As filed with the Securities and Exchange Commission on November 26, 1997
Registration No. 333-5039
File No. 811-7643
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 2 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 4 [X]
(Check appropriate box or boxes)
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Phoenix-Aberdeen Series Fund
(Exact Name of Registrant as Specified in Charter)
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101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices) (Zip Code)
(800) 243-1574
(Registrant's Telephone Number, including Area Code)
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Thomas N. Steenburg
Vice President, Counsel and Secretary
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115-0479
(name and address of Agent for Service)
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It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on November 28, 1997 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on ________________ pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on _________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<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 ..................... Financial Highlights
4. General Description of Registrant ......... Cover Page, Introduction, Investment Objectives
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 Shares, Investor
Account Services, Dividends, Distributions and
Taxes, and Additional Information
7. Purchase of Securities Being Offered ...... Fund Expenses, Distribution Plans, 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 Trust
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 ...... Services of the Adviser, Distribution Plans and
Other Information
17. Brokerage Allocation ........................ Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities ......... The Fund
19. Purchase, Redemption and Pricing of Securities
Being Offered .............................. Net Asset Value, How to Buy Shares, Alternative
Purchase Arrangements, Investor Account
Services, Redemption of Shares, and Dividends,
Distributions and Taxes
20. Tax Status ................................. Dividends, Distributions and Taxes
21. Underwriters ................................. The Distributor
22. Calculation of Performance Data ............ Performance Information
23. Financial Statements ........................ Financial Statements
</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>
[COVER]
PHOENIX
ABERDEEN
Prospectus November 28, 1997
o PHOENIX-ABERDEEN
NEW ASIA FUND
o PHOENIX-ABERDEEN
GLOBAL SMALL CAP FUND
[LOGO] PHOENIX
DUFF & PHELPS
<PAGE>
PHOENIX-ABERDEEN NEW ASIA FUND
PHOENIX-ABERDEEN GLOBAL SMALL CAP FUND
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
November 28, 1997
Phoenix-Aberdeen New Asia Fund (the "New Asia Fund") seeks as its
investment objective long term capital appreciation. 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 Fund") seeks as its
investment objective long-term capital appreciation. It is intended that this
Series will invest primarily in a globally diversified portfolio of equity
securities of small and medium sized companies.
Phoenix-Aberdeen Series Fund (the "Trust") is an open-end management
investment company whose shares are offered in two series (each a "Fund" and
collectively the "Funds"). 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.
This Prospectus sets forth concisely the information about the Funds 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
representations, 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 Funds, Adviser, or Distributor. This Prospectus
does not constitute an offer to sell or a 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 Funds is contained in the Statement of Additional
Information dated November 28, 1997 which has been filed with the Securities
and Exchange Commission (the "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.
The Commission maintains a Web site (http://www.sec.gov) that contains
this Prospectus, the Statement of Additional Information, material incorporated
by reference, and other information regarding registrants that file
electronically with the Commission.
Shares of the Trust 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
COMMISSION 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: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY): (800) 243-1926
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
INTRODUCTION ................................. 2
FUND EXPENSES ................................. 3
FINANCIAL HIGHLIGHTS ........................... 5
PERFORMANCE INFORMATION ..................... 6
INVESTMENT OBJECTIVES AND POLICIES ............ 7
INVESTMENT TECHNIQUES AND RELATED RISKS ...... 9
INVESTMENT RESTRICTIONS ..................... 12
MANAGEMENT OF THE FUNDS ..................... 12
DISTRIBUTION PLANS ........................... 14
HOW TO BUY SHARES ........................... 15
INVESTOR ACCOUNT SERVICES ..................... 20
NET ASSET VALUE .............................. 21
HOW TO REDEEM SHARES ........................ 22
DIVIDENDS, DISTRIBUTIONS AND TAXES ............ 23
ADDITIONAL INFORMATION ........................ 23
</TABLE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of
Phoenix-Aberdeen Series Fund (the "Trust"). The Trust 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"). Shares of the Trust are divided into
two series, each a "Fund" and collectively the "Funds." Each Fund 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 Asset
Management PLC (previously known as Aberdeen Trust plc). The Adviser is
entitled to a monthly management fee at an annual rate of 0.85% of the average
aggregate daily net asset values of the New Asia Fund and Global Fund. See
"Management of the Fund" for a description of the Investment Advisory
Agreement, management fees and the Adviser's undertaking to reimburse the Fund
for certain expenses.
Distributor and Distribution Plans
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
serves as national distributor of the Funds' shares. See "Distribution Plans"
and the Statement of Additional Information. Equity Planning also acts as
financial agent of the Funds and as such receives a fee. See "The Financial
Agent." Equity Planning also serves as the Funds' transfer agent. See "The
Custodian and 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 all classes of
each Fund. Pursuant to the Class A distribution plan, an amount equal to 0.25%
annually of the average daily net assets of Class A Shares of each Fund may be
reimbursed to Equity Planning for furnishing shareholder services ("Service
Fee"). Pursuant to the Class B distribution plan, amounts not exceeding 0.75%
annually of the average daily net assets of Class B Shares of each Fund may be
reimbursed to Equity Planning to finance the distribution of Class B Shares and
0.25% for a Service Fee. See "Distribution Plans."
Purchase of Shares
Each Fund currently offers two classes of shares 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 ("State
Street Bank"), 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 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
2
<PAGE>
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
are available under specific circumstances. See "How to Buy Shares."
Redemption of Shares
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 State Street Bank.
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 a Fund will achieve its investment
objectives. The Adviser has been recently formed and has no prior operating
history. In addition, special risks may be presented by the particular types of
securities in which the Funds may invest. As a result of each Fund's investment
in securities of foreign issuers, and, in particular, issuers located in
specific areas of the globe, each Fund's 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 Fund
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.
FUND EXPENSES
The following table illustrates all expenses and fees that a shareholder
is expected to incur. The expenses and fees set forth in the table were for the
fiscal year ended July 31, 1997, annualized.
<TABLE>
<CAPTION>
New Asia Fund
--------------------------------------------
Class A Shares Class B Shares
appropriate Item, so
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a 4.75% None
percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None
Dividends
Deferred Sales Load (as a percentage of original None 5% during the
purchase price or redemption proceeds, as first year,
applicable) decreasing 1%
annually to 2%
during the fourth
and fifth years;
dropping to 0%
after the fifth year
Redemption Fee None None
Exchange Fee None None
Annual Fund Operating Expenses
(as a percentage of average net assets):
Management Fees 0.85% 0.85%
12b-1 Fees (a) 0.25% 1.00%
Other Operating Expenses
(After Reimbursement) 1.00%(b) 1.00%(b)
------- ----------
Total Fund Operating Expenses
(After Expense Reimbursement) 2.10% 2.85%
======= ==========
<CAPTION>
Global Fund
--------------------------------------------
Class A Shares Class B Shares
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a 4.75% None
percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None
Dividends
Deferred Sales Load (as a percentage of original None 5% during the
purchase price or redemption proceeds, as first year,
applicable) decreasing 1%
annually to 2%
during the fourth
and fifth years;
dropping to 0%
after the fifth year
Redemption Fee None None
Exchange Fee None None
Annual Fund Operating Expenses
(as a percentage of average net assets):
Management Fees 0.85% 0.85%
12b-1 Fees (a) 0.25% 1.00%
Other Operating Expenses
(After Reimbursement) 1.00%(c) 1.00%(c)
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Total Fund Operating Expenses
(After Expense Reimbursement) 2.10% 2.85%
======= ==========
</TABLE>
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(a) "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"). Rule 12b-1 Fees as stated include a Service
Fee. See "Distribution Plans."
(b) The Adviser has agreed to reimburse the New Asia Fund's Class A Shares
and Class B Shares for the amount, if any, by which Other Operating Expenses
for the fiscal year ended July 31, 1998 exceed 1.00% of average net assets of
such Fund. Other Operating Expenses absent expense reimbursement would have
been 2.66% and 2.66% annualized, respectively, of average net assets. Total
Fund Operating Expenses would have been 3.76% and 4.51%, respectively, absent
such reimbursement.
(c) The Adviser has agreed to reimburse the Global Fund's Class A Shares
and Class B Shares for the amount, if any, by which Other Operating Expenses
for the fiscal year ended July 31, 1998 exceed 1.00% of average net assets of
such Fund. Other Operating Expenses absent expense reimbursement would have
been 1.51% and 1.51% annualized, respectively, of average net assets. Total
Fund Operating Expenses would have been 2.61% and 3.36%, respectively, absent
such reimbursement.
3
<PAGE>
<TABLE>
<CAPTION>
Example* New Asia Series
- ---------------------------------------------------- ---------------------------------------
1 year 3 years 5 years 10 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 $68 $110 $155 $279
Class B Shares $69 $108 $150 $300
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 $68 $110 $155 $279
Class B Shares $29 $ 88 $150 $300
<CAPTION>
Example* Global Series
- ---------------------------------------------------- --------------------------------------
1 year 3 years 5 years 10 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 $68 $110 $155 $279
Class B Shares $69 $108 $150 $300
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 $68 $110 $155 $279
Class B Shares $29 $ 88 $150 $300
</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. Class B
Share figures assume conversion to Class A Shares after eight years. See
"Management of the Fund," "Distribution Plans" and "How to Buy Shares."
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table sets forth certain financial information for the
Funds. The financial information has been audited by Price Waterhouse LLP,
independent accountants. Financial statements and notes thereto are
incorporated by reference in the Statement of Additional Information. The
Statement of Additional Information and the Funds' most recent Annual Report
(containing the report of Independent Accountants and additional information
relating to Fund performance) are available at no charge upon request by
calling (800) 243-4361.
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
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NEW ASIA FUND
<TABLE>
<CAPTION>
Class A Class B
--------------------- -------------------
From Inception From Inception
9/4/96 to 9/4/96 to
7/31/97 7/31/97
--------------------- -------------------
Statement.
<S> <C> <C>
Net asset value, beginning of period ...... $ 10.00 $ 10.00
Income from investment operations (7)
Net investment income ..................... 0.09 (4)(5) 0.01(4)(5)
Net realized and unrealized gain ......... 0.41 0.43
-------- --------
Total from investment operations ......... 0.50 0.44
-------- --------
Less distributions
Dividends from net investment income ...... (0.06) (0.05)
Dividends from net realized gains ......... -- --
-------- --------
Total distributions ..................... (0.06) (0.05)
-------- --------
Change in net asset value .................. 0.44 0.39
-------- --------
Net asset value, end of period ............ $ 10.44 $ 10.39
======== ========
Total return(1) .............................. 4.98%(3) 4.37% (3)
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $13,355 $ 6,416
Ratio to average net assets of:
Operating expenses ........................ 2.10%(2) 2.85% (2)
Net investment income ..................... 0.95%(2) 0.06%(2)
Portfolio turnover ........................ 9%(3) 9% (3)
Average commission rate paid(6) ............ $0.0106 $0.0106
</TABLE>
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(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.15
and $0.15, respectively.
(6) A fund is required to disclose its average commission rate per share for
securities trades on which commissions are charged. This rate generally
does not reflect mark-ups, mark-downs, or spreads on shares traded on a
principal basis.
(7) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from
anticipated results depending on the time of share purchases and
redemptions.
5
<PAGE>
GLOBAL SMALL CAP FUND
<TABLE>
<CAPTION>
Class A Class B
---------------------- ----------------------
From Inception From Inception
9/4/96 to 9/4/96 to
7/31/97 7/31/97
---------------------- ----------------------
<S> <C> <C>
Net asset value, beginning of period ...... $ 10.00 $ 10.00
Income from investment operations
Net investment income (loss) ............... (0.03)(4)(5) (0.10)(4)(5)
Net realized and unrealized gain ......... 1.11 1.10
-------- --------
Total from investment operations ......... 1.08 1.00
-------- --------
Less distributions
Dividends from net investment income ...... -- --
Dividends from net realized gains ......... -- --
-------- --------
Total distributions ..................... -- --
-------- --------
Change in net asset value .................. 1.08 1.00
-------- --------
Net asset value, end of period ............ $ 11.08 $ 11.00
======== ========
Total return(1) .............................. 10.80% (3) 10.00% (3)
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $23,874 $17,658
Ratio to average net assets of:
Operating expenses ........................ 2.10% (2) 2.85% (2)
Net investment income (loss) ............... (0.32%)(2) (1.07%)(2)
Portfolio turnover ........................ 162% (3) 162% (3)
Average commission rate paid(6) ............ $0.0127 $0.0127
</TABLE>
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(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.05
and $0.05, respectively.
(6) A fund is required to disclose its average commission rate per share for
securities trades on which commissions are charged. This rate generally
does not reflect mark-ups, mark-downs, or spreads on shares traded on a
principal basis.
-----------
PERFORMANCE INFORMATION
Each Fund may, from time to time, include its performance history 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 Fund in accordance with formulas specified by
the Securities and Exchange Commission. Yield and total return are based on a
Fund's past performance only and are not an indication of future performance.
Performance information about each Fund is based on that Fund's past
performance only and is not an indication of future performance. Performance
information may be expressed as yield of any Fund or Class thereof, and as
total return of any Fund or Class thereof.
The yield of each Fund will be computed by dividing the Fund's 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 Fund's
yield.
Standardized quotations of average annual total return for Class A and
Class B Shares of each Fund 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 Fund 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 Fund (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. Each 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.
Each Fund may also advertise performance relative to certain performance
rankings and indices compiled by independent organizations. Each 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.
6
<PAGE>
Additionally, each Fund may compare a Fund's performance results to other
investment or savings vehicles (such as certificates of deposit) and may refer
to results published in various publications such as Forbes, Fortune, Money,
Barron's, Investor's Business Daily, The Wall Street Journal, The New York
Times, USA Today, Registered Representative, Financial Planning, Mutual Funds,
Mutual Fund Market News, Financial Times, Investment Adviser, Investment Week,
Money Observer, The International Herald Tribune and other newspapers and
periodicals. Each Fund may also refer to results broadcast on television (such
as CNBC and CNN) and on the radio, as well as electronically (such as via the
Internet). Each 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 Fund with certain widely acknowledged outside standards or
indices for market performance, such as the Standard & Poor's 500 Composite
Stock Price Index ("S&P 500 Index"), Dow Jones Industrial Average, Europe
Australia Far East Index (EAFE), Consumer Price Index, FT/S&P-Actuaries' World
Indicies (medium-small components), Morgan Stanley Capital International
("MSCI") Developed Market Indices and MSCI AC Asia Pacific (excluding Japan)
Index.
Advertisements, sales literature and other communications may contain
information about a Fund or the 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, a Fund may discuss
specific portfolio holdings or industries in such communications. To illustrate
components of overall performance, a 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 Fund's portfolio;
or compare a Fund's 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, CS First Boston High Yield Index, MSCI Developed Market
Indices and AC Asia Pacific (excluding Japan) Index, FT/S&P-Actuaries' World
Indicies (medium-small components) and Solomon Brothers Corporate and
Government Bond Indices.
Performance information for a Fund reflects only the performance of a
hypothetical investment in Class A or Class B Shares of a Fund during the
particular time period on which the calculations are based. Performance
information should be considered in light of a particular Fund's investment
objectives and policies, characteristics and qualities of the Fund, 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 Trust's Annual Report, available upon request and without charge, will
contain a discussion of the performance of each Fund and a comparison of that
performance to a securities market index.
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has a different investment objective and is designed to meet
different investment needs. The differences in objectives and policies between
the Funds can be expected to affect the investment return of each Fund and the
degree of market and financial risk to which each Fund is subject. The
investment objective of each Fund is a fundamental policy which may not be
changed without the approval of a vote of a majority of the outstanding shares
of that Fund. Since certain risks are inherent in the ownership of any
security, there can be no assurance that any Fund will achieve its investment
objective. The investment policies of each Fund 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
Fund.
New Asia Fund
The investment objective of the New Asia Fund is to provide long term
capital appreciation. It is intended that this Fund will achieve its objective
by investing under normal market conditions at least 65% of its total assets in
a diversified portfolio of common stocks, convertible securities and preferred
stocks 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
Asian 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 Fund does not intend to invest in securities which are traded in markets in
Japan or in countries organized under the laws of Japan.
The Fund will invest in countries having more established markets in
regions of Asian countries. The Asian countries to be represented in the Fund
will ordinarily consist of three or more of the following countries: China
(including Hong Kong), India, Indonesia, South Korea, Malaysia, Pakistan, the
Philippines, Singapore, Sri Lanka, Taiwan and Thailand. From time to time the
Fund may invest in South Pacific nations such as Australia and New Zealand.
There is no requirement that the Fund, 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 Fund 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,
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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 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 Fund 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 a Fund's 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 Fund may establish and maintain reserves of up to 100% of its assets
for temporary defensive purposes under abnormal market or economic conditions.
The Fund's 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 Fund's
assets are held in cash or cash equivalents, it is not investing in securities
intended to meet the Fund's 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. Exchange rates are determined
by forces of supply and demand in the foreign exchange markets, and these
forces are in turn affected by a range of economic, political, financial,
governmental and other factors. Exchange rate fluctuations can affect the
Fund's net asset value and dividends either positively or negatively depending
upon whether foreign currencies are appreciating or depreciating in value
relative to the U.S. dollar. Exchange rates fluctuate over both the short and
long term. 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 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 the 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
Fund in some foreign countries. See "Foreign Securities" and Statement of
Additional Information.
For many foreign securities, there are U.S. dollar-denominated American
Depositary 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 of 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 Fund 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 Fund may also
invest in ADRs which are not sponsored by domestic banks and present the risks
of foreign investments noted above. The Fund may also invest in European
Depositary 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 Fund
The investment objective of the Global Fund is long-term capital
appreciation. It is intended that this Fund 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
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small to medium 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
Fund 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 Fund's investments. Under normal
circumstances, at least 65% of the Fund's net assets will be invested in three
different countries. The Fund 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 Fund may purchase
securities of companies, wherever organized, which have their principal
activities and interests outside the United States. The Fund 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 Fund may invest in stocks of all types and any variety of industries.
The Fund will not concentrate its investments in specific industries in amounts
greater than 25% of its assets in any particular "industry" without shareholder
approval. During adverse economic or market conditions, any part of the Fund's
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 Fund's
assets are held in cash or cash equivalents, it is not investing in securities
intended to meet the Fund's 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 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.
Additional discussion regarding risks involved in investing in each Fund
are described in the "Investment Techniques and Related Risks" section below.
INVESTMENT TECHNIQUES AND RELATED RISKS
Foreign Securities. Each Fund may purchase foreign securities, including
emerging market securities and those issued by foreign branches of U.S. banks.
A 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, each 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 Funds 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 Funds 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
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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. 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 Funds 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 Fund's investments in such countries and the
availability of additional investments in such countries.
The economies of developing countries generally are heavily dependent upon
international trade and, accordingly, have been and may continue to be
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. These economies also have been and may
continue to be adversely affected by economic conditions in the countries with
which they trade.
The Funds 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 each 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.
Each 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 Funds 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 Fund's 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 Fund 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 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 Fund 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 Fund will engage in
transactions in financial futures contracts and related options only for
hedging purposes and not for speculation. In addition, a Fund will not purchase
or sell any financial futures contract or related option if, immediately
thereafter, the sum of the cash or other assets committed with respect to the
Fund's existing futures and related options positions and the premiums paid for
related options would exceed 5% of the market value of the Fund's total assets.
At the time of purchase of a futures contract or a call option on a futures
contract, any asset, including equity securities and non-investment grade debt
so long as the asset is liquid, unencumbered and marked to market daily equal
to the market value of the futures contract minus the Fund's initial margin
deposit with respect thereto, will be deposited in a pledged account with the
Trust's custodian bank to collateralize fully the position and thereby ensure
that it is not leveraged. The extent to which a Fund may enter into financial
futures contracts and related options may also be limited by
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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
Fund's 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 Fund may be
unable to close its position. The risk in purchasing an option on a financial
futures contract is that a Fund 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 Fund 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 Fund 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 Fund may incur costs in connection with conversions between various
currencies. Each Fund 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, any asset, including equity securities and non-investment grade debt
so long as the asset is liquid, unencumbered and marked to market daily equal
to the market value of the contract, minus the Fund's initial margin deposit
with respect thereto, will be deposited in a pledged account with the Fund's
custodian bank to collateralize fully the position and thereby ensure that it
is not leveraged.
When a Fund 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 Fund 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 Fund 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 Fund's portfolio securities
denominated in such foreign currency. The forecasting of short-term currency
market 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 Fund 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 Fund 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 Fund is obligated to deliver.
If a Fund utilizing this investment technique retains the portfolio
security and engages in an offsetting transaction, the Fund will incur a gain
or a loss (as described below) to the extent that there has been movement in
forward contract prices. If a Fund 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 Fund's 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 Fund 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 Fund 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 decline 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 Fund 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 Fund 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 Fund's net 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 Fund acquires a money market instrument (generally a security issued by the
U.S. Government or an agency thereof, a banker's
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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 Fund and
is unrelated to the interest rate on the underlying instrument. A repurchase
agreement acquired by a Fund 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 Trust'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 Fund 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 Fund; 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 Fund. A Fund 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 Fund 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 Fund 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. 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 Trust to be creditworthy and when the Adviser believes the consideration to
be earned justifies the attendant risks.
Warrants and Stock Rights. A Fund 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 Fund
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 not determined by the Adviser to be liquid under
guidelines adopted by the Board of Trustees of the Fund. Liquidity relates to
the ability of a Fund to sell a security in a timely manner at a price which
reflects the value of that security. Although it is generally the Funds' policy
to hold securities until their maturity, the relative illiquidity of some of
the Funds' portfolio securities may adversely affect the ability of a Fund 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 Fund 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.
INVESTMENT RESTRICTIONS
The investment restrictions to which the Funds are subject, together with
the investment objectives of each Fund, are fundamental policies of each Fund
which may not be changed without the approval of the Fund's shareholders. A
detailed description of each Fund's investment restrictions is contained in the
Statement of Additional Information.
MANAGEMENT OF THE FUNDS
The Trust is a mutual fund, known as an open-end, management investment
company. The Board of Trustees ("Trustees") supervises the business affairs and
investments of the Trust, which is managed on a daily basis by the Trust's
investment adviser. The Trust was organized as a Massachusetts business trust
on May 31, 1996. The Trust is a series fund currently issuing two series of
shares of beneficial interest. Two classes of shares are offered by each Fund.
The Adviser
The Trust's investment adviser is Phoenix-Aberdeen International Advisors,
LLC (the "Adviser"), which is a 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 Asset Management PLC. Aberdeen Asset Management PLC is a
partially-owned subsidiary of Phoenix Home Life. While many of the officers and
directors of the Adviser and Subadvisers 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 in the business of writing
individual and group life and health insurance and annuities. Phoenix Home Life
principal offices are located in Hartford, Connecticut. Its affiliate, Phoenix
Duff & Phelps Corporation ("PDP"), a New York Stock Exchange traded company,
provides various financial advisory services to institutional investors,
corporations and individuals through
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its operating subsidiaries. As of September 30, 1997, Phoenix Duff & Phelps
Corporation, and its advisory subsidiaries, had approximately $44 billion in
assets under management.
Aberdeen Asset Management PLC 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, 1997, Aberdeen Asset Management PLC, and its
advisory subsidiaries, had approximately $17.8 billion in assets under
management.
The Adviser continuously furnishes an investment program for each Fund and
manages the investment and reinvestment of the assets of each Fund subject at
all times to the supervision of the Trustees. The Adviser, at its expense,
furnishes to the Trust 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 Trust. Based upon the diverse range of
portfolio holdings contemplated and the expertise available through certain
affiliates, the Adviser will engage Phoenix Investment Counsel, Inc. ("PIC")
and Aberdeen Fund Managers, Inc. as sub-advisers. PIC is an indirect subsidiary
of PDP and its principal offices are located at 56 Prospect Street, Hartford,
Connecticut 06115. Aberdeen Fund Managers, Inc. is a direct subsidiary of
Aberdeen Asset Management 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 Fund, the Adviser is entitled to a
fee, payable monthly, at an annual rate of 0.85% of the average daily net assets
of each Fund. The Investment Advisory Agreement with the Trust provides that the
Adviser will reimburse the Trust for the amount, if any, by which the total
operating expenses of any Fund (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 Fund 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 Fund
are then qualified for sale. For providing cash management and other services to
each Fund, as needed, the Adviser pays a monthly fee to PIC equivalent to 0.15%
of the average aggregate daily net asset value of each Fund. For providing
advisory services with respect to the Funds' assets allocated from time to time
by the Adviser, the Adviser pays a fee to PIC equivalent to 0.40% of the average
daily net asset value of the assets of each Fund so allocated. For implementing
certain portfolio transactions and providing research and other services to each
Fund, 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 the
New Asia Fund and 0.40% of the average daily net asset value of such assets of
the Global Fund allocated to it by the Adviser for management. For assistance in
implementing certain portfolio transactions, providing research and other
services to each Fund with regard to investments in particular geographic areas,
the Aberdeen Fund Managers Inc. shall engage the services of its affiliates
Aberdeen Fund Managers Ltd. and Aberdeen Asset Management Asia Ltd. for which
such entities shall be paid a fee by Aberdeen Fund Managers Inc. The total
advisory fee of 0.85% of the average daily net assets of each Fund 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 Fund.
