect
to maintain their investment for an extended period of time should consider
purchasing Class A Shares because the accumulated continuing distribution
charges on Class B Shares may exceed the initial sales charge on Class A
Shares during the term of the investment. An investor might determine,
however, that it would be more advantageous to purchase Class B Shares in
order that all of his or her funds be invested initially, although remaining
subject to higher continuing distribution charges and, for a five-year
period, being subject to a contingent deferred sales charge. For example,
based on current fees and expenses, an investor subject to a 4.75% initial
sales charge on Class A Shares would have to hold his investment
approximately 7 years for the Class B distribution fee to exceed the initial
sales charge plus the accumulated distribution fees of Class A Shares. In
this example, an investor intending to maintain his investment for more than
6 years might consider purchasing Class A Shares.
Proceeds from the contingent deferred sales charge are paid to Equity
Planning and are used to defray the expenses of Equity Planning in connection
with the sale of the Class B Shares, such as the payment of compensation to
selected dealers and agents.
Contingent Deferred Sales Charge. Class B Shares redeemed within five
years of purchase will be subject to a contingent deferred sales charge at
the rates set forth below. The charge will be assessed on an amount equal to
the lesser of the current market value or the cost of the shares being
redeemed. Accordingly, no sales charge will be imposed on increases in net
asset value of shares above the initial purchase price. In addition, no
charge will be assessed on shares derived from the reinvestment of dividends
or capital gains distributions.
Equity Planning intends to pay investment dealers a sales commission of 4%
of the sale price of Class B Shares sold by such dealers, subject to future
amendment or termination. Equity Planning will retain all or a portion of the
continuing
16
<PAGE>
distribution fee assessed to Class B shareholders and will receive the entire
amount of the contingent deferred sales charge paid by shareholders on the
redemption of shares. These amounts will be used by Equity Planning to
finance the commission plus interest and related marketing expenses.
The amount of the contingent deferred sales charge, if any, will vary
depending on the number of years from the time of payment for the Class B
Shares to the time of redemption of such shares. For the purpose of
determining the number of years from the time of any payment for the purchase
of shares, all payments made during a month will be aggregated and deemed to
have been made on the last day of the prior month.
<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge as
a Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
- ---------------------- ---------------------
<S> <C>
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 2%
Sixth 0%
</TABLE>
In determining whether a contingent deferred sales charge is applicable to
a redemption, the calculation will be determined in a manner that minimizes
the rate being charged. Therefore, it will be assumed that any Class A Shares
are being redeemed first; any Class B Shares held for over five years or
acquired pursuant to reinvestment of dividends or distributions are redeemed
next, and any Class B Shares held longest during the five-year period are
redeemed next, unless the shareholder directs otherwise. The charge will not
be applied to dollar amounts representing an increase in the net asset value
since the time of purchase.
For example, assume an investor purchased 100 Class B Shares at $10 per
share (at a cost of $1,000) and in the second year after purchase, the net
asset value per share has increased to $12 and, during such time, the
investor has acquired 10 additional Class B Shares through dividend
reinvestment. If, at such time the investor makes his first redemption of 50
Class B Shares (proceeds of $600), 10 shares will not be subject to charge
because they were acquired through dividend reinvestment. With respect to the
remaining 40 shares, the charge is applied only to the original cost of $10
per share and not to the increase in net asset value of $2 per share.
Therefore, $400 of the $600 redemption proceeds will be charged at a rate of
4% (the applicable rate in the second year after purchase) or $16.00.
The contingent deferred sales charge is waived on redemptions of shares
(a) if redemption is made within one year of death (i) of the sole
shareholder on an individual account, (ii) of a joint tenant where the
surviving joint tenant is the deceased's spouse, or (iii) of the beneficiary
of a Uniform Gifts to Minors Act (UGMA), Uniform Transfers to Minors Act
(UTMA) or other custodial account; (b) if redemption is made within one year
of disability, as defined in Section 72(m)(7) of the Code; (c) in connection
with mandatory distributions upon reaching age 70-1/2 under any retirement
plan qualified under Sections 401, 408 or 403(b) of the Code or any
redemption resulting from the tax-free return of an excess contribution to an
IRA; (d) in connection with redemptions by 401(k) plans using an approved
participant tracking system for: participant hardships, death, disability or
normal retirement, and loans which are subsequently repaid; (e) in connection
with the exercise of certain exchange privileges among the Class B Shares of
a Series and Class B Shares of other Phoenix Funds; (f) in connection with
any direct rollover transfer of shares from an established Phoenix Fund
qualified plan into a Phoenix Fund IRA by participants terminating from the
qualified plan; and (g) in accordance with the terms specified under the
Systematic Withdrawal Program. If, upon the occurrence of a death as outlined
above, the account is transferred to an account registered in the name of the
deceased's estate, the contingent deferred sales charge will be waived on any
redemption from the estate account occurring within one year of the death. If
the Class B Shares are not redeemed within one year of the death, they will
remain subject to the applicable contingent deferred sales charge when
redeemed.
Class B Shares will automatically convert to Class A Shares of the same
Series based upon relative net asset values of each class after eight years
from the acquisition of the Class B Shares, and as a result, will thereafter
be subject to the lower distribution fee paid under the Class A distribution
plan. Such conversion will be on the basis of the relative net asset value of
the two classes without the imposition of any sales load, fee or other
charge. The purpose of the conversion feature is to relieve the holders of
Class B Shares that have been outstanding for a period of time sufficient for
Equity Planning to have been compensated for distribution expenses from most
of the burden of such distribution-related expenses.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares
in a shareholder's fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) are converted to Class A Shares, an
equal pro rata portion of the Class B Shares in the sub-account will also be
converted to Class A Shares.
The conversion of Class B Shares to Class A Shares is subject to the
continuing availability of an opinion of counsel or a ruling of the Internal
Revenue Service ("IRS") to the effect that (i) the assessment of the higher
distribution fees and transfer agency costs with respect to Class B Shares
does not result in any dividends or distributions constituting "preferential
dividends" under the Code, and (ii) that the conversion of shares does not
constitute a taxable event under federal income tax law. The Fund has not
sought opinions of counsel as to these matters but has or shall apply to the
IRS for such a ruling. While a ruling similar to the one sought by the Fund
as to preferential dividends has been issued previously by the IRS with
respect to certain Phoenix Funds, complete assurance cannot be given when or
whether the Fund will receive a favorable ruling. While an adverse
17
<PAGE>
determination by the IRS is not expected, the Fund may be required to
reassess the alternative purchase arrangement structure if the IRS does not
rule favorably. In addition, were the IRS not to rule favorably, the Fund
might make additional distributions if doing so would assist in complying
with the Fund's general practice of distributing sufficient income to reduce
or eliminate U.S. federal taxes. The conversion of Class B Shares to Class A
Shares may be suspended if such an opinion or ruling is no longer available.
In that event, no further conversions of Class B Shares would occur, and
shares might continue to be subject to the higher distribution fee for an
indefinite period which may extend beyond the period ending six years after
the end of the month in which affected Class B Shares were purchased.
Exchange Privileges
Shareholders may exchange Class A or Class B Shares held in book-entry form
for shares of the same class of other Phoenix Funds, provided the following
conditions are met: (1) the shares that will be acquired in the exchange (the
"Acquired Shares") are available for sale in the shareholder's state of
residence; (2) the Acquired Shares are the same class as the shares to be
surrendered (the "Exchanged Shares"); (3) the Acquired Shares will be
registered to the same shareholder account as the Exchanged Shares; (4) the
account value of the Fund whose shares are to be acquired must equal or
exceed the minimum initial investment amount required by that Phoenix Fund
after the exchange is implemented; and (5) if a shareholder has elected not
to utilize the Telephone Exchange Privilege (see below), a properly executed
exchange request must be received by Equity Planning. Exchange privileges are
not available for certain shareholders holding Class A Shares of Phoenix
Money Market Series and Class A Shares of the Phoenix Multi-Sector Short Term
Bond Fund held for less than 6 months.
Subject to the above requirements for an exchange, a shareholder or
his/her registered representative may, by telephone or written notice, elect
to have Class A or Class B Shares of the Fund exchanged for the same class of
shares of another Phoenix Fund automatically on a monthly, quarterly,
semi-annual or annual basis or may cancel the privilege ("Systematic
Exchange").
Shareholders who maintain an account balance in the Fund of at least
$5,000, or $2,000 for tax qualified retirement benefit plans (calculated on
the basis of the net asset value of the shares held in a single account), may
direct that shares of the Fund be automatically exchanged at predetermined
intervals for shares of the same class of another Phoenix Fund. If the
shareholder is participating in the Self Security program offered by Phoenix
Home Life, it is not necessary to maintain the above account balances in
order to use the Systematic Exchange privilege.
Such exchanges will be executed upon the close of business on the 10th of
a month and if the 10th falls on a holiday or weekend, then at the close of
business on the next succeeding business day. The minimum initial and
subsequent amount that may be exchanged under the Systematic Exchange is $25.
Systematic Exchange forms are available from Equity Planning.
Exchanges will be based upon each Fund's net asset value per share next
computed following receipt of a properly executed exchange request, without
sales charge. On Class B Share exchanges, the contingent deferred sales
charge schedule of the original shares purchased continues to apply.
The exchange of shares from one Phoenix Fund to another is treated as a
sale of the Exchanged Shares and a purchase of the Acquired Shares for
Federal income tax purposes. The shareholder may, therefore, realize a
taxable gain or loss. See "Dividends, Distributions and Taxes" for
information concerning the Federal income tax treatment of the disposition of
shares.
It is the policy of the Equity Planning to discourage and prevent frequent
trading by shareholders among the Fund and other Phoenix Funds in response to
market fluctuations. The Fund reserves the right to refuse exchange purchases
by any person or broker/dealer if, in the Fund's or Adviser's opinion, the
exchange would adversely affect the Fund's ability to invest effectively
according to its investment objective and policies, or otherwise adversely
affect the Fund and its shareholders. The Fund reserves the right to
terminate or modify its exchange privileges at any time upon giving prominent
notice to shareholders at least 60 days in advance.
Each Phoenix Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the prospectus of the fund
into which the exchange is to be made before any exchange requests are made.
Telephone Exchanges
Unless a shareholder elects in writing not to participate in the Telephone
Exchange Privilege, shares for which certificates have not been issued may be
exchanged by calling 800-367-5877 provided that the exchange is made between
accounts with identical registrations. Under the Telephone Exchange
Privilege, telephone exchange orders may also be entered on behalf of the
shareholder by his or her registered representative.
The Fund and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. In addition to requiring
identical registrations on both accounts, the Transfer Agent will require
address verification and will record telephone instructions on tape. All
exchanges will be confirmed in writing to the shareholder. To the extent that
procedures reasonably designed to prevent unauthorized telephone exchanges
are not followed, the Fund and/or the Transfer Agent may be liable for
following telephone instructions for exchange transactions that prove to be
fraudulent. Broker/dealers other than Equity Planning have agreed to bear the
risk of any loss resulting from any unauthorized telephone exchange
instruction from the firm or its registered representatives. However, the
shareholder would bear the risk of loss resulting from instructions entered
by an unauthorized third party that the Fund and/or the Transfer Agent
reasonably believe to be genuine. The Telephone Exchange Privilege may be
modified or terminated at any time on 60 days' notice to shareholders. In
addition, during times of drastic economic or market changes, the Telephone
18
<PAGE>
Exchange Privilege may be difficult to exercise or may be suspended
temporarily. In such event an exchange may be effected by following the
procedure outlined for tendering shares represented by certificate(s). The
Telephone Exchange Privilege is available only in States where shares being
acquired may be legally sold.
If a shareholder elects not to use the Telephone Exchange Privilege or if
the shares being exchanged are represented by a certificate or certificates,
in order to exchange shares the shareholder must submit a written request to
State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. If
the shares are being exchanged between accounts that are not registered
identically, the signature on such request must be guaranteed by an eligible
guarantor institution as defined by the Transfer Agent in accordance with its
signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker dealers, credit union, national securities
exchanges, registered securities associations, clearing agencies and savings
associations. Any outstanding certificate or certificates for the tendered
shares must be duly endorsed and submitted.
NET ASSET VALUE
The net asset value per share of each class of shares of each Series of the
Fund is determined as of the close of regular trading of the New York Stock
Exchange (the "Exchange"), on days when the Exchange is open. The net asset
value per share of a Series is computed by dividing the aggregate values of
all securities and other assets of the Series, minus all liabilities and
expenses of the Series, by the number of outstanding shares of the Series.
The total liability allocated to a class of a Series, plus that class's
distribution fee and any other expenses allocated solely to that class, are
deducted from the proportionate interest of such class in the assets of the
Series, and the resulting amount for each class is divided by the number of
outstanding shares of that class to produce the net asset value per share.
A security listed or traded on an exchange is valued at its last sale price
on the exchange where it is principally traded. Lacking any sales on the
exchange where it is principally traded on the day of valuation prior to the
time as of which assets are valued, the security is valued at the last bid
price on that exchange. Short-term investments having a remaining maturity
of less than sixty days are valued at amortized cost when the Board of
Trustees has determined that amortized cost would equal fair market value.
All other securities for which over-the-counter market quotations are readily
available are valued at the last bid price. Other assets are valued at fair
market value as determined in good faith by the Board of Trustees.
Generally, trading in foreign securities, as well as trading in corporate
bonds, U.S. Government securities and money market instruments is
substantially completed each day at various times prior to the close of the
general trading session of the Exchange. The values of such securities used
in computing the net asset value of each Series are determined as of such
times. Occasionally, events affecting the value of securities may occur
between such times and the close of the general trading session which will
not be reflected in the computation of a Series net asset value. If events
occur which materially affect the value of such securities, the securities
will be valued at fair market value as determined in good faith by the Board
of Trustees or the Adviser acting at their direction.
The value of securities for which market quotations are not readily
available is determined in good faith by the Trustees or the Adviser acting
at their direction, considering all relevant factors including but not
limited to, prices disseminated by pricing services (when such prices are
believed to reflect the fair value of such securities) and the value of any
comparable securities for which market quotations are readily available.
HOW TO REDEEM SHARES
Any holder of shares of any Series may require the Fund to redeem his shares
at any time at the net asset value per share next computed after receipt of a
redemption request in proper form by State Street Bank and Trust Company,
P.O. Box 8301, Boston, MA 02266-8301. The redemption request must contain the
name of the Series, the shareholder(s') account name(s) and number(s), the
number of shares to be redeemed and the signature(s) of the registered
shareholder(s). If the shares are registered in the names of individuals
singly, jointly or as custodian under the Uniform Gifts to Minors Act and the
proceeds of the redemption do not exceed $50,000 and are to be paid to the
registered owner(s) at the address of record, the signature(s) on the
redemption request need not be guaranteed. Otherwise, the signature(s) must
be guaranteed by an eligible guarantor institution as defined by the Transfer
Agent in accordance with its signature guarantee procedures. Currently such
procedures generally permit guarantees by banks, broker-dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations. When certificates for shares are
in the possession of the shareholder, they must be mailed or presented, duly
endorsed in the full name of the account, with a written request to Equity
Planning that the Fund redeem the shares, with the signature guaranteed, if
required, as described above. Signature(s) must also be guaranteed on any
change of address request submitted in conjunction with any redemption
request.
In addition, each Series maintains a continuous offer to repurchase its
shares, and shareholders may normally sell their shares through securities
dealers, who may charge customary commissions for their services. Payment
will be made within seven days after receipt of the duly endorsed share
certificates or telephone request unless the repurchase or redemption request
relates to shares for which good payment has not yet been collected. For
shares purchased by check or via Invest-by-Phone service, collection of good
payment may take up to 15 days.
Due to the relatively high cost of maintaining small accounts, the Fund
reserves the right to redeem, at net asset value, the shares of any
shareholder whose account has a value, due to redemptions, of less than $200.
Before the Fund
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<PAGE>
redeems these shares, the shareholder will be given notice that the value of
the shares in the account is less than the minimum amount and will be allowed
30 days to make an additional investment in an amount which will increase the
value of the account to at least $200.
A shareholder should contact his/her broker/dealer if he/she wishes to
transfer shares from an existing broker/dealer street name account to a
street name account with another broker/ dealer. The Fund has no specific
procedures governing such account transfers.
Unless a shareholder elects in writing not to participate in the Telephone
Redemption Privilege, shares for which certificates have not been issued may
be redeemed by telephoning (800) 367-5877 and telephone redemptions will also
be accepted on behalf of the shareholder from his or her registered
representative. The Fund and the Transfer Agent will employ reasonable
procedures to confirm that telephone instructions are genuine. Address and
bank account information will be verified, telephone redemption instructions
will be recorded on tape, and all redemptions will be confirmed in writing to
the shareholder. If there has been an address change within the past 60 days,
a telephone redemption will not be authorized. To the extent that procedures
reasonably designed to prevent unauthorized telephone redemptions are not
followed, the Fund and/or the Transfer Agent may be liable for following
telephone instructions for redemption transactions that prove to be
fraudulent. Broker/dealers other than Equity Planning have agreed to bear the
risk of any loss resulting from any unauthorized telephone redemption
instruction from the firm or its registered representatives. However, the
shareholder would bear the risk of loss resulting from instructions entered
by an unauthorized third party that the Fund and/or the Transfer Agent
reasonably believe to be genuine. The Telephone Redemption Privilege may be
modified or terminated at any time without prior notice to shareholders. In
addition, during times of drastic economic or market changes, the telephone
redemption privilege may be difficult to exercise and a shareholder should
submit a written redemption request, as described above.
If the amount of the redemption is $500 or more, the proceeds will be wired
to the shareholder's designated U.S. commercial bank account. If the amount
of the redemption is less than $500, the proceeds will be sent by check to
the address of record on the shareholder's account.
Telephone redemption requests must be received by Equity Planning by the
close of trading on the New York Stock Exchange on any day when Equity
Planning is open for business. Requests made after that time or on a day when
Equity Planning is not open for business cannot be accepted by Equity
Planning. The proceeds of a telephone redemption will normally be sent on the
first business day following receipt of the redemption request. However, with
respect to the telephone redemption of shares purchased by check, such
requests will only be effected after the Fund has assured itself that good
payment has been collected for the purchase of shares, which may take up to
15 days. This expedited redemption privilege is not available to HR-10, IRA
and 403(b)(7) Plans.
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. The Fund has
elected to pay in cash all requests for redemption by any shareholder of
record, but may limit such cash in respect to each shareholder during any 90
day period to the lesser of $250,000 or 1% of the net asset value of the Fund
at the beginning of such period. This election has been made pursuant to Rule
18f-1 under the Investment Company Act of 1940 and is irrevocable while the
Rule is in effect unless the Securities and Exchange Commission, by order,
permits its withdrawal. In case of a redemption in kind, securities delivered
in payment for shares would be valued at the same value assigned to them in
computing the net asset value per share of the Fund. A shareholder receiving
such securities would incur brokerage costs when he sold the securities. A
complete description of redemption procedures is contained in the Statement
of Additional Information.
DIVIDENDS, DISTRIBUTIONS AND
TAXES
Each Series intends to qualify annually as a regulated investment company
under the provisions of Subchapter M of the Internal Revenue Code, as amended
(the "Code") and to distribute annually to shareholders all or substantially
all of its net investment income and net realized capital gains, after
utilization of any capital loss carryovers. If each Series so qualifies, it
generally will not be subject to Federal income tax on the income it
distributes.
Each Series will distribute its net investment income to its shareholders on
a semi-annual basis and net realized capital gains, if any, to its
shareholders on an annual basis. Distributions, whether received by
shareholders in shares or in cash, will be taxable to them as income or
capital gains. Distributions of net realized long-term capital gains, if
designated as such by a Series, are taxable to shareholders as long-term
capital gains, regardless of how long they have owned shares in the Series.
Shareholders who are not subject to tax on their income will not be required
to pay tax on amounts distributed to them. Written notices will be sent to
shareholders following the end of each calendar year regarding the tax status
of all distributions made during each taxable year.
Each Series will be subject to a nondeductible 4% excise tax if it fails to
meet certain annual distribution requirements. In order to prevent imposition
of the excise tax, it may be necessary for each Series to make distributions
more frequently than described in the previous paragraph.
All dividends and distributions with respect to the shares of any class of
any Series will be payable in shares of such class of Series at net asset
value or, at the option of the shareholder, in cash. Any shareholder who
purchases shares of a Series prior to the close of business on the record
date for a dividend or distribution will be entitled to receive such dividend
or distribution. Dividends and distributions (whether received in shares or
in cash) are treated either as ordinary income or long-term capital gains for
Federal income tax purposes.
20
<PAGE>
Investment income received by any Series from sources within foreign
countries may be subject to foreign income taxes withheld at the source. If a
Series should have more than 50% of the value of its assets invested in
securities of foreign corporations at the close of its taxable year, which is
the Fund's present intention, the Fund may elect to permit its shareholders
to take, either as a credit or a deduction, their proportionate share of the
foreign income taxes paid.
The foregoing is only a summary of some of the important tax considerations
generally affecting the Series and their shareholders. Shareholders should
consult competent tax advisers regarding specific tax situations.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS regulations, the Fund may be required to withhold 31% of all
reportable payments including any taxable dividends, capital gain
distributions or share redemption proceeds, for any account which does not
have a taxpayer identification number or social security number and certain
required certifications.
The Fund reserves the right to refuse to open an account for any person
failing to provide a taxpayer identification number along with the required
certifications.
The Fund sends to all shareholders, within 31 days after the end of the
calendar year, information which is required by the Internal Revenue Service
for preparing Federal income tax returns. Investors are urged to consult
their attorney or tax adviser regarding specific questions as to Federal,
foreign, state or local taxes.
ADDITIONAL INFORMATION
Description of Shares
The Fund was established on May 31, 1996 as a Massachusetts business trust.
The capitalization of the Fund consists solely of an unlimited number of
shares of beneficial interest. The Fund currently offers shares in different
Series and different classes of those Series. Holders of shares of a Series
have equal rights with regard to voting, redemptions, dividends,
distributions, and liquidations with respect to that Series, except that
Class B Shares of any Series, which bear higher distribution fees and certain
incrementally higher expenses associated with the deferred sales arrangement,
pay correspondingly lower dividends per share than Class A Shares of the same
Series. Shareholders of all Series vote on the election of Trustees. On
matters affecting an individual Series (such as approval of an investment
advisory agreement or a change in fundamental investment policies) and on
matters affecting an individual class (such as approval of matters relating
to a Plan of Distribution for a particular class of shares), a separate vote
of that Series or class is required. Trustees will call a meeting when at
least 10% of the outstanding shares so request in writing. If the Trustees
fail to call a meeting after being so notified, the Shareholders may call the
meeting. The Trustees will assist the Shareholders by identifying other
shareholders or mailing communications, as required under Section 16(c) of
the Investment Company Act of 1940.
Shares are fully paid, nonassessable, redeemable and fully transferable
when they are issued. Shares do not have cumulative voting rights, preemptive
rights or subscription rights. The assets received by the Fund for the issue
or sale of shares of each Series, and any class thereof and all income,
earnings, profits and proceeds thereof, are allocated to such Series, and
Class, respectively, subject only to the rights of creditors, and constitute
the underlying assets of such Series or class. The underlying assets of each
Series are required to be segregated on the books of account, and are to be
charged with the expenses in respect to such Series and with a share of the
general expenses of the Fund. Any general expenses of the Fund not readily
identifiable as belonging to a particular Series or Class will be allocated
by or under the direction of the Trustees as they determine fair and
equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Fund may be personally liable
for debts or claims against the Fund. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Fund and that every written agreement, undertaking or
obligation made or issued by the Fund shall contain a provision to that
effect. The Declaration of Trust provides for indemnification out of the Fund
property for all losses and expenses of any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability, which is
considered remote, is limited to circumstances in which the Fund itself would
be unable to meet its obligations.
Additional Inquiries
Inquiries and requests for the Statement of Additional Information, the
Annual Report to Shareholders and the Semi-Annual Report to Shareholders
should be directed to Equity Planning at (800) 243-4361 or 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200.
21
<PAGE>
Subject to Completion--Dated May 31, 1996
PHOENIX-ABERDEEN SERIES FUND
101 Munson Street, Greenfield, MA 01301
Statement of Additional Information
[September 31], 1996
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix-Aberdeen Series Fund (the "Fund"), dated [September 3], 1996, and
should be read in conjunction with it. The Fund's Prospectus may be obtained
by calling Phoenix Equity Planning Corporation ("Equity Planning" or the
"Distributor") at (800) 243-4361 or by writing to Equity Planning at 100
Bright Meadow Boulevard, P.O. Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
THE FUND (21) 2
INVESTMENT OBJECTIVES AND POLICIES (5) 2
INVESTMENT RESTRICTIONS (11) 6
PERFORMANCE INFORMATION (5) 7
PORTFOLIO TRANSACTIONS AND BROKERAGE 8
SERVICES OF THE ADVISER (11) 9
NET ASSET VALUE (19) 9
HOW TO BUY SHARES (13) 9
EXCHANGE PRIVILEGES (18) 9
REDEMPTION OF SHARES (19) 10
DIVIDENDS, DISTRIBUTIONS AND TAXES (20) 10
TAX-SHELTERED RETIREMENT PLANS 12
THE NATIONAL DISTRIBUTOR (12) 12
DISTRIBUTION PLANS (12) 13
TRUSTEES AND OFFICERS 14
OTHER INFORMATION 18
</TABLE>
Numbers appearing in parentheses correspond to related disclosures in the
Fund's Prospectus.
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders/Exchanges: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
<PAGE>
THE FUND
Phoenix-Aberdeen Series Fund (the "Fund") is an open-end management
investment company established as a business trust under the laws of the
Commonwealth of Massachusetts by an Agreement and Declaration of Trust dated
May 31, 1996 (the "Declaration of Trust"). The Declaration of Trust
authorizes the assets and shares of the Fund to be divided into series (the
"Series"). Each Series has a different investment objectives, invests
primarily in certain types of securities, and is designed to meet different
investment needs. In many respects, each Series operates as if it were a
separate mutual fund. The Fund's Prospectus describes the investment
objectives of each Series. The following discussion supplements the
description of each Series' investment policies and investment techniques in
the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of each Series are described in the
"Investment Objectives and Policies" section of the Prospectus. The following
discussion supplements the "Investment Techniques and Related Risks" section
of the Prospectus.