The Portfolio Managers
New Asia Fund
Mr. Hugh Young is the portfolio manager of the New Asia Fund 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 Aberdeen Asset Management
Asia Ltd. since 1988. He is also Senior Vice President and portfolio manager
for the Aberdeen New Asia Series of the Phoenix Edge Series Fund.
Global Fund
The Global Fund is managed by an investment committee which is primarily
responsible for the day-to-day management of the portfolio.
The Financial Agent and Administrator
Phoenix Equity Planning Corporation ("Equity Planning") serves as
financial agent of the Trust and, as such, performs bookkeeping and pricing
services and certain other functions for the Trust. As compensation under a
Financial Agent Agreement, Equity Planning is entitled to a fee, payable
monthly and based upon (a) the average of the aggregate daily net asset values
of each Fund, at the following incremental annual rates:
<TABLE>
<S> <C>
First $100 million .05%
$100 million to $300 million .04%
$300 million through $500 million .03%
Greater than $500 million .015%
</TABLE>
(b) a minimum fee of $70,000 for each Fund; and (c) an annual fee of $12,000
for each class of shares beyond one. For its services during the Trust's last
fiscal year, Equity Planning received $97,866 or 0.24% of average net assets.
PDP serves as administrator for the Trust, and, as such, facilitates and
provides administrative services for the Trust. As compensation, under an
Administration Agreement, PDP receives a fee, computed daily and payable
monthly, at the annual rate of 0.15% of the average daily net assets of the
Trust.
The Custodian and Transfer Agent
The custodian of the assets of the Trust is Brown Brothers Harriman & Co.,
40 Water Street, Boston, Massachusetts 02109. The Trust has authorized the
custodian to appoint one or more subcustodians for the assets of the Trust held
outside the United States. The securities and other assets of each Fund are
held by the Custodian or any subcustodian(s) separate from the securities and
assets of each other Fund.
13
<PAGE>
Pursuant to a Transfer Agency and Service Agreement with the Trust, Equity
Planning acts as transfer agent for the Trust (the "Transfer Agent") for which
it is paid $14.95 for each designated shareholder account. 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 Conduct Rules of the National Association of Securities
Dealers, Inc. ("NASD") 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 Trust.
DISTRIBUTION PLANS
Equity Planning is the national distributor of the Funds' 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 Trust and a director and officer of Equity Planning. David R.
Pepin, a director and officer of Equity Planning, is an officer of the Trust.
G. Jeffrey Bohne, Nancy G. Curtiss, William E. Keen, III, William R. Moyer,
Leonard J. Saltiel and Thomas N. Steenburg are officers of the Trust and
officers of Equity Planning.
Equity Planning and the Trust have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Trust shares sold subject to an initial sales charge and those
sold subject to a contingent deferred sales charge. The Trust has granted
Equity Planning the exclusive right to purchase from the Trust and resell, as
principal, shares needed to fill unconditional orders for Trust shares. Equity
Planning may sell Trust shares through its registered representatives or
through securities dealers with whom it has sales agreements. Equity Planning
may also sell Trust shares pursuant to sales agreements entered into with banks
or bank affiliated securities brokers who, acting as agent for their customers,
place orders for Trust 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 Fund.
The sale of a Fund's 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 Trustees have adopted separate distribution plans under Rule 12b-1 of
the 1940 Act for each Fund and each class of shares of each Fund of the Trust
(the "Class A Plans," "Class B Plans" and collectively the "Plans"). The Plans
authorize a Fund to reimburse Equity Planning for expenses in connection with
the sale and promotion of such Fund's shares and the furnishing of shareholder
services. A 12b-1 fee paid by one Fund may be used to finance distribution of
the Shares of another Fund based on the number of shareholder accounts within
the Funds. Pursuant to the Class B Plans, a Fund is authorized to reimburse
Equity Planning monthly for actual expenses of Equity Planning up to 0.75%
annually for the average daily net assets of each Fund's Class B Shares. In
addition, under the Plans the Funds will pay Equity Planning 0.25% annually of
the average daily net assets of the Funds for providing services to
shareholders, including assistance in connection with inquiries related to
shareholder accounts (the "Service Fee").
Expenditures incurred under the Plans may consist of: (i) commissions to
sales personnel for selling shares of the Trust (including underwriting
commissions and finance charges related to the payment of commissions for sales
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
for services rendered in connection with the sale and distribution of shares of
the Trust; (iv) payment of expenses incurred in sales and promotional
activities including advertising expenditures related to the Trust; (v) the
costs of preparing and distributing promotional materials; (vi) the costs of
printing the Trust's Prospectus and Statement of Additional Information for
distribution to potential investors; and (vii) such other similar services that
the Trustees determine are reasonably calculated to result in the sale of
shares of the Trust. From the Service Fee, the Distributor expects to pay a
quarterly fee to qualifying broker-dealer firms, as compensation for providing
personal services and/or the maintenance of shareholder accounts, with respect
to shares sold by such firms. This fee will not exceed on an annual basis 0.25%
of the average annual net asset value of such shares, and will be in addition
to sales charges on Trust shares which are reallowed to such firms. To the
extent that the entire amount of the Service Fee is not paid to such firms, the
balance will serve as compensation for personal and account maintenance
services furnished by the Distributor.
In order to receive payments under the Plans, participants must meet such
qualifications as are to be established in the sole discretion of the
Distributor, such as services to the Trust's
14
<PAGE>
shareholders; or services providing the Trust with more efficient methods of
offering shares to groups of clients, members or prospects of a participant; or
services permitting bulking of purchases or sales, or transmissions of such
purchases or sales by computerized tape or other electronic equipment; or other
batch processing.
For the fiscal year ended July 31, 1997, the Trust paid the Distributor
$65,235 under the Class A Plan and $146,019 under the Class B Plan. The fees
were used to compensate broker-dealers for servicing shareholder's accounts,
including $9,496 paid to W.S. Griffith & Co., Inc., an affiliate, compensating
sales personnel and reimbursing the Distributor for commission expenses and
expenses related to preparation of the marketing material. The Distributor's
expenses from selling and servicing Class B Shares may be more than the
payments received from contingent deferred sales charges collected on redeemed
shares and from the Funds under the Class B Plans. Those expenses may be
carried over and paid in future years. At July 31, 1997, the end of the last
Plan year, the Distributor had incurred unreimbursed expenses under the Class B
Plans of $1,057,379 (equal to 1.72% of the Trust's net assets) which have been
carried over into the present Class B Plan year.
On a quarterly basis, the Trustees review a report on expenditures under
each Plan and the purposes for which expenditures were made. The Trustees
conduct an additional more extensive review annually in determining whether
each Plan will be continued. By its terms, continuation of each Plan from year
to year is contingent on annual approval by a majority of the Trustees 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 either Plan or any related agreements (the "Plan Directors"). Each
Plan provides that it may not be amended to increase materially the costs which
the Trust may bear without approval of the applicable class of shareholders of
the Trust and that other material amendments 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. Each Plan 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." Each Plan may be terminated at any time by vote of a
majority of the Plan Trustees or a majority of the applicable class of
outstanding shares of the Trust.
The Trustees have concluded that there is a reasonable likelihood that the
Plans will benefit the Funds and all classes of shareholders.
The 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 Fund, 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. Shares issued will
be electronically recorded in book entry form. 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 Fund under certain conditions, which have been directed to
any Fund for investment. (See the Statement of Additional Information.)
The Funds offer 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 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 Trust, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the Trust,
the accumulated continuing distribution and services fee and contingent
deferred sales charges on Class B Shares prior to conversion would be less than
the initial sales charge and accumulated services fee on Class A Shares
purchased at the same time, and to what extent
15
<PAGE>
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,
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 and services fee and,
accordingly, pay correspondingly higher dividends per share. However, because
initial sales charges are deducted at the time of purchase, such 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 the close
of trading on the New York Stock Exchange.
The sales charge varies with the size of the purchase and reduced charges
apply to the aggregate of purchases of the Funds 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 Funds 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 Trust 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.
16
<PAGE>
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 $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; or (16) 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 Trust.
In addition, Class A shares purchased by the following investors are not
subject to any Class A sales charge: (1) investment advisers and financial
planners who charge an advisory, consulting or other fee for their services and
buy shares for their own accounts or the accounts of their clients, and (2)
retirement plans and deferred compensation plans and trusts used to fund those
plans (including, for example, plans qualified or created under sections
401(a), 403(b) or 457 of the Internal Revenue Code), and "rabbi trusts" that
buy shares for their own accounts, in each case if those purchases are made
through a broker or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; (3) clients of such
investment advisers or financial planners who buy shares for their own accounts
may also purchase shares without sales charge but only if their accounts are
linked to a master account of their investment adviser or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of these investors may
be charged a fee by the broker, agent or financial intermediary for purchasing
shares).
Shares issued pursuant to the automatic reinvestment of income dividends
or capital gains distributions are not subject to any sales charges. The Trust
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 "reallowed" to selected dealers and agents.
Equity Planning will reallow discounts to selected dealers and agents in the
amounts indicated in the table above. In this regard, Equity Planning may elect
to reallow 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 reallowance 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 Funds 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
17
<PAGE>
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 Funds 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 Trust or Equity Planning to sell a
specified dollar amount of shares qualifying for a reduced sales charge.
Accordingly, out of an initial purchase (and subsequent purchases if
necessary), 5% of the dollar amount of purchases required to complete the
investment is held in escrow in the form of shares (valued at the purchase
price thereof) registered in the investor's name until completion of the
investment, at which time escrowed shares are deposited to the investor's
account. If the investor does not complete the investment and does not within
20 days after written request by Equity Planning or the investor's dealer pay
the difference between the sales charge on the dollar amount specified in the
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
the investor's 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 Funds, 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 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 0.25% 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 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 Fund, and other circumstances. Investors should consider
whether, during the anticipated term of their investment in a Fund, 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.
18
<PAGE>
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 and service 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 distribution and service 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;
19
<PAGE>
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
Fund 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 and service 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 and service 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
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 and service fee for an indefinite period which may extend
beyond the period ending eight years after the end of the month in which
affected Class B Shares were purchased. If the Trust were unable to obtain such
assurances with respect to the assessment of distribution and service fees and
transfer agent costs relative to the Class B Shares, it might make additional
distributions if doing so would assist in complying with the Trust's general
practice of distributing sufficient income to reduce or eliminate U.S. federal
taxes.
INVESTOR ACCOUNT SERVICES
The Funds mail periodic statements and reports to shareholders. In order
to reduce the volume and cost of mailings, to the extent possible, only one
copy of most Fund reports will be mailed to households for multiple accounts
with the same surname at the same household address. Please contact Equity
Planning to request additional copies of shareholder reports toll free at (800)
243-4361.
In most cases, changes to any shareholder account may be accomplished by
calling Shareholder Services at (800) 243-1574. More information relating to
the shareholder account services can be found in the Funds' Statement of
Additional Information ("SAI").
Bank Draft Investing Program (Investo-Matic Plan). By completing the
Investo-Matic Section of the New Account Application, you may authorize the
bank named in the form to draw $25 or more from your personal bank account to
be used to purchase additional shares for your account. The amount you
designate will be made available, in form payable to the order of the Transfer
Agent, by the bank on the date the bank draws on your account and will be used
to purchase shares at the applicable offering price.
Distribution Option. The Funds currently declare all income dividends and
all capital gain distributions, if any, payable in shares of the Funds at net
asset value or, at your option, in cash. By exercising the distribution option,
you may elect to: (1) receive both dividends and capital gain distributions in
additional shares or (2) receive dividends in cash and capital gain
distributions in additional shares or (3) receive both dividends and capital
gain distributions in cash. If you elect to receive dividends and/or
distributions in cash and the check cannot be delivered or remains uncashed due
to an invalid address, then the dividend and/or distribution will be reinvested
after the Transfer Agent has been informed that the proceeds are undeliverable.
Additional shares will be purchased in your account at the then current net
asset value. Dividends and capital gain distributions received in shares are
taxable to you and credited to your account in full and fractional shares
computed at the closing net asset value on the next business day after the
record date. No interest will accrue on amounts represented by uncashed
distribution or redemption checks.
Systematic Withdrawal Program. The Systematic Withdrawal Program allows
you to periodically redeem a portion of your account on a predetermined
monthly, quarterly, semiannual or annual basis. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the month
at the closing net asset value on the date of redemption. The Systematic
Withdrawal Program also provides for redemptions to be tendered on or about the
10th, 15th or 25th of the month with proceeds to be directed through Automated
Clearing House (ACH) to your bank account. In addition to the limitations
stated below, withdrawals may not be less than $25 and minimum account balance
requirements shall continue to apply.
Class A and B shareholders participating in the Systematic Withdrawal
Program must own shares of the Funds worth $5,000 or more, as determined by the
then current net asset
20
<PAGE>
value per share, and elect to have all dividends reinvested. The purchase of
shares while participating in the withdrawal program will ordinarily be
disadvantageous to the Class A Shares investor since a sales charge will be
paid by the investor on the purchase of Class A Shares at the same time as
other shares are being redeemed. For this reason, investors in Class A Shares
may not participate in an automatic investment program while participating in
the Systematic Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any
applicable contingent deferred sales charge on all shares redeemed.
Accordingly, the purchase of Class B Shares will generally not be suitable for
an investor who anticipates withdrawing sums in excess of the above limits
shortly after purchase.
Tax Sheltered Retirement Plans. Shares of the Funds are offered in
connection with the following qualified prototype retirement plans: IRA,
Rollover IRA, SEP-IRA, SIMPLE IRA, SIMPLE 401(k), Profit-Sharing and Money
Purchase Pension Plans which can be adopted by self-employed persons ("Keogh")
and by corporations and 403(b) Retirement Plans. Write or call Equity Planning
at (800) 243-4361 for further information about the plans.
Exchange Privileges
You may exchange shares of one Phoenix Fund for shares of another Phoenix
Fund without paying any fees or sales charges. On exchanges with share classes
that carry a contingent deferred sales charge, the CDSC schedule of the
original shares purchased continues to apply. Shares held in book-entry form
may be exchanged 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; (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 made; and (5) if you have
elected not to use the telephone exchange privilege (see below), a properly
executed exchange request must be received by the Distributor. Exchanges may be
made over the telephone or in writing and may be made at one time or
systematically over a period of time. Note, each Phoenix Fund has different
investment objectives and policies. You should read the prospectus of the
Phoenix Fund into which the exchange is to be made before making any exchanges.
This privilege may be modified or terminated at any time on 60 days' notice.
Market Timer Restrictions. Because excessive trading can hurt Fund
performance and harm shareholders, the Funds reserve the right to temporarily
or permanently terminate exchange privileges or reject any specific order from
anyone whose transactions seem to follow a timing pattern, including those who
request more than one exchange out of a fund within any 30 day period. The
Distributor has entered into agreements with certain market timer entities
permitting them to exchange their clients' shares by telephone. These
privileges are limited under those agreements. The Distributor has the right to
reject or suspend these privileges upon reasonable notice.
Telephone Exchanges. If permitted in your state and unless you waive this
privilege in writing, you or your broker may sell or exchange your shares over
the phone by calling the Distributor at (800) 243-1574. Reasonable procedures
will be used to confirm that telephone instructions are genuine. In addition to
requiring that the exchange is only made between accounts with identical
registrations, the Distributor may require address or other forms of
identification and will record telephone instructions. All exchanges will be
confirmed in writing to you. If procedures reasonably designed to prevent
unauthorized telephone exchanges are not followed, the Trust and/or Distributor
may be liable for following telephone instructions that prove to be fraudulent.
Broker/dealers other than the Distributor assume the risk of any loss resulting
from any unauthorized telephone exchange instructions from their firm or their
registered representatives. You assume the risk that the Distributor acts upon
unauthorized instructions it reasonably believes to be genuine. During times of
severe economic or market changes, this privilege may be difficult to exercise
or may be temporarily suspended. In such event, an exchange may be effected by
written request by following the procedure outlined for selling shares
represented by certificate(s).
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close
of trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The net asset value per share of each Fund is
determined by adding the values of all securities and other assets of each
Fund, subtracting liabilities, and dividing by the total number of outstanding
shares of the Fund. The total liability allocated to a class, 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
Fund, and the resulting amount of each is divided by the number of shares of
that class outstanding to produce the net asset value per share.
Each Fund's investments are valued at market value or, where market
quotations are not available, at fair value as determined in good faith by the
Trustees or their delegates. Foreign and domestic debt securities (other than
short-term investments) are valued on the basis of broker quotations or
valuations provided by a pricing service approved by the Trustees when such
prices are believed to reflect the fair value of such securities. Foreign and
domestic equity securities are valued at the last sale price or, if there has
been no sale that day,
21
<PAGE>
at the last bid price, generally. Short-term investments having a remaining
maturity of less than sixty-one days are valued at amortized cost, which the
Trustees have determined approximates market value. For further information
about security valuations, see the Statement of Additional Information.
HOW TO REDEEM SHARES
You have the right to have the Trust buy back shares at the net asset
value next determined after receipt of a redemption order, and any other
required documentation in proper form, by Phoenix Funds c/o State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. In the case of a Class
B Share redemption, you will be subject to the applicable deferred sales
charge, if any, for such shares (see "Deferred Sales Charge Alternative--Class
B Shares," above). Subject to certain restrictions, shares may be redeemed by
telephone, by check or in writing. In addition, shares may be sold through
securities dealers, brokers or agents who may charge customary commissions or
fees for their services. The Trust does not charge any redemption fees. Payment
for shares redeemed is made within seven days; provided, however, that
redemption proceeds will not be disbursed until each check used for purchases
of shares has been cleared for payment by your bank, which may take up to 15
days after receipt of the check.
The requirements to redeem shares are outlined in the table below.
Additional documentation may be required for redemptions by corporations,
partnerships or other organizations, executors, administrators, trustees,
custodians, guardians, or from IRA's or other retirement plans, or if
redemption is requested by anyone but the shareholder(s) of record. To avoid
delay in redemption or transfer, shareholders having questions about specific
requirements should contact the Funds at (800) 243-1574. Redemption requests
will not be honored until all required documents in proper form have been
received.
How can I sell my Shares?
[TELEPHONE By Phone [bullet] Sales up to $50,000
SYMBOL] [bullet] Not available on most retirement accounts
(800) 243-1574 [bullet] Requests received after 4PM will be
executed on the following business day
[ENVELOPE In Writing [bullet] Letter of instruction from the registered
SYMBOL] owner including the fund and account
number and the number of shares or dollar
amount you wish to sell
[bullet] No signature guarantee is required if your
shares are registered individually, jointly,
or as custodian under the Uniform Gifts to
Minors Act or Uniform Transfers to Minors
Act, the proceeds of the redemption do not
exceed $50,000, and the proceeds are
payable to the registered owners(s) at the
address of record
Shares previously issued in certificate form cannot be redeemed until the
certificated shares have been deposited to your account.
Telephone Redemptions. The Trust 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 you. 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 Trust 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, you would bear the risk of
loss resulting from instructions entered by an unauthorized third party that
the Trust and/or the Transfer Agent reasonably believe to be genuine. The
Telephone Redemption 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 Redemption Privilege may be difficult to exercise
or may be temporarily suspended. In such event, a redemption may be effected by
written request by following the procedure outlined above.
Written Redemptions. Ownership of shares is recorded electronically in
book entry form; no share certificates are available. If you elect not to use
the telephone redemption or telephone exchange privileges or if the shares
being exchanged are represented by a previously issued certificate(s), you must
submit your request in writing. If the shares are being exchanged between
accounts that are not identically registered, 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 unions, 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. The Distributor reserves the right to charge you for lost or stolen
certificates.
Account Reinstatement Privilege. You have a one time privilege of using
redemption proceeds from Class A and B Shares to purchase Class A Shares of any
Phoenix Fund with no sales charge (at net asset value next determined after the
request for reinvestment is made). For Federal income tax purposes, a
redemption and reinvestment will be treated as a sale and purchase of shares.
Special rules may apply in computing the amount of gain or loss in these
situations. (See "Dividends, Distributions and Taxes" for information on the
Federal income tax treatment of a disposition of shares.) A written request to
reinstate your account must be received by the Transfer Agent within 180 days
of the redemption, accompanied by payment for the shares (not in excess of the
redemption value). Class B shareholders who have had the contingent deferred
sales charge waived through participation in the Systematic Withdrawal Program
are not eligible to use the Reinstatement Privilege.
22
<PAGE>
Redemption of Small Accounts
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 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.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
Each Fund 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 Fund so qualifies, it
generally will not be subject to Federal income tax on the income it
distributes.
Each Fund 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 Fund, are
taxable to shareholders as long-term capital gains, regardless of how long they
have owned shares in the Fund. 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 Fund 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 Fund 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 Fund will be payable in shares of such class of Fund at net asset value or,
at the option of the shareholder, in cash. Any shareholder who purchases shares
of a Fund 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.
Investment income received by any Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. If a
Fund 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 Trust'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 Funds and their shareholders.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS regulations, the Funds 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 Funds reserve the right to refuse to open an account for any person
failing to provide a taxpayer identification number along with the required
certifications.
The Funds send 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
Organization of the Trust
The Trust was established on May 31, 1996 as a Massachusetts business
trust. The capitalization of the Trust consists solely of an unlimited number
of shares of beneficial interest. The Trust currently offers shares in two
funds and different classes of those Funds. Holders of shares of a Fund have
equal rights with regard to voting, redemptions, dividends, distributions, and
liquidations with respect to that Fund, except that Class B Shares of any Fund,
which bear higher distribution and services 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 Fund.
Shareholders of all Funds vote on the election of Trustees. On matters
affecting an individual Fund (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 Fund
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 Trust for the issue
or sale
23
<PAGE>
of shares of each Fund, and any class thereof and all income, earnings, profits
and proceeds thereof, are allocated to such Fund, and Class, respectively,
subject only to the rights of creditors, and constitute the underlying assets
of such Fund or class. The underlying assets of each Fund are required to be
segregated on the books of account, and are to be charged with the expenses in
respect to such Fund and with a share of the general expenses of the Trust. Any
general expenses of the Trust not readily identifiable as belonging to a
particular Fund 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 Trust may be personally liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Trust and that every written agreement, undertaking or
obligation made or issued by the Trust shall contain a provision to that
effect. The Declaration of Trust provides for indemnification out of the Trust
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. 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 Trust 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, Enfied, Connecticut 06083-2200.
Registration Statement
This Prospectus omits certain information included in the Statement of
Additional Information and Part C of the Registration Statement filed with the
Securities and Exchange Commission under the Securities Act of 1933 and the
1940 Act. A copy of the Registration Statement may be obtained from the
Securities and Exchange Commission in Washington, D.C.
24
<PAGE>
BACKUP WITHHOLDING INFORMATION
Step 1. Please make sure that the social security number or taxpayer
identification number (TIN) which appears on the Application complies
with the following guidelines:
<TABLE>
<CAPTION>
Account Type Give Social Security Number or Tax Identification Number of:
<S> <C>
Individual Individual
Joint (or Joint Tenant) Owner who will be paying tax
Uniform Gifts to Minors Minor
Legal Guardian Ward, Minor or Incompetent
Sole Proprietor Owner of Business (also provide owner's name)
Trust, Estate, Pension Plan Trust Trust, Estate, Pension Plan Trust (not personal TIN of fiduciary)
Corporation, Partnership,
Other Organization Corporation, Partnership, Other Organization
Broker/Nominee Broker/Nominee
</TABLE>
Step 2. If you do not have a TIN, you must obtain Form SS-5 (Application for
Social Security Number) or Form SS-4 (Application for Employer
Identification Number) from your local Social Security or IRS office
and apply for one. Write "Applied For" in the space on the application.
Step 3. If you are one of the entities listed below, you are exempt from backup
withholding.
[bullet] A corporation
[bullet] Financial institution
[bullet] Section 501(a) exempt organization (IRA, Corporate Retirement
Plan, 403(b), Keogh)
[bullet] United States or any agency or instrumentality thereof
[bullet] A State, the District of Columbia, a possession of the United
States, or any subdivision or instrumentality thereof
[bullet] International organization or any agency or instrumentality
thereof
[bullet] Registered dealer in securities or commodities registered in
the U.S. or a possession of the U.S.
[bullet] Real estate investment trust
[bullet] Common trust fund operated by a bank under section 584(a)
[bullet] An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1)
[bullet] Regulated Investment Company
If you are in doubt as to whether you are exempt, please contact the Internal
Revenue Service.
Step 2. IRS Penalties--If you do not supply us with your TIN, you will be
subject to an IRS $50 penalty unless your failure is due to reasonable
cause and not willful neglect. If you fail to report interest, dividend
or patronage dividend income on your federal income tax return, you
will be treated as negligent and subject to an IRS 5% penalty tax on
any resulting underpayment of tax unless there is clear and convincing
evidence to the contrary. If you falsify information on this form or
make any other false statement resulting in no backup withholding on an
account which should be subject to a backup withholding, you may be
subject to an IRS $500 penalty and certain criminal penalties including
fines and imprisonment.