Financial Futures Contracts and Related Options
Each Series may use financial futures contracts and related options to hedge
against changes in the market value of their portfolio securities or
securities which they intend to purchase. A Series may use foreign currency
futures contracts to hedge against changes in the value of foreign
currencies. See "Foreign Currency Transactions" below. Hedging is
accomplished when an investor takes a position in the futures market opposite
to the investor's cash market position. There are two types of hedges-long
(or buying) and short (or selling) hedges. Historically, prices in the
futures market have tended to move in concert with (although in inverse
relation to) cash market prices, and prices in the futures market have
maintained a fairly predictable relationship to prices in the cash market.
Thus, a decline in the market value of securities or the value of foreign
currencies may be protected against to a considerable extent by gains
realized on futures contracts sales. Similarly, it is possible to protect
against an increase in the market price of securities which a Series
utilizing this investment technique may wish to purchase in the future by
purchasing futures contracts.
Each Series may purchase or sell any financial futures contracts which are
traded on a recognized exchange or board of trade and may purchase exchange-
or board-traded put and call options on financial futures contracts as a
hedge against anticipated changes in the market value of its portfolio
securities or securities which it intends to purchase. Financial futures
contracts consist of interest rate futures contracts, securities index
futures contracts and foreign currency futures contracts. A clearing
corporation associated with the exchange or board of trade on which a
financial futures contract trades assumes responsibility for the completion
of transactions and also guarantees that open futures contracts will be
performed.
In contrast to the situation in which a Series purchases or sells a
security, no security is delivered or received by a Series upon the purchase
or sale of a financial futures contract (although an obligation to deliver or
receive the underlying security in the future is created by such a contract).
Initially, when it enters into a financial futures contract, a Series
utilizing this investment technique will be required to deposit in a
segregated account with the Fund's custodian bank with respect to such Series
an amount of cash or U.S. Treasury bills. This amount is known as initial
margin and is in the nature of a performance bond or good faith deposit on
the contract. The current initial margin deposit required per contract is
approximately 5% of the contract amount. Brokers may establish deposit
requirements higher than this minimum, however, subsequent payments, called
variation margin, will be made to and from the account on a daily basis as
the price of the futures contract fluctuates. This process is known as
marking to market.
The writer of an option on a futures contract is required to deposit
margin pursuant to requirements similar to those applicable to futures
contracts. Upon exercise of an option on a futures contract, the delivery of
the futures position by the writer of the option to the holder of the option
will be accompanied by delivery of the accumulated balance in the writer's
margin account. This amount will be equal to the amount by which the market
price of the futures contract at the time of exercise exceeds, in the case of
a call, or is less than, in the case of a put, the exercise price of the
option on the futures contract.
Although financial futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery.
Closing out is accomplished by effecting an offsetting transaction. A futures
contract sale is closed out by effecting a futures contract purchase for the
same aggregate amount of securities and the same delivery date. If the sale
price exceeds the offsetting purchase price, the seller immediately would be
paid the difference and would realize a gain. If the offsetting purchase
price exceeds the sale price, the seller immediately would pay the difference
and would realize a loss. Similarly, a futures contract purchase is closed
out by effecting a futures contract sale for the same securities and the same
delivery date. If the offsetting sale price exceeds the purchase price, the
purchaser would realize a gain, whereas if the purchase price exceeds the
offsetting sale price, the purchaser would realize a loss.
Any Series utilizing this investment technique will pay commissions on
financial futures contracts and related options transactions. These
commissions may be higher than those which would apply to purchases and sales
of securities directly, and will be in addition to those paid for direct
purchases and sales of securities.
2
<PAGE>
Limitations on Futures Contracts and Related Options
Any Series utilizing this investment technique may not engage in
transactions in financial futures contracts or related options for
speculative purposes but only as a hedge against anticipated changes in the
market value of portfolio securities or securities which it intends to
purchase or foreign currencies. A Series utilizing this investment technique
may not purchase or sell financial futures contracts or related options if,
immediately thereafter, the sum of the amount of initial margin deposits on
the Series' existing futures and related options positions and the premiums
paid for related options would exceed 5% of the market value of the Series'
total assets after taking into account unrealized profits and losses on any
such contracts. At the time of purchase of a futures contract or a call
option on a futures contract, an amount of cash, U.S. Government securities
or other appropriate high-grade debt obligations equal to the market value of
the futures contract minus the Series' initial margin deposit with respect
thereto will be deposited in a segregated account with the Fund's custodian
bank with respect to such Series to collateralize fully the position and
thereby ensure that it is not leveraged.
The extent to which a Series may enter into financial futures contracts
and related options also may be limited by the requirements of the Internal
Revenue Code of 1986 for qualification as a regulated investment company. See
"Taxes".
Risks Relating to Futures Contracts and Related Options
Positions in futures contracts and related options may be closed out on an
exchange if the exchange provides a secondary market for such contracts or
options. A Series utilizing this investment technique will enter into a
futures or futures related option position only if there appears to be a
liquid secondary market. However, there can be no assurance that a liquid
secondary market will exist for any particular option or futures contract at
any specific time. Thus, it may not be possible to close out a futures or
related option position. In the case of a futures position, in the event of
adverse price movements the Series would continue to be required to make
daily margin payments. In this situation, if the Series has insufficient cash
to meet daily margin requirements, it may have to sell portfolio securities
to meet its margin obligations at a time when it may be disadvantageous to do
so. ln addition, the Series may be required to take or make delivery of the
securities underlying the futures contracts it holds. The inability to close
out futures positions also could have an adverse impact on the Series'
ability to hedge its positions effectively.
There are several risks in connection with the use of futures contracts as
a hedging device. While hedging can provide protection against an adverse
movement in market prices, it can also limit a hedger's opportunity to
benefit fully from favorable market movement. In addition, investing in
futures contracts and options on futures contracts will cause a Series to
incur additional brokerage commissions and may cause an increase in a Series'
turnover rate.
The successful use of futures contracts and related options depends on the
ability of the Adviser to forecast correctly the direction and extent of
market movements, interest rates and other market factors within a given time
frame. To the extent market prices remain stable during the period a futures
contract or option is held by a Series or such prices move in a direction
opposite to that anticipated, the Series may realize a loss on the hedging
transaction which is not offset by an increase in the value of its portfolio
securities. Options and futures may also fail as a hedging technique in cases
where the movements of the securities underlying the options and futures do
not follow the price movements of the portfolio securities subject to the
hedge. As a result, the Series's total return for the period may be less than
if it had not engaged in the hedging transaction.
Utilization of futures or options contracts by a Series involves the risk
of imperfect correlation in movements in the price of futures contracts and
movements in the price of the securities or currencies which are being
hedged. If the price of the futures contract moves more or less than the
price of the securities or currency being hedged, the Series will experience
a gain or loss which will not be completely offset by movements in the price
of the securities or currency. It is possible that, where a Series has sold
futures contracts to hedge against decline in the market, the market may
advance and the value of securities held in the Series or the currencies in
which its foreign securities are denominated may decline. If this occurred,
the Series would lose a potentially unlimited amount of money on the futures
contract and would also experience a decline in value in its portfolio
securities. Where futures are purchased to hedge against a possible increase
in the prices of securities or foreign currencies before the Series is able
to invest its cash (or cash equivalents) in securities (or options) in an
orderly fashion, it is possible that the market may decline; if the Series
then determines not to invest in securities (or options) at that time because
of concern as to possible further market decline or for other reasons, the
Series will realize a loss on the futures that would not be offset by a
reduction in the price of the securities purchased.
The market prices of futures contracts may be affected if participants in
the futures market elect to close out their contracts through offsetting
transactions rather than to meet margin deposit requirements. In such cases,
distortions in the normal relationship between the cash and futures markets
could result. Price distortions could also result if investors in futures
contracts opt to make or take delivery of the underlying securities or
currencies rather than to engage in closing transactions because such action
would reduce the liquidity of the futures market. In addition, because, from
the point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the underlying
securities market, increased participation by speculators in the futures
market could cause temporary price distortions. Because of the possibility of
price distortions in the futures market and of the imperfect correlation
between movements in the prices of securities or foreign currencies and
movements in the prices of futures contracts, a correct forecast of market
trends may still not result in a successful hedging transaction.
3
<PAGE>
Repurchase Agreements
Repurchase agreements, as described in the Fund's Prospectus, will be
entered into only with commercial banks, brokers and dealers considered by
the Fund to be credit-worthy. The Trustees of the Fund will monitor each
Series' repurchase agreement transactions periodically and, with the Fund's
investment adviser will consider standards which the Fund's investment
adviser will use in reviewing the creditworthiness of any party to a
repurchase agreement with a Series. No more than an aggregate of 15% of a
Series' net assets, at the time of investment, will be invested in repurchase
agreements having maturities longer than seven days and other investments
subject to legal or contractual restrictions on resale, or for which there
are not readily available market quotations.
The use of repurchase agreements involves certain risks. For example, if
the seller under a repurchase agreement defaults on its obligation to
repurchase the underlying instrument at a time when the value of the
instrument has declined, a Series may incur a loss upon its disposition. If
the seller becomes insolvent and subject to liquidation or reorganization
under bankruptcy or other laws, a bankruptcy court may determine that the
underlying instrument is collateral for a loan by the Series and therefore is
subject to sale by the trustee in bankruptcy. Finally, it is possible that
the Series may not be able to substantiate its interest in the underlying
instrument. While the Trustees of the Fund acknowledge these risks, it is
expected that they can be controlled through careful structuring of
repurchase agreement transactions to meet requirements for treatment as a
purchase and sale under the bankruptcy laws and through monitoring procedures
designed to assure the creditworthiness of counter-parties to such
transactions.
Lending Portfolio Securities
Each Series may lend portfolio securities to broker-dealers and other
financial institutions in amounts up to 25% of the market or other fair value
for its total assets provided that such loans are callable at any time by the
Series utilizing this investment technique and are at all times secured by
collateral held by the Series at least equal to the market value determined
daily of the loaned securities. The Series utilizing this investment
technique will continue to receive any income on the loaned securities and at
the same time will earn interest on cash collateral (which will be invested
in short-term debt obligations) or a securities lending fee in the case of
collateral in the form of U.S. Government securities. A loan may be
terminated at any time by either the Series or the borrower. Upon termination
of a loan the borrower will be required to return the securities to the
Series and any gain or loss in the market price during the period of the loan
would accrue to the Series. If the borrower fails to maintain the requisite
amount of collateral the loan will automatically terminate and the Series may
use the collateral to replace the loaned securities while holding the
borrower liable for any excess of the replacement cost over the amount of the
collateral.
When voting or consent rights which accompany loaned securities pass to
the borrower the Series will follow the policy of calling the loan in whole
or in part as may be appropriate in order to exercise such rights if the
matters involved would have a material effect on the Series' investment in
the securities which are the subject of the loan. The Series may pay
reasonable finders administrative and custodial fees in connection with loans
of its portfolio securities.
As with any extension of credit there are risks of delay in recovery of
the loaned securities and in some cases loss of rights in the collateral
should the borrower of the securities fail financially. However loans of
portfolio securities will be made only to firms considered by the Fund to be
creditworthy and when the Adviser believes the consideration to be earned
justifies the attendant risks.
Foreign Currency Transactions
Each Series may engage in foreign currency transactions. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date which may be any fixed number of days from
the date of the contract agreed upon by the parties at a price set at the
time of the contract. These contracts are traded directly between currency
traders (usually large commercial banks) and their customers. No Series
intends to enter into forward contracts if it would have more than 15% of the
value of its total assets committed to such contracts on a regular or
continuous basis. No Series will enter into such forward contracts or
maintain a net exposure in such contracts where it would be obligated to
deliver an amount of foreign currency in excess of the value of its portfolio
securities and other assets denominated in that currency. The Fund's
custodian banks will segregate cash or liquid high quality debt securities in
an amount not less than the value of a Series' total assets committed to
forward foreign currency exchange contracts entered into for the purchase of
a foreign currency. If the value of the securities segregated declines
additional cash or securities will be added so that the segregated amount is
not less than the amount of the Series' commitments with respect to such
contracts. Generally, a Series will not enter into forward contracts with
terms longer than one year.
Foreign Currency Options. A foreign currency option provides the option
buyer with the right to buy or sell a stated amount of foreign currency at
the exercise price at a specified date or during the option period. A call
option gives its owner the right, but not the obligation, to buy the
currency, while a put option gives its owner the right, but not the
obligation, to sell the currency. The option seller (writer) is obligated to
fulfill the terms of the option sold if it is exercised. However, either
seller or buyer may close its position during the option period for such
options any time prior to expiration.
A call rises in value if the underlying currency appreciates. Conversely,
a put rises in value if the underlying currency depreciates. While purchasing
a foreign currency option can protect a Series utilizing this technique
against an adverse movement
4
<PAGE>
in the value of a foreign currency, it does not limit the gain which might
result from a favorable movement in the value of such currency. For example,
if a Series were holding securities denominated in an appreciating foreign
currency and had purchased a foreign currency put to hedge against a decline
in the value of the currency, it would not have to exercise its put.
Similarly, if a Series had entered into a contract to purchase a security
denominated in a foreign currency and had purchased a foreign currency call
to hedge against a rise in the value of the currency but instead the currency
had depreciated in value between the date of purchase and the settlement
date, the Series would not have to exercise its call but could acquire in the
spot market the amount of foreign currency needed for settlement.
Foreign Currency Futures Transactions. Each Series may use foreign
currency futures contracts and options on such futures contracts. Through the
purchase or sale of such contracts, a Series may be able to achieve many of
the same objectives attainable through the use of foreign currency forward
contracts, but more effectively and possibly at a lower cost. Unlike forward
foreign currency exchange contracts, foreign currency futures contracts and
options on foreign currency futures contracts are standardized as to amount
and delivery period and are traded on boards of trade and commodities
exchanges. It is anticipated that such contracts may provide greater
liquidity and lower cost than forward foreign currency exchange contracts.
Regulatory Restrictions. To the extent required to comply with Securities
and Exchange Commission Release No. IC-10666, when purchasing a futures
contract or writing a put option, each Series will maintain in a segregated
account cash or liquid high-grade debt securities equal to the value of such
contracts. To the extent required to comply with Commodity Futures Trading
Commission Regulation 4.5 and thereby avoid "commodity pool operator" status,
a Series will not enter into a futures contract or purchase an option thereon
if immediately thereafter the initial margin deposits for futures contracts
(including foreign currency and all other futures contracts) held by the
Series plus premiums paid by it for open options on futures would exceed 5%
of the Series' total assets. No Series will engage in transactions in
financial futures contracts or options thereon for speculation, but only to
attempt to hedge against changes in market conditions affecting the values of
securities which the Series holds or intends to purchase. When futures
contracts or options thereon are purchased to protect against a price
increase on securities intended to be purchased later, it is anticipated that
at least 75% of such intended purchases will be completed. When other futures
contracts or options thereon are purchased, the underlying value of such
contracts will at all times not exceed the sum of: (1) accrued profit on such
contracts held by the broker; (2) cash or high quality money market
instruments set aside in an identifiable manner; and (3) cash proceeds from
investments due in 30 days.
Emerging Market Securities. Each Series may invest in countries or regions
with relatively low gross national product per capita compared to the world's
major economies, and in countries or regions with the potential for rapid
economic growth (emerging markets). Emerging markets will include any
country: (i) having an "emerging stock market" as defined by the
International Finance Corporation; (ii) with low-to-middle-income economies
according to the International Bank for Reconstruction and Development (the
"World Bank"); (iii) listed in World Bank publications as developing; or (iv)
determined by the Adviser to be an emerging market as defined above. Each
Series may also invest in securities of: (i) companies the principal
securities trading market for which is an emerging market country; (ii)
companies organized under the laws of, and with a principal office in, an
emerging market country, or (iii) companies whose principal activities are
located in emerging market countries.
The risks of investing in foreign securities may be intensified in the
case of investments in emerging markets. Securities of many issuers in
emerging markets may be less liquid and more volatile than securities of
comparable domestic issuers. Emerging markets also have different clearance
and settlement procedures, and in certain markets there have been times when
settlements have been unable to keep pace with the volume of securities
transactions, making it difficult to conduct such transactions. Delays in
settlement could result in temporary periods when a portion of the assets of
a Series is uninvested and no return is earned thereon. The inability of a
Series to make intended security purchases due to settlement problems could
cause a Series to miss attractive investment opportunities. Inability to
dispose of portfolio securities due to settlement problems could result
either in losses to the Fund due to subsequent declines in value of the
portfolio securities or, if the Series has entered into a contract to sell
the security, in possible liability to the purchaser. Securities prices in
emerging markets can be significantly more volatile than in the more
developed nations of the world, reflecting the greater uncertainties of
investing in less established markets and economies. In particular, countries
with emerging markets may have relatively unstable governments, present the
risk of nationalization of businesses, restrictions on foreign ownership, or
prohibitions of repatriation of assets, and may have less protection of
property rights than more developed countries. The economies of countries
with emerging markets may be predominantly based on only a few industries,
may be highly vulnerable to changes in local or global trade conditions, and
may suffer from extreme and volatile debt burdens or inflation rates. Local
securities markets may trade a small number of securities and may be unable
to respond effectively to increases in trading volume, potentially making
prompt liquidation of substantial holdings difficult or impossible at times.
Securities of issuers located in countries with emerging markets may have
limited marketability and may be subject to more abrupt or erratic price
movements.
Certain emerging markets may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market's balance of payments or for other reasons, a country could
impose temporary restrictions on foreign capital remittances. A Series could
be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by the
application
5
<PAGE>
to the Series any restrictions on investments. Investments in certain foreign
emerging market debt obligations may be restricted or controlled to varying
degrees. These restrictions or controls may at times preclude investment in
certain foreign emerging market debt obligations and increase the expenses of
a Series.
Additional Risk Factors. As a result of its investments in foreign
securities, each Series may receive interest or dividend payments, or the
proceeds of the sale or redemption of such securities, in the foreign
currencies in which such securities are denominated. In that event, a Series
may convert such currencies into dollars at the then current exchange rate.
Under certain circumstances, however, such as where the Adviser believes that
the applicable rate is unfavorable at the time the currencies are received or
the Adviser anticipates, for any other reason, that the exchange rate will
improve, a Series may hold such currencies for an indefinite period of time.
In addition, a Series may be required to receive delivery of the foreign
currency underlying forward foreign currency contracts it has entered into.
This could occur, for example, if an option written by the Fund is exercised
or the Fund is unable to close out a forward contract. A Series may hold
foreign currency in anticipation of purchasing foreign securities. A Series
may also elect to take delivery of the currencies underlying options or
forward contracts if, in the judgment of the Adviser, it is in the best
interest of the Series to do so. In such instances as well, the Series may
convert the foreign currencies to dollars at the then current exchange rate,
or may hold such currencies for an indefinite period of time.
While the holding of currencies will permit a Series to take advantage of
favorable movements in the applicable exchange rate, it also exposes the
Series to risk of loss if such rates move in a direction adverse to the
Series' position. Such losses could reduce any profits or increase any losses
sustained by the Series from the sale or redemption of securities, and could
reduce the dollar value of interest or dividend payments received. ln
addition, the holding of currencies could adversely affect the Series' profit
or loss on currency options or forward contracts, as well as its hedging
strategies.
INVESTMENT RESTRICTIONS
The Fund's fundamental policies as they affect any Series cannot be
changed without the approval vote of a majority of the outstanding shares of
such Series, which is the lesser of (i) 67% or more of the voting securities
of such Series present at a meeting if the holders of more than 50% of the
outstanding voting securities of such Series are present or represented by
proxy or (ii) more than 50% of the outstanding voting securities of such
Series. A proposed change in fundamental policy or investment objective will
be deemed to have been effectively acted upon with respect to any Series if a
majority of the outstanding voting securities of that Series votes for the
approval of the proposal as provided above, notwithstanding (1) that such
matter has not been approved by a majority of the outstanding securities of
any other Series affected by such matter and (2) that such matter has not
been approved by a majority of the outstanding voting securities of the Fund.
The following investment restrictions are fundamental policies of the Fund
with respect to all Series and may not be changed except as described above.
The Fund may not:
1. Purchase for any Series securities of any issuer, other than
obligations issued or guaranteed as to principal and interest by the
United States Government or its agencies or instrumentalities, if
immediately thereafter (i) more than 5% of such Series' total assets
(taken at market value) would be invested in the securities of such issuer
or (ii) more than 10% of the outstanding securities of any class of such
issuer would be held by such Series or by all Series of the Fund in the
aggregate.
2. Act as securities underwriter except as it technically may be deemed
to be an underwriter under the Securities Act of 1933 in selling a
portfolio security.
3. Purchase securities on margin, but it may obtain short-term credit as
may be necessary for the clearance of purchases and sales of securities.
4. Make short sales of securities or maintain a short position unless
against-the-box or unless at the time of sale the Series owns an equal
amount of such securities.
5. Make cash loans, except that the Fund may (i) purchase bonds, notes,
debentures or similar obligations which are customarily purchased by
institutional investors whether publicly distributed or not, and (ii)
enter into repurchase agreements, provided that no more than 10% of any
Series' net assets (taken at market value) may be subject to repurchase
agreements maturing in more than seven days.
6. Make securities loans, except that the Fund may make loans of the
portfolio securities of any Series, provided that the market value of the
securities subject to any such loans does not exceed 25% of the value of
the total assets (taken at market value) of such Series.
7. Make investments in real estate or commodities or commodity contracts,
although (i) the Fund may purchase securities of issuers which deal in
real estate or commodities and may purchase securities which are secured
by interests in real estate, specifically, securities issued by real
estate investment trusts and (ii) any Series may engage in transactions in
financial futures
6
<PAGE>
contracts and related options, provided that the sum of the initial margin
deposits on such Series' existing futures positions and the premiums paid
for related options would not exceed in the aggregate 5% of such Series'
total assets.
8. Invest in oil, gas or other mineral exploration or development
programs, although the Fund may purchase securities of issuers which
engage in whole or in part in such activities.
9. Invest in puts, calls, straddles and any combination thereof, except
that any Series may (i) write (sell) exchange-traded covered call options
on portfolio securities and on securities indices and engage in related
closing purchase transactions and (ii) invest up to 2% of its total assets
in exchange-traded call and put options on securities and securities
indices.
10. Purchase securities of companies for the purpose of exercising
management or control.
11. Participate in a joint or joint and several trading account in
securities.
12. Purchase or retain securities of any issuer if any officer or Trustee
of the Fund, or officer or director of its investment adviser, owns
beneficially more than 1/2 of 1% of the outstanding securities or shares,
or both, of such issuer and all such persons owning more than 1/2 of 1% of
such securities or shares together own beneficially more than 5% of such
securities or shares.
13. Borrow money, except that the Fund may (i) borrow money for any Series
for temporary administrative purposes provided that any such borrowing
does not exceed 10% of the value of the total assets (taken at market
value) of such Series and (ii) borrow money for any Series for investment
purposes, provided that any such borrowing for investment purposes with
respect to any such Series is (a) authorized by the Trustees prior to any
public distribution of the shares of such Series or is authorized by the
shareholders of such Series thereafter, (b) is limited to 33 1/3% of the
value of the total assets (taken at market value) of such Series, and (c)
is subject to an agreement by the lender that any recourse is limited to
the assets of that Series with respect to which the borrowing has been
made. No Series may invest in portfolio securities while the amount of
borrowing of the Series exceeds 5% of the total assets of such Series.
Borrowing for investment purposes has not been authorized for any Series
whose shares are offered by the Fund.
14. Pledge, mortgage or hypothecate the assets of any Series to an extent
greater than 10% of the total assets (taken at market value) of such
Series to secure borrowings made pursuant to the provisions of item 13
above.
15. Issue senior securities, as defined in the 1940 Act, provided,
however, that such Series may secure borrowings made pursuant to the
provisions of item 13 above; and provided, further, that such Series'
obligations under interest-rate swaps, reverse repurchase agreements, when
issued, delayed-delivery and forward-commitment transactions and similar
transactions are not treated as senior securities if covering assets are
appropriately segregated; such Series may not pledge its assets other than
to secure such issuances of senior securities or such borrowings or in
connection with hedging transactions, short sales, when-issued and
forward-commitment transactions and similar investment strategies; for
purposes of this restriction, the term "total assets" includes the
proceeds of senior securities issued but is reduced by any liabilities and
indebtedness not constituting senior securities or excluded from treatment
as senior securities by this restriction.
16. Purchase securities of other investment companies, except that a
Series may make such purchase (a) in the open market involving no
commission or profit to a sponsor or dealer (other than customary broker's
commissions), provided that immediately thereafter (i) not more than 10%
of the Series' total assets would be invested in such securities and (ii)
not more than 3% of the stock of another investment company would be owned
by the Series, or (b) as part of a merger, consolidation, or acquisition
of assets.
The Fund may purchase illiquid securities, including repurchase agreements
providing for settlement more than seven days after notice and restricted
securities (securities that must be registered with the Securities and
Exchange Commission before they can be sold to the public) deemed to be
illiquid, but such securities will not constitute more than 15% of each
Series' net assets. The Board of Trustees, or the Adviser acting at its
direction, values these securities, taking into consideration quotations
available from broker-dealers and pricing services and other information
deemed relevant.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage beyond the specified limit resulting
from a change in values of portfolio securities or amount of net assets shall
not be considered a violation of the restrictions.
PERFORMANCE INFORMATION
Each Series may, from time to time, include performance information in
advertisements or reports to shareholders or prospective investors.
Performance information in advertisements and sales literature may be
expressed as yield on a class of shares of a Series and as total return for a
class of shares such Series.
Quotations of yield for a class of shares of a Series will be based on all
investment income per share earned during a particular 30-day period
(including dividends and interest), less expenses accrued during the period
("net investment income"), and is computed by dividing net investment income
by the value of a share on the last day of the period according to the
following formula:
7
<PAGE>
a -- b
Yield = 2 [(----- + 1)(6) -- 1]
c x d
<TABLE>
<CAPTION>
<S> <C>
Where a = dividends and interest earned during the period by such Series,
b = expenses accrued for the period (net of any reimbursements),
the average daily number of shares outstanding during the period that were entitled to
c = receive dividends, and
d = the maximum offering price per share on the last day of the period.
</TABLE>
Standardized quotations of average annual total return for a class of
shares of a Series will be expressed in terms of the average annual
compounded rate of return for a hypothetical investment over periods of 1, 5
and 10 years (or up to the life of the class of shares), calculated for each
class separately pursuant to the following formula: P(1+T)n = ERV (where P =
a hypothetical initial payment of $1,000, T = the average annual total
return, n = the number of years, and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the period). All total
return figures reflect the deduction of a proportional share of such class's
expenses (on an annual basis), deduction of the maximum initial sales load in
the case of Class A Shares and the maximum contingent deferred sales charge
applicable to a complete redemption of the investment in the case of Class B
Shares, and assume that all dividends and distributions on such class are
reinvested when paid.
A Series also may quote annual, average annual and annualized total return
and aggregate total return performance data, for each class of shares of such
Series, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such
data will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate
rate of return calculations.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities,
supervises their execution and negotiates brokerage commissions on behalf of
the Fund. It is the practice of the Adviser to seek the best prices and best
execution of orders and to negotiate brokerage commissions which in the
Adviser's opinion are reasonable in relation to the value of the brokerage
services provided by the executing broker. Brokers who have executed orders
for the Fund are asked to quote a fair commission for their services. If the
execution is satisfactory and if the requested rate approximates rates
currently being quoted by the other brokers selected by the Adviser, the rate
is deemed by the Adviser to be reasonable. Brokers may ask for higher rates
of commission if all or a portion of the securities involved in the
transaction are positioned by the broker, if the broker believes it has
brought the Fund an unusually favorable trading opportunity, or if the broker
regards its research services as being of exceptional value, and payment of
such commissions is authorized by the Adviser after the transaction has been
consummated. If the Adviser more than occasionally differs with the broker's
appraisal of opportunity or value, the broker would not be selected to
execute trades in the future. The Adviser believes that the Fund benefits
with a securities industry comprised of many diverse firms and that the
long-term interest of shareholders of the Fund is best served by its
brokerage policies which include paying a fair commission rather than seeking
to exploit its leverage to force the lowest possible commission rate. The
primary factors considered in determining the firms to which brokerage orders
are given are the Adviser's appraisal of the firm's ability to execute the
order in the desired manner, the value of research services provided by the
firm, and the firm's attitude toward and interest in mutual funds in general
including the sale of mutual funds managed and sponsored by the Adviser. The
Adviser does not offer or promise to any broker an amount or percentage of
brokerage commissions as an inducement or reward for the sale of shares of
the Fund. Over-the-counter purchases and sales are transacted directly with
principal market-makers except in those circumstances where in the opinion of
the Adviser better prices and execution are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller
firms in general tend to provide information and interpretations on a smaller
scale, frequently with a regional emphasis. ln addition, several firms
monitor federal, state, local and foreign political developments; many of the
brokers also provide access to outside consultants. The outside research
assistance is particularly useful to the Adviser's staff since the brokers as
a group tend to monitor a broader universe of securities and other matters
than the Adviser's staff can follow. In addition, it provides the Adviser
with a diverse perspective on financial markets. Research and investment
information is provided by these and other brokers at no cost to the Adviser
and is available for the benefit of other accounts advised by the Adviser and
its affiliates and not all of this information will be used in connection
with the Fund. While this information may be useful in varying degrees and
may tend to reduce the Adviser's expenses, it is not possible to estimate its
value and in the opinion of the Adviser it does not reduce the Adviser's
expenses in a determinable amount. The extent to which the Adviser makes use
of statistical, research and other services furnished by brokers is
considered by the Adviser in the allocation of brokerage business but there
is no formula by which such business is allocated. The Adviser does so in
accordance with its judgment of the best interest of the Fund and its
shareholders.
8
<PAGE>
Purchases and sales of fixed-income securities will usually be principal
transactions. Such securities often will be purchased or sold from or to
dealers serving as market makers for the securities at a net price. The Fund
will also purchase such securities in underwritten offerings and will, on
occasion, purchase securities directly from the issuer. Generally,
fixed-income securities are traded on a net basis and do not involve
brokerage commissions. The cost of executing fixed-income securities
transactions consists primarily of dealer spreads and underwriting
commissions.
In purchasing and selling fixed-income securities, it is the policy of the
Fund to obtain the best results taking into account the dealer's general
execution and operational facilities, the type of transaction involved and
other factors, such as the dealer's risk in positioning the securities
involved. While the Adviser generally seeks reasonably competitive spreads or
commissions, the Fund will not necessarily pay the lowest spread or
commission available.
The Fund may, in circumstances in which two or more dealers are in a
position to offer comparable results, give preference to a dealer which has
provided statistical or other research services to the Fund. By allocating
transactions in this manner, the Adviser is able to supplement its research
and analysis with the views and information of other securities firms.
SERVICES OF THE ADVISER
The Fund's investment adviser is Phoenix-Aberdeen International Advisors,
LLC (the "Adviser"), which is Delaware limited liability company formed in
1996 and having a place of business located at One American Row, Hartford,
Connecticut 06102. The Adviser is jointly owned and managed by PM Holdings,
Inc., a direct subsidiary of Phoenix Home Life Mutual Insurance Company
("Phoenix Home Life"), and Aberdeen Fund Managers, Inc., a wholly-owned
subsidiary of Aberdeen Trust plc.
The Investment Advisory Agreement was approved by the Trustees of the Fund
on August 21, 1996. The Investment Advisory Agreement will continue in effect
from year to year if specifically approved annually (a) by the Trustees of
the Fund, including a majority of the disinterested Trustees, or (b) by a
majority of the outstanding voting securities of the Fund as defined in the
1940 Act. The Investment Advisory Agreement may be terminated without penalty
at any time by a similar vote upon 60 days' notice or by the adviser upon 60
days' written notice and will automatically terminate in the event of its
assignment as defined in Section 2(a)(4) of the 1940 Act.
The Adviser continuously furnishes an investment program for each Series
and manages the investment and reinvestment of the assets of each Series
subject at all times to the supervision of the Trustees. The Adviser, at its
expense, furnishes to the Fund adequate office space and facilities and
certain administrative services, including the services of any member of its
staff who serves as an officer of the Fund.
As compensation for its services to each Series, the Adviser is entitled
to a fee, payable monthly, at an annual rate of 1.00% of the Series' average
daily net assets. The Investment Advisory Agreement with the Fund provides
that the Adviser will reimburse the Fund for the amount, if any, by which the
total operating expenses of any Series (including the Adviser's compensation,
but excluding interest, taxes, brokerage fees and commissions and
extraordinary expenses) for any fiscal year exceed the level of expenses
which such Series is permitted to bear under the most restrictive expense
limitation (which has not been waived) imposed on mutual funds by any state
in which shares of the Series are then qualified for sale.
NET ASSET VALUE
The net asset value per share of each class of shares of each Series will
be determined at the close of the general trading session of the New York
Stock Exchange (the "Exchange") on each business day the Exchange is open.
The net asset value per share of each class of shares of each Series is
computed by dividing the value of such Series' securities, plus any cash and
other assets (including dividends and interest accrued but not collected)
less all liabilities (including accrued expenses) attributable to such class,
by the number of shares of the class outstanding. See the Fund's current
Prospectus for more information.
HOW TO BUY SHARES
Shares may be purchased from the Distributor or from investment dealers
having sales agreements with the Distributor at the public offering price
(the net asset value next computed following receipt by State Street Bank and
Trust Company of a purchase application in proper form, plus the applicable
sales charge). The minimum initial purchase is $500 ($25 if using the bank
draft investing program designated "Investo-Matic") and the minimum
subsequent investment is $25. In the case of employee payroll deductions
plans, organized group plans and other benefit programs or arrangements
offered by certain dealers, the minimum initial investment may be fixed from
time to time at such lesser amounts as the Adviser in its sole discretion may
determine, and may in certain cases be waived from time to time by the
Adviser, in its sole discretion. See the Fund's current Prospectus.
EXCHANGE PRIVILEGES
Subject to limitations, shareholders may exchange Class A Shares or Class
B Shares held in book-entry form for shares of the same class of other
Phoenix Funds (as defined in the Fund's current Prospectus), provided the
following conditions are met: (1)
9
<PAGE>
the shares that will be acquired in the exchange (the "Acquired Shares") are
available for sale in the shareholder's state of residence; (2) the Acquired
Shares are the same class as the shares to be surrendered (the "Exchanged
Shares"); (3) the Acquired Shares will be registered to the same shareholder
account as the Exchanged Shares; (4) the account value of the Fund whose
shares are to be acquired must equal or exceed the minimum initial investment
amount required by that Fund after the exchange is implemented; and (5) if a
shareholder has elected not to utilize the Telephone Exchange Privilege (see
below), a properly executed exchange request must be received by Equity
Planning.
Subject to the above requirements for an exchange, a shareholder or
his/her registered representative may, by telephone or written notice, elect
to have Class A Shares or Class B Shares of the Fund exchanged for the same
class of shares of another Phoenix Fund automatically on a monthly,
quarterly, semiannual or annual basis or may cancel the privilege
("Systematic Exchange").
Shareholders who maintain an account balance in the Fund of at least
$5,000 or $2,000 for tax qualified retirement benefit plans (calculated on
the basis of the net asset value of the shares held in a single account) may
direct that shares of the Fund be automatically exchanged at predetermined
intervals for shares of the same class of another Phoenix Fund. If the
shareholder is participating in the Self Security Program offered by Phoenix
Home Life Mutual Insurance Company, it is not necessary to maintain the above
account balances in order to use the Systematic Exchange Privilege.
Such exchanges will be executed upon the close of business on the 10th of
a month and if the 10th falls on a holiday or weekend, then at the close of
business on the next succeeding business day. The minimum initial and
subsequent amount that may be exchanged under the Systematic Exchange
Privilege is $25. Systematic Exchange Privilege forms are available from
Equity Planning. Exchanges will be based upon each Fund's net asset value per
share next computed following receipt of a properly executed exchange
request, without sales charge. On Class B Share exchanges, the contingent
deferred sales charge schedule of the original shares purchased continues to
apply.
The exchange of shares from one fund to another is treated as sale of the
Exchanged Shares and a purchase of the Acquired Shares for Federal income tax
purposes. The shareholder may, therefore, realize a taxable gain or loss. See
"Dividends, Distributions and Taxes" in the Prospectus for information
concerning the Federal income tax treatment of a disposition of shares. It is
the policy of the Adviser to discourage and prevent frequent trading by
shareholders among the Fund and other Phoenix Funds in response to market
fluctuations. The Fund reserves the right to terminate or modify its exchange
privileges at any time upon giving prominent notice to shareholders at least
60 days in advance.
Each Phoenix Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the prospectus of the fund
into which the exchange is to be made before any exchange requests are made.
REDEMPTION OF SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended
and payment therefor postponed during periods when the Exchange is closed,
other than a customary weekend and holiday closing, or, if permitted by rules
of the Securities and Exchange Commission, during periods when trading on the
Exchange is restricted or during any emergency which makes it impracticable
for the Fund to dispose of its securities or to determine fairly the value of
its net assets or during any other period permitted by order of the
Securities and Exchange Commission for the protection of investors.
Furthermore, the Transfer Agent will not mail redemption proceeds until
checks received for shares purchased have cleared, which may take up to 15
days, but payment will be forwarded immediately upon demand.
Redemptions by holders of Class B Shares will be subject to the applicable
deferred sales charge, if any.
Each shareholder account in the Fund which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the
giving of not less than 60 days' written notice to the shareholder mailed to
the address of record. During the 60-day period the shareholder has the right
to add to the account to bring its value to $200 or more. See the Fund's
current Prospectus for more information.
Telephone Redemption
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Fund's current Prospectus for
additional information.
Reinvestment Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinstatement of their investment at
net asset value. See the Fund's Prospectus for more information and
conditions attached to the privilege.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to remain qualified as a regulated investment company
under certain provisions of the Code. Under such provisions, the Fund will
not be subject to Federal income tax on such part of its ordinary income and
net realized capital gains which it distributes
10
<PAGE>
to shareholders provided it meets certain distribution requirements. To
qualify for treatment as a regulated investment company, the Fund generally
must, among other things, (a) derive in each taxable year at least 90% of its
gross income from dividends, interest payments with respect to security loans
and gains from the sale or disposition of stock or securities and certain
other items, (b) derive less than 30% of its gross income each taxable year
as gains (without deduction for losses) from the sale or other disposition of
securities held for less than three months and (c) diversify its holdings so
that, at the end of each quarter of the taxable year (i) at least 50% of the
market value of the Fund's assets are represented by cash, U.S. Government
securities, securities of other regulated investment companies and other
securities, with such other securities of any one issuer limited for purposes
of this calculation to an amount not greater than 5% of the Fund's total
assets and 10% of the outstanding voting securities of any one issuer and
(ii) not more than 25% of the value of its total assets is invested in the
securities of any one issuer (other than U.S. Government securities or the
securities of other regulated investment companies). If, in any taxable year,
the Fund does not qualify as a regulated investment company all of its
taxable income will be taxed to the Fund at corporate rates.
It is the Fund's policy to distribute to its shareholders at least 98% of
net investment taxable income due to the Code imposing a 4% nondeductible
excise tax on a regulated investment company, such as the Fund, if it does
not distribute to its shareholders during the calendar year an amount equal
to 98% of its net ordinary income, with certain adjustments, plus 98% of the
Fund's net capital gains for the 12-month period ending on March 31 of such
calendar year. In addition, an amount equal to any undistributed investment
company taxable income or capital gain net income from the previous reporting
year must also be distributed to avoid the excise tax. The excise tax is
imposed on the amount by which the regulated investment company does not meet
the foregoing distribution requirements. If the Fund has taxable income that
would be subject to the excise tax, the Fund intends to distribute such
income so as to avoid payment of the excise tax.
Under another provision of the Code, any dividend declared by the Fund to
shareholders of record in October, November or December of any year will be
deemed to have been received by, and will be taxable to shareholders as of
December 31, provided that the dividend is actually paid by the Fund in
January of the following year.
Under certain circumstances, the sales charge incurred in acquiring shares
of the Fund may not be taken into account in determining the gain or loss on
the disposition of those shares. This rule applies where shares of the Fund
are disposed of within 90 days after the date on which they were acquired and
new shares of a regulated investment company are acquired without a sales
charge or at a reduced sales charge. In that case, the gain or loss realized
on the disposition will be determined by excluding the charge incurred in
acquiring those shares. This exclusion applies to the extent that the
otherwise applicable sales charge with respect to the newly acquired shares
is reduced as a result of the shareholder having incurred a sales charge
initially. The portion of the sales charge affected by this rule will be
treated as a sales charge paid for the new shares.
Distributions by the Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value of a share below a
shareholder's cost for the share, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by the Fund.
The price of shares purchased at that time may include the amount of the
forthcoming distribution, but the distribution generally would be taxable to
them.
Some shareholders may be subject to withholding of Federal income tax on
dividends and redemption payments from the Fund backup withholding at the
rate of 31%. Corporate shareholders and certain other shareholders specified
in the Code generally are exempt from such backup withholding. Generally,
shareholders subject to backup withholding will be (i) those for whom a
certified taxpayer identification number is not on file with the Fund, (ii)
those about whom notification has been received (either by the shareholder or
the Fund) from the IRS that they are subject to backup withholding or (iii)
those who, to the Fund's knowledge, have furnished an incorrect taxpayer
identification number. Generally, to avoid backup withholding, an investor
must, at the time an account is opened, certify under penalties of perjury
that the taxpayer identification number furnished is correct and that he or
she is not subject to backup withholding.
The Fund may invest in certain debt securities that are originally issued
or acquired at a discount. Special rules apply under the Code to the
recognition of income with respect to such debt securities. Under the special
rules, the Fund may recognize income for tax purposes without a corresponding
current receipt of cash. In addition, gain on a disposition of a debt
security subject to the special rules may be treated wholly or partially as
ordinary income, not capital gain.
The Fund intends to accrue dividend income for Federal income tax purposes
in accordance with the rules applicable to regulated investment companies. In
some cases, these rules may have the effect of accelerating (in comparison to
other recipients of the dividend) the time at which the dividend is taken
into account by the Fund as taxable income.
Transactions in options on stock indexes are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by the Fund
during a taxable year or held by the Fund at the close of its taxable year,
will be treated as if sold for their market value. Generally, 60% of any net
gain or loss recognized on the deemed sale, as well as 60% of the gain or
loss with respect to any actual termination (including expiration), will be
treated as long-term capital gain or loss and the remaining 40% will be
treated as short-term capital gain or loss.
11
<PAGE>
In order to qualify under Part I of Subchapter M, the Fund may be
restricted from certain activities, including (i) writing of options on
securities which have been held less than three months, (ii) writing of
options which expire in less than three months, and (iii) effecting closing
purchase transactions with respect to options which have been written less
than three months prior to such transactions.
The Fund may be subject to tax on dividend or interest income received
from securities of non-U.S. issuers withheld by a foreign country at the
source. The United States has entered into tax treaties with many foreign
countries which entitle the Fund to a reduced rate of tax or exemption from
tax on income. It is impossible to determine the effective rate of foreign
tax in advance since the amount of the Fund's assets to be invested within
various countries is not known. The Fund intends to operate so as to qualify
for treaty tax benefits where applicable. To the extent that the Fund is
liable for foreign income taxes withheld at the source, the Fund may operate
so as to meet the requirements of the Code to "pass through" to the Fund's
shareholders tax benefits attributable to foreign income taxes paid by the
Fund. If more than 50% of the value of the Fund's total assets at the close
of its taxable year is comprised of securities issued by foreign
corporations, the Fund may elect with the IRS to "pass through" to the Fund's
shareholders the amount of foreign income taxes paid by the Fund. Pursuant to
this election, shareholders will be required to (i) include in gross income,
even though not actually received, their respective pro rata share of foreign
taxes paid by the Fund; (ii) treat their pro rata share of foreign taxes as
paid by them; (iii) either deduct their pro rata share of foreign taxes in
computing their taxable income, or use such share as foreign tax credit
against U.S. income tax (but not both). No deduction for foreign taxes may be
claimed by a non-corporate shareholder who does not itemize deductions. The
Fund may meet the requirements to "pass through" to its shareholders foreign
income taxes paid, but there can be no assurance that the Fund will be able
to do so. Each shareholder will be notified within 60 days after the close of
each taxable year of the Fund if the foreign taxes paid by the Fund will
"pass through" for that year, and, if so, the amount of each shareholder's
pro rata share (by country) of (i) the foreign taxes paid and (ii) the Fund's
gross income from foreign sources. Shareholders who are not liable for
Federal income taxes will not be affected by such "pass through" of foreign
tax credits.
If the Fund invests in stocks of certain passive foreign investment
companies, the Fund may be subject to U.S. Federal income taxation on a
portion of the "excess distribution" with respect to, or gain from, the
disposition of such stock. The tax would be determined by allocating such
distribution or gain ratably to each day of the Fund's holding period for the
stock. The distribution or gain so allocated to any taxable year of the
excess distribution or disposition would be taxed to the Fund at the highest
ordinary income rate in effect for such year, and the tax would be further
increased by an interest charge to reflect the value of the tax deferral
deemed to have resulted from ownership of foreign company's stock. Any amount
of distribution or gain allocated to the taxable year of the distribution or
disposition would be included in the Fund's investment company taxable income
and, accordingly, would not be taxable to the Fund to the extent distributed
by the Fund as a dividend to its shareholder.
The foregoing is a general summary of the applicable provisions of the
Code and Treasury Regulations presently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and the
Treasury Regulations promulgated thereunder. The Code and these Treasury
Regulations are subject to change by legislative or administrative action
either prospectively or retroactively. Distributions and the transactions
referred to above may be subject to state and local income tax, and the
treatment thereof may differ from the Federal tax treatment discussed herein.
Shareholders are advised to consult with their tax advisor or attorney.
TAX-SHELTERED RETIREMENT PLANS
Shares of the Fund and other Phoenix Funds may be offered in connection
with employer-sponsored 401(k) plans. Adviser and its affiliates may provide
administrative services to these plans and to their participants, in addition
to the services that Adviser and its affiliates provide to the Phoenix Funds,
and receive compensation therefor. For information on the terms and
conditions applicable to employee participation in such plans, including
information on applicable plan administrative charges and expenses,
prospective investors should consult the plan documentation and employee
enrollment information which is available from participating employers.
THE NATIONAL DISTRIBUTOR
Pursuant to a Distribution Agreement with the Fund, Phoenix Equity
Planning Corporation (the "Distributor"), a direct wholly-owned subsidiary
of Phoenix Duff & Phelps Corporation and an affiliate of Adviser, serves as
distributor for the Fund. The address of the Distributor is P.O. Box 2200,100
Bright Meadow Blvd., Enfield, Connecticut 06083-2200. As such, the
Distributor conducts a continuous offering pursuant to a "best efforts"
arrangement requiring the Distributor to take and pay for only such
securities as may be sold to the public. The fees are used to compensate
sales and services person for selling shares of the Fund and for providing
services to shareholders. In addition, the fees are used to compensate the
Distributor for sales and promotional activities.
The Distribution Agreement may be terminated at any time on not more than
60 days' written notice, without payment of a penalty, by the Distributor, by
vote of a majority of the outstanding voting securities of the Fund, or by
vote of a majority of the Trustees of the Fund who are not "interested
persons" of the Fund and who have no direct or indirect financial interest in
the operation of the Distribution Plan or in any related agreements. The
Distribution Agreement will terminate automatically in the event of its
assignment.
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<PAGE>
Dealers with whom the Distributor has entered into sales agreements
receive sales charges in accordance with the commission table set forth in
the Prospectus. The Distributor may from time to time pay, from its own
resources or pursuant to the Plans of Distribution described below, a bonus
or other incentive to dealers (other than the Distributor) which employ a
registered representative who sells a minimum dollar amount of the shares of
the Fund during a specific period of time. Such bonus or other incentive may
take the form of payment for travel expenses, including lodging, incurred in
connection with trips taken by qualifying registered representatives and
members of their families to places within or without the United States or
other bonuses such as gift certificates or the cash equivalent of such
bonuses. The Distributor may, from time to time, reallow the entire portion
of the sales charge which it normally retains to individual selling dealers.
However, such additional reallowance generally will be made only when the
selling dealer commits to substantial marketing support such as internal
wholesaling through dedicated personnel, internal communications and mass
mailings.
DISTRIBUTION PLANS
The Fund has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each class of shares of the Fund (the "Class A Plan," the "Class
B Plan," and collectively the "Plans"). The Plans permit the Fund to
reimburse the Distributor for expenses incurred in connection with activities
intended to promote the sale of shares of each class of shares of the Fund.
Pursuant to the Class A Plan, each Series may reimburse the Distributor
for actual expenses of the Distributor up to 25% of the average daily net
assets of the Class A Shares for such Series. Under the Class B Plan, each
Series may reimburse the Distributor monthly for actual expense of the
Distributor up to 1.00% of the average daily net assets of the Class B Shares
of such Series. Expenditures under the Plans shall consist of: (i)
commissions to sales personnel for selling shares of the Fund (including
underwriting fees and financing expenses incurred in connection with the sale
of Class B Shares): (ii) compensation, sales incentives and payments to
sales, marketing and service personnel; (iii) payments to broker-dealers and
other financial institutions which have entered into agreements with the
Distributor in the form of the Dealer Agreement for Phoenix Funds for
services rendered in connection with the sale and distribution of shares of
the Fund; (iv) payment of expenses incurred in sales and promotional
activities, including advertising expenditures related to the Fund; (v) the
costs of preparing and distributing promotional materials; (vi) the cost of
printing the Fund's Prospectus and Statement of Additional Information for
distribution to potential investors; and (vii) such other similar services
that the Trustees of the Fund determines are reasonably calculated to result
in the sale of shares of the Fund; provided, however, a portion of such
amount paid to the Distributor, which portion shall be equal to or less than
0.25% annually of the average daily net assets of the Fund's shares may be
paid for reimbursing the costs of providing services to the shareholders,
including assistance in connection with inquiries related to shareholder
accounts (the "Service Fee").
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor,
such as services to the Fund's shareholders; or services providing the Fund
with more efficient methods of offering shares to coherent groups of clients,
members or prospects of a participant; or services permitting bulking of
purchases or sales, or transmission of such purchases or sales by
computerized tape or other electronic equipment; or other processing.
The fee received by the Distributor under the early years of the Plans is
not likely to reimburse the Distributor for the total distribution expenses
it will actually incur as a result of the Fund having fewer assets and the
Distributor incurring greater promotional expenses during the start-up phase.
No amounts paid or payable by the Fund under the Plan for Class A Shares may
be used to pay for, or reimburse payment for, sales or promotional services
or activities unless such payment or reimbursement takes place prior to the
earliest of (a) the last day of the one-year period commencing on the last
day of the calendar quarter during which the specific service or activity was
performed, or (b) the last day of the one-year period commencing on the last
day of the calendar quarter during which payment for the services or activity
was made by a third party on behalf of the Fund. If the Plans are terminated
in accordance with their terms, the obligations of the Fund to make payments
to the Distributor pursuant to the Plans will cease and the Fund will not be
required to make any payments past the date on which each Plan terminates.
The Class B Plan, however, does not limit the reimbursement of
distribution-related expenses to expenses incurred in specified time periods.
On a quarterly basis, the Trustees of the Fund review a report on
expenditures under the Plans and the purposes for which expenditures were
made. The Trustees conduct an additional, more extensive review annually in
determining whether the Plans will be continued. By its terms, continuation
of the Plans from year to year is contingent on annual approval by a majority
of the Trustees of the Fund and by a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plans or any related
agreements (the "Plan Trustees"). The Plans provide that they may not be
amended to increase materially the costs which the Fund may bear pursuant to
the Plans without approval of the shareholders of the Fund and that other
material amendments to the Plans must be approved by a majority of the Plan
Trustees by vote cast in person at a meeting called for the purpose of
considering such amendments. The Plans further provides that while it is in
effect, the selection and nomination of Trustees who are not "interested
persons" shall be committed to the discretion of the Trustees who are not
"interested persons." The Plans may be terminated at any time by vote of a
majority of the Plan Trustees or a majority of the outstanding shares of the
Fund.