- -----------
This Prospectus sets forth concisely the information about the Phoenix-Aberdeen
Series Fund (the "Trust") which you should know before investing. Please read
it carefully and retain it for future reference.
The Trust has filed with the Securities and Exchange Commission a Statement of
Additional Information about the Trust, dated November 28, 1997. The Statement
contains more detailed information about the Trust and is incorporated into
this Prospectus by reference. You may obtain a free copy of the Statement by
writing the Trust c/o Phoenix Equity Planning Corporation, 100 Bright Meadow,
P.O. Box 2200, Enfield, Connecticut 06083-2200.
Financial information relating to the Trust is contained in the Annual Report
to Shareholders for the period ended July 31, 1997 and is incorporated into the
Statement of Additional Information by reference.
[RECYCLE LOGO] Printed on recycled paper using soybean ink
<PAGE>
[BACK COVER]
------------------
Phoenix Funds BULK RATE MAIL
PO Box 2200 U.S. POSTAGE
Enfield CT 06083-2200 PAID
SPRINGFIELD, MA
PERMIT NO. 444
------------------
[LOGO] PHOENIX
DUFF & PHELPS
PDP 147 (11/97)
<PAGE>
PHOENIX-ABERDEEN NEW ASIA FUND
PHOENIX-ABERDEEN GLOBAL SMALL CAP FUND
101 Munson Street,
Greenfield, MA 01301
Statement of Additional Information
November 28, 1997
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 "Funds") dated November 28, 1997, and should
be read in conjunction with it. The Funds' 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 FUNDS (1) ................................. 1
INVESTMENT OBJECTIVES AND POLICIES (8) ...... 1
INVESTMENT RESTRICTIONS (13) .................. 5
PERFORMANCE INFORMATION (7) .................. 7
PORTFOLIO TRANSACTIONS AND BROKERAGE ......... 8
SERVICES OF THE ADVISER (13) .................. 9
SERVICES OF THE ADMINISTRATOR (14) ............ 10
NET ASSET VALUE (22) ........................ 11
HOW TO BUY SHARES (16) ........................ 11
ALTERNATIVE PURCHASE ARRANGEMENTS (17) ...... 11
INVESTOR ACCOUNT SERVICES (21) ............... 12
REDEMPTION OF SHARES (23) ..................... 13
DIVIDENDS, DISTRIBUTIONS AND TAXES (24) ...... 14
TAX-SHELTERED RETIREMENT PLANS ............... 15
THE DISTRIBUTOR (15) ........................ 16
DISTRIBUTION PLANS (15) ..................... 16
TRUSTEES AND OFFICERS ........................ 17
OTHER INFORMATION ........................... 24
</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: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PDP 147B (11/97)
<PAGE>
THE FUNDS
Phoenix-Aberdeen Series Fund (the "Funds") 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 Funds dated
May 31, 1996 (the "Declaration of Trust"). The Declaration of Trust authorizes
the assets and shares of the Funds to be divided into two Funds (the "Funds").
Each Fund has a different investment objective, invests primarily in certain
types of securities, and is designed to meet different investment needs. In
many respects, each Fund operates as if it were a separate mutual fund. The
Funds' Prospectus describes the investment objectives of each Fund. The
following discussion supplements the description of each Fund's investment
policies and investment techniques in the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of each Fund 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 Fund 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 Fund 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 Fund
utilizing this investment technique may wish to purchase in the future by
purchasing futures contracts.
Each Fund 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 Fund purchases or sells a
security, no security is delivered or received by a Fund 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 Fund utilizing
this investment technique will be required to deposit in a pledged account with
the Funds' custodian bank with respect to such Fund 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 Fund 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.
1
<PAGE>
Limitations On Futures Contracts and Related Options. Any Fund 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 Fund 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 Fund's existing futures and related options positions
and the premiums paid for related options would exceed 5% of the market value
of the Fund's total assets. At the time of purchase of a futures contract or a
call option on a futures contract, any asset, including equity securities and
non-investment grade debt so long as the asset is liquid, unencumbered and
marked to market daily equal to the market value of the futures contract minus
the Fund's initial margin deposit with respect thereto will be deposited in a
pledged account with the Fund's custodian bank with respect to such Fund to
collateralize fully the position and thereby ensure that it is not leveraged.
The extent to which a Fund 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
"Dividends, Distributions and 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 Fund
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 Fund
would continue to be required to make daily margin payments. In this situation,
if the Fund 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. In addition, the Fund 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 Fund's 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 Fund to incur
additional brokerage commissions and may cause an increase in a Fund's 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 Fund or such prices move in a direction opposite to that
anticipated, the Fund 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
Fund'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 Fund 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 Fund 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 Fund has sold futures contracts to
hedge against decline in the market, the market may advance and the value of
securities held in the Fund or the currencies in which its foreign securities
are denominated may decline. If this occurred, the Fund 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 Fund 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 Fund 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 Fund 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.
2
<PAGE>
Repurchase Agreements
Repurchase agreements, as described in the Funds' Prospectus, will be
entered into only with commercial banks, brokers and dealers considered by the
Funds to be credit-worthy. The Trustees of the Funds will monitor each Fund's
repurchase agreement transactions periodically and, with the Funds' investment
adviser, will consider standards which the Funds' investment adviser will use
in reviewing the creditworthiness of any party to a repurchase agreement with a
Fund. No more than an aggregate of 15% of a Fund's 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 Fund 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 Fund and therefore is subject to sale by the
trustee in bankruptcy. Finally, it is possible that the Fund may not be able to
substantiate its interest in the underlying instrument. While the Trustees of
the Funds 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 Fund 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
Fund utilizing this investment technique and are at all times secured by
collateral held by the Fund at least equal to 102% of the market value
determined daily of the loaned securities. The Fund 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 Fund or the borrower. Upon termination of a loan the
borrower will be required to return the securities to the Fund and any gain or
loss in the market price during the period of the loan would accrue to the
Fund. If the borrower fails to maintain the requisite amount of collateral the
loan will automatically terminate and the Fund 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 Fund 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 Fund's investment in the
securities which are the subject of the loan. The Fund 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 Funds to be
creditworthy and when the Adviser believes the consideration to be earned
justifies the attendant risks.
Foreign Currency Transactions
Each Fund 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 Fund 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 Fund
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 Funds' custodian banks will segregate any asset,
including equity securities and non-investment grade debt securities, so long
as the asset is liquid, unencumbered and marked to market daily in an amount
not less than the value of a Fund's 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 Fund's commitments with respect to such contracts. Generally, a
Fund 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.
3
<PAGE>
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 Fund utilizing this technique against an
adverse movement 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 Fund 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 Fund 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
Fund 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 Fund may use foreign currency
futures contracts and options on such futures contracts. Through the purchase
or sale of such contracts, a Fund 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 Fund will maintain in a pledged account
any asset, including equity securities and non-investment grade debt so long as
the asset is liquid, unencumbered and marked to market daily 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 Fund 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 Fund plus premiums paid by it for open options on futures would exceed 5%
of the Fund's total assets. No Fund 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 Fund 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 Fund 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 Fund 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 Fund is not invested and no
return is earned thereon. The inability of a Fund to make intended security
purchases due to settlement problems could cause a Fund 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 Fund 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.
4
<PAGE>
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 Fund 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 to the Fund 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 Fund.
Investing in Small Cap Issuers
Under normal market conditions, the Global Fund expects to invest at least
65% of its total assets in equity securities of small and medium capitalization
companies. Market capitalization of such issuers are determined at the time of
purchase. While the issuers in which the Fund will primarily invest may offer
greater opportunities for capital appreciation than larger capitalization
issuers, investments in smaller companies may have limited product lines,
markets or financial resources, or they may be dependent on a limited
management group. Full development of these companies takes time and, for this
reason, the Fund should be considered as a long-term investment and not as a
vehicle for seeking short-term profits, nor should an investment in the Fund be
considered a complete investment program. In addition, many small company
stocks trade less frequently and in smaller volume, and may be subject to more
abrupt or erratic price movements than stocks of large companies. The
securities of small companies may also be more sensitive to market changes than
the securities of large companies. These factors may result in above-average
fluctuations in the net asset value of the Fund's shares. The Fund is not an
appropriate investment for individual investors requiring safety of principal
or a predictable return of income from their investment.
Additional Risk Factors
As a result of its investments in foreign securities, each Fund 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 Fund 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 Fund may hold such
currencies for an indefinite period of time.
In addition, a Fund 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 a Fund is exercised or
the Fund is unable to close out a forward contract. A Fund may hold foreign
currency in anticipation of purchasing foreign securities. A Fund 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
Fund to do so. In such instances as well, the Fund 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 Fund to take advantage of
favorable movements in the applicable exchange rate, it also exposes the Fund
to risk of loss if such rates move in a direction adverse to the Fund's
position. Such losses could reduce any profits or increase any losses sustained
by the Fund from the sale or redemption of securities, and could reduce the
dollar value of interest or dividend payments received. In addition, the
holding of currencies could adversely affect the Fund's profit or loss on
currency options or forward contracts, as well as its hedging strategies.
INVESTMENT RESTRICTIONS
The Funds' fundamental policies as they affect any Fund cannot be changed
without the approval vote of a majority of the outstanding shares of such Fund,
which is the lesser of (i) 67% or more of the voting securities of such Fund
present at a meeting if the holders of more than 50% of the outstanding voting
securities of such Fund are present or represented by proxy or (ii) more than
50% of the outstanding voting securities of such Fund. A proposed change in
fundamental policy or investment objective will be deemed to have been
effectively acted upon with respect to any Fund if a majority of the
outstanding voting securities of that Fund 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 Fund affected
by such matter and (2) that such matter has not been approved by a majority of
the outstanding voting securities of the Trust.
The following investment restrictions are fundamental policies of the
Funds with respect to all Funds and may not be changed except as described
above. The Funds may not:
1. Purchase for any Fund 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 Fund's 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 Fund
or by all Funds of the Trust 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.
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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 Fund owns an equal amount of
such securities.
5. Make cash loans, except that the Funds 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 15% of any Fund's 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 Funds may make loans of the
portfolio securities of any Fund, 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 Fund.
7. Make investments in real estate (including real estate limited
partnerships) or commodities or commodity contracts, although (i) the Funds 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
Fund may engage in transactions in financial futures contracts and related
options, provided that the sum of the initial margin deposits on such Fund's
existing futures positions and the premiums paid for related options would not
exceed in the aggregate 5% of such Fund's total assets.
8. Invest in oil, gas or other mineral leases or exploration or
development programs, although the Funds 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 Fund 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 Trust, or officer or director of its investment adviser(s), 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 Funds may (i) borrow money for any Fund
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
Fund and (ii) borrow money for any Fund for investment purposes, provided that
any such borrowing for investment purposes with respect to any such Fund is (a)
authorized by the Trustees prior to any public distribution of the shares of
such Fund or is authorized by the shareholders of such Fund thereafter, (b) is
limited to 33 1/3% of the value of the total assets (taken at market value) of
such Fund, and (c) is subject to an agreement by the lender that any recourse
is limited to the assets of that Fund with respect to which the borrowing has
been made. No Fund may invest in portfolio securities while the amount of
borrowing of the Fund exceeds 5% of the total assets of such Fund. Borrowing
for investment purposes has not been authorized for any Fund whose shares are
offered by the Funds.
14. Pledge, mortgage or hypothecate the assets of any Fund to an extent
greater than 10% of the total assets (taken at market value) of such Fund 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 Fund may secure borrowings made pursuant to the provisions
of item 13 above; and provided, further, that such Fund's 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 Fund 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 Fund
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 Fund's 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 Fund, or (b) as part of a
merger, consolidation, or acquisition of assets.
17. Invest in amounts greater than 25% of a Fund assets in a particular
"industry."
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The Funds 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) not deemed to be
liquid, but such securities will not constitute more than 15% of each Fund's
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.
For purposes of establishing industry classifications for the Global Small
Cap Fund, the Adviser utilizes the William O'Neil & Co., Inc. Industry Group
Index. The William O'Neil & Co., Inc. Industry Group Index presently comprises
197 industry classifications. Classifications are determined based on the
following broad sectors: Basic Material, Energy, Capital Equipment, Technology,
Consumer Cyclical, Retail, Consumer Staple, Health Care, Transportation,
Financial, and Utilities. Sectors are then divided into industry groups based
upon income sources and other economically relevant criteria as determined by
O'Neil & Co., Inc.
PERFORMANCE INFORMATION
Each Fund 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 Fund and as total return for a class of shares of such
Fund.
Standardized quotations of average annual total return for a class of
shares of a Fund 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.
Quotations of yield for a class of shares of a Fund 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:
YIELD = 2[((a-b))+ 1)(6) -1]
cd
where a = dividends and interest earned during the period by the Fund.
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.
For the New Asia Fund, the average annual total return of Class A Shares
and Class B Shares from inception on September 4, 1996 through July 31, 1997
was -0.02% and -0.63%, respectively. For the Global Fund, the average annual
total return of Class A Shares and Class B Shares from inception on September
4, 1996 through July 31, 1997 was 5.52% and 5.00%, respectively.
A Fund also may quote annual, average annual and annualized total return
and aggregate total return performance data, for each class of shares of such
Fund, 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.
The Funds may from time to time include in advertisements containing total
return the ranking of those 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 Funds may compare performance results to other investment or
savings vehicles (such as certificates of
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deposit) and may refer to results published in various publications such as
Changing Times, Forbes, Fortune, Money, Barrons, Business Week, 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 & Poor's The
Outlook, and Personal Investor. The Funds 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 the Funds against certain widely acknowledged
outside standards or indices for stock and bond market performance, such as the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"), Russell 2000
Index, Morgan Stanley Capital International All Country World Index, Dow Jones
Industrial Average, Europe Australia Far East Index (EAFE), Morgan Stanley
Capital International Developed Market Indices and AC Asia Pacific (excluding
Japan) Index, FT (S&P--Actuaries' World Indices (medium-small components),
Consumer Price Index, Lehman Brothers Corporate Index and Lehman Brothers
T-Bond Index.
Advertisements, sales literature and other communications may contain
information about the Funds and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Funds to
respond quickly to changing market and economic conditions. From time to time
the Funds may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Funds may
separate its cumulative and average annual returns into income and capital
gains components.
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 Trust. 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 Funds 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 Funds
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 Funds' benefits with a
securities industry comprised of many diverse firms and that the long-term
interest of shareholders of the Funds are 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 Trust. 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. In 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 Trust. 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 Funds and its shareholders.
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 Funds
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.
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<PAGE>
In purchasing and selling fixed-income securities, it is the policy of the
Funds 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 Funds will not necessarily pay the lowest spread or commission
available.
The Funds 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 Trust. 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.
The Funds have adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to
lower commission costs on a per-share and per-dollar basis. According to the
bunching procedures, the Adviser shall aggregate transactions unless it
believes in its sole discretion that such aggregation is inconsistent with its
duty to seek best execution (which shall include the duty to seek best price)
for the Funds. No advisory account of the Adviser is to be favored over any
other account and each account that participates in an aggregated order is
expected to participate at the average share price for all transactions of the
Adviser in that security on a given business day, with all transaction costs
share pro rata based on the Funds' participation in the transaction. If the
aggregated order is filled in its entirety, it shall be allocated among the
Adviser's accounts in accordance with the allocation order, and if the order is
partially filled, it shall be allocated pro rata based on the allocation order.
Notwithstanding the foregoing, the order may be allocated on a basis different
from that specified in the allocation order if all accounts of the Adviser
whose orders are allocated receive fair and equitable treatment and the reason
for such different allocation is explained in writing and is approved in
writing by the Adviser's compliance officer as soon as practicable after the
opening of the markets on the trading day following the day on which the order
is executed. If an aggregated order is partially filled and allocated on a
basis different from that specified in the allocation order, no account that is
benefited by such different allocation may intentionally and knowingly effect
any purchase or sale for a reasonable period following the execution of the
aggregated order that would result in it receiving or selling more shares than
the amount of shares it would have received or sold had the aggregated order
been completely filled. The Trustees will annually review these procedures or
as frequently as shall appear appropriate.
For the fiscal year ended July 31, 1997, the Funds paid brokerage
commissions of $294,129. Brokerage commissions of $275,758 were paid on
portfolio transactions aggregating $77,301,863 during the last fiscal year and
were executed by brokers who provided research and other statistical and
factual information.
SERVICES OF THE ADVISER
The Trust's investment adviser is Phoenix-Aberdeen International Advisors,
LLC (the "Adviser"), which is a 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 Asset Management plc. Based upon the diverse range of
portfolio holdings contemplated and the expertise available through certain
affiliates, the Adviser will engage Phoenix Investment Counsel, Inc. ("PIC")
and Aberdeen Fund Managers, Inc. as sub-advisers.
Phoenix Home Life was founded in 1851 and is in the business of writing
individual and group life and health insurance and annuities. The principal
office of Phoenix Home Life is located at One American Row, Hartford,
Connecticut, 06115. Its affiliate, Phoenix Duff & Phelps Corporation ("PDP"), a
New York Stock Exchange traded company, provides various financial advisory
services to institutional investors, corporations and individuals through its
operating subsidiaries. As of September 30, 1997, Phoenix Duff & Phelps
corporation, and its advisory subsidiaries, had approximately $44 billion in
assets under management. PIC is an indirect subsidiary of PDP and its principal
offices are located at 56 Prospect Street, Hartford, Connecticut 06115.
Aberdeen Asset Management PLC was founded in 1983 and through subsidiaries
operated 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, 1997, Aberdeen Asset Management PLC, and its
advisory subsidiaries, had approximately $17.8 billion in assets under
management.
Aberdeen Asset Management PLC, the parent of Aberdeen Fund Managers, Inc.,
recently announced the acquisition of a Scottish advisory group in exchange for
a large block of its stock to be issued to the advisory group's parent. Upon
completion of the transaction, the Scottish Provident Institution will own
approximately 41% of Aberdeen Asset Management plc.
The investment advisory agreements provide that the Funds will bear all
costs and expenses (other than those specifically referred to as being borne by
the Adviser) incurred in the operation of the Trust. Such expenses include, but
shall not be limited to, all expenses incurred in 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
9
<PAGE>
distributor under its agreement with the Trust), expenses of printing and
mailing stock certificates (if any) 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 Funds will also pay the fees and bear the expense of registering
and maintaining the registration of the Funds and its shares with the
Securities and Exchange Commission and registering or qualifying its shares
under state or other securities laws and the expense of preparing and mailing
prospectuses and reports to shareholders. If authorized by the Trustees, the
Funds 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 Funds is a party.
The Adviser continuously furnishes an investment program for each Fund and
manages the investment and reinvestment of the assets of each Fund subject at
all times to the supervision of the Trustees. The Adviser, at its expense,
furnishes to the Funds 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 Trust.
As compensation for its services to each Fund, the Adviser is entitled to
a fee, payable monthly, at an annual rate of 0.85% of the Fund's average daily
net assets. For providing cash management and other services to each Fund, as
needed, the Adviser pays a monthly fee to PIC equivalent to 0.15% of the
average daily net asset value of each Fund. For providing advisory services
with respect to the Trust's assets allocated from time to time by the Adviser,
the Adviser pays a fee to PIC equivalent to 0.40% of the average daily net
asset value of the assets of each Fund so allocated. For implementing certain
portfolio transactions and providing research and other services to each Fund,
the Adviser also pays a monthly subadvisory fee to Aberdeen Fund Managers, Inc.
equivalent to 0.40% of the average daily net asset value of the New Asia Fund
and 0.40% of the average daily net asset value of the Global Fund allocated to
it by the Adviser for management. Total management fees for the fiscal year
ended July 31, 1997 for the New Asia Fund and the Global Fund were $105,851 and
$240,064, respectively.
The Investment Advisory Agreement with the Funds provide that the Adviser
will reimburse the Funds for the amount, if any, by which the total operating
expenses of any Fund (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 Fund 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 Fund are then
qualified for sale. In the event legislation were to be adopted in each state
so as to eliminate this restriction, the Funds would take such action necessary
to eliminate this expense limitation.
The investment advisory agreements also provide that each adviser shall
not be liable to the Funds or any shareholder of the Funds for any error of
judgment or mistake of law or for any loss suffered by the Funds or by any
shareholder of the Funds in connection with the matters to which the agreement
relates, except a loss resulting from willful misfeasance, bad faith, gross
negligence or reckless disregard on the part of such adviser in the performance
of its duties thereunder.
The Investment Advisory Agreement and the Investment Subadvisory
Agreements were approved by the Trustees of the Funds on August 21, 1996.
Provided that it has been approved by a vote of the majority of the outstanding
shares of a Fund of the Funds which is subject to its terms and conditions,
each agreement continues from year to year with respect to such Fund so long as
(1) such continuance is approved at least annually by the Trustees or by a vote
of the majority of the outstanding voting securities of such Fund and (2) the
terms and any renewal of the agreements with respect to such Fund have been
approved by the vote of a majority of the Trustees who are not parties to the
agreement or "interested persons," as that term is defined in the Investment
Company Act of 1940, of the Funds or the relevant adviser, of any such party
cast in person at a meeting called for the purpose of voting on such approval.
On sixty days' written notice and without payment of any penalty the agreements
may be terminated as to the Funds or as to a Fund by the Trustees or by the
relevant adviser and may be terminated as to a Fund by a vote of the majority
of the outstanding voting securities of such Fund. Each agreement automatically
terminates upon its assignment (within the meaning of the Investment Company
Act). The Investment Advisory Agreement provides that upon its termination, or
at the request of the adviser, the Funds will eliminate all references to
"Phoenix" and/or "Phoenix-Aberdeen" from its name, and will not thereafter
transact business in the a name using the word "Phoenix" or "Phoenix-Aberdeen."
SERVICES OF THE ADMINISTRATOR
Phoenix Duff & Phelps Corporation (the "Administrator") serves as
administrator for the Trust. Under the terms of the Administration Agreement,
the Administrator will assist in maintaining office facilities, furnish
clerical services, office supplies and stationery, prepare and file tax returns
of the Trust, monitor the Trust's expense accruals and pay all expenses upon
proper authorization from the Trust, monitor the Funds' status as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986,
monitor and make recommendations concerning fidelity bond coverage, monitor
compliance with the policies and limitations of the Funds as set forth in the
Funds' governing documents, supervise the external audit and tax return
preparation by the Trust's auditor, and prepare and/or coordinate all materials
for the Board of Trustees' meetings. As compensation, the Administrator
receives a fee, computed daily and payable monthly, at the annual rate of 0.15%
of the average daily net assets of the Trust. For the fiscal year ended July
31, 1997, the Administration fees for the New Asia Fund and the Global Fund
were $18,680 and $42,364, respectively.
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The Agreement continues in effect from year to year provided such
continuance is specifically approved at least annually by the Trust's Board of
Trustees including a majority of the trustees who are not interested persons or
by a vote of a majority of the outstanding voting securities of the Trust. The
Agreement automatically terminates upon its assignment and may be terminated by
the either party at any time upon not less than 60 days' written notice.
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close
of trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. Since the Funds do not price securities on weekends or
United States national holidays, the net asset value of a Fund's foreign assets
may be significantly affected on days when the investor has no access to the
Funds. The net asset value per share of a Fund is determined by adding the
values of all securities and other assets of the Fund, subtracting liabilities,
and dividing by the total number of outstanding shares of the Fund. Assets and
liabilities are determined in accordance with generally accepted accounting
principles and applicable rules and regulations of the Securities and Exchange
Commission. The total liability allocated to a class, 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
Fund, and the resulting amount of each is divided by the number of shares of
that class outstanding to produce the net asset value per share.
A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world,
the calculation of net asset value may not take place for any Fund which
invests in foreign securities contemporaneously with the determination of the
prices of the majority of the portfolio securities of such Fund. All assets and
liabilities initially expressed in foreign currency values will be converted
into United States dollar values at the mean between the bid and ask quotations
of such currencies against United States dollars as last quoted by any
recognized dealer. If an event were to occur after the value of an investment
was so established but before the net asset value per share was determined,
which was likely to materially change the net asset value, then the instrument
would be valued using fair value considerations by the Trustees or their
delegates. If at any time a Fund has investments where market quotations are
not readily available, such investments are valued at the fair value thereof as
determined in good faith by the Trustees although the actual calculations may
be made by persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
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 Distributor, or pursuant to the
Systematic Exchange privilege or for an individual retirement account (IRA). In
addition, there are no subsequent investment minimum amounts in connection with
the reinvestment of dividend or capital gain distributions. 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.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares of the Funds may be purchased from investment dealers 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 either (i) at the time of the
purchase (the "initial sales charge alternative"), or (ii) on a contingent
deferred basis (the "deferred sales charge alternative").
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is more 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 Funds, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the Funds,
the accumulated continuing distribution and services fee and contingent
deferred sales charges on Class B shares prior to conversion would be less than
the initial sales charge and accumulated distribution and services fee on Class
A shares purchased at the same time, and to what extent such differential would
be offset by the lower expenses attributable to Class A shares.
Class A shares are subject to a lower distribution and services fee and,
accordingly, pay correspondingly higher dividends, to the extent any dividends
are paid, per share. However, because initial sales charges are deducted at the
time of purchase, such 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 charges, not all their
funds will be invested initially. However, other investors might determine
11
<PAGE>
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.
The distribution expenses incurred by the Distributor in connection with
the sale of the shares will be paid, in the case of Class A shares, from the
proceeds of the initial sales charge and the ongoing distribution and services
fee and, in the case of Class B shares, from the proceeds of the ongoing
distribution and services fee and the contingent deferred sales charge incurred
upon redemption within five years of purchase. Sales personnel of
broker-dealers distributing the Trust's shares may receive differing
compensation for selling Class A or Class B shares. Investors should understand
that the purpose and function of the contingent deferred sales charge and
ongoing distribution and services fee with respect to the Class B shares are
the same as those of the initial sales charge and ongoing distribution and
services fees with respect to the Class A shares.
Dividends paid by the Funds, if any, with respect to Class A and Class B
shares will be calculated in the same manner at the same time on the same day,
except that the higher distribution and services fee and any incremental
transfer agency costs relating to Class B shares will be borne exclusively by
that class. See "Dividends, Distributions and Taxes."
The Trustees have determined that currently no conflict of interest exists
between the Class A and Class B shares. On an ongoing basis, the Trustees,
pursuant to their fiduciary duties under the 1940 Act and state laws, will seek
to ensure that no such conflict arises.
Class A Shares
An investor who elects the initial sales charge alternative acquires Class
A shares. Class A shares incur a sales charge when they are purchased and enjoy
the benefit of not being subject to any sales charge when they are redeemed.
Class A shares are subject to an ongoing distribution and services fee at an
annual rate of 0.25% of the Trust's aggregate average daily net assets
attributable to the Class A shares. In addition, certain purchases of Class A
shares qualify for reduced initial sales charges. See the Funds' current
Prospectus.
Class B Shares
An investor who elects the deferred sales charge alternative acquires
Class B shares. Class B shares do not incur a sales charge when they are
purchased, but they are subject to a sales charge if they are redeemed within
five years of purchase. The deferred sales charge may be waived in connection
with certain qualifying redemptions. See the Funds' current Prospectus.
Class B shares are subject to an ongoing distribution and services fee at
an annual rate of up to 1.00% of the Trust's aggregate average daily net assets
attributable to the Class B shares. Class B shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment
is made. The higher ongoing distribution and services fee paid by Class B
shares will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class A
shares. Class B shares will automatically convert to Class A shares eight years
after the end of the calendar month in which the shareholder's order to
purchase was accepted, in the circumstances and subject to the qualifications
described in the Funds' Prospectus.
Class B shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B shares will automatically convert to Class A shares
and will no longer be subject to the higher distribution and services fee. 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 the Distributor
to have been compensated for distribution expenses related to the Class B
shares 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) convert to Class A, an equal pro rata
portion of the Class B shares in the sub-account will also convert to Class A.
INVESTOR ACCOUNT SERVICES
The Funds offer combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange privileges
as described in the Funds' current Prospectus. Certain privileges may not be
available in connection with all classes. In most cases, changes to account
services may be accomplished over the phone. Inquiries regarding policies and
procedures relating to shareholder account services should be directed to
Shareholder Services at (800) 243-1574.
Exchanges. Class A Shares of the Funds held under six months are not
eligible for the exchange privilege. Under certain circumstances, shares of any
Phoenix Fund 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. Shareholders may exchange shares
12
<PAGE>
held in book-entry form for an equivalent number (value) of the same class of
shares of any other Phoenix Fund, if currently offered. On exchanges with share
classes that carry a contingent deferred sales charge, the CDSC schedule of
original shares purchased continues to apply. The exchange of shares is treated
as a sale and purchase for federal income tax purposes (see also "Dividends,
Distributions and Taxes").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Phoenix Fund automatically on a monthly,
quarterly, semi-annual or annual basis or may cancel this privilege at any
time. If you maintain an account balance 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), you may direct that the shares
be automatically exchanged at predetermined intervals for shares of the same
class of another Phoenix Fund. This requirement does not apply to Phoenix "Self
Security" program participants. Systematic exchanges will be executed upon the
close of business on the 10th day of each month or the next succeeding business
day. Systematic exchange forms are available from the Distributor. Exchanges
will be based upon each Fund's net asset value per share next computed after
the close of business on the 10th day of each month (or succeeding business
day), without sales charge. On Class B Share exchanges, the CDSC schedule of
the original shares purchased continues to apply.
Dividend Reinvestment Across Accounts. If you maintain an account balance
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), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account of
one of the other Phoenix Funds at net asset value. You should obtain a current
prospectus and consider the objectives and policies of each Fund carefully
before directing dividends and distributions to another Fund. Reinvestment
election forms and prospectuses are available from Equity Planning.
Distributions may also be mailed to a second payee and/or address. Requests for
directing distributions to an alternate payee must be made in writing with a
signature guarantee of the registered owner(s). To be effective with respect to
a particular dividend or distribution, notification of the new distribution
option must be received by the Transfer Agent at least three days prior to the
record date of such dividend or distribution. If all shares in your account are
repurchased or redeemed or transferred between the record date and the payment
date of a dividend or distribution, you will receive cash for the dividend or
distribution regardless of the distribution option selected.
Invest-By-Phone. This expedited investment service allows you to make an
investment in an account by requesting a transfer of funds from the balance of
your bank account. Once a request is phoned in, the Transfer Agent will
initiate the transaction by wiring a request for monies to your commercial
bank, savings bank or credit union via Automated Clearing House (ACH). Your
bank, which must be an ACH member, will in turn forward the monies to the
Transfer Agent for credit to your account. ACH is a computer based clearing and
settlement operation established for the exchange of electronic transactions
among participating depository institutions. This service may also be used to
sell shares of each Fund and direct proceeds of sale through ACH to your bank
account.
To establish this service, please complete the Invest-by-Phone Application
and attach a voided check. Upon the Transfer Agent's acceptance of the
authorization form (usually within two weeks) you may call toll free (800)
367-5877 prior to 3:00 p.m. (Eastern Time) to place your purchase request.
Instructions as to the account number and amount to be invested must be
communicated to the Transfer Agent. The Transfer Agent will then contact your
bank via ACH with appropriate instructions. The purchase is normally credited
to your account the day following receipt of the verbal instructions. The Funds
may delay the mailing of a check for redemption proceeds of Fund shares
purchased with a check or via Invest-by-Phone service until the Fund has
assured itself that good payment has been collected for the purchase of the
shares, which may take up to 15 days after receipt of the check. The Funds and
the Transfer Agent reserve the right to modify or terminate the Invest-by-Phone
service for any reason or to institute charges for maintaining an
Invest-by-Phone account.
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 therefore postponed during periods when the New York Stock Exchange is
closed, other than a customary weekend and holiday closings, 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. See the Funds' current
Prospectus for further information.
Redemptions by holders of Class B Shares will be subject to the applicable
deferred sales charge, if any.
Each shareholder account in the Funds 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 30 days' written notice to the shareholder mailed to
the address of record. During the 30-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.
13
<PAGE>
Telephone Redemption
Shareholders may redeem by telephone up to $50,000 worth of their shares
held in book-entry form. See the Funds' 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 Funds' current Prospectus for more information and
conditions attached to the privilege.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to remain qualified as a regulated investment company
under certain provisions of the Internal Revenue Code, as amended ("Code").
Under such provisions, the Funds will not be subject to Federal income tax on
such part of its ordinary income and net realized capital gains which it
distributes to shareholders provided it meets certain distribution
requirements. To qualify for treatment as a regulated investment company, the
Funds 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) diversify its holdings so that, at the end of each
quarter of the taxable year (i) at least 50% of the market value of each 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 each 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, each Fund does not qualify as a regulated
investment company all of the Funds' taxable income will be taxed to the Funds
at corporate rates.
It is the Funds'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 Funds, 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 each Fund's
net capital gains for the 12-month period ending on October 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 each Fund has taxable income that would be
subject to the excise tax, each 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 Funds 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 Funds in
January of the following year.
Under certain circumstances, the sales charge incurred in acquiring shares
of the Funds 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 Funds
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 Funds reduce the net asset value of each 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 Funds.
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 Funds 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 Funds, (ii) those about whom
notification has been received (either by the shareholder or the Funds) from
the IRS that they are subject to backup withholding or (iii) those who, to the
Funds' 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.
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<PAGE>
Each 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, each 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 Funds intend 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 Funds 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 Funds
during a taxable year or held by the Funds 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.
In order to qualify under Part I of Subchapter M, the Funds 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 Funds 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 Funds 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 Funds' assets to be invested within various
countries is not known. The Funds intend to operate so as to qualify for treaty
tax benefits where applicable. To the extent that the Funds are liable for
foreign income taxes withheld at the source, the Funds may operate so as to
meet the requirements of the Code to "pass through" to the Funds' shareholders
tax benefits attributable to foreign income taxes paid by the Funds. If more
than 50% of the value of the Funds' total assets at the close of its taxable
year is comprised of securities issued by foreign corporations, the Funds may
elect with the IRS to "pass through" to the Funds' shareholders the amount of
foreign income taxes paid by the Funds. 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 Funds;
(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 Funds may meet the requirements to "pass
through" to its shareholders foreign income taxes paid, but there can be no
assurance that the Funds will be able to do so. Each shareholder will be
notified within 60 days after the close of each taxable year of the Funds if
the foreign taxes paid by the Funds 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 Funds' 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 Funds invest in stocks of certain passive foreign investment
companies, the Funds 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 Funds' 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 Funds 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 Funds' investment company taxable income and, accordingly,
would not be taxable to the Funds to the extent distributed by the Funds 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 Funds and other Phoenix Funds may be offered in connection
with employer-sponsored 401(k) plans. The Adviser(s) and their 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.
15
<PAGE>
THE DISTRIBUTOR
Pursuant to a Distribution Agreement with the Funds, 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 service persons
for selling shares of the Funds and for providing services to shareholders. In
addition, the fees are used to compensate the Distributor for sales and
promotional activities. For the fiscal year ended July 31, 1997, purchasers of
shares of the Funds paid aggregate sales charges of $699,467 of which the
Distributor received net commissions of $125,818 for its services, the balance
being paid to dealers.
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 Funds, or by
vote of a majority of the Fund's Trustees who are not "interested persons" of
the Funds 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.
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 Funds
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.
Equity Planning also acts as financial agent of the Funds and as such
performs administrative, bookkeeping and pricing functions for the Funds. As
compensation for such services Equity Planning is entitled to a fee, payable
monthly and based upon the average of the aggregate daily net asset values of
each Fund, at the following incremental annual rates:
<TABLE>
<S> <C>
First $100 million .05%
$100 million to $300 million .04%
$300 million through $500 million .03%
Greater than $500 million .015%
A minimum fee applies to each Fund as follows:
New Asia Series $70,000
Global Small Cap Series $70,000
</TABLE>
In addition, Equity Planning is paid $12,000 for each class of shares of
each Fund beyond one. For its services during the Funds' fiscal year ended July
31, 1997, Equity Planning received $97,866.
DISTRIBUTION PLANS
The Funds has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each class of shares of the Funds (the "Class A Plan," the "Class
B Plan," and collectively the "Plans"). The Plans permit the Funds 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 Funds.
Pursuant to the Class B Plan, each Fund may reimburse the Distributor
monthly for actual expense of the Distributor up to 0.75% of the average daily
net assets of the Class B Shares of such Fund. Expenditures under the Plans
shall consist of: (i) commissions to sales personnel for selling shares of the
Funds: (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 Funds; (iv) payment
of expenses incurred in sales and promotional activities, including advertising
expenditures related to the Funds; (v) the costs of preparing and distributing
promotional materials; (vi) the cost of printing the Funds' Prospectus and
Statement of Additional Information for distribution to potential investors;
and (vii) such other similar services that the Trustees of the Funds determine
are reasonably calculated to result in the sale of shares of the Funds. In
addition, the Funds will pay the Distributor 0.25% annually of the average
daily net assets of the Funds' shares for 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 Funds' shareholders; or services providing the Funds
with more efficient methods of
16
<PAGE>
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.
On a quarterly basis, the Trustees of the Funds 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 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 Funds may bear pursuant to the Plans without
approval of the shareholders of the Funds 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 Funds.
For the fiscal year ended July 31, 1997, the Funds paid Rule 12b-1 Fees in
the amount of $211,254, of which the principal underwriter received $171,251,
W.S. Griffith & Co., Inc., an affiliate received $9,496 and unaffiliated
broker-dealers received $30,507. Distributor expenses under the Plans consisted
of: (1) advertising ($197,377); (2) printing and mailing of prospectuses to
other than current shareholders ($20,000); (3) compensation to dealers
($922,598); (4) compensation to sales personnel ($440,781); (5) service costs
($70,643) and (6) other ($90,584).
TRUSTEES AND OFFICERS
The following table sets forth information concerning the Trustees and
executive officers of the Funds, including their principal occupations during
the past five years. Unless otherwise noted, the address of each Trustee and
executive officer is 56 Prospect Street, Hartford, Connecticut 06115.
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- ------------------------ ------------------ ----------------------------------------------------------------------
<S> <C> <C>
C. Duane Blinn (70)** Trustee Partner in the law firm of Day, Berry & Howard. Director/Trustee,
Day, Berry & Howard Phoenix Funds (1980-present). Trustee, Phoenix-Aberdeen Series Fund
CityPlace and Phoenix Duff & Phelps Institutional Mutual Funds (1996-present).
Hartford, CT 06103 Director/Trustee, the National Affiliated Investment Companies (until
1993).
Robert Chesek (63) Trustee Trustee/Director (1981-present) and Chairman (1989-1994), Phoenix
49 Old Post Road Funds. Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Wethersfield, CT 06109 Phelps Institutional Mutual Funds (1996-present). Vice President,
Common Stock, Phoenix Home Life Mutual Insurance Company (1980-
1994). Director/Trustee, the National Affiliated Investment Companies
(until 1993).
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- --------------------------- ----------------- ------------------------------------------------------------------------
<S> <C> <C>
E. Virgil Conway (68) Trustee Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (1978-present), Atlantic Mutual
Insurance Company (1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Freddie Mac Mortgage
Securities Fund (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), The Harlem Youth Development Foundation (1987-
present), Accuhealth (1994-present), Trism, Inc. (1994-present), Realty
Foundation of New York (1972-present), New York Housing Partnership
Development Corp. (Chairman) (1981-present) and Fund Directions
(Advisory Director) (1993-present). Director/Trustee, Phoenix Funds
(1993-present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Duff & Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present). Chairman, Audit
Committee of the City of New York (1981-1996). Advisory Director,
Blackrock Fannie Mae Mortgage Securities Fund (1989-1996).
Chairman, Financial Accounting Standards Advisory Council (1992-
1995). Director/Trustee, the National Affiliated Investment Companies
(until 1993).
Harry Dalzell-Payne (68) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee, Phoenix-
330 East 39th Street Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
Apartment 29G Funds (1996-present). Director, Duff & Phelps Utilities Tax-Free
New York, NY 10016 Income Inc. and Duff & Phelps Utility and Corporate Bond Trust Inc.
(1995-present). Director, Farragut Mortgage Co., Inc. (1991-1994).
Director/Trustee, the National Affiliated Investment Companies (1983-
1993). Formerly a Major General of the British Army.
*Francis E. Jeffries (67) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-
6585 Nicholas Blvd. Aberdeen Series Inc. and Phoenix Duff & Phelps Institutional Mutual
Apt. 1601 Funds (1996-present). Director, Duff & Phelps Utilities Income Inc.
Naples, FL 33963 (1987-present), Duff & Phelps Utilities Tax-Free Income Inc. (1991-
present) and Duff & Phelps Utility and Corporate Bond Trust Inc.
(1993-present). Director, The Empire District Electric Company (1984-
present). Director (1989-1997), Chairman of the Board (1993-1997),
President (1989-1993), and Chief Executive Officer (1989-1995),
Phoenix Duff & Phelps Corporation.
Leroy Keith, Jr. (58) Trustee Chairman and Chief Executive Officer, Carson Products Company
Chairman and Chief (1995-present). Director/Trustee, Phoenix Funds (1980-present).
Executive Officer Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Carson Product Company Institutional Mutual Funds (1996-present). Director, Equifax Corp.
64 Ross Road (1991-present) and Keystone International Fund, Inc. (1989-present).
Savannah, GA 30750 Trustee, Keystone Liquid Trust, Keystone Tax Exempt Trust, Keystone
Tax Free Fund, Master Reserves Tax Free Trust, and Master Reserves
Trust. President, Morehouse College (1987-1994). Chairman and Chief
Executive Officer, Keith Ventures (1992-1994). Director/Trustee, the
National Affiliated Investment Companies (until 1993). Director, Blue
Cross/Blue Shield (1989-1993) and First Union Bank of Georgia
(1989-1993).
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- ---------------------------- ----------------- --------------------------------------------------------------------------
<S> <C> <C>
*Philip R. McLoughlin (51) Trustee and Chairman (1997-present), Vice Chairman (1995-1997) and Chief
President Executive Officer (1995-present), Phoenix Duff & Phelps Corporation.
Director (1994-present) and Executive Vice President, Investments (1988-
present), Phoenix Home Life Mutual Insurance Company. Director/Trustee
and President, Phoenix Funds (1989-present). Trustee and President,
Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Director, Duff & Phelps Utilities Tax-Free
Income Inc. (1995-present) and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1995-present). Director (1983-present) and Chairman (1995-
present), Phoenix Investment Counsel, Inc. Director (1984-present) and
President (1990-present), Phoenix Equity Planning Corporation. Director
(1993-present), Chairman (1993-present) and Chief Executive Officer
(1993-1995), National Securities & Research 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), PXRE Corporation (Delaware)
(1985-present), and World Trust Fund (1991-present). Director and
Executive Vice President, Phoenix Life and Annuity Company (1996-
present). Director and Executive Vice President, PHL Variable Insurance
Company (1995-present). Director, Phoenix Charter Oak Trust Company
(1996-present). Director and Vice President, PM Holdings, Inc. (1985-
present). Director and President, Phoenix Securities Group, Inc. (1993-
1995). Director (1992-present) and President (1992-1994), W.S. Griffith &
Co., Inc. Director (1992-present) and President (1992-1994), Townsend
Financial Advisers, Inc. Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Everett L. Morris (69) Trustee Vice President, W.H. Reaves and Company (1993-present). Director/
164 Laird Road Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
Colts Neck, NJ 07722 Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free Income Inc.
(1991-present) and Duff & Phelps Utility and Corporate Bond Trust
Inc. (1993-present). Director, Public Service Enterprise Group,
Incorporated (1986-1993). President and Chief Operating Officer,
Enterprise Diversified Holdings, Incorporated (1989-1993).
*James M. Oates (51) Trustee Chairman, IBEX Capital Markets LLC (1997-present). Managing
Managing Director Director, Wydown Group (1994-present). Director, Phoenix Duff &
The Wydown Group Phelps Corporation (1995-present). Director/Trustee, Phoenix Funds
IBEX Capital Markets LLC (1987-present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
60 State Street Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Suite 950 Govett Worldwide Opportunity Funds, Inc. (1991-present), Blue Cross
Boston, MA 02109 and Blue Shield of New Hampshire (1994-present), Investors Financial
Service Corporation (1995-present), Investors Bank & Trust Corporation
(1995-present), Plymouth Rubber Co. (1995-present) and Stifel
Financial (1996-present). Member, Chief Executives Organization
(1996-present). Director (1984-1994), President (1984-1994) and Chief
Executive Officer (1986-1994), Neworld Bank. Director/Trustee, the
National Affiliated Investment Companies (until 1993).
*Calvin J. Pedersen (55) Trustee Director (1986-present), President (1993-present) and Executive Vice
Phoenix Duff & Phelps President (1992-1993), Phoenix Duff & Phelps Corporation. Director/
Corporation Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
55 East Monroe Street Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
Suite 3600 (1996-present). President and Chief Executive Officer, Duff & Phelps
Chicago, IL 60603 Utilities Tax-Free Income Inc. (1995-present), Duff & Phelps Utilities
Income Inc. (1994-present) and Duff & Phelps Utility and Corporate
Bond Trust Inc. (1995-present).
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- ----------------------------- ----------------- -------------------------------------------------------------------------
<S> <C> <C>
Philip R. Reynolds (70)** Trustee Director/Trustee, Phoenix Funds (1984-present). Trustee, Phoenix-
43 Montclair Drive Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
West Hartford, CT 06107 Funds (1996-present). Director, Vestaur Securities, Inc. (1972-present).
Trustee and Treasurer, J. Walton Bissell Foundation, Inc. (1988-
present). Director/Trustee, the National Affiliated Investment
Companies (until 1993).
Herbert Roth, Jr. (69) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee, Phoenix-
134 Lake Street Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
P.O. Box 909 Funds (1996-present). Director, Boston Edison Company (1978-
Sherborn, MA 01770 present), Phoenix Home Life Mutual Insurance Company (1972-
present), Landauer, Inc. (medical services) (1970-present),Tech Ops./
Sevcon, Inc. (electronic controllers) (1987-present), and Mark IV
Industries (diversified manufacturer) (1985-present). Director, Key
Energy Group (oil rig service) (1988-1994). Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Richard E. Segerson (51) Managing Director, Mullin Associates (1993-present). Director/Trustee,
102 Valley Road Phoenix Funds (1993-present). Trustee, Phoenix-Aberdeen Series Fund
New Canaan, CT 07840 and Phoenix Duff & Phelps Institutional Mutual Funds (1996-present).
Vice President and General Manager, Coats & Clark, Inc. (previously
Tootal American, Inc.) (1991-1993). Director/Trustee, the National
Affiliated Investment Companies (1984-1993).
Lowell P. Weicker, Jr. (66) Trustee/Director, Phoenix Funds (1995-present). Trustee, Phoenix-
731 Lake Avenue Aberdeen Series Fund and Phoenix Duff & Phelps Institutional Mutual
Greenwich, CT 06830 Funds (1996-present). Director, UST Inc. (1995-present), HPSC Inc.
(1995-present), Duty Free International, Inc. (1997-present) and
Compuware (1996-present). Visiting Professor, University of Virginia
(1997-present). Chairman, Dresing, Lierman, Weicker (1995-1996).
Governor of the State of Connecticut (1991-1995).
Michael E. Haylon (39) Executive Director and Executive Vice President--Investments, Phoenix Duff &
Vice Phelps Corporation (1995-present). Executive Vice President, Phoenix
President Funds (1993-present) and Phoenix-Aberdeen Series Fund (1996-
present). Executive Vice President (1997-present), Vice President
(1996-1997), Phoenix Duff & Phelps Institutional Mutual Funds.
Director (1994-present), President (1995-present), Executive Vice
President (1994-1995), Vice President (1991-1994), Phoenix
Investment Counsel, Inc. Director (1994-present), President (1996-
present), Executive Vice President (1994-1996), Vice President (1993-
1994), National Securities & Research Corporation. Director, Phoenix
Equity Planning Corporation (1995-present). Senior Vice President,
Securities Investments, Phoenix Home Life Mutual Insurance Company
(1993-1995). Various other positions with Phoenix Home Life Mutual
Insurance Company (1990-1993).
David R. Pepin (54) Executive Executive Vice President, Phoenix Funds and Phoenix-Aberdeen Series
Vice Fund and Phoenix Duff & Phelps Institutional Mutual Funds (1996-
President present). Director (1997-present) and Executive Vice President (1996-
present), Phoenix Duff & Phelps Corporation. Managing Director,
Phoenix-Aberdeen International Advisers, LLC (1996-present). Director
and Executive Vice President, Phoenix Equity Planning Corp. (1996-
present). Director, Phoenix Investment Counsel, Inc. and National
Securities & Research Corporation (1996-present). Various positions
with Phoenix Home Life Mutual Insurance Company (1994-1995). Vice
President and General Manager, Finance and Health, Digital
Equipment Corporation (1980-1994).
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- ------------------------------ ----------------- ------------------------------------------------------------------------
<S> <C> <C>
Chong Yoon Chou (29) Senior Investment Director, Aberdeen Asset Management Asia Limited
Aberdeen Asset Management Vice (1994-present).
Asia Limited President
88A Circular Road
Singapore 049439
Christopher D. Fishwick (36) Senior Investment Director, Aberdeen Asset Managers, LTD (1991-present).
Aberdeen Asset Vice Director, Phoenix-Aberdeen International Advisors LLC (1996-present).
Managers, LTD President
10 Queens Terrace
Aberdeen, Scotland
Vivek Gandhi (28) Senior Investment Manager, Aberdeen Asset Management Asia Limited
Aberdeen Asset Management Vice (1994-present). Project Finance Officer, Industrial Credit & Investment
Asia Limited President Corporation of India Ltd (1993-1994).
88A Circular Road
Singapore 049439
Peter Hames (35) Senior Aberdeen Asset Managers, Ltd: European Fund Manager (1992) and
Aberdeen Asset Management Vice Aberdeen Asset Management Asia Limited: Far East Investment
Asia Limited President Director (1992-present).