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<PAGE>
TRUSTEES AND OFFICERS
The following table sets forth information concerning the Trustees and
executive officers of the Fund, including their principal occupations during
the past five years. Unless otherwise noted, the address of each Trustee and
executive officer is One American Row, Hartford, Connecticut 06115.
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
---------------------- ---------------------- ----------------------------------------------------------
<S> <C> <C>
C. Duane Blinn Trustee Partner in law firm of Day, Berry & Howard.
Day, Berry & Howard Director/Trustee, Phoenix Funds (1980-present). Trustee,
CityPlace Phoenix Duff & Phelps Institutional Mutual Funds
Hartford, CT 06103 (1996-present). Director/Trustee, the National Affiliated
Age: 68 Investment Companies (until 1993).
Robert Chesek Trustee Trustee/Director, Phoenix Funds (1981-present) and
49 Old Post Road Chairman (1989-1994). Director/Trustee, the National
Wethersfield, CT 06109 Affiliated Investment Companies (until 1993). Vice
Age: 61 President, Common Stock, Phoenix Home Life Mutual
Insurance Company (1980- 1994). Trustee, Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present)
E. Virgil Conway Trustee Trustee/Director, Consolidated Edison Company of New York,
9 Rittenhouse Road Inc. (1970-present), Pace University (1978-present),
Bronxville, NY 10708 Atlantic Mutual Insurance Company (1974-present), HRE
Age: 66 Properties (1989-present), Greater New York Councils, Boy
Scouts of America (1985-present), Union Pacific Corp.
(1978-present), Atlantic Reinsurance Company
(1986-present), Blackrock Fund for Fannie Mae Mortgage
Securities (Advisory Director) (1989-present), Centennial
Insurance Company, Josiah Macy, Jr., Foundation, and The
Harlem Youth Development Foundation. Board Member,
Metropolitan Transportation Authority (1992-present).
Chairman, Audit Committee of the City of New York
(1981-present). Director/Trustee the National Affiliated
Investment Companies (until 1993). Director/Trustee,
Phoenix Funds (1993- present). Director, Accuhealth
(1994-present), Trism Inc. (1994-present). Director,
Realty Foundation of New York (1972-present) and the New
York Housing Partnership Development Corp. (1981-present).
Advisory Director, Fund Directions (1993-present). Former
Director, New York Chamber of Commerce and Industry
(1974-1990).
Harry Dalzell-Payne Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
330 East 39th Street Phoenix Duff & Phelps Institutional Mutual Funds
Apartment 2G (1996-present). Director, Farragut Mortgage Co., Inc.
New York, NY 10022 (1991-1994). Director/Trustee the National Affiliated
Age: 66 Investment Companies (1983-1993). Consultant, The Levett
Group Holding, Inc. (1989- 1990). Independent real estate
market consultant (1982-1990). Formerly a Major General of
the British Army.
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<PAGE>
Francis E. Jeffries* Trustee Chairman and Chief Executive Officer, Phoenix Duff &
Phoenix Duff & Phelps Phelps Corporation. Director/Trustee, Duff & Phelps
Corporation Utilities Income Inc., Duff & Phelps Utilities Tax-Free
55 East Monroe Street Income Inc., Duff & Phelps Utility and Corporate Bond Fund
Chicago, 60603 Inc., Duff & Phelps Mutual Funds, The Empire District
Age: 65 Electric Company. Chairman and Chief Executive Officer,
Phoenix Duff & Phelps Corporation (until 1993). Chairman
of the Board of Directors, Duff & Phelps Investment
Management Company (until 1993).
Leroy Keith, Jr. Trustee Chairman and Chief Executive Officer, Carson Products
Chairman and Chief Company (1995-present). Director/Trustee, Phoenix Funds
Executive (1980-present). Trustee, Phoenix Duff & Phelps
Officer Institutional Mutual Funds (1996-present). Director,
Carson Products Equifax Corp. (1991-present), and Keystone International
Company Fund, Inc. (1989-present). Trustee, Keystone Liquid Trust,
64 Ross Road Keystone Tax Exempt Trust, Keystone Tax Free Fund, Master
Savannah, GA 31405 Reserves Tax Free Trust, and Master Reserves Trust.
Age: 57 Director/Trustee the National Affiliated Investment
Companies (until 1993). Director, Blue Cross/Blue Shield
(1989-1993) and First Union Bank of Georgia (1989-1993).
President, Morehouse College (1987-1994). Chairman and
Chief Executive Officer, Keith Enterprises (1992-1995).
15
<PAGE>
Philip R. McLoughlin* Trustee and President Director (1994-present) and Executive Vice President,
Age: 49 Investments (1987-present), Phoenix Home Life Mutual
Insurance Company. Director/Trustee and President, Phoenix
Funds (1989-present). Director (1983-present) and Chairman
(1995-present), Phoenix Investment Counsel, Inc. Director
(1984-present) and President (1990- present), Phoenix
Equity Planning Corporation. Director, Phoenix Realty
Group, Inc. (1994-present), Phoenix Realty Advisors, Inc.
(1987-present), Phoenix Realty Investors, Inc.
(1994-present), Phoenix Realty Securities, Inc.
(1994-present), Phoenix Founders, Inc. (1981-present),
PXRE Corporation (Delaware) (1985- present), Phoenix Re
Corporation (New York) (1985- 1992), World Fund
(1991-present). Director/Trustee, the National Affiliated
Investment Companies (until 1993). Director, Chairman and
Chief Executive Officer, National Securities & Research
Corporation (1993 present) and Director and President,
Phoenix Securities Group, Inc. (1993-present). Director
(1992-present) and President, W.S. Griffith & Co., Inc.
(1992-1994) and Director (1992-present) and President
(1992-1994) Townsend Financial Advisers, Inc.
(1992-present). Director and Vice President, PM Holdings,
Inc. (1985-present).
Everett L. Morris Trustee Vice President, W. H. Reaves and Company.
164 Laird Road Director/Trustee, Duff & Phelps Utilities Tax-Free Income
Colts Neck, NJ 07722 Inc., Duff & Phelps Utility and Corporate Bond Fund Inc.,
Age: 67 Duff & Phelps Mutual Funds. Director, Public Service
Enterprise Group Incorporated (until 1993). President and
Chief Operating Officer, Enterprise Diversified Holdings
Incorporated (until 1993). Senior Executive Vice President
and Chief Financial Officer, Public Service Electric and
Gas Company (until 1992). Director, First Fidelity Bank,
N.A., N.J. (until 1991).
James M. Oates Trustee Director, Phoenix Duff & Phelps Corporation
Managing Director (1995-present). Director/Trustee, Phoenix Funds
The Wydown Group (1987-present). Trustee, Phoenix Duff & Phelps
50 Congress Street Institutional Mutual Funds (1996-present). Director,
Suite 1000 Govett Worldwide Opportunities Funds, Inc. (1991-
Boston, MA 02109 present), Blue Cross and Blue Shield of New Hampshire
Age: 49 (1994-present), Investors Financial Services Corporation
(1995-present), and Investors Bank & Trust Corporation
(1995-present). Director/ Trustee, the National Affiliated
Investment Companies (until 1993). Director and President
(1984-1994) and Chief Executive Officer (1986- 1994),
Neworld Bank. Director, Savings Bank Life Insurance
Company (1988-1994). Stifel Financial Corporation
(1986-1995).
16
<PAGE>
Calvin J. Pedersen* Trustee President and Chief Operating Officer of Phoenix Duff &
Phoenix Duff & Phelps Phelps Corporation. Chairman of the Board of Directors,
Corporation Duff & Phelps Investment Management Co. Director,
55 East Monroe Street President and Chief Executive Officer, Duff & Phelps
Chicago, IL 60603 Utilities Tax-Free Income Inc., Duff & Phelps Utility and
Age: 54 Corporate Bond Fund Inc., Duff & Phelps Mutual Funds.
President and Chief executive Officer, Duff & Phelps
Utilities Income Inc.
Philip R. Reynolds Trustee Director/Trustee, Phoenix Funds (1984- present). Trustee,
43 Montclair Drive Phoenix Duff & Phelps Institutional Mutual Funds
West Hartford, CT (1996-present). Director, Vestaur Securities, Inc.
06107 (1972-present). Trustee and Treasurer, J. Walton Bissell
Age: 68 Foundation, Inc. (1988-present). Director/ Trustee, the
National Affiliated Investment Companies (until 1993).
Herbert Roth, Jr. Trustee Director/Trustee, Phoenix Funds (1980-present). Director,
134 Lake Street Boston Edison Company (1978-present), Phoenix Home Life
P.O. Box 909 Mutual Insurance Company (1972-present), Landauer, Inc.
Sherbom, MA 01770 (medical services) (1970-present), Tech Ops./Sevcon, Inc.
Age: 67 (electronic controllers) (1987-present), Key Energy Group
(oil rig service) (1988-1993), and Mark IV Industries
(diversified manufacturer) (1985-present). Director/
Trustee, the National Affiliated Investment Companies
(until 1993).
Richard E. Segerson Trustee Director/Trustee, Phoenix Funds (1993-present). Trustee,
102 Valley Road Phoenix Duff & Phelps Institutional Mutual Funds
New Canaan, CT 06840 (1996-present). Vice President and General Manager, Coats
Age: 50 & Clark, Inc. (1991-1993). Director/ Trustee, the National
Affiliated Investment Companies (until 1993).
Lowell P. Weicker, Jr. Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
Dresing Lierman Phoenix Duff & Phelps Institutional Mutual Funds
Weicker (1996-present). Chairman, Dresing Lierman Weicker
6931 Arlington Road (1995-present). Director, UST Inc. (1995- present) and
Suite 501 HPSC, Inc. (1995-present). Governor of the State of
Bethesda, MD 20814 Connecticut (1991-1995). President and Chief Executive
Age: 64 Officer, Research! America (1989-1990).
[OFFICERS TO COME]
</TABLE>
*Indicates that the Trustee is an "interested person" of the Fund within the
meaning of the definition set forth in Section 2(a)(19) of the 1940 Act.
For services on the Board of Trustees of the Fund, each Trustee who is not
a full-time employee of the Adviser or any of its affiliates currently
receives a retainer at the annual rate of $36,000 and a fee of $2,000 per
joint meeting of the Boards. Each Trustee who serves on the Audit Committee
receives a retainer at the annual rate of $2,000 and a fee of $2,000 per
joint Audit Committee meeting attended. Each Trustee who serves on the
Nominating Committee receives an annual retainer at the annual rate of $1,000
and a fee of $1,000 per joint Nominating Committee meeting attended. Each
Trustee who serves on the Executive Committee and who is not an interested
person of the Fund receives a retainer at the annual rate of $1,000 and
$1,000 per joint Executive Committee meeting attended. Costs are allocated
equally to each of the series of the Phoenix Funds within the Phoenix Fund
complex (which includes the Fund). The foregoing does not include the
reimbursement of expenses incurred in connection with meeting attendance.
Officers and interested Trustees of the Fund are compensated for their
services by the Adviser and receive no compensation from the Fund.
17
<PAGE>
For the Fund's upcoming fiscal year, the Trustees will receive
approximately the following compensation:
<TABLE>
<CAPTION>
Total
Compensation
Pension or From Fund and
Aggregate Retirement Benefits Estimated Fund Complex
Compensation Accrued as Part Annual Benefits (____ Funds)
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
- ----------------------- ------------ ------------------- ---------------- -------------------
<S> <C> <C> <C> <C>
C. Duane Blinn
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Francis E. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Calvin J. Pedersen
Phillip R. Reynolds
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
</TABLE>
On , 1996, the Trustees and officers of the Fund beneficially
owned less than 1% of the outstanding shares of the Fund.
OTHER INFORMATION
Independent Accountants
[Price Waterhouse LLP] has been selected as the independent accountants for
the Fund. [Price Waterhouse LLP] audits the Fund's annual financial
statements and expresses an opinion thereon.
Custodian and Transfer Agent
Brown Brothers Harriman & Co. serves as custodian of the Fund's assets (the
"Custodian"); Equity Planning acts as Transfer Agent for the Fund (the
"Transfer Agent").
Report to Shareholders
The fiscal year of the Fund ends on March 31. The Fund will send financial
statements to its shareholders at least semiannually. An annual report
containing financial statements audited by the Fund's independent accountants
will be sent to shareholders each year.
Financial Statements
The financial statement for the Fund as of September [], 1996 is
incorporated herein by reference. The financial information relating to the
Fund is available by calling Equity Planning at (800) 243-4361, or by writing
to Equity Planning at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. A copy of the Fund's Annual Report must precede or
accompany this Statement of Additional Information.
18
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
PART C--OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements:
No financial statements have been included for the Fund.
(b) Exhibits:
<TABLE>
<CAPTION>
<S> <C>
(1) Declaration of Trust of the Registrant
(2) None
(3) None
(4) Reference is made to Article IV, Section 4.1 of Registrant's Declaration of Trust
(5)(a) Investment Advisory Agreement between Registrant and Phoenix-Aberdeen International
Advisors, LLC
(b)* Sub-Investment Advisory Agreement between Phoenix-Aberdeen International Advisors, LLC
and Phoenix Investment Counsel, Inc.
(c)* Sub-Investment Advisory Agreement between Phoenix-Aberdeen International Advisors, LLC
and Aberdeen Fund Managers, Inc.
(6) Distribution Agreement between Registrant and Phoenix Equity Planning Corporation
(7) None
(8)* Custodian Agreement between Registrant and Brown Brothers Harriman & Co.
(9)(a) Financial Agent Agreement between Registrant and Phoenix Equity Planning Corporation
(b) Transfer Agent Agreement between Registrant and Phoenix Equity Planning Corporation
(c)* Sub-Transfer Agent Agreement between Phoenix Equity Planning Corporation and State Street
Bank & Trust Company
(10)* Opinion of Counsel
(11)* Consent of Accountants
(12) None
(13)* Initial Capitalization Agreement
(14) None
(15) Rule 12b-1 Distribution Plans
(16)* Schedule for Computation of Performance Quotations
(17) Not yet applicable.
(18) Rule 18f-3 Dual Distribution Plan
</TABLE>
*To Be Filed By Amendment
Item 25. Persons Controlled by or under Common Control with Registrant.
As of the date hereof, to the best knowledge of the Registrant, no person is
directly or indirectly controlled by or under common control with the
Registrant.
Item 26. Number of Holders of Securities.
As of May 31, 1996:
<TABLE>
<CAPTION>
Number of
Title of Class Record-holders
- -------------------------- -----------------
<S> <C>
Asian Series
Class A Shares 0
Class B Shares 0
Global Small Cap Series
Class A Shares 0
Class B Shares 0
</TABLE>
C-1
<PAGE>
Item 27. Indemnification.
Please see Article V of the Registrant's Declaration of Trust (incorporated
herein by reference). Registrant's trustees and officers are covered by an
Errors and Omissions Policy. The Investment Advisory Agreement between the
Registrant and its Adviser provides in relevant part that, in the absence of
willful malfeasance, bad faith, gross negligence or reckless disregard of the
obligations or duties under the Investment Advisory Agreement on the part of
the Adviser, the Adviser shall not be liable to the Registrant or to any
shareholder for any act or omission in the course of or connected in any way
with rendering services or for any losses that may be sustained in the
purchase, holding or sale of any security.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, directors, officers and controlling
persons of the Registrant and the investment advisers and distributor
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 trustee, director, officer, or controlling
person of the Registrant and the principal underwriter in connection with the
successful defense or any action, suit or proceeding) is asserted against the
Registrant by such trustee, director, officer or controlling person or the
Distributor in connection with the shares 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 28. Business and Other Connections of Investment Adviser.
See "Management of the Fund" in the Prospectus for information regarding the
business of the Adviser. For information as to the business, profession,
vocation or employment of a substantial nature of directors and officers of
the Adviser, reference is made to the Adviser's current Form ADV (SEC File
Nos. [ ]) filed under the Investment Advisers Act of 1940, incorporated
herein by reference.
Item 29. Principal Underwriter.
(a) The sole principal underwriter for the Registrant is Phoenix Equity
Planning Corporation.
(b) The directors and executive officers of Phoenix Equity Planning
Corporation, the distributor for Registrant, are as follows:
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Underwriter with Registrant
- -------------------------- ---------------------------- ------------------------
<S> <C> <C>
Martin J. Gavin Director and Vice President
56 Prospect Street Executive Vice President
P.O. Box 150480
Hartford, CT 06115-0480
Michael E. Haylon Director Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and Trustee and President
One American Row President
Hartford, CT 06115
Leonard J. Saltiel Senior Vice President Vice President
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
William R. Moyer Senior Vice President, Vice President
100 Bright Meadow Blvd. Finance and Treasurer
P.O. Box 2200
Enfield, CT 06083-2200
G. Jeffrey Bohne Vice President, Secretary
100 Bright Meadow Blvd. Transfer Agent Operations
P.O. Box 2200
Enfield, CT 06083-2200
C-2
<PAGE>
Nancy G. Curtiss Vice President, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Maris Lambergs Vice President, None
100 Bright Meadow Blvd. National Sales Manager
P.O. Box 2200
Enfield, CT 06083-2200
James M. Dolan Vice President and Vice President
100 Bright Meadow Blvd. Compliance Officer;
P.O. Box 2200 Assistant Secretary
Enfield, CT 06083-2200
William J. Newman Senior Vice President None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Elizabeth R. Sadowinski Vice President, None
100 Bright Meadow Blvd. Field and Investor Services
P.O. Box 2200
Enfield, CT 06083-2200
Eugene A. Charon Controller None
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
Thomas N. Steenburg Secretary None
</TABLE>
One American Row
Hartford, CT 06115
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by each principal underwriter who is not an
affiliated person of the Registrant or an affiliated person of such
affiliated person, directly or indirectly, from the Registrant during the
Registrant's last fiscal year.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by the
Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules thereunder will be maintained at the offices of the Registrant located
at 56 Prospect Street, Hartford, CT 06115, or its investment adviser,
Phoenix-Aberdeen International Advisors, LLC, One American Row, Hartford, CT
06102, or the custodian, Brown Brothers Harriman & Co., 40 Water
Street,Boston, MA 02109. All such accounts, books and other documents
required to be maintained by the principal underwriter will be maintained at
Phoenix Equity Planning Corporation, 100 Bright Meadow Boulevard, Enfield,
Connecticut 06083.
Item 31. Management Services.
None.
Item 32. Undertakings.
(a) Not applicable.
(b) Registrant undertakes to file a post-effective amendment using
financial statements, which need not be certified, within four to six
months from the effective date of the Registrant's Registration
Statement with respect to the Fund.
(c) Registrant undertakes to furnish to each person to whom a prospectus
is delivered a copy of the Registrant's latest annual report to
shareholders upon request and without charge if the information called
for by Item 5A of Form N-1A is contained in such annual report.
(d) Registrant undertakes to provide the information specified pursuant to
Regulation S-K, Item 512 (Reg. S.229.512), as applicable, the terms of
which are incorporated herein by reference.
(e) Registrant undertakes to call a special meeting of shareholders for
the purpose of voting upon the question of removal of a trustee or
trustees and to assist in communications with other shareholders, as
required by Section 16(c) of the 1940 Act, if requested to do so by
holders of at least 10% of a Portfolio's outstanding shares.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the undersigned Trustees of the Registrant
have duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereto duly authorized in the City of Hartford, and State
of Connecticut on the 31st day of May, 1996.
PHOENIX-ABERDEEN SERIES FUND
By: /s/ Thomas N. Steenburg
Name: Thomas N. Steenburg
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated, on this 31st day of May, 1996.
<TABLE>
<CAPTION>
Signature Title
- ------------------------ ----------------------
<S> <C>
/s/ Richard J. Wirth Trustee
Richard J. Wirth
/s/ Thomas N. Steenburg Trustee
Thomas N. Steenburg
/s/ Nancy G. Curtiss Treasurer (Principal
Nancy G. Curtiss Financial and
Accounting Officer)
</TABLE>
S-1(c)
Exhibit 1 Declaration of Trust
<PAGE>
EXHIBIT 1
PHOENIX-ABERDEEN SERIES FUND
PROVISIONS
OF
DECLARATION OF TRUST
MAY 31, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I NAME, RESIDENT AGENT AND DEFINITIONS 4
Section 1.1 Name .............................................................. 4
Section 1.2 Resident Agent..................................................... 4
Section 1.3 Definitions........................................................ 4
(a) "Trust ................................................................ 4
(b) "Trustees" ............................................................ 4
(c) "Shares" .............................................................. 4
(d) "Series" .............................................................. 4
(e) "Class" ............................................................... 4
(f) "Shareholder".......................................................... 4
(g) "Investment Company Act"............................................... 4
(h) "Commission" .......................................................... 4
(i) "Declaration of Trust"................................................. 4
(j) "Vote of a Majority of the Outstanding Voting Securities".............. 4
ARTICLE II THE TRUSTEES ....................................................... 4
Section 2.1 Number, Designation, Election, Term, etc. ......................... 4
(a) Number and Election ................................................... 4
(b) Term .................................................................. 4
(c) Resignation and Retirement ............................................ 4
(d) Removal ............................................................... 5
(e) Vacancies ............................................................. 5
(f) Effect of Vacancy ..................................................... 5
(g) No Accounting ......................................................... 5
Section 2.2 Powers of Trustees ................................................ 5
(a) Investments ........................................................... 5
(b) Disposition of Assets ................................................. 5
(c) Ownership Powers ...................................................... 6
(d) Subscription .......................................................... 6
(e) Form of Holding ....................................................... 6
(f) Reorganization, etc.................................................... 6
(g) Voting Trusts, etc .................................................... 6
(h) Compromise ............................................................ 6
(j) Borrowing and Security ................................................ 6
(k) Insurance ............................................................. 6
Section 2.3 Action by Trustees ................................................ 6
Section 2.4 Certain Contract .................................................. 6
(a) Advisory .............................................................. 6
(b) Administration ........................................................ 7
(c) Financial Agency ...................................................... 7
(d) Distribution .......................................................... 7
(e) Custodian ............................................................. 7
(f) Transfer Agency ....................................................... 7
(g) Dividend Disbursing Agency ........................................... 7
(h) Shareholder Servicing ................................................. 7
Section 2.5 Certain Conflicts of Interest ..................................... 7
Section 2.6 Payment of Trust Expenses and Compensation of Trustees ............ 7
Section 2.7 Ownership of Assets of the Trust .................................. 8
2
<PAGE>
ARTICLE III SHARES............................................................. 8
Section 3.1 Description of Shares ............................................. 8
Section 3.2 Establishment and Designation of Series ........................... 8
(a) Assets Belonging to Series .......................................... 8
(b) Liabilities Belonging to Series ..................................... 9
(c) Dividends ........................................................... 9
(d) Liquidation ......................................................... 9
(e) Shareholder Voting .................................................. 9
(f) Redemption by Shareholder............................................ 9
(g) Repurchase .......................................................... 10
(h) Redemption by Trust ................................................. 10
(i) Net Asset Value ..................................................... 10
(j) Transfer ............................................................ 10
(k) Equality ............................................................ 10
(l) Fractions ........................................................... 10
(m) Exchange Privilege................................................... 10
Section 3.3 Establishment and Designation of Classes .......................... 10
Section 3.4 Ownership of Shares .............................................. 12
Section 3.5 Investments in the Trust .......................................... 12
Section 3.6 No Preemptive or Appraisal Rights ................................. 12
Section 3.7 Status of Shares and Limitation of Personal Liability ............. 12
ARTICLE IV SHAREHOLDERS' VOTING POWERS AND MEETINGS ........................... 12
Section 4.1 Voting Powers ..................................................... 12
Section 4.2 Meetings .......................................................... 12
Section 4.3 Record Dates ...................................................... 13
Section 4.4 Quorum and Required Vote .......................................... 13
Section 4.5 Action by Written Consent ......................................... 13
Section 4.6 Inspection of Records ............................................. 13
ARTICLE V LIMITATION OF LIABILITY: INDEMNIFICATION ............................ 13
Section 5.1 Trustees, Shareholders, etc. Not Personally Liable; Notice ........ 13
Section 5.2 Trustee's Good Faith Action; Expert Advice; No Bond or Surety ..... 13
Section 5.3 Indemnification of Shareholders ................................... 14
Section 5.4 Indemnification of Trustees, Officers, etc. ....................... 14
Section 5.5 Compromise Payment ................................................ 14
Section 5.6 Indemnification Not Exclusive, etc. ............................... 14
Section 5.7 Liability of Third Persons Dealing with Trustees .................. 14
ARTICLE VI MISCELLANEOUS ...................................................... 14
Section 6.1 Duration and Termination of Trust ................................. 14
Section 6.2 Reorganization .................................................... 15
Section 6.3 Amendments ........................................................ 15
Section 6.4 Filing of Copies; References; Headings ............................ 15
Section 6.5 Applicable Law .................................................... 15
</TABLE>
3
<PAGE>
THIS AGREEMENT AND DECLARATION OF TRUST (herein called "Declaration of
Trust") made at Greenfield, in the Commonwealth of Massachusetts on the
thirty-first day of May, 1996 by and between Thomas N. Steenburg and Richard
J. Wirth, whose addresses are 101 Munson Street, Greenfield, Massachusetts,
(hereinafter collectively called the "Trustees"), and such persons as may
from time to time become Shareholders of this Trust by purchasing or
otherwise acquiring shares of beneficial interest issued hereunder, is hereby
adopted to read in its entirety as follows:
THE TRUSTEES hereby agree and declare that they will hold all cash,
securities, and other property which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same
upon the following terms and conditions for the benefit of the holders from
time to time of shares of beneficial interest in the Trust.
ARTICLE I
NAME, RESIDENT AGENT AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as "Phoenix-Aberdeen Series
Fund" and the Trustees shall conduct the business of the Trust under that
name or such other name as they may from time to time determine.
Section 1.2 Resident Agent. To the extent required, the Trustees shall
have power to appoint a resident agent for the Trust in The Commonwealth of
Massachusetts, and from time to time to replace the resident agent so
appointed.