88A Circular Road
Singapore 049439
Gawaine Lewis (34) Senior Investment Manager, Aberdeen Fund Managers, Inc. (1995-present).
Aberdeen Fund Managers Inc. Vice Investment Manager, Aberdeen Asset Managers, LTD (1994-1995).
1 Financial Plaza President Portfolio Manager, CIM Fund Managers (1991-1994).
Ft. Lauderdale, FL 33394
William J. Newman (58) Senior Vice Executive Vice President (1995-present) and Chief Investment
President Strategist (1996-present), Phoenix Investment Counsel, Inc. Executive
Vice President (1996-present) and Chief Investment Strategist (1996-
present). Senior Vice President (1995-1996) National Securities
& Research Corporation. Senior Vice President, Phoenix Strategic
Equity Series Fund (1996-present). Senior Vice President, The Phoenix
Edge Series Fund (1995-present), Phoenix Multi-Portfolio Fund (1995-
present), Phoenix Income and Growth Fund (1996-present), Phoenix
Series Fund (1996-present). Phoenix Strategic Allocation Fund, Inc.
(1996-present). Phoenix Worldwide Opportunities Fund (1996-present).
Phoenix Duff & Phelps Institutional Mutual Funds (1996-present) and
Phoenix-Aberdeen Series Fund (1996-present). Senior Vice President,
Phoenix Equity Planning Corporation (1995-1996), Vice President,
Common Stock and Chief Investment Strategist, Phoenix Home Life
Mutual Insurance Company (April 1995-November 1995). Chief
Investment Strategist, Kidder, Peabody Co., Inc. (1993-1994).
Managing Director, Equities, Bankers Trust Company (1991-1993).
Hugh Young (39) Senior Far East Investment Director, Aberdeen Asset Management Asia
Aberdeen Asset Vice Limited (1988-present). Managing Director, Aberdeen Asset
Management President Management Asia Limited (1992-present). Director, Phoenix-Aberdeen
Asia Limited International Advisors LLC (1996-present). Senior Vice President, The
88A Circular Road Phoenix Edge Series Fund (1996-present). Director, Abtrust Asian
Singapore 049439 Smaller Companies Investment Trust plc (1995-present), Abtrust New
Dawn Investment Trust plc (1989-present), Abtrust New Thai
Investment Trust plc (1989-present), Abtrust Emerging Asia Investment
Trust Limited (1990-present), JF Philippine Fund Inc. and Apollo
Tiger.
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- --------------------------- ----------------- -----------------------------------------------------------------------
<S> <C> <C>
Shahreza Yusof (25) Senior Investment Manager, Aberdeen Asset Management Asia Limited
Aberdeen Asset Management Vice (1994-present).
Asia Limited President
88A Circular Road
Singapore 049439
John D. Kattar (42) Vice Managing Director/Senior Portfolio Manager, Phoenix Investment
President Counsel, Inc. (1997-present). Vice President, The Phoenix Edge Series
Fund and Phoenix-Aberdeen Series Fund (1997-present). Director
(1989-1997), Senior Vice President (1993-1996) Baring Asset
Management Company, Inc.
William E. Keen, III (34) Vice Assistant Vice President, Phoenix Equity Planning Corporation (1996-
100 Bright Meadow Blvd. President present). Vice President, Phoenix Funds (1996-present), Phoenix Duff
P.O. Box 2200 & Phelps Institutional Mutual Funds (1996-present), Phoenix-Aberdeen
Enfield, CT 06083-2200 Series Fund (1996-present). Assistant Vice President, USAffinity
Investments LP (1994-1995). Treasurer and Secretary, USAffinity
Funds (1994-1995). Manager, Fund Administration, SEI Corporation
(1991-1994).
William R. Moyer (53) Vice Senior Vice President and Chief Financial Officer, Phoenix Duff &
100 Bright Meadow Blvd. President Phelps Corporation (1995-present). Senior Vice President, Finance
P.O. Box 2200 (1990-present), Chief Financial Officer (1996-present), and Treasurer
Enfield, CT 06083-2200 (1994-1996), Phoenix Equity Planning Corporation. Senior Vice
President (1990-present), Chief Financial Officer (1996-present) and
Treasurer (1994-present), Phoenix Investment Counsel, Inc. Senior Vice
President, Finance (1993-present), Chief Financial Officer (1996-
present), and Treasurer (1994-present), National Securities & Research
Corporation. Senior Vice President and Chief Financial Officer, Duff &
Phelps Investment Management Co. (1996-present). Vice President,
Phoenix Funds (1990-present), Phoenix-Duff & Phelps Institutional
Mutual Funds (1996-present), Phoenix-Aberdeen Series Fund (1996-
present). Senior Vice President and Chief Financial Officer, W. S.
Griffith & Co., Inc. (1992-1995) and Townsend Financial Advisers, Inc.
(1993-1995). Vice President, Investment Products Finance, Phoenix
Home Life Mutual Insurance Company (1990-1995). Vice President,
the National Affiliated Investment Companies (until 1993).
Leonard J. Saltiel (43) Vice Managing Director Operations and Service, (1996-present), Senior Vice
President President (1994-1996), Phoenix Equity Planning Corporation. Vice
President, Phoenix Funds (1994-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present), and Phoenix-Aberdeen
Series Fund (1996-present). Vice President, National Securities &
Research Corporation (1994-1996). Vice President, Investment
Operations, Phoenix Home Life Mutual Insurance Company (1994-
1995). Various positions with Home Life Insurance Company and
Phoenix Home Life Mutual Insurance Company (1987-1994).
Julie L. Sapia (40) Vice Head Money Market Trader (1997-present), Money Market Trader
President (1995-1997), Phoenix Investment Counsel, Inc. Vice President (1997-
present), The Phoenix Edge Series Fund, Phoenix Series Fund, Phoenix
Duff & Phelps Institutional Mutual Funds, and Phoenix Aberdeen
Series Fund. Various positions with Phoenix Home Life Mutual
Insurance Company (1985-1995).
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- ------------------------ ----------------- --------------------------------------------------------------------------
<S> <C> <C>
Dorothy J. Skaret (45) Vice Director, Money Market Trading (1996-present), Vice President (1991-
President 1996), Phoenix Investment Counsel Inc. Director, Money Market Trading
(1996-present), Vice President (1993-1996), National Securities &
Research Corporation. Vice President, Phoenix Series Fund (1990-
present), The Phoenix Edge Series Fund (1990-present), Phoenix Realty
Securities, Inc. (1995-present), and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Director, Public Fixed Income, Phoenix
Home Life Mutual Insurance Company (1991-1995). Various positions
with Phoenix Home Life Mutual Insurance Company (1986-1991).
Nancy G. Curtiss (45) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer (1996-
present), Phoenix Equity Planning Corporation. Treasurer, Phoenix Funds
(1994-present), Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present), Phoenix-Aberdeen Series Fund (1996-present). Second Vice
President and Treasurer, Fund Accounting, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions with Phoenix Home
Life Insurance Company (1987-1994).
G. Jeffrey Bohne (50) Secretary Vice President and General Manager, Phoenix Home Life Mutual
101 Munson Street Insurance Co. (1993-present). Vice President, Mutual Fund Customer
Greenfield, MA 01301 Service (1996-present). Vice President, Transfer Agency Operations
(1993-1996). Phoenix Equity Planning Corporation. Clerk, Phoenix
Investment Counsel, Inc. (1995-present). Secretary, Phoenix Funds (1993-
present), Phoenix Duff & Phelps Institutional Mutual Funds (1996-present)
and Phoenix-Aberdeen Series Fund (1996-present). Vice President, Home
Life of New York Insurance Company (1984-1992).
- -----------
</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.
**Pursuant to the retirement policy of the Phoenix Funds, Messrs. Blinn
and Reynolds will retire from the Board of Trustees effective January 1, 1998.
For services rendered to the Trust during the fiscal year ended July 31,
1997, the Trustees received an aggregate of $30,310 from the Trust as Trustees'
fees. For services on the Board of Trustees of the Phoenix Funds, 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 $40,000 and a fee of $2,500
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 Funds
receive a retainer at the annual rate of $1,000 and $1,000 per joint Executive
Committee meeting attended. The function of the Executive Committee of the
Funds is to serve as a contract review, compliance review and performance
review delegate of the full Board of Trustees. Costs are allocated equally to
each of the series of the Phoenix Funds within the Phoenix Fund complex (which
includes the Trust). The foregoing fees do not include the reimbursement of
expenses incurred in connection with meeting attendance. Officers and employees
of the Adviser who are interested persons are compensated for their services by
the Adviser and receive no compensation from the Trust.
23
<PAGE>
For the Trust's current fiscal year, the Trustees will receive
approximately the following compensation:
<TABLE>
<CAPTION>
Total
Compensation
Pension or Estimated From Fund and
Retirement Annual Fund Complex
Aggregate Benefits Benefits (13 Funds)
Compensation Accrued as Part Upon Paid to
Name From Fund of Fund Expenses Retirement Trustees
- ------------------------ -------------- ------------------ ------------ --------------
<S> <C> <C> <C> <C>
C. Duane Blinn $2,700* $64,750
Robert Chesek $2,415 $57,750
E. Virgil Conway+ $3,005 $70,750
Harry Dalzell-Payne+ $2,645 $61,750
Francis E. Jeffries $1,500* $28,750
Leroy Keith, Jr. $2,415 None None $57,750
Philip R. McLoughlin+ -- for any for any --
Everett L. Morris+ $2,480* Trustee Trustee $59,250
James M. Oates+ $2,480 $61,000
Calvin J. Pedersen -- --
Philip R. Reynolds $2,415 $57,750
Herbert Roth, Jr.+ $3,170 $73,250
Richard E. Segerson $2,610 $64,000
Lowell P. Weicker, Jr. $2,475 $61,000
</TABLE>
* This compensation (and the earnings thereon) will be deferred pursuant to
the Deferred Compensation Plan. At June 30, 1997, the total amount of
deferred compensation (including interest and other accumulation earned on
the original amounts deferred) accrued for Messrs. Blinn, Jeffries, Morris
and Roth was $349,026.91, $28,561.41, $85,849.73 and $132,587.69,
respectively. At present, by agreement among the Fund, the Distributor and
the electing director, director fees that are deferred are paid by the Fund
to the Distributor. The liability for the deferred compensation obligation
appears only as a liability of the Distributor.
+ Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
As of July 31, 1997, the Trustees and officers of the Funds beneficially
owned less than 1% of the outstanding shares of the Trust.
OTHER INFORMATION
Independent Accountants
Price Waterhouse LLP, 160 Federal Street, Boston, MA 02110, has been
selected as the independent accountants for the Trust. Price Waterhouse LLP
audits the Trust's annual financial statements and expresses an opinion
thereon.
Custodian and Transfer Agent
Brown Brothers Harriman & Co., 40 Water Street, Boston, MA 02109, serves
as custodian of the Trust's assets (the "Custodian"). Phoenix Equity Planning
Corporation, 100 Bright Meadow Boulevard, Enfield, CT 06082, serves as Transfer
Agent for the Funds (the "Transfer Agent").
Report to Shareholders
The fiscal year of the Funds ends on July 31. The Funds will send
financial statements to its shareholders at least semiannually. An annual
report containing financial statements audited by the Trust's independent
accountants will be sent to shareholders each year.
Financial Statements
The Financial Statements for the Funds' fiscal year ended July 31, 1997,
appearing in the Funds' 1997 Annual Report to Shareholders, are incorporated
herein by reference. The Annual Report must precede or accompany this Statement
of Additional Information.
24
<PAGE>
New Asia Series
- --------------------------------------------------------------------------------
INVESTMENTS AT JULY 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C>
COMMON STOCKS--92.2%
Australia--13.1%
Australian Gas Light Co. Ltd. (Utility-Gas) 60,000 $ 375,531
BRL Hardy Ltd. (Beverages) .................. 175,000 479,845
Commonwealth Bank of Australia
--Instalment Receipt (Banks) ............ 35,000 320,766
Davids Ltd. (Retail) ........................ 277,968 182,260
Pacific BBA Ltd. (Miscellaneous) ............ 135,000 573,355
QBE Insurance Group Ltd. (Insurance) ...... 110,000 655,689
------------
2,587,446
------------
Hong Kong--22.7%
CDL Hotels International Ltd. (Hotels) ...... 900,000 424,282
Giordano International Ltd. (Retail) ...... 499,000 314,191
HSBC Holdings PLC (Banks) .................. 30,000 1,046,174
Hongkong Electric Holdings Ltd. (Utility-
Electric) ................................. 135,000 550,985
Manhattan Card Co., Ltd. (Consumer
Finance) ................................. 800,000 335,809
National Mutual Asia Ltd. (Insurance) ...... 540,000 571,908
Smartone Telecommunications (Utility-
Telephone) (b) ........................... 200,000 565,709
Swire Pacific Ltd. Class B (Miscellaneous) 425,000 675,169
------------
4,484,227
------------
India--6.5%
Grasim Industries Ltd. Sponsored GDR
144A (Basic Materials) (c) ............... 27,000 364,500
Industrial Credit & Investment Corporation
of India Ltd. Sponsored GDR
(Diversified Financial Services) ......... 55,000 929,500
------------
1,294,000
------------
Indonesia--7.9%
PT Bank Bali (Banks) ........................ 225,000 623,805
PT Duta Anggada TBK (Property) ............ 450,000 271,032
PT Indosat (Utility-Telephone) ............ 220,000 668,833
------------
1,563,670
------------
Malaysia--7.1%
AMMB Holdings Berhad (Diversified
Financial Services) ..................... 65,000 369,809
Malaysian Oxygen Berhad (Chemical) ......... 95,000 403,565
Muhibbah Engineering Berhad
(Engineering & Construction) ............ 80,000 236,677
Sime UEP Properties Berhad (Property) ...... 186,000 388,014
------------
1,398,065
------------
New Zealand--2.8%
Telecom Corporation of New Zealand Ltd.
(Utility-Telephone) ..................... 110,000 560,132
------------
Philippines--6.4%
Ayala Land, Inc. Class B (Property) ......... 700,000 518,966
Philippine Long Distance Telephone Co.
Sponsored ADR (Utility-Telephone) ......... 22,000 738,375
------------
1,257,341
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C>
Singapore--9.4%
Clipsal Industries Ltd. (Electrical
Equipment) .............................. 135,000 $ 496,800
Development Bank of Singapore Ltd.
(Banks) ................................. 27,000 350,578
Robinson & Co. Ltd. (Retail) ............... 105,000 510,367
Rothmans Industries Ltd. (Tobacco) ......... 95,000 494,052
------------
1,851,797
------------
South Korea--6.7%
Korea Electric Power Corp. Sponsored
ADR (Utility-Electric) .................. 29,000 536,500
Samsung Electronics Sponsored GDR 144A
Non-Voting Shares (Electronics) (c) ...... 25,000 762,500
Samsung Electronics Sponsored GDR 144A
Voting Shares (Electronics) (b) (c) ...... 414 25,254
------------
1,324,254
------------
Taiwan--2.0%
Standard Foods Taiwan Ltd. GDR (Retail-
Food) (b) ................................. 45,000 393,750
------------
Thailand--7.6%
Bangkok Bank Public Company Ltd.
(Banks) ................................. 50,000 389,020
Ruam Pattana Fund II (Closed End Mutual
Fund) .................................... 1,500,000 437,647
Siam Cement Public Co. Ltd. (Building &
Construction) ........................... 14,500 292,957
Siam Commercial Bank Public Co. Ltd.
(Banks) ................................. 90,000 386,823
------------
1,506,447
------------
TOTAL COMMON STOCKS
(Identified cost $17,557,618) ............... 18,221,129
------------
WARRANTS--0.0%
Malaysia--0.0%
AMMB Holdings Berhad Warrants
(Diversified Financial Services) (b) ...... 7,500 9,103
------------
TOTAL WARRANTS
(Identified cost $0) ........................ 9,103
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------- -------
<S> <C> <C> <C>
CONVERTIBLE BONDS--0.1%
Malaysia--0.1%
AMMB Holdings Berhad (ICULS)
Cv. 7.50%, '02
(Diversified Financial
Services) ............... NR 75(d) 26,456
-------------
TOTAL CONVERTIBLE BONDS
(Identified cost $30,030) ........................ 26,456
-------------
</TABLE>
See Notes to Financial Statements
3
<PAGE>
New Asia Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- --------------------
<S> <C> <C> <C>
NON-CONVERTIBLE BONDS--0.1%
Malaysia--0.1%
AMMB Holdings Berhad 5%, '02
(Diversified Financial
Services) ............... NR 75(d) $ 24,606
---------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $30,030) ........................... 24,606
---------------
TOTAL LONG-TERM INVESTMENTS--92.4%
(Identified cost $17,617,678) ..................... 18,281,294
---------------
SHORT-TERM OBLIGATIONS--7.1%
Aubrey G. Lanston & Co., Inc.
repurchase agreement, 5.72%,
dated 7/31/97 due 8/1/97,
repurchase price $1,400,222,
collateralized by U.S. Treasury
Note 6.625%, 4/30/02, market
value $1,430,843 ..................... $ 1,400 1,400,000
---------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $1,400,000) ........................ 1,400,000
---------------
TOTAL INVESTMENTS--99.5%
(Identified cost $19,017,678)........................ 19,681,294(a)
Cash and receivables, less liabilities--0.5% ...... 89,922
---------------
NET ASSETS--100.0% $ 19,771,216
===============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $1,874,904 and gross
depreciation of $1,621,870 for federal income tax purposes. At July 31,
1997, the aggregate cost of securities for federal income tax purposes was
$19,428,260.
(b) Non-income producing.
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At July 31,
1997, these securities amounted to a value of $1,152,254 or 5.8% of net
assets.
(d) Par value represents Malaysian Ringgits.
See Notes to Financial Statements
4
<PAGE>
New Asia Series
- --------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Long-Term Investments
(Unaudited)
<TABLE>
<S> <C>
Banks .............................. 17.1%
Basic Materials ..................... 2.0
Beverages ........................... 2.6
Building & Construction ............ 1.6
Chemical ........................... 2.2
Closed End Mutual Fund ............... 2.4
Consumer Finance ..................... 1.8
Diversified Financial Services ...... 7.4
Electrical Equipment ............... 2.7
Electronics ........................ 4.3
Engineering & Construction ......... 1.3
Hotels .............................. 2.3
Insurance ........................... 6.7
Miscellaneous ........................ 6.8
Property ........................... 6.4
Retail .............................. 5.5
Retail-Food ........................ 2.2
Tobacco .............................. 2.7
Utility-Electric ..................... 6.0
Utility-Gas ........................ 2.1
Utility-Telephone .................. 13.9
------
100.0%
======
</TABLE>
See Notes to Financial Statements
5
<PAGE>
New Asia Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $19,017,678) $19,681,294
Cash 22,347
Receivables
Investment securities sold 95,221
Dividends and interest 43,925
Fund shares sold 29,205
Tax reclaim 383
Prepaid expenses 5,600
------------
Total assets 19,877,975
------------
Liabilities
Payables
Fund shares repurchased 6,923
Transfer agent fee 10,040
Distribution fee 8,153
Financial agent fee 6,965
Trustees' fee 3,600
Administration fee 2,481
Investment advisory fee 1,809
Accrued expenses 66,788
------------
Total liabilities 106,759
------------
Net Assets $19,771,216
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $19,029,133
Undistributed net investment income 72,144
Accumulated net realized gain 6,289
Net unrealized appreciation 663,650
------------
Net Assets $19,771,216
============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $13,354,750) 1,278,692
Net asset value per share $ 10.44
Offering price per share
$10.44/(1-4.75%) $ 10.96
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $6,416,466) 617,740
Net asset value and offering price per share $ 10.39
</TABLE>
STATEMENT OF OPERATIONS
FROM INCEPTION SEPTEMBER 4, 1996
TO JULY 31, 1997
<TABLE>
<S> <C>
Investment Income
Dividends $ 293,861
Interest 110,792
Foreign taxes withheld (29,496)
----------
Total investment income 375,157
----------
Expenses
Investment advisory fee 105,851
Distribution fee--Class A 22,195
Distribution fee--Class B 35,750
Financial agent fee 48,401
Administration fee 18,680
Registration 84,317
Custodian 68,066
Transfer agent 46,971
Professional 22,704
Printing 19,644
Trustees 17,189
Miscellaneous 5,754
----------
Total expenses 495,522
Less expenses borne by investment adviser (207,197)
----------
Net expenses 288,325
----------
Net investment income 86,832
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 6,289
Net realized loss on foreign currency transactions (6,423)
Net change in unrealized appreciation (depreciation)
on investments 663,616
Net change in unrealized appreciation (depreciation) on
foreign currency and foreign currency transactions 34
----------
Net gain on investments 663,516
----------
Net increase in net assets resulting from
operations $ 750,348
==========
</TABLE>
See Notes to Financial Statements
6
<PAGE>
New Asia Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
September 4, 1996
to July 31, 1997
-------------------
<S> <C>
From Operations
Net investment income $ 86,832
Net realized loss (134)
Net change in unrealized appreciation (depreciation) 663,650
------------
Increase in net assets resulting from operations 750,348
------------
From Distributions to Shareholders
Net investment income--Class A (52,987)
Net investment income--Class B (15,128)
------------
Decrease in net assets from distributions to shareholders (68,115)
------------
From Share Transactions
Class A
Proceeds from sales of shares (1,467,788 shares) 14,761,764
Net asset value of shares issued from reinvestment of distributions (4,967 shares) 49,716
Cost of shares repurchased (194,063 shares) (1,936,251)
------------
Total 12,875,229
------------
Class B
Proceeds from sales of shares (673,230 shares) 6,773,565
Net asset value of shares issued from reinvestment of distributions (1,408 shares) 14,076
Cost of shares repurchased (56,898 shares) (573,887)
------------
Total 6,213,754
------------
Increase in net assets from share transactions 19,088,983
------------
Net increase in net assets 19,771,216
Net Assets
Beginning of period 0
------------
End of period (including undistributed net investment income of $72,144) $ 19,771,216
============
</TABLE>
See Notes to Financial Statements
7
<PAGE>
New Asia Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A Class B
--------------------- ----------------------
From Inception From Inception
9/4/96 to 9/4/96 to
7/31/97 7/31/97
--------------------- ----------------------
<S> <C> <C>
Net asset value, beginning of period $ 10.00 $ 10.00
Income from investment operations(8)
Net investment income 0.09(4)(5) 0.01(4)(6)
Net realized and unrealized gain 0.41 0.43
----------- -----------
Total from investment operations 0.50 0.44
----------- -----------
Less distributions
Dividends from net investment income (0.06) (0.05)
Dividends from net realized gains -- --
----------- -----------
Total distributions (0.06) (0.05)
----------- -----------
Change in net asset value 0.44 0.39
----------- -----------
Net asset value, end of period $ 10.44 $ 10.39
=========== ===========
Total return(1) 4.98%(3) 4.37%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 13,355 $ 6,416
Ratio to average net assets of:
Operating expenses 2.10%(2) 2.85%(2)
Net investment income 0.95%(2) 0.06%(2)
Portfolio turnover 9%(3) 9%(3)
Average commission rate paid(7) $ 0.0106 $ 0.0106
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.15.
(6) Includes reimbursement of operating expenses by investment adviser of $0.15.
(7) A fund is required to disclose its average commission rate per share for
securities trades on which commissions are charged. This rate generally does
not reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
(8) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the time of share purchases and redemptions.
See Notes to Financial Statements
8
<PAGE>
Global Small Cap Series
- --------------------------------------------------------------------------------
INVESTMENTS AT JULY 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCKS--93.7%
Argentina--0.4%
SA Importadora y Exportadora de la
Patagonia (Retail/Wholesale--Food) ...... 10,000 $ 160,032
-----------
Australia--1.9%
Davids Ltd. (Retail/Wholesale--Food) ...... 245,100 160,709
Pacific BBA Ltd. (Auto/Truck--
Replacement Parts) ........................ 150,000 637,061
-----------
797,770
-----------
Brazil--1.3%
Centrais Electricas de Santa Catarina SA
(Electric--Power Utility) ............... 90,000 132,145
CIA Energentica Brasillia Preference
Non-Voting Shares (Electric--Power
Utility) ................................. 800,000 124,850
TV Filme, Inc. (Media--Cable TV) (b) ...... 8,000 79,000
Uniao de Bancos Brasileiros SA Sponsored
GDR (Banks--Foreign) (b) .................. 5,000 201,250
-----------
537,245
-----------
Chile--0.3%
Santa Isabel SA Sponsored ADR
(Retail--Supermarkets) .................. 4,500 123,750
-----------
Denmark--1.8%
Danske Traelast (Retail/Wholesale
--Building Products) ..................... 2,800 250,854
Sondagsavisen A/S (Media--Newspapers) ...... 9,850 492,605
-----------
743,459
-----------
Finland--1.5%
Amer Group Ltd. Class A (Leisure--
Toys/Games/Hobby) (b) ..................... 9,900 180,809
Oy Saunatec Ltd. (Household--
Appliances) .............................. 23,045 244,112
Starckjohann Oy (Building--Construction
Products/Miscellaneous) (b) ............... 100,000 184,461
-----------
609,382
-----------
France--3.5%
Altran Technologies SA
(Telecommunications--Services) ............ 660 213,058
Hyparlo SA
(Retail--Miscellaneous/Diversified) ...... 2,150 196,168
LVL Medical (Medical--Outpatient Home
Care) .................................... 2,310 300,296
Penauille Polyservices (Commercial
Services--Security/Safety) ............... 830 187,515
Picogiga (Electric--Semiconductor
Equipment) (b) ........................... 7,000 219,866
Societe Industrielle D'Aviations Latecoere
SA (Aerospace/Defense) .................. 2,310 318,947
-----------
1,435,850
-----------
Germany--3.3%
Apcoa Parking AG (Commercial
Services--Miscellaneous) .................. 3,000 262,155
Bien-Haus AG
(Building--Mobile/Manufacturing & RV) 550 179,670
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
Germany--continued
Leica Camera AG (Leisure--Photo
Equipment/Related) ........................ 6,100 $ 167,885
Loesch Umweltschutz AG (Pollution
Control-- Equipment) ..................... 23,068 555,129
Puma AG (Retail--Apparel/Shoe) ............ 7,300 201,906
-----------
1,366,745
-----------
Hong Kong--3.0%
Giordano International Ltd. (Retail--
Apparel/Shoe) ........................... 651,000 409,897
Innovative International Holdings Ltd.