Section 1.3 Definitions. Whenever used herein, unless otherwise required
by the context or specifically provided:
<TABLE>
<CAPTION>
<S> <C>
(a) "Trust" refers to the Massachusetts business trust established by this Agreement and
Declaration of Trust, as amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named herein and their duly elected successors;
(c) "Shares" refers to the transferable units of interest into which beneficial interest in the
Trust or any Series of the Trust (as the context may require) shall be divided from time to
time;
(d) "Series" refers to the Series of Shares established and designated pursuant to the provisions
of Article III;
(e) "Class" refers to the Class of a Series of Shares established and designated pursuant to the
provisions of Article III;
(f) "Shareholder" means a record owner of Shares;
(g) The "Investment Company Act" refers to the Investment Company Act of 1940 and the rules and
regulations thereunder, all as amended from time to time;
(h) The term "Commission" shall mean the Securities and Exchange Commission;
(i) "Declaration of Trust" shall mean this Agreement and Declaration of Trust as amended or
restated from time to time;
(j) "Vote of a Majority of the Outstanding Voting Securities" means the lesser of (i) 67% of the
shares represented at a meeting at which more than 50% of the outstanding shares are
represented or (ii) more than 50% of the outstanding shares.
</TABLE>
ARTICLE II THE TRUSTEES
Section 2.1 Number, Designation, Election, Term, etc.
<TABLE>
<CAPTION>
<S> <C>
(a) Number and Election. At each meeting for the purpose, the Shareholders shall fix the number
of Trustees, to serve until the election and qualification of their successors, and shall at
such meeting elect the number of Trustees so fixed. The Trustees serving as such may increase
or decrease the number of Trustees to a number other than the number theretofore fixed. No
decrease in the number of Trustees shall have the effect of removing any Trustee from office
prior to the expiration of his term. However, the number of Trustees may be decreased in
conjunction with the removal of a Trustee pursuant to subsection (d) of this Section 2.1.
(b) Term. Each Trustee shall serve as a Trustee until the election and qualification of his
successor, or until such Trustee sooner dies, resigns, retires or is removed.
(c) Resignation and Retirement. Any Trustee may resign his trust or retire as a Trustee, by
written instrument signed by him and delivered to the remaining Trustees or to any officer of
the Trust. Such resignation or retirement shall take effect upon such delivery or upon such
later date as is specified in such instrument.
4
<PAGE>
(d) Removal. Any Trustee may be removed with or without cause at any time either by written
instrument, signed by at least two-thirds of the number of Trustees prior to such removal,
specifying the date upon which such removal shall become effective, or by the Shareholders at
any meeting called for the purpose.
(e) Vacancies. Any vacancy resulting from any reason, including without limitation the death,
resignation, retirement, removal or incapacity of any of the Trustees, or resulting from an
increase in the number of Trustees by the Trustees, may be filled by a majority of the
remaining Trustees through the appointment in writing of a successor Trustee to hold office
until the election and qualification of his successor, provided that immediately after filling
any such vacancy at least two-thirds (2/3) of the Trustees then holding office shall have been
elected to such office by the Shareholders at a meeting for the purpose. Such appointment of a
successor Trustee shall be effective upon the written acceptance of the person named therein
to serve as a Trustee and written agreement by such person to be bound by the provisions of
this Declaration of Trust whereupon the Trust estate shall vest in the new Trustee, together
with the continuing Trustees, without any further act or conveyance.
(f) Effect of Vacancy. The death, resignation, retirement, removal or incapacity of the Trustees,
or of any one of them, shall not operate to annul or terminate the Trust or to revoke or
terminate any existing agency or contract created or entered into pursuant to the terms of
this Declaration of Trust. During any vacancy a majority of the remaining Trustees may
exercise any and all of the powers of the Trustees hereunder. The determination of a vacancy
or vacancies in the number of Trustees by reason of death, resignation or disability when made
by the remaining Trustees and set forth in any instrument filling such vacancy or vacancies
shall be final and conclusive for all purposes.
(g) No Accounting. Except to the extent required by the Investment Company Act or under
circumstances which would justify his removal for cause, no person ceasing to be a Trustee as
a result of his death, resignation, retirement, removal or incapacity (nor the estate of any
such person) shall be required to make an accounting to the Shareholders or remaining Trustees
upon such cessation.
</TABLE>
Section 2.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility. Without limiting the foregoing, the Trustees may adopt
By-Laws not inconsistent with this Declaration of Trust providing for the
conduct of the business and affairs of the Trust and may amend and repeal
them to the extent that such By-Laws do not reserve the right to the
Shareholders; they may, as they consider appropriate, elect and remove
officers, appoint and terminate agents and consultants, and hire and
terminate employees, any one or more of the foregoing of whom may be a
Trustee, and may provide for the compensation of all of the foregoing; they
may appoint from their own number, and terminate, any one or more committees
consisting of two or more Trustees, including without implied limitation an
executive committee, which may, when the Trustees are not in session and
subject to the provisions of the Investment Company Act, exercise some or all
of the power and authority of the Trustees as the Trustees may determine; in
accordance with Section 2.4 they may retain one or more advisers,
administrators, financial agents and custodians and may authorize any such
custodian to employ sub-custodians or agents and to deposit all or any part
of the Trust's assets in a system or systems for the central handling of
securities and debt instruments, retain one or more transfer, dividend,
accounting or Shareholder servicing agents, provide for the distribution of
Shares by the Trust through one or more distributors, principal underwriters
or otherwise, set record dates of times for the determination of Shareholders
or certain of them with respect to various matters; they may compensate or
provide for the compensation of the Trustees, officers, advisers,
administrators, financial agents, custodians, other agents, consultants and
employees of the Trust or the Trustees on such terms as they deem
appropriate; and in general they may delegate to any officer of the Trust, to
any committee of the Trustees and to any employee, adviser, administrator,
distributor, financial agent, custodian, transfer agent, dividend disbursing
agent, or any other agent or consultant of the Trust such authority, powers,
functions and duties as they consider desirable or appropriate for the
conduct of the business and affairs of the Trust, including without implied
limitation the power and authority to act in the name of the Trust and of the
Trustees, to sign documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing but subject to the fundamental investment
policies of the Trust and to the extent not inconsistent with the Investment
Company Act or other applicable law, the Trustees shall have the power and
authority:
<TABLE>
<CAPTION>
<S> <C>
(a) Investments. To invest and reinvest from time to time cash and other assets of the Trust in
any type or class of security or debt instrument including Shares of Series established
pursuant to the terms of this Declaration of Trust; and to hold cash or other assets of the
Trust uninvested in whole or in part without in any event being bound or limited by any
present or future law, rule of court or custom in regard to investments by trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage, hypothecate, write options
on and lease any or all of the assets of the Trust;
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<PAGE>
(c) Ownership Powers. To vote or give assent, or exercise any rights of ownership, with respect to
stock or other securities, debt instruments or property ownership, and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with respect to securities, debt
instruments or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or otherwise which in any manner
arise out of ownership of securities or debt instruments;
(e) Form of Holding. Subject to the provisions of Section 2.7, to hold any security, debt
instrument or property in a form not indicating any trust, whether in bearer, unregistered or
other negotiable form, or in the name of the Trustees or of the Trust or in the name of a
custodian, sub-custodian or other depository or a nominee or nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security or debt instrument of which
is or was held in the Trust; to consent to any contract, lease, mortgage, purchase or sale of
property by such corporation or issuer, and to pay calls or subscriptions with respect to any
security or debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any securities or debt instruments in acting
through a committee, depositary, voting trustee or otherwise, and in that connection to
deposit any security or debt instrument with, or transfer any security or debt instrument to,
any such committee, depositary or trustee, and to delegate to them such power and authority
with relation to any security or debt instrument (whether or not so deposited or transferred)
as the Trustees shall deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depositary or trustee as the Trustees shall deem
proper.
(h) Compromise. To compromise, arbitrate or otherwise adjust claims in favor of or against the
Trust or any matter in controversy, including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or limited partnerships and any other
combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and pledge the assets of the Trust or
any part thereof to secure obligations arising in connection with such borrowing; and
(k) Insurance. To purchase and pay for entirely out of Trust property such insurance as they may
deem necessary or appropriate for the conduct of the business, including, without limitation,
insurance covering each officer and employee of the Trust against larceny and embezzlement and
insurance covering each Trustee with respect to any errors or omissions which may be committed
or omitted by such Trustee.
</TABLE>
Section 2.3 Action by Trustees. Except as otherwise provided by the
Investment Company Act or other applicable law or this Declaration of Trust,
any action taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of Trustees (a quorum, consisting of at least a majority
of the Trustees then in office, being present), within or without
Massachusetts, including any meeting held by means of a conference telephone
or other communications equipment by means of which all persons participating
in the meeting can hear each other at the same time and participation by such
means shall constitute presence in person at a meeting, or by written
consents of a majority of the Trustees then in office.
Section 2.4 Certain Contracts. Subject to compliance with the provisions
of the Investment Company Act, but notwithstanding any limitations of present
and future law or custom in regard to delegation of powers by trustees
generally, the Trustees may, at any time and from time to time and without
limiting the generality of their powers and authority otherwise set forth
herein, enter into one or more contracts with any one or more corporations,
trusts, associations, partnerships, limited partnerships, other types of
organizations, or individuals ("Contracting Party") to provide for the
performance and assumption of some or all of the following services, duties
and responsibilities to, for or of the Trust and/or the Trustees, and to
provide for the performance and assumption of such other services, duties and
responsibilities in addition to those set forth below as the Trustees may
determine to be appropriate;
<TABLE>
<CAPTION>
<S> <C>
(a) Advisory. Subject to the general supervision of the Trustees and in conformity with the stated
policy of the Trustees with respect to the investments of the Trust or of the assets belonging
to any Series, to manage such investments and assets, to make investment decisions with
respect thereto, and to place purchase and sale orders for portfolio transactions relating to
such investments and assets;
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<PAGE>
(b) Administration. Subject to the general supervision of the Trustees and in conformity with any
policies of the Trustees with respect to the operations of the Trust, to provide all or any
part of the administrative and clerical personnel, office space and office equipment and
services appropriate for the efficient administration and operation of the Trust;
(c) Financial Agency. Subject to the general supervision of the Trustees and in conformity with
any policies of the Trustees with respect to the operations of the Trust, to provide financial
and accounting services whether with respect to the Trust's assets, or otherwise, including,
but not limited to, the preparation and supervision of the Trust's financial statements and
reports, bookkeeping services, pricing services, periodic reports to Shareholders and others,
supporting schedules in connection with any audit of the Trust's business or operations, and
registration statements, prospectuses and other documents required to be filed under all
applicable Federal and state laws and to provide many services involved in registering and
maintaining the registration of the Trust and of its Shares with the Commission and
registering or qualifying its Shares under state or other securities laws or any services
involved in preparing reports to Shareholders;
(d) Distribution. To distribute the Shares of the Trust; to be principal underwriter of such
Shares or to act as agent of the Trust in the sale of Shares and the acceptance or rejection
of orders for the purchase of Shares;
(e) Custodian. To maintain custody of the property of the Trust and accounting records in
connection therewith;
(f) Transfer Agency. To maintain records of the ownership of outstanding Shares, the issuance and
redemption and the transfer thereof;
(g) Dividend Disbursing Agency. To disburse any dividends and other distributions declared by the
Trustees and in accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends; and
(h) Shareholder Servicing. To provide service with respect to the relationship of the Trust and
its Shareholders, records with respect to Shareholders and their Shares, and similar matters.
</TABLE>
Section 2.5 Certain Conflicts of Interest. The same person may be the
Contracting Party for some or all of the services, duties and
responsibilities to, for and of the Trust and/or the Trustees, and the
contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the
Investment Company Act relating to the standard of duty of and the rights to
indemnification of the Contracting Party and others, as the Trustees may
determine.
The fact that:
<TABLE>
<CAPTION>
<S> <C>
(i) any of the Shareholders, Trustees or officers of the Trust is a shareholder, director,
officer, partner, trustee, employee, manager, adviser, principal underwriter, distributor or
agent of or for any Contracting Party, or of or for any parent or affiliate of any Contracting
Party, or that the Contracting Party or any parent or affiliate thereof is a Shareholder or
has an interest in the Trust, or that
(ii) any Contracting Party may have a contract providing for the rendering of any similar services
to one or more other corporations, trusts, associations, partnerships, limited partnerships or
other organizations, or has other business or interests shall not affect the validity of any
contract for the performance and assumption of services, duties and responsibilities to, for
or of the Trust and/or the Trustees or disqualify any Shareholder, Trustee or officer of the
Trust from voting upon or executing the same or create any liability or accountability to the
Trust or its Shareholders, provided that in the case of any relationship or interest referred
to in the preceding clause (i) on the part of any Trustee or officer of the Trust either (x)
the material facts as to such relationship or interest have been disclosed to or are known by
the Trustees not having any such relationship or interest and the contract involved is
approved in good faith by a majority of such Trustees not having such relationship or interest
(even though such unrelated or disinterested Trustees are less than a quorum of all the
Trustees), or (y) the material facts as to such relationship or interest and as to the
contract have been disclosed to or are known by the Shareholders entitled to vote thereon and
the contract involved is specifically approved in good faith by vote of the Shareholders, and
(z) the specific contract involved is fair to the Trust as of the time authorized, approved or
ratified by the Trustees or by the Shareholders.
</TABLE>
Section 2.6 Payment of Trust Expenses and Compensation of Trustees The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust, or partly out of principal and partly out of income, and
to charge or allocate the same to, between or among such one or more of the
Series that may be established and designated pursuant to Article III, as the
Trustees deem fair, any or all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with the
management thereof, including, but not limited to, the Trustees' compensation
and such expenses and charges for the services of the Trust's officers,
employees, adviser, administrator, financial agent, distributor, principal
underwriter, auditor, counsel, custodian, transfer agent, dividend disbursing
agent, Shareholder servicing agent, and such other agents, consultants,
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<PAGE>
and independent contractors and such other expenses and charges including
non-recurring expenses and other expenses which may be deemed extraordinary
expenses under all applicable Federal or State law, as the Trustees may deem
necessary or proper to incur. The expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust may be paid from
sources other than the Trust assets. Without limiting the generality of any
other provision hereof, the Trustees shall be entitled to reasonable
compensation from the Trust or from other sources that may be available for
their services as Trustees.
Section 2.7 Ownership of Assets of the Trust. Notwithstanding the
provisions of subsection (e) of Section 2.2, title to all of the assets of
the Trust shall at all times be considered as vested in the Trustees as joint
tenants.
ARTICLE III SHARES
Section 3.1 Description of Shares. The beneficial interest in the Trust
shall be divided into an unlimited number of Shares, with a par value of one
dollar each. The Trustees shall have the authority from time to time to
establish and designate one or more Series of Shares (including, without
limitation, those Series specifically established and designated in Section
3.2), and/or one or more Classes of Shares of a Series (including, without
limitation, those Classes of Shares specifically established and designated
in Section 3.3), as they deem necessary or desirable. The Trustees may issue
Shares of any Series (or Class thereof) for such consideration and on such
terms as they may determine (or for no consideration if pursuant to a Share
dividend or split), all without action or approval of the Shareholders. All
Shares when so issued on the terms determined by the Trustees shall be fully
paid and non-assessable. The Trustees may classify or reclassify any unissued
Shares or any Shares previously issued and reacquired of any Series into one
or more Series (or Class thereof) that may be established and designated from
time to time. The Trustees may hold as treasury Shares (of the same or some
other Series or Class), reissue for such consideration and on such terms as
they may determine, or cancel, at their discretion from time to time, any
Shares of any Series (or Class thereof) reacquired by the Trust.
The Trustee may from time to time close the transfer books or establish
record dates and times for the purposes of determining the holders of Shares
entitled to be treated as such, to the extent provided or referred in Section
3.4.
The establishment and designation of any Series of Shares (or Class
thereof) in addition to those established and designated in Sections 3.2 and
3.3 shall be effective upon the execution by a majority of the then Trustees
of an instrument setting forth such establishment and designation and the
relative rights and preferences of such Series, or Class, as the case may be,
or as otherwise provided in such instrument. At any time that there are no
Shares outstanding, of any particular Series (or Class thereof) previously
established and designated the Trustees may by an instrument executed by a
majority of their number abolish that Series (or Class thereof) and the
establishment and designation thereof.
Any Trustee, officer or other agent of the Trust and any organization in
which any such person is interested may acquire, own, hold and dispose of
Shares of any Series of the Trust (or Class thereof) to the same extent as if
such person were not a Trustee, officer or other agent of the Trust or were
not such an organization; and the Trust may issue and sell or cause to be
issued and sold and may purchase Shares of any Series (or Class thereof) from
any such person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the sale or
purchase of Shares of such Series generally.
Section 3.2 Establishment and Designation of Series. Without limiting the
authority of the Trustees set forth in Section 3.1 to establish and designate
any further Series, the following two Series are hereby established and
designated: "Phoenix-Aberdeen Asian Fund," and "Phoenix-Aberdeen Global Small
Cap Fund." Shares of each Series established and designated in this Section
3.2 and any Shares of any further Series that may from time to time be
established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Series at the time of
establishing and designating the same) have the following relative rights and
preferences, subject to Article III, Section 3.3, below:
<TABLE>
<CAPTION>
<S> <C>
(a) Assets Belonging to Series. All consideration received by the
Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds
or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to
that Series for all purposes, subject only to the rights of
creditors, and shall be so recorded upon the books of account
of the Trust. Such consideration, assets, income, earnings,
profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, together with any
General Items, as defined herein, allocated to that Series as
provided herein, are herein referred to as "assets belonging
to" that Series. In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to
any particular Series (collectively "General Items"), the
Trustees shall allocate such General Items to and among any
one or more of the Series established and designated from
time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable; and any
General Items so allocated to a particular Series shall
belong to that Series. Each such allocation by the Trustees
shall be conclusive and binding upon the Shareholders of all
Series for all purposes.
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<PAGE>
(b) Liabilities Belonging to Series. The assets belonging to each
particular Series shall be charged with the liabilities of
the Trust in respect to that Series and all expenses, costs,
charges and reserves attributable to that Series, and any
general liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as belonging to
any particular Series shall be allocated and charged by the
Trustees to and among any one or more of the Series
established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion
deem fair and equitable. The liabilities, expenses, costs,
charges and reserves allocated and so charged to a Series are
herein referred to as "liabilities belonging to" that Series.
Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon
the holders of all Series for all purposes. The Trustees
shall have full discretion, to the extent not inconsistent
with the Investment Company Act, to determine which items
shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a
particular Series may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise
pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, to
the holders of Shares of that Series, from such of the income
and capital gains, accrued or realized, from the assets
belonging to that Series as the Trustees may determine, after
providing for actual and accrued liabilities belonging to
that Series. All dividends and distributions on Shares of a
particular Series shall be distributed pro rata to the
holders of that Series in proportion to the number of Shares
of that Series held by such holders at the date and time of
record established for the payment of such dividends or
distributions, except that in connection with any dividend or
distribution program or procedure the Trustees may determine
that no dividend or distribution shall be payable on Shares
as to which the Shareholder's purchase order and/or payment
have not been received by the time or times established by
the Trustees under such program or procedure. Such dividends
and distributions may be made in cash or Shares or a
combination thereof as determined by the Trustees or pursuant
to any program that the Trustees may have in effect at the
time for the election by each Shareholder of the mode of the
making of such dividend or distribution to that Shareholder.
Any such dividend or distribution paid in Shares will be paid
at the net asset value thereof as determined in accordance
with subsection (i) of this Section 3.2.
(d) Liquidation. In the event of the liquidation or dissolution
of the Trust or redemption of all of the Shares of any
Series, the Shareholders of each Series that has been
established and designated shall be entitled to receive, as a
Series, when and as declared by the Trustees, the excess of
the assets belonging to that Series over the liabilities
belonging to that Series. The assets so distributable to the
Shareholders of any Series shall be distributed among such
Shareholders in proportion to the number of shares of that
Series held by them and recorded on the books of the Trust.
The redemption of all the Shares of any particular Series may
be authorized by a vote of a majority of the Trustees then in
office subject to the approval of a Vote of a Majority of the
Outstanding Voting Securities of that Series.
(e) Shareholder Voting. On each matter submitted to a vote of the
Shareholders, each holder of a Share shall be entitled to one
vote for each Share, and a proportionate vote for each
fractional Share, standing in his name on the books of the
Trust irrespective of the Series thereof and all Shares of
all Series shall vote as a single class ("Single Class
Voting"); provided, however, that (a) as to any matter with
respect to which a separate vote of any Series is required,
such requirement as to a separate vote by that Series shall
apply in lieu of Single Class Voting as described above; (b)
in the event that the separate vote requirement referred to
in (a) above applies with respect to one or more Series,
then, subject to (c) below, the Shares of all Series entitled
to vote and to which the separate vote requirement referred
to in (a) above does not apply shall vote as a single class;
and (c) as to any matter which affects (within the meaning of
Rule 18f-2 under the Investment Company Act) the interest of
one or more but not all Series, only the holders of Shares of
the one or more affected Series shall be entitled to vote.
(f) Redemption by Shareholder. Each holder of Shares of a
particular Series, upon request to the Trust and compliance
with appropriate transfer requirements, shall be entitled to
require the Trust to redeem all or any part of the shares of
that Series standing in the name of such holder on the books
of Trust at a redemption price equal to the net asset value
per Share of that Series next determined in accordance with
subsection (i) of this Section 3.2 after the receipt in good
order of the request for redemption.
Notwithstanding the foregoing, the Trust may postpone
payment of the redemption price and may suspend the right of
the holders of shares of any Series to require the Trust to
redeem Shares of that Series during any period or at any time
when and to the extent permissible under the Investment
Company Act.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(g) Repurchase. The Trust may maintain, or authorize its agent to maintain, an offer to repurchase
its outstanding Shares. During any period when such an offer is being maintained, each Share
for which a repurchase order is received shall be repurchased at a price equal to the net
asset value per Share next determined in accordance with subsection (i) of this Section 3.2
after receipt of such repurchase order less such amount not in excess of 1% of such net asset
value as the Trustees may determine.
(h) Redemption by Trust. Each Share of each Series that has been established and designated is
subject to redemption by the Trust at the redemption price which would be applicable if such
Share was then being redeemed by the Shareholder pursuant to subsection (f) of this Section
3.2 at any time if the Trustees determine in their sole discretion that such redemption is in
the best interest of the holders of the Shares, or any Series thereof, of the Trust, and upon
such redemption the holders of the Shares so redeemed shall have no further right with respect
thereto other than to receive payment of such redemption price.
(i) Net Asset Value. Except as otherwise provided herein, the net asset value per Share of any
Series shall be the quotient obtained by dividing the value of the net assets of that Series
(being the value of the assets belonging to that Series less the liabilities belonging to that
Series) by the total number of Shares of that Series outstanding, all determined in accordance
with the method and procedures established by the Trustees from time to time.
(j) Transfer. All Shares of each particular Series shall be transferable, but transfers of Shares
of a particular Series will be recorded on the Share transfer records of the Trust applicable
to that Series only at such times as may be permitted by the Trustees.
(k) Equality. All Shares of each particular Series shall represent an equal proportionate interest
in the assets belonging to that Series (subject to the liabilities belonging to that Series),
and each Share of any particular Series shall be equal to each other Share of that Series; but
the provisions of this sentence shall not restrict any distinctions permissible under
subsection (c) of this Section 3.2 that may exist with respect to dividends and distributions
on Shares of the same Series. The Trustees may from time to time divide or combine the Shares
of any particular Series into a greater or lesser number of Shares of that Series without
thereby changing the proportionate beneficial interest in the assets belonging to that Series
or in any way affecting the rights of Shares of any other Series.
(l) Fractions. Any fractional Share of any Series, if any such fractional Share is outstanding,
shall carry proportionately all the rights and obligations of a whole Share of that Series,
including rights with respect to voting, receipt of dividends and distributions, redemption of
Shares, and liquidation of the Trust.
(m) Exchange Privilege. Subject to compliance with the requirements of the Investment Company Act,
the Trustees shall have the authority to provide that holders of Shares of any Series shall
have the right to exchange said Shares for Shares of one or more other Series of Shares in
accordance with such requirements and procedures as may be established by the Trustees.
</TABLE>
Section 3.3 Designation and Establishment of Classes. The Trustees, in
their discretion, may authorize the division of the Shares of any Series into
two or more Classes, and the different Classes shall be established and
designated, the variations in the relative rights and preferences as between
the different Classes shall be fixed and determined, by the Trustees;
provided, that all Shares of any Series shall be identical to all other
Shares of the same Series, except, subject to the provisions of this Section
3.3, that there may be variations between different classes as to allocation
of expenses, rights of redemption, special and relative rights as to
dividends and on liquidation, conversion rights, and conditions under which
the several Classes shall have separate voting rights. All references to
Shares in this Declaration shall be deemed to refer to Shares of any or all
Classes as the context may require.
<TABLE>
<CAPTION>
<S> <C>
(a) Without in any manner limiting the rights of the Trustees set forth in the immediately preceding
paragraph, the Trustees hereby divide the Shares of each of the Series described in Section 3.2,
above, into two Classes. The Classes of each such respective Series, so established, shall be
designated as "Class A Shares" and "Class B Shares". The following preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms
and conditions of redemption shall pertain to all Shares in each of the foregoing Classes:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
(1) The assets belonging to each Class shall be invested in the same investment portfolio as
the applicable Series.
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<PAGE>
(2) The dividends and distributions of investment income and capital gains with respect to each
Class shall be in such amounts as may be declared from time to time by the Trustees, and
the dividends and distributions of each Class of a Series may vary from dividends and
distributions of investment income and capital gains with respect to the other Class of
that Series to reflect differing allocations of the expenses of the Trust between the
holders of the two classes of such Series and any resultant differences between the net
asset value per share of the two classes of such Series, to such extent and for such
purposes as the Trustees may deem appropriate. The allocation of investment income or
capital gains and expenses and liabilities of each Series between the Class A Shares and
the Class B Shares shall be determined by the Trustees in a manner that is consistent with
Rule 18f-3 under the Investment Company Act.
(3) The holders of Class A Shares and Class B Shares shall have (i) exclusive voting rights
with respect to provisions of any distribution plan adopted by the Trust pursuant to Rule
12b-1 under the Investment Company Act (a "Plan") applicable to each respective Class of a
particular Series, and (ii) no voting rights with respect to provisions of any Plan
applicable to the other Class of that Series, any other Series, or with regard to any other
matter submitted to a vote of shareholders of the Trust which does not affect holders of
that respective Class of such Series.
(4)(i) Each Class B Share, other than a share purchased through the automatic reinvestment of a
dividend or a distribution with respect to Class B Shares, shall be converted
automatically, and without any action or choice on the part of the holder thereof, into
Class A Shares on the date that is the first business day following the month in which the
eighth anniversary date of the date of issuance of the Class B Share falls (the "Conversion
Date"). With respect to Class B Shares issued in an exchange or series of exchanges for
shares of shares of beneficial interest or common stock, as the case may be, of another
investment company or class or series thereof registered under the Investment Company Act
pursuant to an exchange privilege granted by the Trust, the date of issuance of the Class B
Shares for the purposes of the immediately preceding sentence shall be the date of issuance
of the original shares of beneficial interest or common stock, as the case may be.
(ii) Each Class B Share acquired through the automatic reinvestment of a dividend or a
distribution with respect to Class B Shares shall be segregated in a separate sub-account.
Each time any Class B Shares in a shareholder's Fund account (other than those in the
aforedescribed applicable sub-account) convert to Class A Shares, an equal pro rata portion
of the Class B Shares then in the sub-account will also convert to Class A Shares without
any action or choice on the part of the holder thereof. The portion will be determined by
the ratio that the shareholder's Class B Shares converting to Class A Shares bears to the
shareholder's total Class B Shares not acquired through dividends and distributions.
(iii) The conversion of Class B Shares to Class A Shares is subject to the continuing
availability of an opinion of counsel or a ruling from the Internal Revenue Service that
payment of different dividends on Class A Shares and Class B Shares does not result in the
Trust's dividends or distributions constituting "preferential dividends" under the Internal
Revenue Code of 1986, as amended, and that the conversion of shares does not constitute a
taxable event under federal income tax law.
(iv) The number of shares of Class A Shares into which a share of Class B Shares is converted
pursuant to paragraphs (a) (4)(i) and (a) (4)(ii) hereof shall equal the number (including
for this purpose fractions of a Share) obtained by dividing the net asset value per share
of the Class B Shares (for the purposes of sales and redemptions thereof on the Conversion
Date) by the net asset value per share of the Class A Shares (for the purposes of sales and
redemptions thereof on the Conversion Date).
(v) On the Conversion Date, the Class B Shares converted into shares of Class A Shares will
cease to accrue dividends and will no longer be deemed outstanding and the rights of the
holders thereof (except the right to receive (i) the number of shares of Class A Shares
which have been converted and (ii) declared but unpaid dividends as of the Conversion Date)
will cease. To the extent that Share certificates are issued, certificates representing
Class A Shares resulting from the conversion need not be issued until certificates
representing Class B Shares converted, if issued, have been received by the Trust or its
agent duly endorsed for transfer.
11
<PAGE>
(5) The net asset value of a Share shall reflect all indebtedness, expenses and liabilities
attributable to each applicable Class within each respective Series. The net asset value of
a Share shall be determined by dividing the net asset value of each applicable Class of a
particular Series by the number of Shares of that Class outstanding within that Series.
Notwithstanding the foregoing, Shares of each Class shall represent an equal proportionate
interest in the assets belonging to the applicable Class within that Series, subject to the
liabilities of that particular Class. Shares of each Class shall also represent an interest
in the assets belonging to such Series which shall be proportionate to the relative
aggregate net asset value of such Class relative to the aggregate net asset value of the
other Class within said Series, subject to the liabilities of that particular Series.
</TABLE>
Section 3.4 Ownership of Shares The ownership of Shares shall be recorded
on the books of the Trust or of a transfer or similar agent for the Trust,
which books shall be maintained separately for the Shares of each Series (and
Class thereof) that has been established and designated. No certificates
certifying the ownership of Shares need be issued except as the Trustees may
otherwise determine from time to time. The Trustees may make such rules as
they consider appropriate for the issuance of Share certificates, the use of
facsimile signatures, the transfer of Shares, and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar agent, as
the case may be, shall be conclusive as to who are the Shareholders and as to
the number of Shares of each Series (and Class thereof) held from time to
time by each such Shareholder.
Section 3.5 Investments in the Trust. The Trustees may accept investments
in the Trust from such persons and on such terms and for such consideration,
not inconsistent with the provisions of the Investment Company Act, as they
from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, transfer agent or other person to accept orders for
the purchase of Shares that conform to such authorized terms and to reject
any purchase orders for Shares whether or not conforming to such authorized
terms.
Section 3.6 No Preemptive or Appraisal Rights. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust. Shareholders shall have no appraisal rights
other than as may from time to time be provided by applicable law.
Section 3.7 Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in
this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and
to have become a party hereto. Ownership of Shares shall not entitle the
Shareholder to any title in or to the whole or any part of the Trust property
or right to call for a partition or division of the same or for an
accounting. The Trust shall not be deemed or otherwise construed to be a
partnership nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees nor any officer, employee or
agent of the Trust shall have any power to bind personally any Shareholder
nor, except as specifically provided herein, to call upon any Shareholder for
the payment of any sum of money or assessment whatsoever other than such as
the Shareholder may at any time agree to pay.
ARTICLE IV SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 4.1 Voting Powers. The Shareholders shall have power to vote only
(i) for the election or removal of Trustees as provided in Section 2.1, (ii)
with respect to any contract with a Contracting Party as provided in Section
2.4 as to which Shareholder approval is required by the Investment Company
Act, (iii) with respect to any termination or reorganization of the Trust or
any Series to the extent and as provided in Sections 6.1 and 6.2, (iv) with
respect to any amendment of this Declaration of Trust to the extent and as
provided in Section 6.3, (v) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
and (vi) with respect to such additional matters relating to the Trust as may
be required by the Investment Company Act, this Declaration of Trust or any
registration of the Trust with the Commission or state regulatory agency, or
as the Trustees may consider necessary or desirable. There shall be no
cumulative voting in the election of Trustees. Shares may be voted by proxy.
A proxy purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger. At any time when no Shares
of a Series are outstanding, the Trustees may with respect to that Series
exercise all rights of Shareholders and may take any action required by law
or this Declaration of Trust to be taken by Shareholders with respect to that
Series.
Section 4.2 Meetings. There shall be such meetings of Shareholders of the
Trust as may be required by the Investment Company Act or as may be called by
the Trustees, at the office of the Trust or at such other place as may be
designated in the call thereof, which call shall made by the Trustees. In the
event that any such meeting is not held on the date fixed in the notice
thereof, whether the omission be by oversight or otherwise, a subsequent
meeting may be called by the Trustees and held in lieu of the original
meeting, with the same effect as though held on such date. Meetings may also
be called by the Trustees from time to time for the purpose of taking action
upon any matter requiring the vote or authority of the Shareholders as herein
provided or upon any other matter deemed by the Trustees to be necessary or
desirable. Written notice of any meeting of Shareholders shall be given or
caused to be given by the Trustees by mailing such notice at least seven days
before such meeting, postage prepaid, stating
12
<PAGE>
the time, place and purpose of the meeting, to each Shareholder at the
Shareholder's address as it appears on the records of the Trust. If the
Trustees shall fail to call or give notice of any meeting of Shareholders for
a period of 60 days after written application by Shareholders holding at
least 10% of the Shares then outstanding requesting a meeting be called for a
purpose requiring action by the Shareholders as provided herein, then
Shareholders holding at least 10% of the Shares then outstanding may call and
give notice of such meeting, and thereupon the meeting shall be held in the
manner provided for herein in case of call thereof by the Trustees.
Section 4.3 Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time close the
transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine;
or without closing the transfer books the Trustees may fix a date and time
not more than 60 days prior to the date of any meeting of Shareholders or
other action as the date and time of record for the determination of
Shareholders entitled to vote at such meeting or any adjournment thereof or
to be treated as Shareholders of record for purposes of such action and no
Shareholder becoming such after that date and time shall be so entitled to
vote at such meeting or any adjournment thereof or to be treated as a
Shareholder of record for purposes of such other action.
Section 4.4 Quorum and Required Vote. A majority of the Shares entitled to
vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting, without the necessity of further notice. A
majority of the Shares voted, at a meeting at which a quorum is present,
shall decide any questions and a plurality shall elect a Trustee, except when
a different vote is provided for by any provision of the Investment Company
Act or other applicable law or by this Declaration of Trust.
Section 4.5 Action by Written Consent. Subject to the provisions of the
Investment Company Act and other applicable law, any action taken by
Shareholders of the Trust or of any Series may be taken without a meeting if
a majority of Shareholders entitled to vote on the matter ( or such larger
proportion thereof as shall be required by the Investment Company Act or by
any express provision of this Declaration of Trust) consent to the action in
writing and such written consents are filed with the records of the meetings
of Shareholders. Such consent shall be treated for all purposes as a vote
taken at a meeting of Shareholders.
Section 4.6 Inspection of Records. The records of the Trust shall be open
to inspection by Shareholders to the extent permitted by the Trustees.
ARTICLE V LIMITATION OF LIABILITY: INDEMNIFICATION
Section 5.1 Trustees, Shareholders, etc. Not Personally Liable;
Notice. All persons extending credit to, contracting with or having any claim
against the Trust shall look only to the assets of the Trust for payment
under such credit, contract or claim; and neither the Shareholders nor the
Trustees, nor any of the Trust's officers, employees or agents, whether past,
present or future, shall be personally liable therefore. Every note, bond,
contract, instrument, certificate or undertaking and every other act or thing
whatsoever executed or done by or on behalf of the Trust or the Trustees or
any of them in connection with the Trust shall be conclusively deemed to have
been executed or done only by or for the Trust or the Trustees and not
personally. Nothing in this Declaration of Trust shall protect any Trustee or
officer against any liability to the Trust or the Shareholders to which such
Trustee or officer would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of The Commonwealth
of Massachusetts and shall recite to the effect that the same was executed or
made by or on behalf of the Trust or by them as Trustees or Trustee or as
officers or officer and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders individually
but are binding only upon the assets and property of the Trust, but the
omission thereof shall not operate to bind any Trustees or Trustee or
officers or officer or Shareholders or Shareholder individually.
Section 5.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretion hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his
own wilful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of the Trustee, and for
nothing else, and shall not be liable for errors of judgement or mistakes of
fact or law. Subject to the foregoing, ( a) the Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of any
officer, agent, employee, consultant, adviser, administrator, distributor or
principal underwriter, financial agent, custodian or transfer, dividend
disbursing, Shareholder servicing or other agent of the Trust, nor shall any
Trustee be responsible for the act or omission of any other Trustee; (b) the
Trustees may take advice of counsel or other experts with respect to the
meaning and operation of this Declaration of Trust and their duties as
Trustees and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice; and (c) in
discharging their duties, the Trustees, when acting in good faith, shall be
entitled to rely upon the books of account of the Trust and upon
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<PAGE>
written reports made to the Trustees by any officer appointed by them, any
independent public accountant, and (with respect to the subject matter of the
contract involved) any officer, partner or responsible employee of a
Contracting Party appointed by the Trustees pursuant to Section 2.4. The
Trustees as such shall not be required to give any bond or surety or any
other security for the performance of their duties.
Section 5.3 Indemnification of Shareholders. In case any Shareholder or
former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been
a Shareholder and not because of such Shareholder's acts or omissions or for
some other reason, the Trust (upon proper and timely request by the
Shareholder) shall assume the defense against such charge and satisfy any
judgement thereon, and the Shareholder or former Shareholder (or his heirs,
executors, administrators or other legal representatives or, in the case of a
corporation or other entity, its corporate or other general successor) shall
be entitled out of the assets of the Trust estate to be held harmless from
and indemnified against all loss and expense arising from such charge or
liability.
Section 5.4 Indemnification of Trustees, Officers, etc. The Trust shall
indemnify each of its Trustees and officers (hereinafter referred to as a
"Covered Person") against all liabilities, including but not limited to
amounts paid in satisfaction of judgements, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or criminal, before
any court or administrative or legislative body, in which such Covered Person
may be or may have been involved as a party or otherwise or with which such
person may be or may have been threatened, while in office or thereafter, by
reason of being or having been such a Trustee or officer, except with respect
to any matter as to which such Covered Person shall have been finally
adjudicated in any such action, suit or other proceeding not to have acted in
good faith in the reasonable belief that such Covered Person's action was in
or not opposed to the best interests of the Trust and except that no Covered
Person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject by
reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's
office. Expenses, including accountants' and counsel fees so incurred by any
such Covered Person (but excluding amounts paid in satisfaction of
judgements, in compromise or as fines or penalties), may be paid from time to
time by the Trust in advance of the final disposition of any such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
Covered Person to repay amounts so paid to the Trust if it is ultimately
determined that indemnification of such expenses is not authorized under this
Article V.
Section 5.5 Compromise Payment. As to any matter disposed of by a
compromise payment of any such Covered Person referred to in Section 5.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless there has
been obtained an opinion in writing of independent legal counsel to the
effect that such Covered Person does not appear not to have acted in good
faith in the reasonable belief that his action was in or not opposed to the
best interests of the Trust and that such indemnification would not protect
such person against any liability to the Trust to which such person would
otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
office. Any payment made to any covered Person hereunder shall not prevent
the recovery from any Covered Person of any amount paid to such Covered
Person in accordance with any of such clauses as indemnification if such
Covered Person is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief that
such Covered Person's action was in or not opposed to the best interests of
the Trust or to have been liable to the Trust or its Shareholders by reason
of wilful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's office.
Section 5.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article V shall not be exclusive of or
affect any other rights to which any such Covered Person may be entitled. As
used in this Article V, "Covered Person" shall include such person's heirs,
executors and administrators. Nothing contained in this article shall affect
any rights to indemnification to which personnel of the Trust, other than
Trustees and officers, and other persons may be entitled by contract or
otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person.
Section 5.7 Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred to the Trust or
upon its order.
ARTICLE VI MISCELLANEOUS
Section 6.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The
Trust may be terminated at any time by a majority of the Trustees then in
office subject to the approval by a Vote of a Majority of Outstanding Voting
Securities of each Series voting separately by Series.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated, as
may be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets
to distributable form in cash, securities or other property, or any
combination thereof, and distribute the proceeds to the Shareholders, in
conformity with the provisions of subsection (d) of Section 3.2.
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<PAGE>
Section 6.2 Reorganization. The Trustees may sell, convey and transfer the
assets of the Trust, or the assets belonging to any one or more Series, to
another Trust, partnership, association or corporation organized under the
laws of any state of the United States, or to the Trust, to be held as assets
belonging to another Series of the Trust, in exchange for cash, shares or
other securities (including, in the case of a transfer to another Series of
the Trust, Shares of such other Series) with such transfer being made subject
to, or with the assumption by the transferee of, the liabilities belonging to
each Series the assets of which are so transferred; provided, however, that
no assets belonging to any particular Series shall be so transferred unless
the terms of such transfer shall have first been approved at a meeting called
for the purpose by a Vote of a Majority of the Outstanding Voting Securities
of that Series. Following such transfer, the Trustees shall distribute such
cash, shares or other securities (giving due effect to the assets and
liabilities belonging to and any other differences among the various Series
the assets belonging to which have so been transferred) among the
Shareholders of the Series the assets belonging to which have been so
transferred; and if all of the assets of the Trust have been so transferred,
the Trust shall be terminated.
Section 6.3 Amendments. All rights granted to the Shareholders under this
Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or
Trustee or repeal the prohibition of assessment except as herein provided
upon the Shareholders without the express consent of each Shareholder or
Trustee involved. Subject to the foregoing, the provisions of this
Declaration of Trust (whether or not related to the rights of Shareholders)
may be amended at any time by an instrument in writing signed by a majority
of the then Trustees (or by a Trustee or officer of the Trust pursuant to the
vote of a majority of such Trustees), when authorized to do so by the vote in
accordance with subsection (e) of Section 3.2 by Shareholders holding a
majority of the Shares entitled to vote, except that amendments (a)
establishing and designating any further Series or Shares, as provided in
Section 3.1, or (b) abolishing any Series of Shares (or Class thereof) of
which there are no Shares outstanding, or (c) adopting, altering, or amending
investment restrictions with respect to the Trust or any Series of the Trust
which are not fundamental investment policies of the Trust or of any Series,
or (d) having the purpose of changing the name of the Trust or the name of
the Series or Class established and designated, or of supplying any omission,
curing any ambiguity or curing, correcting or supplementing any provision
hereof which is internally inconsistent with any other provision hereof or
which is defective or inconsistent with the Investment Company Act or with
the requirements of the Internal Revenue Code and applicable regulations for
the Trust's obtaining the most favorable treatment thereunder available to
regulated investment companies, shall not require authorization by
Shareholder vote. Subject to the foregoing, any such amendment shall be
effective as provided in the instrument containing the terms of such
amendment or, if there is no provision therein with respect to effectiveness,
upon the execution of such instrument and of a certificate (which may be a
part of such instrument) executed by a Trustee or officer of the Trust to the
effect that such amendment has been duly adopted.
Section 6.4 Filing of Copies; References; Headings. The original or a
conformed copy of this Declaration of Trust and of each amendment thereto
shall be kept at the office of the Trust where it may be inspected by any
Shareholder. A copy of this Declaration of Trust and of each amendment
thereto shall be filed by the Trust with the Secretary of The Commonwealth of
Massachusetts, as well as with any other governmental office where such
filing may be required, but the failure to make any such filing shall not
impair the effectiveness of this Declaration of Trust or any such subsequent
amendment. Anyone dealing with the Trust may rely on a certificate by a
Trustee or officer of the Trust as to whether or not any such amendments have
been made, as to the identities of the Trustees and officers, and as to any
matters in connection with the Trust hereunder; and, with the same effect as
if it were the original, may rely on a copy certified by an officer of the
Trust to be a copy of this Declaration of Trust or of any such subsequent
amendment. In this instrument and in any such amendment, references to this
instrument, and all expressions like "herein", "hereof" and "hereunder" shall
be deemed to refer to this instrument as a whole as the same may be amended
or affected by any such amendments. The masculine gender shall include the
feminine and neuter genders. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect
the meaning, construction or effect of this instrument. This instrument or
any amendment thereto may be executed in any number of counterparts each of
which shall be deemed an original.
Section 6.5 Applicable Law. This Declaration of Trust, made in the
Commonwealth of Massachusetts, and the Trust created hereunder, is governed
by the laws of said Commonwealth and is construed and administered according
to said laws. The Trust is of the type referred to in Section 1 of chapter
182 of the Massachusetts General Laws and of the type commonly called a
Massachusetts business trust, and, without limiting the provisions hereof,
the Trust may exercise all powers which are ordinarily exercised by such a
trust.
IN WITNESS WHEREOF, the undersigned have executed this instrument this
31st day of May, 1996.
_____________________
Thomas N. Steenburg
_____________________
Richard J. Wirth
15
Exhibit 5(a) Investment Advisory Agreement
<PAGE>
EXHIBIT 5(a)
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made effective as of the day of September, 1996 by and
between Phoenix-Aberdeen Series Fund, a Massachusetts business trust having a
place of business located at 101 Munson Street, Greenfield, Massachusetts
(the "Trust") and Phoenix-Aberdeen International Advisors, LLC, a Delaware
limited liability company having a place of business located at 56 Prospect
Street, Hartford, Connecticut (the "Adviser").
WITNESSETH THAT:
1. The Trust hereby appoints the Adviser to act as investment adviser to the
Trust on behalf of the following two series of the Trust established and
designated by the Trustees on or before the date hereof, namely (i)
Phoenix-Aberdeen Asian Fund and (ii) Phoenix-Aberdeen Global Small Cap Fund
(collectively, the "Existing Series"), for the period and on the terms set
forth herein. The Adviser accepts such appointment and agrees to render the
services described in this Agreement for the compensation herein provided.
2. In the event that the Trustees desire to retain the Adviser to render
investment advisory services hereunder with respect to one or more additional
series ("Additional Series"), the Trust shall notify the Adviser in writing.
If the Adviser is willing to render such services, it shall notify the Trust
in writing, whereupon such Additional Series shall become subject to the
terms and conditions of this Agreement.
3. The Adviser shall furnish continuously an investment program for the
Existing Series and any Additional Series which may become subject to the
terms and conditions set forth herein (sometimes collectively referred to as
the "Series") and shall manage the investment and reinvestment of the assets
of each Series, subject at all times to the supervision of the Trustees.
4. With respect to managing the investment and reinvestment of the Series'
assets, the Adviser shall provide, at its own expense:
<TABLE>
<CAPTION>
<S> <C>
(a) Investment research, advice and supervision;
(b) An investment program for each Series consistent with its investment objectives;
(c) Implementation of the investment program for each Series including the purchase and sale of
securities;
(d) Advice and assistance on the general operations of the Trust; and
(e) Regular reports to the Trustees on the implementation of each Series' investment program.
</TABLE>
5. The Adviser shall, for all purposes herein, be deemed to be an independent
contractor.
6. The Adviser shall furnish at its own expense, or pay the expenses of the
Trust, for the following:
<TABLE>
<CAPTION>
<S> <C>
(a) Office facilities, including office space, furniture and equipment;
(b) Personnel necessary to perform the functions required to manage the investment and
reinvestment of each Series' assets (including those required for research, statistical and
investment work);
(c) Personnel to serve without salaries from the Trust as officers or agents of the Trust. The
Adviser need not provide personnel to perform, or pay the expenses of the Trust for, services
customarily performed for an open-end management investment company by its national
distributor, custodian, financial agent, transfer agent, auditors and legal counsel; and
(d) Compensation and expenses, if any, of the Trustees who are also full-time employees of the
Adviser or any of its affiliates.
</TABLE>
7. All costs and expenses not specifically enumerated herein as payable by
the Adviser shall be paid by the Trust. Such expenses shall include, but
shall not be limited to, all expenses (other than those specifically referred
to as being borne by the Adviser) incurred in the operation of the Trust and
any public offering of its shares, including, among others, interest, taxes,
brokerage fees and commissions, fees of Trustees who are not full-time
employees of the Adviser or any of its affiliates, expenses of Trustees' and
shareholders' meetings including the cost of printing and mailing proxies,
expenses of insurance premiums for fidelity and other coverage, expenses of
repurchase and redemption of shares, expenses of issue and sale of shares (to
the extent not borne by its national distributor under its agreement with the
Trust), expenses of printing and mailing stock certificates representing
shares of the Trust, association membership dues, charges of custodians,
transfer agents, dividend disbursing agents and financial agents,
bookkeeping, auditing and legal expenses. The Trust will also pay the fees
and bear the expense of registering and maintaining the registration of the
Trust and its shares with the Securities and Exchange Commission and
registering or qualifying
1
<PAGE>
its shares under state or other securities laws and the expense of preparing
and mailing prospectuses and reports to shareholders. Additionally, if
authorized by the Trustees, the Trust shall pay for extraordinary expenses
and expenses of a non-recurring nature which may include, but not be limited
to the reasonable and proportionate cost of any reorganization or acquisition
of assets and the cost of legal proceedings to which the Trust is a party.
8. For providing the services and assuming the expenses outlined herein, the
Trust agrees that the Adviser shall be compensated as follows:
<TABLE>
<CAPTION>
<S> <C>
(a) The Trust shall pay the Adviser a monthly fee with respect to each Series at the annual rate
of 1.00% of the average aggregate daily net asset values of each Series. The amounts payable
to the Adviser with respect to each Series shall be based upon the average of the values of
the net assets of such Series as of the close of business each day, computed in accordance
with the Trust's Declaration of Trust.
(b) Compensation shall accrue immediately upon the effective date of this Agreement.
(c) If there is termination of this Agreement during a month, each Series' fee for that month
shall be proportionately computed upon the average of the daily net asset values of such
Series for such partial period in such month.
(d) The Adviser agrees to reimburse the Trust for the amount, if any, by which the total operating
and management expenses for any Series (including the Adviser's compensation, pursuant to this
paragraph, but excluding taxes, interest, costs of portfolio acquisitions and dispositions and
extraordinary expenses), for any "fiscal year" exceed the level of expenses which such Series
is permitted to bear under the most restrictive expense limitation (which is not waived by the
State) imposed on open-end investment companies by any state in which shares of such Series
are then qualified. Such reimbursement, if any, will be made by the Adviser to the Trust
within five days after the end of each month. For the purpose of this subparagraph (d), the
term "fiscal year" shall include the portion of the then current fiscal year which shall have
elapsed at the date of termination of this Agreement.
</TABLE>
9. The services of the Adviser to the Trust are not to be deemed exclusive,
the Adviser being free to render services to others and to engage in other
activities. Without relieving the Adviser of its duties hereunder and subject
to the prior approval of the Trustees and subject further to compliance with
applicable provisions of the Investment Company Act of 1940, as amended, the
Adviser may appoint one or more agents to perform any of the functions and
services which are to be provided under the terms of this Agreement upon such
terms and conditions as may be mutually agreed upon among the Trust, the
Adviser and any such agent.
10. The Adviser shall not be liable to the Trust or to any shareholder of the
Trust for any error of judgment or mistake of law or for any loss suffered by
the Trust or by any shareholder of the Trust in connection with the matters
to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
the Adviser in the performance of its duties hereunder.
11. It is understood that:
<TABLE>
<CAPTION>
<S> <C>
(a) Trustees, officers, employees, agents and shareholders of the Trust are or may be "interested
persons" of the Adviser as directors, officers, stockholders or otherwise;
(b) Directors, officers, employees, agents and stockholders of the Adviser are or may be
"interested persons" of the Trust as Trustees, officers, shareholders or otherwise; and
(c) The existence of any such dual interest shall not affect the validity hereof or of any
transactions hereunder.
</TABLE>
12. This Agreement shall become effective with respect to the Existing Series
as of the date stated above (the "Contract Date") and with respect to any
Additional Series, on the date specified in the notice to the Trust from the
Adviser in accordance with paragraph 2 hereof that the Adviser is willing to
serve as Adviser with respect to such Additional Series. Unless terminated as
herein provided, this Agreement shall remain in full force and effect for a
period of two years following the Contract Date, and, with respect to each
Additional Series, until the next anniversary of the Contract Date following
the date on which such Additional Series became subject to the terms and
conditions of this Agreement and shall continue in full force and effect for
periods of one year thereafter with respect to each Series so long as (a)
such continuance with respect to any such Series is approved at least
annually by either the Trustees or by a "vote of the majority of the
outstanding voting securities" of such Series and (b) the terms and any
renewal of this Agreement with respect to any such Series have been approved
by a vote of a majority of the Trustees who are not parties to this Agreement
or "interested persons" of any such party cast in person at a meeting called
for the purpose of voting on such approval; provided, however, that the
continuance of this Agreement with respect to each Additional Series is
subject to its approval by a "vote of a majority of the outstanding voting
securities" of any such Additional Series on or before the next anniversary
of the Contract Date following the date on which such Additional Series
became a Series hereunder.