(Auto/Truck--Original Equipment) ......... 1,000,000 452,050
Magician Industries Holding Ltd.
(Household--Housewares) .................. 1,500,000 402,002
-----------
1,263,949
-----------
India--3.4%
Crompton Greaves Ltd. Sponsored GDR
(Electric Products--Miscellaneous) (b) .... 126,700 389,603
Industrial Credit & Investment Corporation
of India Ltd. Sponsored GDR
(Finance--Investment Bankers) (b) ......... 60,000 1,014,000
-----------
1,403,603
-----------
Indonesia--3.6%
PT Bank Bali (Banks--Foreign) ............... 200,000 554,493
PT Duta Anggada TBK (Real Estate
Development) .............................. 800,000 481,835
PT Tigaraksa Satria (Retail--
Miscellaneous/Diversified) ............... 350,000 461,759
-----------
1,498,087
-----------
Ireland--1.0%
Saville Systems Ireland PLC Sponsored ADR
(Computer--Integrated Systems) (b) ...... 6,500 414,375
-----------
Israel--1.2%
Tadiran Ltd.
(Telecommunications--Equipment) ......... 15,242 493,155
-----------
Japan--4.0%
FCC Co. Ltd. (Auto/Truck--Replacement
Parts) .................................... 27,000 640,794
Kawasumi Laboratories
(Medical/Dental--Supplies) ............... 34,000 542,737
Nishio Rent All Co. (Trucks & Parts--
Heavy Duty) .............................. 19,000 229,476
Shinmei Electric (Electric--Miscellaneous
Components) .............................. 12,000 260,473
-----------
1,673,480
-----------
Malaysia--1.3%
Asas Dunia Berhad (Real Estate
Development) .............................. 170,000 531,955
-----------
Mexico--0.5%
Industrias CH SA Series B
(Steel--Producers) (b) .................. 33,000 154,282
Tekchem SA (Chemicals--Specialty) (b) ...... 182,000 41,615
-----------
195,897
-----------
</TABLE>
See Notes to Financial Statements
9
<PAGE>
Global Small Cap Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
Netherlands--1.9%
ASM Lithography Holding NV NY
Registered (Electric--Semiconductor
Equipment) ................................. 6,000 $ 486,000
QIAGEN NV (Medical--Biomed/Genetics) (b) 5,700 307,800
-----------
793,800
-----------
Norway--0.6%
Tomra Systems ASA (Pollution Control--
Equipment) ................................. 12,600 257,919
-----------
Singapore--3.8%
Industrial & Commercial Bank Ltd.
(Banks--Foreign) ........................... 78,000 273,080
Robinson & Co. Ltd. (Retail--
Apparel/Shoe) .............................. 140,000 680,489
Rothmans Industries Ltd. (Tobacco) ......... 120,000 624,065
-----------
1,577,634
-----------
Spain--2.1%
Adolfo Dominguez SA (Retail--
Apparel/Shoe) (b) ........................ 4,500 155,538
Catalana Occidente SA (Insurance--Multi
Line) (b) ................................. 5,255 267,028
Corp. Financiera Reunida SA (Finance--
Investment Bankers) (b) .................. 105,485 472,073
-----------
894,639
-----------
Sweden--0.4%
Bure Investment Aktiebolaget (Finance--
Public Traded Investment Funds) ............ 15,000 175,190
-----------
Switzerland--1.0%
Disetronic Holding AG (Medical--
Instruments) .............................. 80 150,784
Lindt & Spruengli AG (Food--
Confectionery) ........................... 15 282,769
-----------
433,553
-----------
Taiwan--1.3%
Standard Foods Taiwan Limited GDR
(Food--Flour & Grain) (b) .................. 60,000 525,000
-----------
Thailand--0.4%
Bangkok First Investment & Trust Ltd.
(Finance--Investment Bankers) ............ 100,000 166,275
-----------
United Kingdom--9.4%
Cedardata PLC (Computer--Software) ......... 75,000 85,367
DCS Group PLC (Computer--Software) ......... 100,000 413,528
GWR Group PLC (Media--Radio/TV) ............ 100,000 282,509
Gerrard Group PLC (Finance--Investment
Bankers) ................................. 83,592 462,042
Gresham Computing PLC (Computer--
Software) ................................. 570,000 280,052
ILP Group PLC (Containers--
Paper/Plastic) ........................... 200,000 90,075
JJB Sports PLC (Retail--Apparel/Shoe) ...... 110,000 862,021
Rolfe & Nolan PLC (Computer--Services) ...... 127,300 755,753
St. James Beach Hotels PLC (Leisure--
Hotels & Motels) ........................... 100,000 316,901
Wilmington Group PLC (Media--
Periodicals) .............................. 200,000 368,490
-----------
3,916,738
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
United States--40.8%
Banks--Midwest--0.6%
Charter One Financial, Inc. .................. 4,500 $ 260,719
-----------
Commercial Services--Miscellaneous--1.0%
Caribiner International, Inc. (b) ............ 2,900 105,487
The Registry, Inc. (b) ..................... 6,000 303,750
-----------
409,237
-----------
Commercial Services--Printing--0.6%
Consolidated Graphics, Inc. (b) ............ 5,400 254,137
-----------
Commercial Services--Schools--0.9%
Computer Learning Centers, Inc. (b) ......... 2,000 95,750
Learning Tree International, Inc. (b) ...... 4,800 195,600
Strayer Education, Inc. ..................... 2,000 75,000
-----------
366,350
-----------
Computer--Integrated Systems--1.0%
DAOU Systems, Inc. (b) ..................... 5,000 98,750
Imnet Systems, Inc. (b) ..................... 9,000 315,000
-----------
413,750
-----------
Computer--Services--3.1%
At Home Corp. Series A (b) .................. 4,000 78,000
Complete Business Solutions, Inc. (b) ...... 7,000 192,500
Computer Horizons Corp. (b) .................. 8,000 320,000
Computer Task Group, Inc. .................. 6,000 269,250
RWD Technologies, Inc. (b) .................. 3,200 67,200
Technology Solutions Co. (b) ............... 9,000 353,250
-----------
1,280,200
-----------
Computer--Software--2.4%
Keane, Inc. (b) .............................. 1,500 91,688
Manugistics Group, Inc. (b) .................. 15,000 648,750
USCS International, Inc. (b) ............... 6,000 195,000
Vantive Corp. (b) ........................... 1,500 46,875
-----------
982,313
-----------
Cosmetics/Personal Care--0.8%
Twinlab Corp. (b) ........................... 4,000 90,500
Weider Nutrition International, Inc. ......... 12,000 220,500
-----------
311,000
-----------
Electric--Laser Systems/Component--1.1%
Cymer, Inc. (b) .............................. 6,500 474,500
-----------
Electric--Miscellaneous Components--1.2%
RF Micro Devices, Inc. (b) .................. 9,000 151,875
Rambus, Inc. (b) ........................... 6,000 331,500
-----------
483,375
-----------
Electric--Semiconductor Equipment--2.4%
Asyst Technologies, Inc. (b) ............... 3,500 188,125
PRI Automation, Inc. (b) ..................... 10,000 496,250
Uniphase Corp. (b) ........................... 4,500 307,125
-----------
991,500
-----------
Electric--Semiconductor Manufacturing--2.8%
Jabil Circuit, Inc. (b) ..................... 13,600 662,150
Sanmina Corp. (b) ........................... 4,000 293,500
Unitrode Corp. (b) ........................... 3,500 208,031
-----------
1,163,681
-----------
</TABLE>
See Notes to Financial Statements
10
<PAGE>
Global Small Cap Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
United States--continued
Finance--Consumer Loans--0.5%
FIRSTPLUS Financial Group, Inc. (b) ......... 4,500 $ 205,312
------------
Finance--Equity REIT--0.8%
CCA Prison Realty Trust (b) .................. 1,000 31,000
Security Capital Atlantic, Inc. ............... 12,000 282,000
------------
313,000
------------
Finance--Investment Management--0.5%
ARM Financial Group, Inc. Class A ............ 9,000 186,750
------------
Insurance--Life--0.9%
AmerUs Life Holdings, Inc. Class A ............ 3,500 97,125
Equitable of Iowa Companies .................. 3,000 197,812
ReliaStar Financial Corp. ..................... 1,000 76,687
------------
371,624
------------
Insurance--Property/Casualty/Title--0.5%
American Bankers Insurance Group, Inc. ....... 3,000 203,063
------------
Leisure--Services--0.0%
Travel Services International, Inc. (b) ...... 500 10,250
------------
Machine--Tools & Related Products--0.3%
JLK Direct Distribution, Inc. Class A (b) .... 5,000 128,438
------------
Media--Radio/TV--0.4%
Heftel Broadcasting Corp. Class A (b) ......... 3,000 175,500
------------
Medical--Biomed/Genetics--2.3%
Biogen, Inc. (b) .............................. 4,000 154,000
Immunex Corp. (b) ........................... 13,500 516,375
Incyte Pharmaceuticals, Inc. (b) ............ 4,000 271,000
------------
941,375
------------
Medical--Generic Drugs--0.7%
Watson Pharmaceuticals, Inc. (b) ............ 5,500 272,250
------------
Medical--Hospitals--0.6%
Quorum Health Group, Inc. (b) ............... 7,500 267,188
------------
Medical--Instruments--1.5%
Arterial Vascular Engineering, Inc. (b) ...... 8,500 326,188
Spine-Tech, Inc. (b) ........................ 5,000 296,250
------------
622,438
------------
Medical--Nursing Homes--0.2%
American Retirement Corp. (b) ............... 5,000 101,250
------------
Medical--Products--1.0%
Affymetrix, Inc. (b) ........................ 13,000 424,125
------------
Oil & Gas--Canadian Exploration & Production--0.5%
Domain Energy Corp. (b) ..................... 16,000 222,000
------------
Oil & Gas--Drilling--1.4%
Falcon Drilling Company, Inc. (b) ............ 20,000 577,500
------------
Oil and Gas--Field Services--1.1%
Cal Dive International, Inc. (b) ............ 7,000 186,375
Tuboscope, Inc. (b) ........................... 12,000 289,500
------------
475,875
------------
Oil and Gas--Machinery/Equipment--2.9%
Cooper Cameron Corp. (b) ..................... 4,500 263,812
EVI, Inc. (b) ................................. 4,000 195,500
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
Oil and Gas--Machinery/Equipment--continued
Gulf Island Fabrication, Inc. (b) ............ 9,600 $ 340,800
Varco International, Inc. (b) ............... 10,000 386,875
------------
1,186,987
------------
Retail--Home Furnishings--0.4%
Ethan Allen Interiors, Inc. .................. 3,500 185,500
------------
Telecommunications--Cellular--0.7%
CellStar Corp. (b) ........................... 10,000 300,000
------------
Telecommunications--Equipment--4.2%
Advanced Fibre Communications (b) ............ 8,500 593,938
Brightpoint, Inc. (b) ........................ 12,200 364,475
CIENA Corp. (b) .............................. 4,000 224,500
Powerwave Technologies, Inc. (b) ............ 4,500 158,062
Spectrian Corp. (b) ........................... 1,000 45,500
Tekelec (b) ................................. 5,000 307,500
World Access, Inc. (b) ........................ 2,400 67,500
------------
1,761,475
------------
Telecommunications--Services--0.5%
Boston Communications Group, Inc. (b) ......... 6,000 81,750
MasTec, Inc. (b) .............................. 2,000 107,375
------------
189,125
------------
Transportation--Equipment Manufacturing--1.0%
Datum, Inc. (b) .............................. 6,000 198,000
Halter Marine Group, Inc. (b) ............... 7,200 220,500
------------
418,500
------------
Total United States .............................. 16,930,287
------------
TOTAL COMMON STOCKS
(Identified cost $34,700,443) .................. 38,919,769
------------
TOTAL LONG-TERM INVESTMENTS
(Identified cost $34,700,443) .................. 38,919,769
------------
</TABLE>
<TABLE>
<CAPTION>
PAR
VALUE
(000)
---------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--6.5%
Aubrey G. Lanston & Co., Inc.
repurchase agreement, 5.72%, dated
7/31/97 due 8/1/97, repurchase price
$2,700,429, collateralized by U.S.
Treasury Note 6.625%, 4/30/02,
market value $2,760,229................ $2,700 2,700,000
------------
$2,700
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $2,700,000) ............................. 2,700,000
------------
TOTAL INVESTMENTS - 100.2%
(Identified cost $37,400,443)............................. 41,619,769(a)
Cash and receivables, less
liabilities -- (0.2%)................................... (87,837)
------------
NET ASSETS -- 100.0% ....................................... $41,531,932
=============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $6,010,405 and gross
depreciation of $2,478,033 for federal income tax purposes. At July 31,
1997, the aggregate cost of securities for federal income tax purposes was
$38,087,397.
(b) Non-income producing.
See Notes to Financial Statements
11
<PAGE>
Global Small Cap Series
- --------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Long-Term Investments
(Unaudited)
<TABLE>
<S> <C>
Aerospace/Defense ................................. 0.8%
Auto/Truck--Original Equipment ..................... 1.2
Auto/Truck--Replacement Parts ..................... 3.3
Banks--Foreign .................................... 2.6
Banks--Midwest .................................... 0.7
Building--Construction Products/Miscellaneous ...... 0.5
Building--Mobile/Manufacturing & RV ............... 0.5
Chemicals--Specialty .............................. 0.1
Commercial Services--Miscellaneous ............... 1.7
Commercial Services--Printing ..................... 0.7
Commercial Services--Schools ..................... 0.9
Commercial Services--Security/Safety ............... 0.5
Computer--Integrated Systems ..................... 2.1
Computer--Services ................................. 5.2
Computer--Software ................................. 4.5
Containers--Paper/Plastic ........................ 0.2
Cosmetics/Personal Care ........................... 0.8
Electric--Laser Systems/Component .................. 1.2
Electric--Miscellaneous Components ............... 1.9
Electric--Power Utility ........................... 0.7
Electric--Semiconductor Equipment .................. 4.4
Electric--Semiconductor Manufacturing ............ 3.0
Electric Products--Miscellaneous .................. 1.0
Finance--Consumer Loans ........................... 0.5
Finance--Equity REIT .............................. 0.8
Finance--Investment Bankers ........................ 5.4
Finance--Investment Management ..................... 0.5
Finance--Public Traded Investment Funds ............ 0.5
Food--Confectionery .............................. 0.7
Food--Flour & Grain .............................. 1.3
Household--Appliances .............................. 0.6
Household--Housewares .............................. 1.0
Insurance--Life .................................... 1.0
Insurance--Multi Line .............................. 0.7
Insurance--Property/Casualty/Title ............... 0.5
Leisure--Hotels & Motels ........................... 0.8
Leisure--Photo Equipment/Related .................. 0.4
Leisure--Services ................................. 0.0
Leisure--Toys/Games/Hobby ........................ 0.5
Machine--Tools & Related Products .................. 0.3
Media--Cable TV .................................... 0.2
Media--Newspapers ................................. 1.3
Media--Periodicals ................................. 0.9
Media--Radio/TV .................................... 1.2
Medical--Biomed/Genetics ........................... 3.2
Medical--Generic Drugs ........................... 0.7
Medical--Hospitals ................................. 0.7
Medical--Instruments .............................. 2.0
Medical--Nursing Homes ........................... 0.3
Medical--Outpatient Home Care ..................... 0.8
Medical--Products ................................. 1.1
Medical/Dental--Supplies ........................... 1.4
Oil & Gas--Canadian Exploration & Production ...... 0.6
Oil & Gas--Drilling .............................. 1.5
Oil & Gas--Field Services ........................ 1.2
Oil & Gas--Machinery/Equipment ..................... 3.1
Pollution Control--Equipment ..................... 2.1
Real Estate Development ........................... 2.6
Retail--Apparel/Shoe .............................. 5.9
Retail--Home Furnishings ........................... 0.5
Retail--Miscellaneous/Diversified .................. 1.7
Retail--Supermarkets .............................. 0.3
Retail/Wholesale--Building Products ............... 0.6
Retail/Wholesale--Food ........................... 0.8
Steel--Producers ................................. 0.4
Telecommunications--Cellular ..................... 0.8
Telecommunications--Equipment ..................... 5.8
Telecommunications--Services ..................... 1.0
Tobacco ............................................. 1.6
Transportation--Equipment Manufacturing ............ 1.1
Trucks & Parts--Heavy Duty ........................ 0.6
------
100.0%
======
</TABLE>
See Notes to Financial Statements
12
<PAGE>
Global Small Cap Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $37,400,443) $ 41,619,769
Foreign currency at value
(Identified cost $145,476) 145,451
Cash 15,877
Receivables
Investment securities sold 723,616
Fund shares sold 18,819
Interest and dividends 48,439
Receivable from adviser 33,152
Tax reclaim 7,779
Prepaid expenses 5,598
------------
Total assets 42,618,500
------------
Liabilities
Payables
Investment securities purchased 857,775
Fund shares repurchased 58,404
Distribution fee 19,786
Transfer agent fee 16,238
Financial agent fee 6,964
Administration fee 5,241
Trustees' fee 3,500
Accrued expenses 118,660
------------
Total liabilities 1,086,568
------------
Net Assets $ 41,531,932
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $ 38,519,900
Undistributed net investment loss (162,808)
Accumulated net realized loss (1,044,791)
Net unrealized appreciation 4,219,631
------------
Net Assets $ 41,531,932
============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $23,873,958) 2,154,026
Net asset value per share $ 11.08
Offering price per share
$11.08/(1-4.75%) $ 11.63
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $17,657,974) 1,604,682
Net asset value and offering price per share $ 11.00
</TABLE>
STATEMENT OF OPERATIONS
FROM INCEPTION SEPTEMBER 4, 1996
TO JULY 31, 1997
<TABLE>
<S> <C>
Investment Income
Dividends $ 362,395
Interest 180,628
Foreign taxes withheld (40,097)
------------
Total investment income 502,926
------------
Expenses
Investment advisory fee 240,064
Distribution fee--Class A 43,040
Distribution fee--Class B 110,269
Financial agent fee 49,465
Administration fee 42,364
Custodian 107,265
Registration 89,707
Transfer agent 65,571
Professional 22,877
Printing 22,804
Trustees 17,090
Miscellaneous 10,198
------------
Total expenses 820,714
Less expenses borne by investment adviser (144,912)
------------
Net expenses 675,802
------------
Net investment loss (172,876)
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized loss on securities (1,044,791)
Net realized loss on foreign currency transactions (60,957)
Net change in unrealized appreciation (depreciation)
on investments 4,219,326
Net change in unrealized appreciation (depreciation) on
foreign currency and foreign currency transactions 305
------------
Net gain on investments 3,113,883
------------
Net increase in net assets resulting from
operations $ 2,941,007
============
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Global Small Cap Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
September 4, 1996
to July 31, 1997
-------------------
<S> <C>
From Operations
Net investment loss $ (172,876)
Net realized loss (1,105,748)
Net change in unrealized appreciation (depreciation) 4,219,631
------------
Increase in net assets resulting from operations 2,941,007
------------
From Share Transactions
Class A
Proceeds from sales of shares (2,544,464 shares) 26,115,134
Net asset value of shares issued from reinvestment of distributions (0 shares) --
Cost of shares repurchased (390,438 shares) (4,060,236)
------------
Total 22,054,898
------------
Class B
Proceeds from sales of shares (1,768,033 shares) 18,246,161
Net asset value of shares issued from reinvestment of distributions (0 shares) --
Cost of shares repurchased (163,351 shares) (1,710,134)
------------
Total 16,536,027
------------
Increase in net assets from share transactions 38,590,925
------------
Net increase in net assets 41,531,932
Net Assets
Beginning of period 0
------------
End of period (including undistributed net investment loss of ($162,808)) $ 41,531,932
============
</TABLE>
See Notes to Financial Statements
14
<PAGE>
Global Small Cap Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A Class B
------------------------- --------------------------
From Inception From Inception
9/4/96 to 9/4/96 to
7/31/97 7/31/97
------------------------- --------------------------
<S> <C> <C>
Net asset value, beginning of period $ 10.00 $ 10.00
Income from investment operations
Net investment income (loss) (0.03)(4)(5) (0.10)(4)(6)
Net realized and unrealized gain 1.11 1.10
----------- -----------
Total from investment operations 1.08 1.00
----------- -----------
Less distributions
Dividends from net investment income -- --
Dividends from net realized gains -- --
----------- -----------
Total distributions -- --
----------- -----------
Change in net asset value 1.08 1.00
----------- -----------
Net asset value, end of period $ 11.08 $ 11.00
=========== ===========
Total return(1) 10.80% (3) 10.00% (3)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 23,874 $ 17,658
Ratio to average net assets of:
Operating expenses 2.10% (2) 2.85% (2)
Net investment income (loss) (0.32%)(2) (1.07%)(2)
Portfolio turnover 162% (3) 162% (3)
Average commission rate paid(7) $ 0.0127 $ 0.0127
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of
$0.05.
(6) Includes reimbursement of operating expenses by investment adviser of
$0.05.
(7) A fund is required to disclose its average commission rate per share for
securities trades on which commissions are charged. This rate generally
does not reflect mark-ups, mark-downs, or spreads on shares traded on a
principal basis.
See Notes to Financial Statements
15
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
NOTES TO FINANCIAL STATEMENTS
July 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix-Aberdeen Series Fund (the "Fund") is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as a diversified, open-end management investment company
whose shares are offered in two separate Series. Each Series has distinct
investment objectives.
The New Asia Series seeks as its investment objective long-term capital
appreciation through investing in equity securities of issuers located in at
least three different countries throughout Asia other than Japan. The Global
Small Cap Series seeks as its investment objective long-term capital
appreciation through investing in a globally diversified portfolio of equity
securities of small and medium sized companies.
Each Series offers both Class A and Class B shares. Class A shares are
sold with a front-end sales charge of up to 4.75%. Class B shares are sold with
a contingent deferred sales charge which declines from 5% to zero depending on
the period of time the shares are held. Both classes of shares have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that each class bears different distribution expenses and
has exclusive voting rights with respect to its distribution plan. Income and
expenses of each Series are borne pro rata by the holders of both classes of
shares, except that each class bears distribution expenses unique to that
class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. Security valuation:
Equity securities are valued at the last sale price, or if there had been
no sale that day, at the last bid price. Debt securities are valued on the
basis of broker quotations or valuations provided by a pricing service which
utilizes information with respect to recent sales, market transactions in
comparable securities, quotations from dealers, and various relationships
between securities in determining value. Short-term investments having a
remaining maturity of 60 days or less are valued at amortized cost which
approximates market. All other securities and assets are valued at fair value
as determined in good faith by or under the direction of the Trustees.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign securities,
as soon as the Series is notified. Interest income is recorded on the accrual
basis. Realized gains and losses are determined on the identified cost basis.
C. Income taxes:
Each of the Series is treated as a separate taxable entity. It is the
policy of each Series in the Fund to comply with the requirements of the
Internal Revenue Code (the "Code") applicable to regulated investment
companies, and to distribute substantially all of its taxable and tax-exempt
income to its shareholders. In addition, each Series intends to distribute an
amount sufficient to avoid imposition of any excise tax under Section 4982 of
the Code. Therefore, no provision for federal income taxes or excise taxes has
been made.
D. Distributions to shareholders:
Distributions are recorded by each Series on the ex-dividend date. Income
and capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, foreign
currency gain/loss, partnerships, operating losses and losses deferred due to
wash sales and excise tax regulations. Permanent book and tax basis differences
relating to shareholder distributions will result in reclassifications to paid
in capital.