Any approval of this Agreement by a vote of the holders of a "majority of
the outstanding voting securities|P|P' of any Series shall be effective to
continue this Agreement with respect to such Series notwithstanding (a) that
this Agreement has not been approved
2
<PAGE>
by a "vote of a majority of the outstanding voting securities" of any other
Series of the Trust affected thereby and (b) that this Agreement has not been
approved by the holders of a "vote of a majority of the outstanding voting
securities" of the Trust, unless either such additional approval shall be
required by any other applicable law or otherwise.
13. The Trust may terminate this Agreement with respect to the Trust or to
any Series upon 60 days' written notice to the Adviser at any time, without
the payment of any penalty, by vote of the Trustees or, as to each Series, by
a "vote of the majority of the outstanding voting securities" of such Series.
The Adviser may terminate this Agreement upon 60 days' written notice to the
Trust, without the payment of any penalty. This Agreement shall immediately
terminate in the event of its "assignment".
14. The terms "majority of the outstanding voting securities", "interested
persons" and "assignment", when used herein, shall have the respective
meanings in the Investment Company Act of 1940, as amended.
15. In the event of termination of this Agreement, or at the request of the
Adviser, the Trust will eliminate all reference to "Phoenix" and/or
"Phoenix-Aberdeen" from its name, and will not thereafter transact business
in a name using the word "Phoenix" and/or "Phoenix-Aberdeen" in any form or
combination whatsoever, or otherwise use the word "Phoenix" and/or "Phoenix-
Aberdeen" as part of its name. The Trust will thereafter in all prospectuses,
advertising materials, letterheads, and other material designed to be read by
investors and prospective investors delete from its name the word "Phoenix"
and/or "Phoenix-Aberdeen" or any approximation thereof. If the Adviser
chooses to withdraw the Trust's right to use the word "Phoenix" and/or
"Phoenix-Aberdeen", it agrees to submit the question of continuing this
Agreement to a vote of the Trust's shareholders at the time of such
withdrawal.
16. It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust property
of the Trust, as provided in the Declaration of Trust. The execution and
delivery of this Agreement have been authorized by the Trustees and
shareholders of the Trust and signed by the President of the Trust, acting as
such, and neither such authorization by such Trustees and shareholders nor
such execution and delivery by such officer shall be deemed to have been made
by any of them individually or be binding upon or impose any liability on any
of them personally, but shall bind only the trust property of the Trust as
provided in its Declaration of Trust. The Declaration of Trust, as amended,
is or shall be on file with the Secretary of The Commonwealth of
Massachusetts.
17. This Agreement shall be construed and the rights and obligations of the
parties hereunder enforced in accordance with the laws of The Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first
written above.
PHOENIX-ABERDEEN SERIES FUND
By:________________________________
Philip R. McLoughlin, President
PHOENIX INVESTMENT COUNSEL, INC.
By:________________________________
Michael E. Haylon, President
3
Exhibit 6 Distribution Agreement
<PAGE>
EXHIBIT 6
DISTRIBUTION AGREEMENT
THIS AGREEMENT made as of this day of September, 1996, by and between
Phoenix-Aberdeen Series Fund, a Massachusetts business trust having a place
of business located at 101 Munson Street, Greenfield, Massachusetts (the
"Trust") and Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Distributor").
WITNESSETH THAT:
1. The Trust hereby grants to the Distributor the right to purchase shares of
beneficial interest of each class of each series of the Trust established and
designated as of the date hereof and of any additional series and classes
thereof which the Trustees may establish and designate during the term of
this Agreement (collectively called the "Series") and to resell shares of
each Series (collectively called the "Shares") as principal and not as agent.
The Distributor accepts such appointment and agrees to render the services
described in this Agreement for the compensation herein provided.
2. The Distributor's right to purchase Shares shall be exclusive except that
the terms of this Agreement shall not apply to Shares issued or transferred:
<TABLE>
<CAPTION>
<S> <C>
a) pursuant to an offer of exchange exempted under Section 22(d) of the Investment Company Act of
1940, as amended (the "Act") by reason of the fact that said offer is permitted by Section 11
of the Act, including any offer made pursuant to clause (1) or (2) of Section 11(b);
b) upon the sale to a registered unit investment trust which is the issuer of periodic payment
plan certificates the net proceeds of which are invested in redeemable securities;
c) pursuant to an offer made solely to all registered holders of Shares, or all registered
holders of Shares of any Series, proportionate to their holdings or proportionate to any cash
distribution made to them by the Trust (subject to appropriate qualifications designed solely
to avoid issuance of fractional securities);
d) in connection with any merger or consolidation of the Trust or of any Series with any other
investment company or the acquisition by the Trust, by purchase or otherwise, of any other
investment company;
e) pursuant to sales exempted from Section 22(d) of the Act, by rule or regulation or order of
the Securities and Exchange Commission as provided in the then current registration statement
of the Trust; or
f) in connection with the reinvestment by Trust shareholders of dividend and capital gains
distributions.
</TABLE>
3. The "Net Asset Value" and the "Public Offering Price" of the Shares of
each Series as referred to in this Agreement shall be computed in accordance
with the provisions of the then current registration statement of the Trust.
The Distributor shall be notified promptly by the Trust of such computations.
4. Each day the Distributor shall have the right to purchase from the Trust,
as principal, the amount of Shares of each Series needed to fill
unconditional orders for Shares of such Series received by the Distributor
from dealers or investors, but no more than the Shares needed, at a price
equal to the Net Asset Value of the Shares of such Series. Any purchase of
Shares by the Distributor under this Agreement shall be subject to reasonable
adjustment for clerical errors, delays and errors of transmission and
cancellation of orders.
5. With respect to transactions other than with dealers, the Distributor will
sell Shares of each Series only at the Public Offering Price then in effect,
except to the extent that sales at less than the Public Offering Price may be
allowed by the Act, any rule or regulation promulgated thereunder or by order
of the Securities and Exchange Commission, provided, however, that any such
sales at less than the Public Offering Price shall be consistent with the
terms of the then current registration statement of the Trust. Any sale of
Shares of each Series to or through a person other than a dealer will be at
the Public Offering Price; however, the Distributor may pay a commission to
such person equal to no more than the difference between the Public Offering
Price and the Net Asset Value of those Shares. The Distributor will sell at
Net Asset Value Shares of any Series which are offered by the then current
registration statement or prospectus of the Trust of sale at such Net Asset
Value.
6. Sales at a discount from the Public Offering Price shall be made in
accordance with the terms and conditions of uniform selling agreements
allowing such discounts. Such discounts shall not exceed the difference
between the Net Asset Value and the Public Offering Price.
7. The Trust shall furnish the Distributor with copies of its Declaration of
Trust, as amended from time to time. The Trust shall also furnish the
Distributor with any other documents of the Trust which will assist the
Distributor in the performance of its duties hereunder.
1
<PAGE>
8. The Distributor agrees to use its best efforts (in states where it may
lawfully do so) to obtain from investors unconditional orders for Shares
authorized for issue by the Trust and registered under applicable Federal
securities laws, and, so long as it does so, nothing herein contained shall
prevent the Distributor from entering into similar arrangements with other
registered investment companies. The Distributor may, in the exercise of its
discretion, refuse to accept orders for Shares from any person.
9. Upon receipt by the Trust of a purchase order from the Distributor,
accompanied by proper applications for the purchase of Shares and delivery
instructions, the Trust shall, as promptly as practicable thereafter, cause
evidence of ownership of such Shares to be delivered as indicated in such
purchase order. Payment for such Shares shall be made by the Distributor to
the Trust in a manner acceptable to the Trust, provided that the Distributor
shall pay for such Shares no later than the third business day after the
Distributor shall have contracted to purchase such shares.
10. In connection with offering for sale and selling Shares, the Trust
authorizes the Distributor to give only such information and to make only
such statements or representations as are contained in the then current
registration statement of the Trust or in then current sales literature or
advertisements.
11. The Trust agrees to pay the following expenses:
<TABLE>
<CAPTION>
<S> <C>
a) the cost of mailing stock certificates representing Shares;
b) fees and expenses (including legal expenses) of registering and maintaining registrations of
the Trust and of each Series with the Securities and Exchange Commission including the
preparation and printing of registration statements and prospectuses for filing with said
Commission;
c) fees and expenses (including legal expenses) incurred in registering and qualifying Shares for
sale with any state regulatory agency and fees and expenses of maintaining, renewing,
increasing or amending such registrations and qualifications;
d) the expense of any issue or transfer taxes upon the sale of Shares to the Distributor by the
Trust; and
e) the cost of preparing and distributing reports and notices to shareholders.
</TABLE>
12. The Distributor agrees to pay the following expenses:
<TABLE>
<CAPTION>
<S> <C>
a) all expenses of printing prospectuses and statements of additional information sued in
connection with the sale of Shares and printing and preparing all other sales literature;
b) all fees and expenses in connection with the qualification of the Distributor as a dealer in
the various states and countries;
c) the expense of any stock transfer tax required in connection with the sale of Shares by the
Distributor as principal to dealers or to investors; and
d) all other expenses in connection with offering for sale and the sale of Shares which have not
been herein specifically allocated to the Trust.
</TABLE>
13. The Trust hereby appoints the Distributor its agent to receive requests
to accept the Trust's offer to repurchase Shares upon such terms and
conditions as may be described in the Trust's then current registration
statement. The agency granted in this paragraph 13 is terminable at the
discretion of the Trust.
14. The Trust agrees to indemnify and hold harmless the Distributor, its
officers and directors and each person, if any, who controls the Distributor
within the meaning of section 15 of the Securities Act of 1933, as amended,
against any losses, claims, damages, liabilities and expenses (including the
cost of any legal fees incurred in connection therewith) which the
Distributor, its officers, directors or any such controlling person may incur
under said Act, under any other statute, at common law or otherwise, arising
out of or based upon
<TABLE>
<CAPTION>
<S> <C>
a) any untrue statement or alleged untrue statement of a material fact contained in the Trust's
registration statement or prospectus (including amendments and supplements thereto), or
b) any omission or alleged omission to state a material fact required to be stated in the Trust's
registration statement or prospectus or necessary to make the statements in either not
misleading, provided, however, that insofar as losses, claims, damages, liabilities or
expenses arise out of or are based upon any such untrue statement or omission or alleged
untrue statement or omission made in reliance and in conformity with information furnished to
the Trust by the Distributor for use in the Trust's registration statement or prospectus, such
indemnification is not applicable. In no case shall the Trust indemnify the Distributor or its
controlling persons as to any amounts incurred for any
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
liability arising out of or based upon any action for which the Distributor, its officers and
directors or any controlling person would otherwise be subject to liability by reason of
willful misfeasance, bad faith, or gross negligence in the performance of its duties or by
reason of the reckless disregard of its obligations and duties under this Agreement.
</TABLE>
15. The Distributor agrees to indemnify and hold harmless the Trust, its
officers and trustees and each person, if any, who controls the Trust within
the meaning of Section 15 of the Securities Act of 1933, as amended, against
any losses, claims, damages, liabilities and expenses (including the cost of
any legal fees incurred in connection therewith) which the Trust, its
officers, trustees or any such controlling person any incur under said Act,
under any other statute, at common law or otherwise arising out of the
acquisition of any shares by any person which
<TABLE>
<CAPTION>
<S> <C>
a) may be based upon any wrongful act by the Distributor or any of its employees or
representatives, or
b) may be based upon any untrue statement or alleged untrue statement of a material fact
contained in the Trust's registration statement or prospectus (including amendments and
supplements thereto), or any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading if such statement
or omission was made in reliance upon information furnished or confirmed in writing to the
Trust by the Distributor.
</TABLE>
16. It is understood that:
<TABLE>
<CAPTION>
<S> <C>
a) trustees, officers, employees, agents and shareholders of the Trust are or may be interested
persons, as that term is defined in the Act ("Interested Persons"), of the Distributor as
directors, officers, stockholders or otherwise;
b) directors, officers, employees, agents and stockholders of the Distributor are or may be
Interested Persons of the Trust as trustees, officers, shareholders or otherwise;
c) the Distributor may be an Interested Person of the Trust as shareholder or otherwise; and
d) the existence of any such dual interest shall not offset the validity hereof or of any
transactions hereunder.
</TABLE>
17. The Trust may terminate this Agreement by 60 days written notice to the
Distributor at any time, without the payment of any penalty, by vote of the
Trustees or by a vote of a majority of the outstanding voting securities, as
that term is defined in the Act, of the Trust. The Distributor may terminate
this Agreement by 60 days written notice to the Trust, without the payment of
any penalty. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in the Act.
18. Subject to prior termination as provided in paragraph 17, this Agreement
shall continue in force for one year from the date of execution and from year
to year thereafter so long as the continuance after such one year period
shall be specifically approved at least annually by vote of the Trustees, or
by a vote of a majority of the appropriate class of outstanding voting
securities, as that term is defined in the Act, of the Trust. Additionally,
each annual renewal of this Agreement must be approved by the vote of a
majority of the Trustees who are not parties to the Agreement or Interested
Persons of any such party, cast in person at a meeting of the Trustees called
for the purpose of voting on such approval.
19. It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust property
of the Trust, as provided in the Declaration of Trust. The execution and
delivery of this Agreement by the President of the Trust has been authorized
by the Trustees acting as such, and neither such execution and delivery by
such officer nor such authorization by such Trustees shall be deemed to have
been made by any of them individually or be binding upon or impose any
liability on any of them personally, but shall bind only the trust property
of the Trust as provided in the Declaration of Trust. The Declaration of
Trust is on file with the Secretary of The Commonwealth of Massachusetts.
20. This Agreement shall become effective upon the date first set forth
above. This Agreement shall be governed by the laws of The Commonwealth of
Massachusetts and shall be binding on the successors and assigns of the
parties to the extend permitted by law.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first written above.
PHOENIX-ABERDEEN SERIES FUND
By:________________________________
PHOENIX EQUITY PLANNING CORPORATION
By:________________________________
3
Exhibit 9(a) Financial Agent Agreement
<PAGE>
EXHIBIT 9(a)
FINANCIAL AGENT AGREEMENT
THIS AGREEMENT made and concluded as of this day of September, 1996 by and
between Phoenix Equity Planning Corporation, a Connecticut corporation having
a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Financial Agent") and Phoenix-Aberdeen Series Fund, a
Massachusetts business trust having a place of business located at 101 Munson
Street, Greenfield, Massachusetts (the "Trust").
WITNESSETH THAT:
1. Financial Agent shall keep the books of the Trust and compute the daily
net asset value of shares of the Trust in accordance with instructions
received from time to time from the Board of Trustees of the Trust; which
instructions shall be certified to Financial Agent by the Trust's Secretary.
Financial Agent shall report such net asset value so determined to the Trust
and shall perform such other services as may be requested from time to time
by the Trust as are reasonably incidental to Financial Agent's duties
hereunder.
2. Financial Agent shall be obligated to maintain, for the periods and in the
places required by Rule 31a-2 under the Investment Company Act of 1940, as
amended, those books and records maintained by Financial Agent. Such books
and records are the property of the Trust and shall be surrendered promptly
to the Trust upon its request. Furthermore, such books and records shall be
open to inspection and audit at reasonable times by officers and auditors of
the Trust.
3. As compensation for its services hereunder during any fiscal year of the
Trust, Financial Agent shall receive, within five days after the end of each
fiscal quarter, a fee equivalent to 0.03% of the average aggregate daily net
asset values of the Trust.
4. Financial Agent shall not be liable for anything done or omitted by it in
the exercise of due care in discharging its duties specifically described
hereunder and shall be answerable and accountable only for its own acts and
omissions and not for those of any agent employed by it nor for those of any
bank, trust company, broker, depository, correspondent or other person.
Financial Agent shall be protected in acting upon any instruction, notice,
request, consent, certificate, resolution, or other instrument or paper
believed by Financial Agent to be genuine, and to have been properly
executed, and shall, unless otherwise specifically provided herein, be
entitled to receive as conclusive proof of any fact or matter required to be
ascertained by Financial Agent hereunder a certificate signed by the
Secretary of the Trust. Financial Agent shall be entitled, with respect to
questions of law relating to its duties hereunder, to advice of counsel
(which may be counsel for the Trust) and, with respect to anything done or
omitted by it in good faith hereunder in conformity with the advice of or
based upon an opinion of counsel, to be held harmless by the Trust from all
claims of loss or damage. Nothing herein shall protect Financial Agent
against any liability to the Trust or to its respective shareholders to which
Financial Agent would otherwise be subject by reason of its wilful
misfeasance, bad faith, gross negligence or reckless disregard of its duties
hereunder. Except as provided in this paragraph, Financial Agent shall not be
entitled to any indemnification by the Trust.
5. Subject to prior approval of the Board of Trustees of the Trust, Financial
Agent may appoint one or more sub-financial agents to perform any of the
functions and services which are to be provided under the terms of this
Agreement upon such terms and conditions as may be mutually agreed upon by
the Trust, Financial Agent and such sub-financial agent.
6. This Agreement shall continue in effect only so long as (a) such
continuance is specifically approved at least annually by the Board of
Trustees of the Trust or by a vote of a majority of the outstanding voting
securities of the Trust, and (b) the terms and any renewal of such Agreement
have been approved by the vote of a majority of the trustees of the Trust who
are not parties to this Agreement or interested persons, as that term is
defined in the Investment Company Act of 1940, as amended, of any such party,
cast in person at a meeting called for the purpose of voting on such
approval. A "majority of the outstanding voting securities of the Trust"
shall have, for all purposes of this Agreement, the meaning provided therefor
in said Investment Company Act.
7. Either party may terminate the within Agreement by tendering written
notice to the other, whereupon Financial Agent will be relieved of the duties
described herein. This Agreement shall immediately terminate in the event of
its assignment, as that term is defined in said Investment Company Act.
8. This Agreement shall be construed and the rights and obligations of the
parties hereunder enforced in accordance with the laws of the Commonwealth of
Massachusetts.
1
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first written above.
PHOENIX-ABERDEEN SERIES FUND
By:________________________________
PHOENIX EQUITY PLANNING CORPORATION
By:________________________________
2
Exhibit 9(b) Transfer Agent Agreement
<PAGE>
EXHIBIT 9(b)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
PHOENIX-ABERDEEN SERIES FUND
and
PHOENIX EQUITY PLANNING CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-------
<S> <C>
Article 1 -- Terms of Appointment; Duties of Transfer Agent 3
Article 2 -- Fees and Expenses 4
Article 3 -- Representations and Warranties of Transfer Agent 4
Article 4 -- Representations and Warranties of the Fund 4
Article 5 -- Data Access and Proprietary Information 5
Article 6 -- Indemnification 5
Article 7 -- Standard of Care 6
Article 8 -- Covenants 6
Article 9 -- Termination 7
Article 10 -- Assignment 7
Article 11 -- Amendment 7
Article 12 -- Connecticut Law to Apply 7
Article 13 -- Force Majeure 7
Article 14 -- Consequential Damages 7
Article 15 -- Merger of Agreement 7
Article 16 -- Limitations of Liability of the Trustees and Shareholders 7
Article 17 -- Counterparts 8
</TABLE>
2
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the day of September, 1996, by and between the
Phoenix-Aberdeen Series Fund (the "Fund") and Phoenix Equity Planning
Corporation (the "Transfer Agent").
WITNESSETH:
WHEREAS, the Fund desires to appoint Transfer Agent as their transfer
agent, dividend disbursing agent and agent in connection with certain other
activities, and Transfer Agent desires to accept such appointment; and
WHEREAS, the parties wish to set forth herein their mutual understandings
and agreements.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and other good and valuable consideration, the receipt and sufficiency
whereof being hereby acknowledged and affirmed, the parties hereto agree as
follows:
Article 1 Terms of Appointment; Duties of Transfer Agent
1.01 Subject to the terms and conditions set forth in this Agreement, the
Fund hereby employs and appoints Transfer Agent to act as, and Transfer Agent
agrees to act as, transfer agent for the authorized and issued shares of
beneficial interest of the Fund (hereinafter collectively and singularly
referred to as "Shares"), dividend disbursing agent and agent in connection
with any accumulation, open-account or similar plans provided to the
shareholders of the Fund ("Shareholders") and as set out in the currently
effective registration statement of the Fund (the prospectus and statement of
additional information portions of such registration statement being referred
to as the "Prospectus"), including, without limitation, any periodic
investment plan or periodic withdrawal program.
1.02 Transfer Agent agrees that it will perform the following services
pursuant to this Agreement:
<TABLE>
<CAPTION>
<S> <C>
(a) In accordance with procedures established from time to time by agreement between the Fund and
Transfer Agent, Transfer Agent shall:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
i) Receive for acceptance, orders for the purchase of Shares, and promptly deliver payment and
appropriate documentation therefor to the Custodian appointed from time to time by the
Trustees of the Fund (which entity or entities, as the case may be, shall be referred to as
the "Custodian");
ii) Pursuant to purchase orders, issue the appropriate number of Shares and hold such Shares in
the each appropriate Shareholder account;
iii) Receive for acceptance, redemption requests and redemption directions and deliver the
appropriate documentation therefor to the Custodian;
iv) In respect to the transactions in items (i), (ii) and (iii) above, the Transfer Agent shall
execute transactions directly with broker-dealers authorized by the Fund who shall thereby be
deemed to be acting on behalf of the Fund;
v) At the appropriate time as and when it receives monies paid to it by any Custodian with
respect to any redemption, pay over or cause to be paid over in the appropriate manner such
monies as instructed by the redeeming Shareholders;
vi) Effect transfers of Shares by the registered owners thereof upon receipt of appropriate
instructions;
vii) Prepare and transmit payments for dividends and distributions declared by the Fund, if any;
viii) Issue replacement certificates for those certificates alleged to have been lost, stolen or
destroyed upon receipt by the Transfer Agent of indemnification satisfactory to the Transfer
Agent and the Fund, and the Transfer Agent at its option, may issue replacement certificates
in place of mutilated stock certificates upon presentation thereof and without such indemnity;
ix Maintain records of account for and advise the Fund and its respective Shareholders as to the
foregoing; and
x) Record the issuance of Shares and maintain pursuant to Rule 17Ad-10(e) under the Exchange Act
of 1934, a record of the total number of Shares which are authorized, issued and outstanding
based upon data provided to it by the Fund. The Transfer Agent shall also provide on a regular
basis to the Fund the total number of Shares which are authorized, issued and outstanding
shall have no obligation, when recording the issuance of Shares, to monitor the issuance of
such Shares or to take cognizance of any laws relating to the issue or sale of such Shares,
which functions shall be the sole responsibility of the Fund.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(b) In addition to and not in lieu of the services set forth in the above paragraph (a), Transfer
Agent shall: (i) perform all of the customary services of a transfer agent, dividend disbursing
agent and, as relevant, agent in connection with accumulation, open-account or similar plans
(including without limitation any periodic investment plan or periodic withdrawal program),
including, but not limited to, maintaining all Shareholder accounts, preparing Shareholder
meeting lists, mailing proxies, receiving and tabulating proxies, mailing Shareholder reports
and Prospectuses to current Shareholders, withholding taxes on U.S. resident and non-resident
alien accounts, preparing and filing U.S. Treasury Department Forms 1099 and other appropriate
forms required with respect to dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and statements of account to Shareholders
for all purchases and redemptions of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for Shareholders, and providing Shareholder
account information; and (ii) provide a system which will enable the Fund to monitor the total
number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to Transfer Agent in writing those transactions and
assets to be treated as exempt from blue sky reporting for each State, and (ii) verify the
establishment of transactions for each State on the system prior to activation and thereafter
monitor the daily activity for each State. The responsibility of Transfer Agent for the Fund's
blue sky State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of such transactions
to the Fund as provided above.
(d) Procedures as to who shall provide certain of the services in Article 1 may be established from
time to time by agreement between the Fund and Transfer Agent per the attached service
responsibility schedule, if any. The Transfer Agent may at times perform only a portion of these
services and the Fund or its agent may perform these services on behalf of the Fund.
(e) The Transfer Agent shall provide additional services on behalf of the Fund (i.e., escheatment
services) which may be agreed upon in writing between the Fund and the Transfer Agent.
</TABLE>
Article 2 Fees and Expenses
2.01 In consideration of the services provided by the Transfer Agent
pursuant to this Agreement, the Fund agrees to pay Transfer Agent an annual
maintenance fee for each Shareholder account as set forth in Schedule A
attached hereto and made a part hereof. Annual Maintenance Fees and
out-of-pocket expenses and advances identified under Section 2.02 below may
be changed from time to time subject to mutual written agreement between the
Fund and Transfer Agent. Nothing herein shall preclude the assignment of all
or any portion of the foregoing fees and expense reimbursements to any
sub-agent contracted by Transfer Agent.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agree
to reimburse Transfer Agent for out-of-pocket expenses or advances incurred
by Transfer Agent for the items set out in Schedule A attached hereto. In
addition, any other expenses incurred by Transfer Agent at the request or
with the consent of the Fund, will be reimbursed by the Fund requesting the
same.
2.03 The Fund agree to pay all fees and reimbursable expenses within five
days following the mailing of the respective billing notice. The above fees
will be charged against the Fund's custodian checking account five (5) days
after the invoice is transmitted to the Fund. Postage for mailing of
dividends, proxies, Fund reports and other mailings to all Shareholder
accounts shall be advanced to Transfer Agent at least seven (7) days prior to
the mailing date of such materials.
Article 3 Representations and Warranties of Transfer Agent
The Transfer Agent represents and warrants to the Fund that:
3.01 It is a corporation organized and existing and in good standing under
the laws of the State of Connecticut.
3.02 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.03 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
3.04 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3.05 It is and shall continue to be a duly registered transfer agent
pursuant to Section 17A(c)(2) of the Securities Exchange Act of 1934.
Article 4 Representations and Warranties of Fund
The Fund represents and warrants to Transfer Agent that:
4.01 All trust proceedings, as the case may be, required to enter into and
perform this Agreement have been undertaken and are in full force and effect.
4
<PAGE>
4.02 The Fund is an open-end, diversified management investment companies
registered under the Investment Company Act of 1940.
4.03 A registration statement under the Securities Act of 1933 is
currently effective for the Fund and such registration statement will remain
effective, and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares being offered for sale.
Article 5 Data Access and Proprietary Information
5.01 The Fund acknowledge that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Transfer Agent as part of the Fund's
ability to access certain Fund-related data ("Customer Data") maintained by
the Transfer Agent on data bases under the control and ownership of the
Transfer Agent or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information (collectively,
"Proprietary Information") of substantial value to the Transfer Agent or
other third party. In no event shall Proprietary Information be deemed
Customer Data. The Fund agrees to treat all Proprietary Information as
proprietary to the Transfer Agent and further agrees that it shall not
divulge any Proprietary Information to any person or organization except as
may be provided hereunder. Without limiting the foregoing, the Fund agrees
for itself and its employees and agents:
<TABLE>
<CAPTION>
<S> <C>
(a) to access Customer Data solely from location as may be designated in writing by the Transfer
Agent and solely in accordance with the Transfer Agent's applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary Information;
(c) to refrain from obtaining unauthorized access to any portion of the Proprietary Information,
and if such access is inadvertently obtained, to inform in a timely manner of such fact and
dispose of such information in accordance with the Transfer Agent's instructions;
(d) to refrain from causing or allowing third-party data acquired hereunder from being
retransmitted to any other computer facility or other location, except with the prior written
consent of the Transfer Agent;
(e) that the Fund shall have access only to those authorized transactions agreed upon by the
parties; and
(f) to honor all reasonable written requests made by the Transfer Agent to protect at the Transfer
Agent's expense the rights of the Transfer Agent in Proprietary Information at common law,
under federal copyright law and under other federal or state law.
</TABLE>
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Article 5. The obligations of this Article shall
survive any earlier termination of this Agreement.
5.02 If the Fund notifies the Transfer Agent that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, the Transfer Agent shall endeavor in a
timely manner to correct such failure. Organizations from which the Transfer
Agent may obtain certain data included in the Data Access Services are solely
responsible for the contents of such data and the Fund agrees to make no
claim against the Transfer Agent arising out of the contents of such
third-party data, including, but not limited to, the accuracy thereof. DATA
ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE
TRANSFER AGENT EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY
STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5.03 If the transactions available to the Fund include the ability to
originate electronic instructions to the Transfer Agent in order to (i)
effect the transfer or movement of cash or Shares or (ii) transmit
Shareholder information or other information (such transactions constituting
a "COEFI"), then in such event the Transfer Agent shall be entitled to rely
on the validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity with
security procedures established by the Transfer Agent from time to time.
Article 6 Indemnification
6.01 The Transfer Agent shall not be responsible for, and the Fund shall
indemnify and hold Transfer Agent harmless from and against, any and all
losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to:
<TABLE>
<CAPTION>
<S> <C>
(a) All actions of Transfer Agent or its agent or subcontractors required to be taken pursuant to
this Agreement, provided that such actions are taken in good faith and without negligence or
willful misconduct.
5
<PAGE>
(b) The lack of good faith, negligence or willful misconduct by the Fund which arise out of the
breach of any representation or warranty of the Fund hereunder.
(c) The reliance on or use by the Transfer Agent or its agents or subcontractors of information,
records and documents which (i) are received by Transfer Agent or its agents or
subcontractors, and (ii) have been prepared, maintained or performed by the Fund or any other
person or firm on behalf of the Fund including but not limited to any previous transfer agent
or registrar.
(d) The reliance on, or the carrying out by Transfer Agent or its agents or subcontractors of any
instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement under the federal securities laws
or regulations or the securities laws or regulations of any state that such Shares be
registered in such state or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of such Shares in such
state.
</TABLE>
6.02 Transfer Agent shall indemnify and hold each of the Fund harmless
from and against any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or attributable to any action
or failure or omission to act by Transfer Agent, or any sub-agent, as a
result of Transfer Agent's, or such sub-agent's, lack of good faith,
negligence or willful misconduct.
6.03 At any time the Transfer Agent may apply to any officer of the Fund
for instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by Transfer
Agent under this Agreement, and Transfer Agent and its agents or
subcontractors shall not be liable and shall be indemnified by the Fund for
any action taken or omitted by it in reliance upon such instructions or upon
the opinion of such counsel. The Transfer Agent, its agents and
subcontractors shall be protected and indemnified in acting upon any paper or
document furnished by or on behalf of the Fund, reasonably believed to be
genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided Transfer Agent
or its agents or subcontractors by machine readable input, telex, CRT data
entry or other similar means authorized by the Fund, and shall not be held to
have notice of any change of authority of any person, until receipt of
written notice thereof from the Fund. Transfer Agent, its agents and
subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the proper manual or
facsimile signatures of the officers of any Fund, and the proper
countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
6.04 In order that the indemnification provisions contained in this
Article 6 shall apply, upon the assertion of a claim for which either party
may be required to indemnify the other, the party seeking indemnification
shall promptly notify the other party of such assertion, and shall keep the
other party advised with respect to all developments concerning such claim.
The party who may be required to indemnify shall have the option to
participate with the party seeking indemnification in the defense of such
claim. The party seeking indemnification shall in no case confess any claim
or make any compromise in any case in which the other party may be required
to indemnify it except with the other party's prior written consent.
6.05 Transfer Agent hereby expressly acknowledges that recourse against
the Fund, if any, shall be subject to those limitations provided by governing
law and the Declaration of Trust of the Fund, as applicable, and agrees that
obligations assumed by the Fund hereunder shall be limited in all cases to
the Fund and its assets. Transfer Agent shall not seek satisfaction of any
such obligation from the shareholders or any shareholder of the Fund, nor
shall the Transfer Agent seek satisfaction of any obligations from the
Trustees or any individual Trustee of the Fund.
Article 7 Standard of Care
7.01 The Transfer Agent shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement, but assumes no responsibility and
shall not be liable for loss or damage due to errors unless said errors are
caused by its negligence, bad faith, or willful misconduct of that of its
employees.
Article 8 Covenants
8.01 The Fund shall promptly furnish to Transfer Agent the following:
<TABLE>
<CAPTION>
<S> <C>
(a) A certified copy of the resolution of its Trustees authorizing the appointment of Transfer
Agent and the execution and delivery of this Agreement.
(b) A copy of the Declaration of Trust and all amendments thereto.
</TABLE>
8.02 The Transfer Agent hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such
certificates, forms and devices.
6
<PAGE>
8.03 The Transfer Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as
amended, and the Rules thereunder, Transfer Agent agrees that all such
records prepared or maintained by Transfer Agent relating to the services to
be performed by Transfer Agent hereunder are the property of the Fund and
will be preserved, maintained and made available in accordance with such
Section and Rules, and will be surrendered promptly to the Fund on and in
accordance with its request.
8.04 The parties agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other
person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records, Transfer Agent will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that
it may be held liable for the failure to exhibit the Shareholder records to
such person.
Article 9 Termination
9.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
9.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne
by the Fund. Additionally, Transfer Agent reserves the right to charge any
other reasonable expenses associated with such termination and/or a charge
equivalent to the average of three (3) months' fees to the terminating Fund.
Article 10 Assignment
10.01 Except as provided in Section 10.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
10.03 The Transfer Agent may, without further consent on the part of any
of the Fund, subcontract for the performance hereof with one or more
sub-agents; provided, however, that Transfer Agent shall be as fully
responsible to the Fund for the acts and omissions of any subcontractor as it
is for its own acts and omissions.
Article 11 Amendment
11.01 This Agreement may be amended or modified by a written agreement
executed by the parties and authorized or approved by a resolution of the
Trustees of the Fund.
Article 12 Connecticut Law to Apply
12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of
Connecticut.
Article 13 Force Majeure
13.01 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to
the other for any damages resulting from such failure to perform or otherwise
from such causes.
Article 14 Consequential Damages
14.01 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any act or
failure to act hereunder.
Article 15 Merger of Agreement
15.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
15.02 This Agreement shall not be merged with or construed in conjunction
with any other current or future agreement between the Fund and Phoenix
Equity Planning Corporation, each and all of which agreements shall at all
times remain separate and distinct.
Article 16 Limitations of Liability of the Trustees and Shareholders
16.01 Notice is hereby given that the Agreement and Declaration of Trust on
file with the Secretary of the Commonwealth of Massachusetts was executed on
behalf of the Trustees as trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
Shareholders individually but are binding only upon the assets and property
of the Fund.
7
<PAGE>
Article 17 Counterparts
17.01 This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
PHOENIX-ABERDEEN SERIES FUND
By:________________________________
Name: Philip R. McLoughlin
Title: President
ATTEST:
By:____________________________
Name:
Title:
PHOENIX EQUITY PLANNING
CORPORATION
By:________________________________
Name:
Title:
ATTEST:
By:____________________________
Name:
Title:
8
<PAGE>
Schedule A Fee Schedule
Annual Maintenance Fees shall be based on the following formula:
AMF(Fund) = BAMF x SA
where, AMF(Fund) refers to the aggregate Annual Maintenance Fee levied
against the Fund,
BAMF refers to the Base Annual Maintenance Fee levied against the Fund
for each shareholder account, as more particularly described below, at
the basic annual per account rate of $14.95 for each designated Class
A shareholder account and $19.95 for each designated Class B
shareholder account, plus out-of-pocket expenses, subject to
prescribed minimum charges described below.
SA refers to the number of Shareholder Accounts subject to the terms
of this Agreement and any and all sub-transfer agent agreements which
presently or hereafter may be entered into by the Transfer Agent. For
the purpose of computing the foregoing, the Transfer Agent will
ascertain the number of Shareholders of each Fund regardless of
whether any such Shares are held in accordance with any pooled or
omnibus accounts or arrangement managed or controlled by any entity,
broker/dealer or sub-transfer agent.
Minimum Charges
Notwithstanding anything herein possibly to the contrary, in the event that,
and for so long as, there are less than [ ] shareholder accounts within the
Fund, the Fund shall pay in lieu of the Annual Maintenance Fee, a minimum
charge equivalent to $[ ].
Other Fees
(bullet) Omnibus Accounts, Per Transaction $2.50
(bullet) Closed Accounts, per Account, per month $0.20
(bullet) Check writing Fees:
(bullet) Privilege set-up $5.00
(bullet) Per Cleared Check $1.00
Out-of-Pocket Expenses
Out-of-pocket expenses include, but are not limited to: confirmation
production, postage, forms, telephone, microfilm, microfiche, stationary and
supplies billed as .1122% of postage costs and expenses incurred at the
specific direction of any Fund. Postage for mass mailings is due seven days
in advance of the mailing date.
9
Exhibit 15 Distribution Plans
<PAGE>
EXHIBIT 15
PHOENIX-ABERDEEN SERIES FUNC
(the "Fund")
CLASS A SHARES
DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have
entered into a Distribution Agreement pursuant to which the Distributor will
act as principal underwriter of each class of shares of the Fund for sale to
the permissible purchasers. The Trustees of the Fund have determined to adopt
this Distribution Plan (the "Plan"), in accordance with the requirements of
Section 12b-1 of the Investment Company Act of 1940, as amended (the "Act")
with respect to Class A shares of the Fund and have determined that there is
a reasonable likelihood that the Plan will benefit the Fund and its Class A
shareholders.
2. Rule 12b-1 Fees
The Fund shall reimburse the Distributor, at the end of each month, up to a
maximum on an annual basis of 0.25% of the average daily value of the net
assets of the Fund's Class A shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by Distributor subsequent to the
effectiveness of this Plan, in connection with the sale and promotion of the
Class A shares of the Fund and the furnishing of services to Class A
shareholders of the Fund. Such expenditures shall consist of: (i) commissions
to sales personnel for selling Class Y shares of the Fund (including
underwriting commissions and finance charges related to the payment of
commissions); (ii) compensation, sales incentives and payments to sales,
marketing and service personnel; (iii) payments to broker-dealers and other
financial institutions which have entered into selling agreements with the
Distributor for services rendered in connection with the sale and
distribution of Class A shares of the Fund; (iv) payment of expenses incurred
in sales and promotional activities, including advertising expenditures
related to the Class A shares of the Fund; (v) the costs of preparing and
distributing promotional materials; (vi) the cost of printing the Fund's
Prospectus and Statement of Additional Information for distribution to
potential investors; and (vii) such other similar services that the Trustees
of the Fund determine are reasonably calculated to result in the sale of
Class A shares of the Fund; provided however, that all or a portion of such
amount paid to the Distributor, which sum shall be equal to or less than
0.25% annually of the average daily net assets of the Fund's Class A shares,
may be paid for reimbursing the costs of providing services to Class A
shareholders including assistance in connection with inquiries related to
shareholder accounts (the "Service Fee").
Amounts paid or payable by the Fund under this Plan or any agreement with any
person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall,
given all surrounding circumstances, represent charges within the range of
what would have been negotiated at arm's length as payment for the specific
sales or promotional services and activities to be financed hereunder and any
related agreement, as determined by the Trustees of the Fund, in the exercise
of reasonable business judgment, in light of fiduciary duties under state law
and Sections 36(a) and (b) of the Act and based upon appropriate business
estimates and projections.
3. Reports
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare
and furnish to the Trustees of the Fund for their review, and the Trustees
shall review, a written report complying with the requirements of Rule 12b-l
under the Act regarding the amounts expended under this Plan and the purposes
for which such expenditures were made.
4. Required Approval
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who
have no direct or indirect financial interest in the operation of this Plan
or in any related agreement (the "Disinterested Trustees"), cast in person at
a meeting called for the purpose of voting on this Plan or any related
agreement and this Plan shall not take effect with respect to the Fund until
it has been approved by a vote of at least a majority of the outstanding
voting Class A shares (as such phrase is defined in the Act).
1
<PAGE>
5. Term
This Plan shall remain in effect for one year from the date of its adoption
and may be continued thereafter if specifically approved at least annually by
a vote of at least a majority of the Trustees of the Fund as well as a
majority of the Disinterested Trustees. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the
amount of the distribution expenses provided in Paragraph 2 hereof (including
the Service Fee) without the approval of at least a majority of the
outstanding voting securities (as defined in the Act) of the Class A shares
of the Fund and (b) all material amendments to this Plan must be approved by
a majority vote of the Trustees of the Fund and of the Disinterested Trustees
cast in person at a meeting called for the purpose of such vote.
6. Selection of Disinterested Trustees
While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
Any related agreement shall be in writing and shall provide that (a) such
agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class A shares of the Fund on not more than 60 days' written notice to the
other party to the agreement and (b) such agreement shall terminate
automatically in the event of its assignment.
8. Termination
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class A shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
The Fund shall preserve copies of this Plan and any related agreements and
all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six
years from the date of this Plan, the agreement or report, as the case may
be, the first two years in an easily accessible place.
10. Non-Recourse
The Fund's Declaration of Trust dated May 31, 1996, a copy of which, together
with the amendments thereto ("Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, refers to the Trustees under
the Declaration of Trust collectively as Trustees, but not as individuals or
personally, and no Trustee, shareholder, officer, employee or agent of the
Fund may be held to any personal liability, nor may any resort be had to
their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of the Fund but the Fund property
only shall be liable.
2
<PAGE>
PHOENIX-ABERDEEN SERIES FUNC
(the "Fund")
CLASS B SHARES
DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have
entered into a Distribution Agreement pursuant to which the Distributor will
act as principal underwriter of each class of shares of the Fund for sale to
the permissible purchasers. The Trustees of the Fund have determined to adopt
this Distribution Plan (the "Plan"), in accordance with the requirements of
Section 12b-1 of the Investment Company Act of 1940, as amended (the "Act")
with respect to Class B shares of the Fund and have determined that there is
a reasonable likelihood that the Plan will benefit the Fund and its Class B
shareholders.
2. Rule 12b-1 Fees
The Fund shall reimburse the Distributor, at the end of each month, up to a
maximum on an annual basis of 0.25% of the average daily value of the net
assets of the Fund's Class B shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by Distributor subsequent to the
effectiveness of this Plan, in connection with the sale and promotion of the
Class B shares of the Fund and the furnishing of services to Class B
shareholders of the Fund. Such expenditures shall consist of: (i) commissions
to sales personnel for selling Class A shares of the Fund (including
underwriting commissions and finance charges related to the payment of
commissions); (ii) compensation, sales incentives and payments to sales,
marketing and service personnel; (iii) payments to broker-dealers and other
financial institutions which have entered into selling agreements with the
Distributor for services rendered in connection with the sale and
distribution of Class B shares of the Fund; (iv) payment of expenses incurred
in sales and promotional activities, including advertising expenditures
related to the Class B shares of the Fund; (v) the costs of preparing and
distributing promotional materials; (vi) the cost of printing the Fund's
Prospectus and Statement of Additional Information for distribution to
potential investors; and (vii) such other similar services that the Trustees
of the Fund determine are reasonably calculated to result in the sale of
Class B shares of the Fund; provided however, that all or a portion of such
amount paid to the Distributor, which sum shall be equal to or less than
0.25% annually of the average daily net assets of the Fund's Class B shares,
may be paid for reimbursing the costs of providing services to Class B
shareholders including assistance in connection with inquiries related to
shareholder accounts (the "Service Fee").
Amounts paid or payable by the Fund under this Plan or any agreement with any
person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall,
given all surrounding circumstances, represent charges within the range of
what would have been negotiated at arm's length as payment for the specific
sales or promotional services and activities to be financed hereunder and any
related agreement, as determined by the Trustees of the Fund, in the exercise
of reasonable business judgment, in light of fiduciary duties under state law
and Sections 36(a) and (b) of the Act and based upon appropriate business
estimates and projections.
3. Reports
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare
and furnish to the Trustees of the Fund for their review, and the Trustees
shall review, a written report complying with the requirements of Rule 12b-l
under the Act regarding the amounts expended under this Plan and the purposes
for which such expenditures were made.
4. Required Approval
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who
have no direct or indirect financial interest in the operation of this Plan
or in any related agreement (the "Disinterested Trustees"), cast in person at
a meeting called for the purpose of voting on this Plan or any related
agreement and this Plan shall not take effect with respect to the Fund until
it has been approved by a vote of at least a majority of the outstanding
voting Class B shares (as such phrase is defined in the Act).
3
<PAGE>
5. Term
This Plan shall remain in effect for one year from the date of its adoption
and may be continued thereafter if specifically approved at least annually by
a vote of at least a majority of the Trustees of the Fund as well as a
majority of the Disinterested Trustees. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the
amount of the distribution expenses provided in Paragraph 2 hereof (including
the Service Fee) without the approval of at least a majority of the
outstanding voting securities (as defined in the Act) of the Class B shares
of the Fund and (b) all material amendments to this Plan must be approved by
a majority vote of the Trustees of the Fund and of the Disinterested Trustees
cast in person at a meeting called for the purpose of such vote.
6. Selection of Disinterested Trustees
While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
Any related agreement shall be in writing and shall provide that (a) such
agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class B shares of the Fund on not more than 60 days' written notice to the
other party to the agreement and (b) such agreement shall terminate
automatically in the event of its assignment.
8. Termination
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class B shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
The Fund shall preserve copies of this Plan and any related agreements and
all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six
years from the date of this Plan, the agreement or report, as the case may
be, the first two years in an easily accessible place.
10. Non-Recourse
The Fund's Declaration of Trust dated May 31, 1996, a copy of which, together
with the amendments thereto ("Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, refers to the Trustees under
the Declaration of Trust collectively as Trustees, but not as individuals or
personally, and no Trustee, shareholder, officer, employee or agent of the
Fund may be held to any personal liability, nor may any resort be had to
their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of the Fund but the Fund property
only shall be liable.
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Exhibit 18 Dual Distribution Plan
<PAGE>
EXHIBIT 18
PHOENIX-ABERDEEN SERIES FUND
(the "Fund")
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended
("1940 Act"), this Plan describes the multi-class system for the Fund,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the effective date of this Plan, the Fund shall offer multiple classes
of shares, as described herein, pursuant to Rule 18f-3 and this Plan.
2. The Multi-Class Structure
The portfolios of the Fund listed on Schedule A hereto shall offer two
classes of shares, Class A and Class B ("Multi-Class Portfolios"). Shares of
the Multi-Class Portfolios shall represent an equal pro rata interest in the
respective Portfolio and, generally, shall have identical voting, dividend,
liquidation, and other rights, preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each
class shall have a different designation; (b) each class shall bear any Class
Expenses, as defined by Section B, below; (c) each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to
its distribution arrangement; and (d) each class shall have separate voting
rights on any matter submitted to shareholders in which the interests of one
class differ from the interests of any other class. In addition, Class A and
Class B shares shall have the features described in Sections a, b, c and d,
below.
a. Distribution Plans
The Fund has adopted Distribution Plans pursuant to Rule 12b-1 with respect
to each Multi-Class Portfolio, containing substantially the following terms:
i. Class A shares of each Multi-Class Portfolio shall reimburse Phoenix
Equity Planning Corporation (the "Distributor") for costs and expenses
incurred in connection with distribution and marketing of shares thereof, as
provided in the Class A Distribution Plan and any supplements thereto,
subject to an annual limit of 0.25% of the average daily net assets of a
Multi-Class Portfolio's Class A shares.
ii. Class B shares of each Multi-Class Portfolio shall reimburse the
Distributor for costs and expenses incurred in connection with distribution
and marketing of shares thereof, as provided in the Class B Distribution Plan
and any supplements thereto, subject to an annual limit of 1.00% of the
average daily net assets of a Multi-Class Portfolio's Class B shares.
b. Allocation of Income and Expenses
i. General.
The gross income, realized and unrealized capital gains and losses and
expenses (other than Class Expenses, as defined below) of each Multi-Class
Portfolio shall be allocated to each class on the basis of its net asset
value relative to the net asset value of the Multi-Class Portfolio. Expenses
to be so allocated include expenses of the Fund that are not attributable to
a particular Multi-Class Portfolio or class of a Multi-Class Portfolio but
are allocated to a Multi-Class Portfolio ("Fund Expenses") and expenses of a
particular Multi-Class Portfolio that are not attributable to a particular
class of that Multi-Class Portfolio ("Portfolio Expenses"). Fund Expenses
include, but are not limited to, trustees' fees, insurance costs and certain
legal fees. Portfolio Expenses include, but are not limited to, certain state
registration fees, custodial fees, advisory fees and other expenses relating
to the management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
Expenses attributable to a particular class ("Class Expenses") shall be
limited to: (a) payments pursuant to the Distribution Plan for that class;
(b) transfer agent fees attributable to a specific class, (c) printing and
postage expenses related to preparing and distributing material such as
shareholder reports, prospectuses and proxy materials to current shareholders
of the class; (d) registration fees for shares of the class (other than those
set forth in Section (b)(i) above); (e) the expense of administrative
personnel and services as required to support the shareholders of a specific
class; (f) litigation or other legal expenses relating solely to one class of
shares; and (g) trustees' fees incurred as a result of issues relating to a
class of shares. Expenses described in subsection (a) of this paragraph must
be allocated to the class for which they are incurred. All other expenses
described in this paragraph
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<PAGE>
may be allocated as Class Expenses, if the Fund's President and Treasurer
have determined, subject to Board approval or ratification, which of such
categories of expenses will be treated as Class Expenses, consistent with
applicable legal principles under the 1940 Act and the Internal Revenue Code
of 1986, as amended ("Code").
In the event that a particular expense is no longer reasonably allocable by
class or to a particular class, it shall be treated as a Fund Expense or
Portfolio Expense as applicable, and in the event a Fund Expense or Portfolio
Expense becomes allocable as a Class Expense, it shall be so allocated,
subject to compliance with Rule 18f-3 and Board approval or ratification.
The initial determination of expenses that will be allocated as Class
Expenses and any subsequent changes thereto as set forth in this Plan shall
be reviewed by the Board of Trustees and approved by such Board and by a
majority of the Trustees who are not "interested persons" of the Fund, as
defined in the 1940 Act ("Independent Trustees")
iii. Waivers or Reimbursements of Expenses
Expenses may be waived or reimbursed by the Fund's investment adviser(s), its
principal underwriters, or any other provider of services to a Multi-Class
Portfolio without the prior approval of the Board of Trustees.
b. Exchange Privileges
Shareholders of a Multi-Class Portfolio may exchange shares of a particular
class for shares of the same class in another Multi-Class Portfolio, at the
relative net asset values of the respective shares to be exchanged and with
no sales charge, provided the shares to be acquired in the exchange are, as
may be necessary, qualified for sale in the shareholder's state of residence
and subject to the applicable requirements, if any, as to minimum amount.
d. Conversion Feature
Class B Shares of a Multi-Class Portfolio will automatically convert to Class
A Shares of that portfolio, without sales charge, at the relative net asset
values of each such classes, not later than eight years from the acquisition
of the Class B Shares. The conversion of Class B Shares to Class A Shares is
subject to the continuing availability of an opinion of counsel or a ruling
from the Internal Revenue Service to the effect that (i) the assessment of
the higher distribution fees and transfer agency costs with respect to Class
B Shares does not result in any dividends or distributions constituting
"preferential dividends" under the Code, and (ii) that the conversion of
shares does not constitute a taxable event under federal income tax law.
3. Board Review
a. Initial Approval
The Board of Trustees, including the Independent Trustees, at a meeting held
on August , 1996, initially approved the Plan based on a determination that
the Plan, including the expense allocation, is in the best interests of each
class and Multi-Class Portfolio individually and of the Fund.
b. Approval of Amendments
The Plan may not be amended materially unless the Board of Trustees, the
Independent Trustees, have found that the proposed amendment, including any
proposed related expense allocation, is in the best interests of each class
and Multi-Class Portfolio individually and of the Fund.
c. Periodic Review
The Board shall review reports of expense allocations and such other
information as they request at such times, or pursuant to such schedule, as
they may determine consistent with applicable legal requirements.
4. Contracts
Any agreement related to the Multi-Class System shall require the parties
thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
The Plan, having been reviewed and approved by the Board of Trustees and the
Independent Trustees, shall take effect as of September , 1996.
6. Amendments
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3(b) of this
Plan.
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