E. Foreign currency translation:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at
the trade date. The gain or loss resulting from a change in currency exchange
rates between the trade and settlement dates of a portfolio transaction is
treated as a gain or loss on foreign currency. Likewise, the gain or loss
resulting from a change in currency exchange rates between the date income is
accrued and paid is treated as a gain or loss on foreign currency. The Fund
does not separate that portion of the results of operations arising from
changes in exchange rates and that portion arising from changes in the market
prices of securities.
F. Forward currency contracts:
Each Series may enter into forward currency contracts in conjunction with
the planned purchase or sale of foreign denominated securities in order to
hedge the U.S. dollar cost or proceeds. Forward currency contracts involve, to
16
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
NOTES TO FINANCIAL STATEMENTS
July 31, 1997 (Continued)
varying degrees, elements of market risk in excess of the amount recognized in
the statement of assets and liabilities. Risks arise from the possible
movements in foreign exchange rates or if the counterparty does not perform
under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any 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 and
their customers. The contract is marked-to-market daily and the change in
market value is recorded by each Series as an unrealized gain (or loss). When
the contract is closed or offset with the same counterparty, the Series records
a realized gain (or loss) equal to the change in the value of the contract when
it was opened and the value at the time it was closed or offset.
G. Expenses:
Expenses incurred by the Fund with respect to more than one Series are
allocated in proportion to the net assets of each Series, except where
allocation of direct expense to each Series or an alternative allocation method
can be more fairly made.
H. Repurchase agreements
A repurchase agreement is a transaction where a Series acquires a security
for cash and obtains a simultaneous commitment from the seller to repurchase
the security at an agreed upon price and date. The Series, through its
custodian, takes possession of securities collateralizing the repurchase
agreement. The collateral is marked-to-market daily to ensure that the market
value of the underlying assets remains sufficient to protect the Series in the
event of default by the seller. If the seller defaults and the value of the
collateral declines, or, if the seller enters insolvency proceedings,
realization of collateral may be delayed or limited.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
Phoenix-Aberdeen International Advisors, LLC ("PAIA" or the "Adviser")
serves as the investment adviser to the Fund. PAIA is a joint venture between
PM Holdings, Inc., a direct subsidiary of Phoenix Home Life Mutual Insurance
Company ("PHL"), and Aberdeen Fund Managers, Inc. ("Aberdeen"), a wholly-owned
subsidiary of Aberdeen Trust PLC.
PAIA is entitled to a fee at an annual rate of 0.85% of the average daily
net assets of each Series. Pursuant to sub-advisory agreements, the Adviser
delegates certain investment decisions and functions to other entities. Phoenix
Investment Counsel, Inc. ("PIC"), an indirect, majority-owned subsidiary of
PHL, receives a fee at an annual rate of 0.15% of the average daily net assets
of each Series from PAIA for providing cash management and other services, as
needed. In addition, PAIA allocates certain assets of the Global Small Cap
Series for management by PIC. PAIA pays a sub-advisory fee to PIC at an annual
rate of 0.40% of the average daily net assets of the Global Small Cap Series so
allocated. PAIA also pays a sub-advisory fee to Aberdeen at an annual rate of
0.40% of the average net assets of the New Asia Series and 0.40% of the average
net assets of the Global Small Cap Series allocated to Aberdeen by the Adviser
for management.
The Adviser has agreed to reimburse the New Asia Series and the Global
Small Cap Series to the extent that other operating expenses (excluding
advisory fees, distribution fees, interest, taxes, brokerage fees and
commissions and extraordinary expenses) exceed 1.00% of the average daily net
assets for Class A and Class B shares for each Series.
Phoenix Equity Planning Corporation ("PEPCO" or the "Distributor"), an
indirect, majority-owned subsidiary of PHL, which serves as the national
distributor of the Fund's shares, has advised the Fund that it retained net
selling commissions of $71,678 for Class A shares and deferred sales charges of
$54,140 for Class B shares for the period ended July 31, 1997. In addition,
each Series pays PEPCO a distribution fee at an annual rate of 0.25% for Class
A shares and 1.00% for Class B shares applied to the average daily net assets
of each Series. The Distributor has advised the Fund that of the total amount
expensed for the period ended July 31, 1997, $171,251 was retained by the
Distributor, $30,507 was paid out to unaffiliated participants and $9,496 was
paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent to the Fund and to each Series, PEPCO received a fee
for bookkeeping and pricing services at an annual rate of 0.03% of the average
daily net assets of each Series through December 31, 1996, and starting on
January 1, 1997, at an annual rate of 0.05% of average daily net assets up to
$100 million, 0.04% of average daily net assets of $100 million to $300
million, 0.03% of average daily net assets of $300 million through $500
million, and 0.015% of average daily net assets greater than $500 million; a
minimum fee may apply. As Administrator for the Fund, Phoenix Duff & Phelps
Corporation ("PDP"), an indirect, majority-owned subsidiary of PHL, received a
fee at an annual rate of 0.15% of the average daily net assets of each Series
for administrative services.
17
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
NOTES TO FINANCIAL STATEMENTS
July 31, 1997 (Continued)
PEPCO serves as the Fund's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the period ended July 31, 1997, transfer
agent fees were $112,542 of which PEPCO retained $12,042 which is net of fees
paid to State Street.
At July 31, 1997, PHL and its affiliates held Fund shares which aggregated
the following:
<TABLE>
<CAPTION>
Aggregate
Shares Net Asset Value
--------- -----------------
<S> <C> <C>
New Asia Series Class A ...... 291,622 $3,044,538
New Asia Series Class B ...... 10,045 104,368
Global Small Cap Series Class A 490,000 5,429,200
Global Small Cap Series Class B 10,000 110,000
</TABLE>
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the period ended July 31, 1997
(excluding U.S. Government and agency securities, short-term securities, and
forward currency contracts) aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
------------- -------------
<S> <C> <C>
New Asia Series ......... $18,670,526 $ 1,059,137
Global Small Cap Series ... 82,470,827 46,725,593
</TABLE>
There were no purchases or sales of long-term U.S. Government and agency
securities during the period ended July 31, 1997.
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a Series' ability to
repatriate such amounts.
5. CAPITAL LOSS CARRYOVERS
At July 31, 1997, the Global Small Cap Series had a capital loss carryover
of $166,196, expiring in 2005, which may be used to offset future capital
gains.
Under current tax law, foreign currency and capital losses realized after
October 31, 1996, may be deferred and treated as occurring on the first day of
the following fiscal year. For the year ended July 31, 1997, the following
foreign currency and capital losses were deferred:
<TABLE>
<S> <C>
New Asia Series ............... $ 4,097
Global Small Cap Series ...... 777,042
</TABLE>
6. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Series of the Fund have
recorded several reclassifications in the capital accounts. These
reclassifications have no impact on the net asset value of the Series and are
designed generally to present undistributed income and realized gains on a tax
basis which is considered to be more informative to the shareholder. As of July
31, 1997, the Series recorded the following reclassifications to increase
(decrease) the accounts listed below:
<TABLE>
<CAPTION>
Capital paid
Undistributed Accumulated in on shares
net investment net realized of beneficial
income (loss) gain (loss) interest
---------------- -------------- ---------------
<S> <C> <C> <C>
New Asia Series .. $53,427 $ 6,423 $ (59,850)
Global Small
Cap Series ... 10,068 60,957 (71,025)
</TABLE>
This report is not authorized for distribution to prospective investors in
the Phoenix-Aberdeen Series Fund unless preceded or accompanied by an effective
prospectus which includes information concerning the sales charge, the Fund's
record and other pertinent information.
18
<PAGE>
PHOENIX ABERDEEN SERIES FUND
PART C--OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements:
Included in Part A: Financial Highlights
Included in Part B: Financial Statements and Notes thereto are included in
the Annual Report to Shareholders dated July 31, 1997,
incorporated by reference.
(b) Exhibits:
<TABLE>
<S> <C>
1.1 Declaration of Trust of the Registrant filed via Edgar with the Registration Statement on June 24, 1996 and
incorporated herein by reference
1.2 Amendment to Declaration of Trust filed via Edgar with Pre-Effective Amendment No. 1 on
August 27, 1996 and incorporated herein by reference
2. None
3. None
4. Reference is made to Article IV, Section 4.1 of Registrant's Declaration of Trust referred to in Exhibit 1.1
5.1 Investment Advisory Agreement between Registrant and Phoenix-Aberdeen International Advisors, LLC
filed via Edgar with the Registration Statement on June 24, 1996 and incorporated herein by reference
5.2 Sub-Investment Advisory Agreement between Phoenix-Aberdeen International Advisors, LLC and Phoenix
Investment Counsel, Inc. filed via Edgar with Pre-Effective Amendment No. 1 on August 27, 1996 and
incorporated herein by reference
5.3 Sub-Investment Advisory Agreement between Phoenix-Aberdeen International Advisors, LLC and
Aberdeen Fund Managers, Inc. filed via Edgar with Pre-Effective Amendment No. 1 on August 27, 1996
and incorporated herein by reference
6.1* Underwriting Agreement between Registrant and Phoenix Equity Planning Corporation, dated November
19, 1997, filed via EDGAR herewith.
6.2* Form of Sales Agreement between Phoenix Equity Planning Corporation and dealers, filed via EDGAR
herewith.
6.3* Form of Supplement to Phoenix Family of Funds Sales Agreement filed via EDGAR herewith.
6.4* Form of Financial Institution Sales Contract for the Phoenix Family of Funds filed via EDGAR herewith.
7. None
8. Custodian Agreement between Registrant and Brown Brothers Harriman & Co. filed via Edgar with
Pre-Effective Amendment No. 1 on August 27, 1996 and incorporated herein by reference
9.1 Administration Agreement between Registrant and Phoenix Duff & Phelps Corporation filed via Edgar with
Pre-Effective Amendment No. 1 on August 27, 1996 and incorporated herein by reference
9.2 Financial Agent Agreement between Registrant and Phoenix Equity Planning Corporation dated December
11, 1996 filed via Edgar with Post-Effective Amendment No. 1 on March 31, 1997 and incorporated herein
by reference.
9.3 Transfer Agency and Service Agreement between Registrant and Phoenix Equity Planning Corporation filed
via Edgar with the Registration Statement on June 24, 1996 and incorporated herein by reference
9.4* Sub-Transfer Agent Agreement between Phoenix Equity Planning Corporation and State Street Bank and
Trust Company filed via EDGAR herewith.
10. Opinion of Counsel filed via Edgar with Pre-Effective Amendment No. 2 on September 4, 1996 and
incorporated herein by reference
11.* Consent of Accountants filed via Edgar herewith.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
12. None
13. Initial Capitalization Agreement filed via Edgar with Pre-Effective Amendment No. 1 on August 27, 1996
and incorporated herein by reference
14. None
15.1* Class A Shares Amended and Restated Distribution Plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940, filed via EDGAR herewith.
15.2* Class B Shares Amended and Restated Distribution Plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940, filed via EDGAR herewith.
16.* Schedule for Computation of Performance Quotations filed via EDGAR herewith.
17.* Financial Data Schedule filed via Edgar herewith and reflected on Edgar as Exhibit 27.
18* Amended and Restated Rule 18f-3 Dual Distribution Plan filed via EDGAR herewith.
19. Powers of Attorney filed via Edgar with Pre-Effective Amendment No. 1 on August 27, 1996
</TABLE>
- -----------
*Filed herewith.
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 September 30, 1997:
<TABLE>
<CAPTION>
Number of
Title of Class Record-holders
- ------------------------------ ---------------
<S> <C>
New Asia Series
Class A Shares 1,393
Class B Shares 713
Global Small Cap Series
Class A Shares 2,001
Class B Shares 1,689
</TABLE>
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.
801-52167) filed under the Investment Advisers Act of 1940, incorporated herein
by reference.
C-2
<PAGE>
Item 29. Principal Underwriter.
(a) Equity Planning also serves as the principal underwriter for the
following other registrants:
Phoenix Series Fund, Phoenix Strategic Allocation Fund, Inc., Phoenix Duff
& Phelps Institutional Mutual Funds, Phoenix Multi-Sector Fixed Income Fund,
Inc., Phoenix Multi-Sector Short Term Bond Fund, Phoenix Multi-Portfolio Fund,
Phoenix California Tax Exempt Bonds, Inc., Phoenix Income and Growth Fund,
Phoenix Worldwide Opportunities Fund, Phoenix Strategic Equity Series Fund,
Phoenix Equity Series Fund, Phoenix-Engemann Funds, Phoenix Investment Trust
97, Phoenix Home Life Variable Universal Life Account, Phoenix Home Life
Variable Accumulation Account, PHL Variable Accumulation Account, Phoenix Life
and Annuity Variable Universal Life Account and PHL Variable Separate Account
MVA1.
(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 Distributor with Registrant
- ------------------------- ------------------------------- -------------------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
56 Prospect Street
P.O. Box 150480-0480
Hartford, CT 06115
David R. Pepin Director and Executive Executive Vice President
56 Prospect Street Vice President, Mutual Fund
P.O. Box 150480 Sales and Operations
Hartford, CT 06115-0480
Leonard J. Saltiel Managing Director, Vice President
56 Prospect Street Operations and Service
P.O. Box 150480
Hartford, CT 06115-0480
Paul A. Atkins Senior Vice President and None
56 Prospect Street Sales Manager
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Senior Vice President and Vice President
100 Bright Meadow Blvd. Chief Financial Officer
P.O. Box 1900
Enfield, CT 06083-1900
John F. Sharry Managing Director, Mutual None
56 Prospect Street Fund Distribution
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Mutual Fund Clerk and Secretary
101 Munson Street Customer Service
Greenfield, MA 01301
Eugene A. Charon Vice President and Controller None
100 Bright Meadow Blvd.
P.O. Box 1900
Enfield, CT 06083-1900
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Distributor with Registrant
- ------------------------- --------------------------- ----------------------
<S> <C> <C>
Elizabeth R. Sadowinski Vice President, None
56 Prospect Street Administration
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Assistant Clerk and
56 Prospect Street Counsel and Secretary Assistant Secretary
P.O. Box 150480
Hartford, CT 06115-0480
William E. Keen, III Assistant Vice President, Vice President
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 1900
Enfield, CT 06083-1900
</TABLE>
(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 06082.
Item 31. Management Services.
None.
Item 32. Undertakings.
(a) 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.
(b) 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.
(c) 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-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of the Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to the 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 26th day of November, 1997.
PHOENIX-ABERDEEN SERIES FUND
ATTEST: /s/ Thomas N. Steenburg By: /s/ Philip R. McLoughlin
----------------------------- ----------------------------------
Thomas N. Steenburg Philip R. McLoughlin
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities indicated, on this 26th day of November, 1997.
<TABLE>
<CAPTION>
Signature Title
- ---------------------------- -------------------------------
<S> <C>
Trustee
-------------------------
C. Duane Blinn*
Trustee
-------------------------
Robert Chesek*
Trustee
-------------------------
E. Virgil Conway*
Treasurer (principal financial
------------------------- and accounting officer)
Nancy G. Curtiss*
Trustee
-------------------------
Harry Dalzell-Payne*
Trustee
-------------------------
Francis E. Jeffries
Trustee
-------------------------
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin President and Director
-------------------------
Philip R. McLoughlin
Trustee
-------------------------
Everett L. Morris
Trustee
-------------------------
James M. Oates*
Trustee
-------------------------
Calvin J. Pedersen
Trustee
-------------------------
Philip R. Reynolds*
Trustee
-------------------------
Herbert Roth, Jr.*
Trustee
-------------------------
Richard E. Segerson*
Trustee
-------------------------
Lowell P. Weicker, Jr.*
</TABLE>
*By /s/ Philip R. McLoughlin
-------------------------------------
*Philip R. McLoughlin pursuant to
powers of attorney previously filed.
S-1(c)
UNDERWRITING AGREEMENT
THIS AGREEMENT made as of this 19th day of November, 1997, by and between
Phoenix Aberdeen, a Massachusetts business trust having a place of business
located at 101 Munson Street, Greenfield, Massachusetts (the "Fund") and Phoenix
Equity Planning Corporation, a Connecticut corporation having a place of
business located at 100 Bright Meadow Boulevard, Enfield, Connecticut (the
"Underwriter").
WITNESSETH THAT:
1. The Fund hereby grants to the Underwriter the right to purchase shares of
beneficial interest of each class of each series of the Fund established and
designated as of the date hereof and of any additional series and classes
thereof which the Board of Directors or Board of Trustees, as applicable
("Trustees") may establish and designate during the term of this Agreement
(called the "Series" and "Classes", respectively) and to resell shares of
various Classes, as applicable, of each Series (collectively called the
"Shares") as principal and not as agent. The Underwriter accepts such
appointment and agrees to render the services described in this Agreement for
the compensation herein provided.
2. The Underwriter's right to purchase Shares shall be exclusive except that the
terms of this Agreement shall not apply to Shares issued or transferred:
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
Fund (subject to appropriate qualifications designed solely to avoid
issuance of fractional securities);
1
<PAGE>
d) in connection with any merger or consolidation of the Fund or of any
Series with any other investment company or the acquisition by the Fund,
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 Fund; or
f) in connection with the reinvestment by Fund shareholders of dividend and
capital gains distributions.
3. The "Net Asset Value" and the "Public Offering Price" of the Shares as
referred to in this Agreement shall be computed in accordance with the
provisions of the then current registration statement of the Fund. The
Underwriter shall be notified promptly by the Fund of such computations.
4. The Underwriter has and shall enter into written sales agreements with
broker/dealers ("dealers") and with banks as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended, (Exchange Act) that are not
required to register as a broker/dealer under the Exchange Act or the
regulations thereunder ("Banks"). Such sales agreements shall provide that
dealers or Banks shall use their best efforts to promote the sale of Shares.
Such sales agreements shall include such terms and conditions as Underwriter may
determine not inconsistent with this Agreement; provided, however, that such
sales agreements shall specify a) that the dealer is registered as a
broker/dealer under the Exchange Act and a member of the National Association of
Securities Dealers, Inc. or, in the alternative, that the Bank is exempt from
broker/dealer registration under the Exchange Act; and b) that such dealers and
Banks agree that they will comply with all applicable state, and federal laws
and the rules and regulations of applicable regulatory agencies.
5. Each day the Underwriter shall have the right to purchase from the Fund, as
principal, the amount of Shares needed to fill unconditional orders for such
Shares received by the Underwriter from dealers, Banks, or investors, but no
more than the Shares needed, at a price equal to the Net Asset Value of the
Shares. Any purchase of Shares by the Underwriter under this Agreement shall be
subject to reasonable adjustment for clerical errors, delays and errors of
transmission and cancellation of orders.
6. With respect to transactions other than with dealers or Banks, the
Underwriter will sell Shares 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
2
<PAGE>
current registration statement of the Fund. The Underwriter will sell at Net
Asset Value Shares of any Classes which are offered by the then current
registration statement or prospectus of the Fund for sale at such Net Asset
Value or at Net Asset Value with a contingent deferred sales charge ("CDSC
Shares"). The Underwriter shall receive from the Fund all contingent deferred
sales charges applied on redemptions of CDSC Shares.
7. Sales at a discount from the Public Offering Price shall be made in
accordance with the terms and conditions of the terms of the current
registration statement of the Fund allowing such discounts. Such discounts shall
not exceed the difference between the Net Asset Value and the Public Offering
Price; however, the Underwriter may offer compensation in excess of the
difference between the Net Asset Value and the Public Offering Price, at its
discretion and from its own profits and resources, and only as described in the
current registration statement of the Fund. With respect to sales of CDSC
Shares, the Underwriter, in accordance with the terms of the current
registration statement of the Fund, shall pay dealers a commission on such sales
from its own profits and resources.
8. As reimbursement for expenditures made in connection with providing certain
distribution-related services, the Underwriter may receive from the Fund a
distribution service fee under the terms and conditions set forth in the Fund's
distribution plan adopted under Rule 12b-1 under the Investment Company Act of
1940, as amended, as the plan may be amended from time to time and subject to
any further limitations on such fees as the Trustees may impose. The Underwriter
may receive from the Fund a service fee to be retained by the Underwriter as
compensation for providing services to shareholders of the Fund or to be paid to
dealers and Banks for providing services to their clients who are also
shareholders of the Fund.
9. The Fund shall furnish the Underwriter with copies of its organizational
documents, as amended from time to time. The Fund shall also furnish the
Underwriter with any other documents of the Fund which will assist the
Underwriter in the performance of its duties hereunder.
10. The Underwriter 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 Fund and registered under applicable Federal
securities laws, and, so long as it does so, nothing herein contained shall
prevent the Underwriter from entering into similar arrangements with other
registered investment companies. The Underwriter may, in the exercise of its
discretion, refuse to accept orders for Shares from any person.
11. Upon receipt by the Fund of a purchase order from the Underwriter,
accompanied by proper delivery instructions, the Fund shall, as promptly as
practicable thereafter, cause evidence of ownership of Shares to be delivered as
indicated in such purchase order. Payment for such Shares shall be made by the
Underwriter to the Fund in a manner acceptable to the Fund,
3
<PAGE>
provided that the Underwriter shall pay for such Shares no later than the third
business day after the Underwriter shall have contracted to purchase such
shares.
12. In connection with offering for sale and selling Shares, the Fund authorizes
the Underwriter to give only such information and to make only such statements
or representations as are contained in the then current registration statement
of the Fund. The Underwriter shall be responsible for the approval and filing of
sales material as required under SEC and NASD regulations.
13. The Fund agrees to pay the following expenses:
a) the cost of mailing stock certificates representing Shares;
b) fees and expenses (including legal expenses) of registering and
maintaining registrations of the Fund and of each Series and Class 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 Underwriter by the Fund;
e) the cost of preparing and distributing reports and notices to
shareholders; and
f) fees and expenses of the transfer agent, including the cost of preparing
and mailing notices to shareholders pertaining to transactions with
respect to such shareholders accounts.
14. The Underwriter agrees to pay the following expenses:
a) all expenses of printing prospectuses and statements of additional
information used 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
Underwriter as a dealer in the various states and countries;
4
<PAGE>
c) the expense of any stock transfer tax required in connection with the
sale of Shares by the Underwriter 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 Fund.
15. The Fund hereby appoints the Underwriter its agent to receive requests to
accept the Fund's offer to repurchase Shares upon such terms and conditions as
may be described in the Fund's then current registration statement. The agency
granted in this paragraph 15 is terminable at the discretion of the Fund. As
compensation for acting as such agent and as part of the consideration for
acting as underwriter, Underwriter shall receive from the Fund all contingent
deferred sales charges imposed upon the redemption of Shares. Whether and to
what extent a contingent deferred sales charge will be imposed shall be
determined in accordance with, and in the manner set forth in, the Fund's
prospectus.
16. The Fund agrees to indemnify and hold harmless the Underwriter, its officers
and directors and each person, if any, who controls the Underwriter 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 Underwriter, 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
a) any untrue statement or alleged untrue statement of a material fact
contained in the Fund'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 Fund'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 Fund by the Underwriter for use in the
Fund's registration statement or prospectus, such indemnification is not
applicable. In no case shall the Fund indemnify the Underwriter or its
controlling persons as to any amounts incurred for any liability arising
out of or based upon any action for which the Underwriter, 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.
5
<PAGE>
17. The Underwriter agrees to indemnify and hold harmless the Fund, its officers
and trustees and each person, if any, who controls the Fund 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 Fund, its officers, trustees or any
such controlling person may 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
a) may be based upon any wrongful act by the Underwriter 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 Fund's registration statement, prospectus
(including amendments and supplements thereto) or sales material, 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 Fund by the
Underwriter.
18. It is understood that:
a) trustees, officers, employees, agents and shareholders of the Fund are
or may be interested persons, as that term is defined in the Act
("Interested Persons"), of the Underwriter as directors, officers,
stockholders or otherwise;
b) directors, officers, employees, agents and stockholders of the
Underwriter are or may be Interested Persons of the Fund as trustees,
officers, shareholders or otherwise;
c) the Underwriter may be an Interested Person of the Fund as shareholder
or otherwise; and
d) the existence of any such dual interest shall not offset the validity
hereof or of any transactions hereunder.
19. The Fund may terminate this Agreement by 60 days written notice to the
Underwriter 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 Fund. The Underwriter may terminate this
Agreement by 60 days written notice to the Fund, 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.
6
<PAGE>
20. Subject to prior termination as provided in paragraph 19, 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 Fund. 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.
21. It is expressly agreed that the obligations of the Fund hereunder shall not
be binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Fund personally, but bind only the trust property of the Fund,
as provided in the Declaration of Trust. The execution and delivery of this
Agreement by the President of the Fund 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 Fund as provided in
the Declaration of Trust. The Declaration of Trust is on file with the
Secretary of The Commonwealth of Massachusetts.
22. This Agreement shall become effective upon the date first set forth
above. This Agreement shall be governed by the laws of the State of Connecticut
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: /s/ Philip R. McLaughlin
--------------------------------
Philip R. McLaughlin
President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ David R. Pepin
--------------------------------
David R. Pepin
Executive Vice President
[logo]PHOENIX Phoenix Funds
DUFF&PHELPS Sales Agreement
- --------------------------------------------------------------------------------
PHOENIX EQUITY PLANNING CORPORATION
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, Connecticut 06083-2200
Dealer Name:
Address:
Phoenix Equity Planning Corporation ("PEPCO", "we", "us", or "our") invites you
to participate in the sale and distribution of shares of registered investment
companies (which shall collectively be referred to hereinafter as the "Funds")
for which we are national distributor or principal underwriter, and which may be
listed in Annex A hereto which such Annex may be amended by us from time to
time. Upon acceptance of this agreement by PEPCO, you may offer and sell shares
of each of the Funds (hereafter "Shares") subject, however, to the terms and
conditions hereof including our right to suspend or cease the sale of such
shares. For the purposes hereof, the above referenced dealer shall be referred
to as "you".
1. You understand and agree that in all sales of Shares to the public, you
shall act as dealer for your own account. All purchase orders and
applications are subject to acceptance or rejection by us in our sole
discretion and are effective only upon confirmation by us. Each purchase
will be deemed to have been consummated in our principal office subject to
our acceptance and effective only upon confirmation to you by us.
2. You agree that all purchases of Shares by you shall be made only for the
purpose of covering purchase orders already received from your customers
(who may be any person other than a securities dealer or broker) or for
your own bona-fide investment.
3. You shall offer and sell Shares pursuant to this agreement for the purpose
of covering purchase orders of your customers, to the extent applicable,
(a) at the current public offering price ("Offering Price") for Class A
Shares or (b) at the Net Asset Value for Class B shares as set forth in the
current prospectus of each of the funds. The offer and sale of Class B
Shares by you is subject to Annex B hereto, "Compliance Standards for the
Sale of the Phoenix Funds Under Their Alternative Purchase Arrangements".
4. You shall pay us for Shares purchased within three (3) business days of the
date of our confirmation to you of such purchase or within such time as
required by applicable rule or law. The purchase price shall be (a) the
Offering Price, less only the applicable dealer discount (Dealer Discount)
for Class A Shares, if applicable, or (b) the Net Asset Value, less only
the applicable sales commission (Sales Commission) for Class B Shares, if
applicable, as set forth in the current prospectus at the time the purchase
is received by us. We have the right, without notice, to cancel any order
for which payment of good and sufficient funds has not been received by us
as provided in this paragraph, in which case you may be held responsible
for any loss suffered resulting from your failure to make payment as
aforesaid.
5. You understand and agree that any Dealer Discount, Sales Commission or fee
is subject to change from time to time without prior notice. Any orders
placed after the effective date of any such change shall be subject to the
Dealer Discount or Sales Commission in effect at the time such order is
received by us.
6. You understand and agree that Shares purchased by you under this Agreement
will not be delivered until payment of good and sufficient funds has been
received by us. Delivery of Shares will be made by credit to a shareholder
open account unless delivery of certificates is specified in the purchase
order. In order to avoid unnecessary delay, it is understood that, at your
request, any Shares resold by you to one of your customers will be
delivered (whether by credit to a shareholder open account or by delivery
of certificates) in the name of your customer.
<PAGE>
7. You understand that on all purchases of Shares to which the terms of this
Agreement are applicable by a shareholder for whom you are dealer of
record, we will pay you an amount equal to the Dealer Discount, Sales
Commission or fees which would have been paid to you with respect to such
Shares if such Shares had been purchased through you. You understand and
agree that the dealer of record for this purpose shall be the dealer
through whom such shareholder most recently purchased Shares of such fund,
unless the shareholder or you have instructed us otherwise. You understand
that all amounts payable to you under this paragraph and currently payable
under this agreement will be paid as of the end of the month unless
specified otherwise for the total amount of Shares to which this paragraph
is applicable but may be paid more frequently as we may determine in our
discretion. Your request for Dealer Discount or Sales Commission reclaims
will be considered if adequate verification and documentation of the
purchase in question is supplied to us, and the reclaim is requested within
three years of such purchase.
8. We appoint the transfer agent (or identified sub-transfer agent) for each
of the Funds as our agent to execute the purchase transaction of Shares and
to confirm such purchases to your customers on your behalf, and you
guarantee the legal capacity of your customers so purchasing such Shares.
You further understand that if a customer's account is established without
the customer signing the application form, you hereby represent that the
instructions relating to the registration and shareholder options selected
(whether on the application form, in some other document or orally) are in
accordance with the customer's instructions and you agree to indemnify the
Funds, the transfer agent (or identified sub-transfer agent) and us for any
loss or liability resulting from acting upon such instructions.
9. Upon the purchase of Class A Shares pursuant to a Letter of Intent, you
will promptly return to us any excess of the Dealer Discount previously
allowed or paid to you over that allowable in respect to such larger
purchases.
10. Unless at the time of transmitting a purchase order you advise us to the
contrary, we may consider that the investor owns no other Shares and may
further assume that the investor is not entitled to any lower sales charge
than that accorded to a single transaction in the amount of the purchase
order, as set forth in the current prospectus.
11. You understand and agree that if any Shares purchased by you under the
terms of this Agreement are, within seven (7) business days after the date
of our confirmation to you of the original purchase order for such Shares,
repurchased by us as agent for such fund or are tendered to such fund for
redemption, you shall forfeit the right to, and shall promptly pay over to
us the amount of any Dealer Discount or Sales Commission allowed to you
with respect to such Shares. We will notify you of such repurchase or
redemption within ten (10) days of the date upon which certificates are
delivered to us or to such fund or the date upon which the holder of Shares
held in a shareholder open account places or causes to be placed with us or
with such fund an order to have such shares repurchased or redeemed.
12. You agree that, in the case of any repurchase of any Shares made more than
seven (7) business days after confirmation by us of any purchase of such
Shares, except in the case of Shares purchased from you by us for your own
bona fide investment, you will act only as agent for the holders of such
Shares and will place the orders for repurchase only with us. It is
understood that you may charge the holder of such Shares a fair commission
for handling the transaction.
13. Our obligations to you under this Agreement are subject to all the
provisions of the respective distribution agreements entered into between
us and each of the Funds. You understand and agree that in performing your
services under this agreement you are acting in the capacity of an
independent contractor, and we are in no way responsible for the manner of
your performance or for any of your acts or omissions in connection
therewith. Nothing in the Agreement shall be construed to constitute you or
any of your agents, employees, or representatives as our agent, partner or
employee, or the agent, partner of employee of any of the Funds.
In connection with the sale and distribution of shares of Phoenix Funds,
you agree to indemnify and hold us and our affiliates, employees, and/or
officers harmless from any damage or expense as a result of (a) the
negligence, misconduct or wrongful act by you or any employee,
representative, or agent of yours and/or (b) any actual or alleged
violation of any securities laws, regulations or orders. Any indebtedness
or obligation of yours to us whether arising hereunder or otherwise, and
any liabilities incurred or moneys paid by us to any person as a result of
any misrepresentation, wrongful or unauthorized act or omission, negligence
of, or failure of you or your employees, representatives or agents to
comply with the Sales Agreement, shall be set off against any compensation
payable under this agreement. Any differential between such expenses and
compensation payable hereunder shall be payable to us upon demand. The
terms of this provision shall not be impaired by the termination of this
agreement.
In connection with the sale and distribution of shares of Phoenix Funds, we
agree to indemnify and hold you, harmless from any damage or expense on
account of the gross and willful negligence, misconduct or wrongful act of
us or any employee, representative, or agent of ours which arises out of or
is based upon any untrue statement or alleged untrue statement of material
fact, or the omission or alleged omission of a material fact in: (i) any
registration statement, including any prospectus or any post-effective
amendment thereto; or (ii) any material prepared and/or supplied by us for
use in conjunction with the offer or sale of Phoenix Funds; or (iii) any
state registration or other document filed in any state or jurisdiction in
order to qualify any Fund under the securities laws of such state or
jurisdiction. The terms of this provision shall not be impaired by the
termination of this agreement.
<PAGE>
14. We will supply you with reasonable quantities of the current prospectus,
periodic reports to shareholders, and sales materials for each of the
Funds. You agree not to use any other advertising or sales material
relating to the sale of shares of any of the Funds unless such other
advertising or sales material is pre-approved in writing by us.
15. You agree to offer and sell Shares only in accordance with the terms and
conditions of the then current prospectus of each of the Funds and subject
to the provisions of this Agreement, and you will make no representations
not contained in any such prospectus or any authorized supplemental sales
material supplied by us. You agree to use your best efforts in the
development and promotion of sales of the Shares covered by this Agreement,
and agree to be responsible for the proper instruction, training and
supervision of all sales representatives employed by you in order that such
Shares will be offered in accordance with the terms and conditions of this
Agreement and all applicable laws, rules and regulations. All expenses
incurred by you in connection with your activities under this Agreement
shall be borne by you. In consideration for the extension of the right to
exercise telephone exchange and redemption privileges to you and your
registered representatives, you agree to bear the risk of any loss
resulting from any unauthorized telephone exchange or redemption
instructions from you or your registered representatives. In the event we
determine to refund any amounts paid by any investor by reason of such
violation on your part, you shall forfeit the right to, and pay over to us,
the amount of any Dealer Discount or Sales Commission allowed to you with
respect to the transaction for which the refund is made.
16. You represent that you are properly registered as a broker or dealer under
the Securities and Exchange Act of 1934 and are member of the National
Association of Securities Dealers, Inc. (NASD) and agree to maintain
membership in the NASD or in the alternative, that you are a foreign dealer
not eligible for membership in the NASD. You agree to notify us promptly of
any change, termination or suspension of the foregoing status. You agree to
abide by all the rules and regulations of the NASD including Section 26 of
Article III of the Rules of Fair Practice, which is incorporated herein by
reference as if set forth in full. You further agree to comply with all
applicable state and Federal laws and the rules and regulations of
applicable regulatory agencies. You further agree that you will not sell,
or offer for sale, Shares in any jurisdiction in which such Shares have not
been duly registered or qualified for sale. You agree to promptly notify us
with respect to (a) the initiation and disposition of any formal
disciplinary action by the NASD or any other agency or instrumentality
having jurisdiction with respect to the subject matter hereof against you
or any of your employees or agents; (b) the issuance of any form of
deficiency notice by the NASD or any such agency regarding your training,
supervision or sales practices; and (c) the effectuation of any consensual
order with respect thereto.
17. Either party may terminate this agreement for any reason by written or
electronic notice to the other party which termination shall become
effective fifteen (15) days after the date of mailing or electronically
transmitting such notice to the other party. We may also terminate this
agreement for cause or as a result of a violation by you, as determined by
us in our discretion, of any of the provisions of this Agreement, said
termination to be effective on the date of mailing written or transmitting
electronic notice to you of the same. Without limiting the generality of
the foregoing, your own expulsion from the NASD will automatically
terminate this Agreement without notice. Your suspension from the NASD or
violation of applicable state or Federal laws or rules and regulations of
applicable regulatory agencies will terminate this Agreement effective upon
the date of our mailing written notice or transmitting electronic notice to
you of such termination. Our failure to terminate this Agreement for any
cause shall not constitute a waiver of our right to so terminate at a later
date.
18. All communications and notices to you or us shall be sent to the addresses
set forth at the beginning of this Agreement or to such other address as
may be specified in writing from time to time.
19. This agreement shall become effective upon the date of its acceptance by us
as set forth herein. This agreement may be amended by PEPCO from time to
time. This Agreement and all rights and obligations of the parties
hereunder shall be governed by and construed under the laws of the State of
Connecticut. This agreement is not assignable or transferable, except that
we may assign or transfer this agreement to any successor distributor of
the Shares described herein.
ACCEPTED ON BEHALF OF ACCEPTED ON BEHALF OF
PHOENIX EQUITY PLANNING DEALER FIRM:
CORPORATION:
Date ______________________________ Date __________________________________
By /s/ John F. Sharry By
________________________________ ____________________________________
Print Name John F. Sharry Print Name
_________________________ ____________________________
Managing Director, Retail Sales
Print Title _______________________ Print Title ___________________________
NASD CRD Number _______________________
<PAGE>
[logo]PHOENIX Amended Annex A, Dealer Agreement with
DUFF&PHELPS Phoenix Equity Planning Corporation, Nov. 5, 1997
- --------------------------------------------------------------------------------
I. Phoenix Family of Funds
- --------------------------------------------------------------------------------
Phoenix Series Fund
Balanced Fund Series
Convertible Fund Series
Growth Fund Series
Aggressive Growth Fund Series
High Yield Fund Series
Money Market Fund Series
U.S. Government Securities Fund Series
Phoenix-Aberdeen Series Fund
Aberdeen New Asia Fund
Aberdeen Global Small Cap Fund
Phoenix Multi-Portfolio Fund
Tax-Exempt Bond Portfolio
Mid Cap Portfolio
International Portfolio
Real Estate Securities Portfolio
Emerging Markets Bond Portfolio
Phoenix Strategic Equity Series Fund
Equity Opportunities Fund
Strategic Theme Fund
Small Cap Fund
Phoenix Equity Series Fund
Core Equity Fund
Growth and Income Fund
Phoenix California Tax Exempt Bonds, Inc.
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Worldwide Opportunities Fund
Phoenix Strategic Allocation Fund, Inc.
Phoenix Income and Growth Fund
Phoenix Value Equity Fund
Phoenix Small Cap Value Fund
(effective 11-20-97)
- --------------------------------------------------------------------------------
Equity Planning may sponsor, to all qualifying dealers, on non-discriminatory
basis, sales contests, training and educational meetings and provide to all
qualifying broker/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. Applicable waivers of Class A sales loads and Class B
contingent deferred sales charges are described in the prospectus.
- --------------------------------------------------------------------------------
Class A Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares (Except Multi-Sector Short Term Multi-Sector Short Term
Bond Fund & Money Market) Bond Fund Class A Shares
Dealer Discount Dealer Discount
Sales Charge or Agency Fee Sales Charge or Agency Fee
Amount of as Percentage of as Percentage of as Percentage of as Percentage of
Transaction Offering Price Offering Price Offering Price Offering Price
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.25% 2.25% 2.00%
- -------------------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 4.50 4.00 1.25 1.00
- -------------------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 3.50 3.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 3.00 2.75 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 2.00 1.75 0.75 0.75
- -------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more None None None None
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Shares of the Money Market Series are offered to the public at their constant
net asset value of $1.00 per share with no sales charge on Class A shares.
Finders Fee: In connection with Class A Share purchases of $1,000,000 or more
(or subsequent purchases in any amount), Equity Planning may pay broker/dealers,
from its own profits and resources, a percentage of the net asset value of
shares sold (excluding Money Market shares) as set forth in the table below. If
part or all of such investment, 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.
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchase Amount $1,000,000 to $3,000,000 $3,000,001 to $6,000,000 $6,000,001 or more
- -------------------------------------------------------------------------------------------------------------------------------
Payment to Broker/Dealers 1% 0.50 of 1% 0.25 of 1%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*In the case of accounts held in the name of qualified employees, 1% is paid on
the first $1 million.
Trail: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of Class A shares sold by such broker/dealers (except
Money Market Series) and remaining outstanding on the Funds' books during the
period in which the fee is calculated. Dealers must have an aggregate value of
$50,000 or more in one Fund to qualify for payment in that Fund.
<PAGE>
- --------------------------------------------------------------------------------
Class B Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Shares
(Except Multi-Sector Short Term Bond Fund) Multi-Sector Short Term Bond Fund Class B
<S> <C>
Sales Commission 4.00% Sales Commission 2.00%
</TABLE>
Broker/Dealer firms maintaining house/omnibus accounts, upon redemption of a
customer account within the time frames specified below, shall forward to Equity
Planning the indicated contingent deferred sales charge.
<TABLE>
<CAPTION>
Years Since Purchase Contingent Deferred Contingent Deferred
Sales Charges Sales Charges
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
First 5.00% 2.00%
- ---------------------------------------------------------------------------------------------------------------------------
Second 4.00 1.50
- ---------------------------------------------------------------------------------------------------------------------------
Third 3.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------
Fourth and Fifth 2.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------
Sixth 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Trail: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of shares sold by such broker/dealers (except Money Market
Series) and remaining outstanding on the Funds' books during the period in which
the fee is calculated, commencing one year after the investment date. Dealers
must have an aggregate value of $50,000 or more in one Fund to qualify for
payment in that Fund.
- --------------------------------------------------------------------------------
Class C Shares - Multi-Sector Short Term Bond Fund Only
- --------------------------------------------------------------------------------
Trail: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
Finders Fee:
In connection with Class C Share purchases of $250,000 or more (or subsequent
purchases in any amount) excluding purchases by qualified employee benefit plans
with at least 100 eligible employees, Equity Planning may pay broker-dealers,
from its own resources, an amount equal to 0.50% of purchases above $250,000
but under $3 million plus 0.25% on purchases in excess of $3 million.
If all or part of the investment is subsequently redeemed, except for exchanges
or purchases of other Phoenix funds, within one year of the investment date, the
broker-dealer will refund to the Distributor such amount paid with respect to
the investment.
- --------------------------------------------------------------------------------
Class C Shares - Available only for the Funds listed below:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Core Equity Fund Multi-Sector Fixed Income Fund Value Equity Fund
Growth and Income Fund Strategic Theme Fund Small Cap Value Fund
(effective 11-20-97)
</TABLE>
Sales Commission: 1%. Contingent deferred sales charge: 1% for one year from the
date of each purchase. Broker/Dealer firms maintaining house/omnibus accounts,
upon redemption of a customer account within one year of purchase date, shall
forward to Equity Planning the indicated contingent deferred sales charge.
Trail and Service Fee: Equity Planning intends to pay a fee after the first year
to qualifying broker/dealer firms at the equivalent of 0.75% annually, and a
Service Fee at the equivalent of 0.25% annually, based on the average daily net
asset value of shares sold by such broker/dealers and remaining outstanding on
the Funds' books during the period in which the fee is calculated. Dealers must
have an aggregate value of $50,000 or more in the Fund to qualify for payment.
<PAGE>
- --------------------------------------------------------------------------------
Class M Shares - Available only for the Funds listed below:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Core Equity Fund Multi-Sector Fixed Income Fund Value Equity Fund
Growth and Income Fund Strategic Theme Fund Small Cap Value Fund
(effective 11-20-97)
</TABLE>
<TABLE>
<CAPTION>
Dealer Discount
Sales Charge or Agency Fee
Amount of as Percentage of as Percentage of
Offering Price Offering Price Offering Price
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 3.50% 3.00%
- ----------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 2.50 2.00
- ----------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 1.50 1.00
- ----------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 1.00 1.00
- ----------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 None None
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Trail: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
- --------------------------------------------------------------------------------
II. A. Phoenix Duff & Phelps Institutional Mutual Funds
- --------------------------------------------------------------------------------
Balanced Portfolio Growth Stock Portfolio
Enhanced Reserves Portfolio Money Market Portfolio
Managed Bond Portfolio U.S. Government Securities Portfolio
Finder's Fee: Equity Planning may pay broker/dealers, from its own profits and
resources, a percentage of the net asset value of Class X and Class Y shares
sold as set forth in the table below. If part of any investment 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.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchase Amount 0 to $5,000,000 $5,000,001 to $10,000,000 $10,000,001 or more
- -----------------------------------------------------------------------------------------------------------------------------------
Payment to Broker/Dealers 0.50% 0.25% 0.10%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Trail: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold (except Money Market Portfolio) by
such broker/dealers and remaining outstanding on the Funds' books during the
period in which the fee is calculated, subject to future amendment or
termination.
- --------------------------------------------------------------------------------
II. B. Phoenix Duff & Phelps Institutional Mutual Funds
- --------------------------------------------------------------------------------
Phoenix Real Estate Equity Securities Portfolio
Trail: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold by such broker/dealers and
remaining outstanding on the Funds' books during the period in which the fee is
calculated, subject to future amendment or termination.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sales Promotion:
- --------------------------------------------------------------------------------
In connection with net purchases of any combination of classes of eligible Funds
between October 1, 1997 and December 31, 1997, Equity Planning may pay
participating broker/dealers, from its profits and resources, an additional
dealer discount or sales commission equal to 0.50% of the purchase price. This
promotion will not apply to shares acquired through non-commissionable
exchanges.
Eligible Funds:
Phoenix Value Equity Fund Phoenix Small Cap Value Fund
(effective 11-20-97)
Phoenix-Engemann Funds:
Growth Fund Nifty Fifty Fund
Balanced Return Fund Global Growth Fund
Small & Mid-Cap Growth Fund Value 25 Fund
Phoenix Equity Series Fund:
Core Equity Fund Growth and Income Fund
<PAGE>
- --------------------------------------------------------------------------------
III. Phoenix - Engemann Funds
- --------------------------------------------------------------------------------
Nifty Fifty Fund Growth Fund
Small & Mid-Cap Growth Fund Global Growth Fund
Balanced Return Fund Value 25 Fund
Equity Planning at its expense, may from time to time also provide additional
compensation to dealers who sell shares of any of the Funds. Compensation may
include financial assistance to dealers in connection with conferences, sales
training or promotional programs for their employees, seminars for the public,
advertising campaigns regarding one or more of the Funds and/ or other
dealer-sponsored special events.
Service Fees: Dealers may be eligible to receive a continuing service fee equal
to 0.25% per annum of the average net asset value of the Funds' shares held by
such persons in order to compensate them for providing certain services to their
clients, including processing redemption transactions and providing account
maintenance and certain information and assistance with respect to the Funds,
and responding to shareholder inquiries.
Class B and C CDSC: Broker/Dealer firms maintaining house/omnibus accounts, upon
redemption of a customer account within the time frames specified below, shall
forward to Equity Planning the indicated contingent deferred sales charge.
- --------------------------------------------------------------------------------
III. A. Phoenix - Engemann Funds: Class A Shares
- --------------------------------------------------------------------------------
Class A Shares for Initial Sales Charge Alternative
The public offering price of Class A shares for purchasers choosing the initial
sales charge alternative is the net asset value per share plus a sales charge
depending upon the amount purchases as described in the following table.
<TABLE>
<CAPTION>
Dealer Commission
Sales Charge as of Percentage of as percentage of
Amount of Purchase Public the Public
at the Public Offering Price Offering Price Offering Price
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 5.50% 5.00%
- ---------------------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 4.75 4.25
- ---------------------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 3.75 3.25
- ---------------------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 2.50 2.00
- ---------------------------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 2.00 1.75
- ---------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more None *
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Finders Fee: On purchases made at net asset value, as described in the
prospectus, dealers may receive a one-time fee, as follows: 1% on purchases up
through $2 million, plus 0.80% on the next $1 Million, plus 0.20% on the next $2
million, and 0.10% on the excess over $5 million.
- --------------------------------------------------------------------------------
III. B. Phoenix - Engemann Funds: Class B Shares
- --------------------------------------------------------------------------------
Class B Shares for Deferred Sales Charge Alternative
Equity Planning may pay out of its own resources to the selling dealer a
commission equal to 4.25% of the amount of the purchase.
Years Since Purchase CDSC as a Percentage of
Dollar Amount
Subject to Charge
- --------------------------------------------------------------------------------
First 5.00%
- --------------------------------------------------------------------------------
Second 4.00
- --------------------------------------------------------------------------------
Third 3.00
- --------------------------------------------------------------------------------
Fourth 3.00
- --------------------------------------------------------------------------------
Fifth and Thereafter None
- --------------------------------------------------------------------------------
III. C. Phoenix - Engemann Funds: Class C Shares
- --------------------------------------------------------------------------------
Equity Planning may pay out of its own resources to the selling dealer a
commission equal to 1% of the amount of the purchase.
Trail: To the extent dealer provides distribution, marketing or administrative
services in connection with the sale of the Shares of a Fund, dealer may receive
a fee based on the average net asset value of such Shares which are attributable
to customers of dealer, at the rate of 0.75% per annum.
Global Growth Fund, Small & Mid-Cap Growth Fund, Value 25 Fund only: 1% CDSC for
1 year.
PDP80A (11-97) Distributed by Phoenix Equity Planning Corporation,
Enfield, CT, 06083
<PAGE>
[logo]PHOENIX Annex B To Dealer Agreement With
DUFF&PHELPS Phoenix Equity Planning Corporation
- --------------------------------------------------------------------------------
Compliance Standards for
the Sale of the Phoenix Funds
Under Their Alternative Purchase Arrangements
As national distributor or principal underwriter of the Phoenix Funds, which
offer their shares on both a front-end and deferred sales charge basis, Phoenix
Equity Planning Corporation ("PEPCO") has established the following compliance
standards which set forth the basis upon which shares of the Phoenix Funds may
be sold. These standards are designed for those broker/dealers ("dealers") that
distribute shares of the Phoenix Funds and for each dealer's financial
advisors/registered representatives.
As shares of the Phoenix Funds are offered with two different sales arrangements
for sales and distribution fees, it is important for an investor not only to
choose a mutual fund that best suits his investment objectives, but also to
choose the sales financing method which best suits his particular situation. To
assist investors in these decisions and to ensure proper supervision of mutual
fund purchase recommendations, we are instituting the following compliance
standards to which dealers must adhere when selling shares of the Phoenix Funds:
1. Any purchase of a Phoenix Fund for less than $250,000 may be either of
shares subject to a front-end load (Class A shares) or subject to deferred
sales charge (Class B shares).
2. Any purchase of a Phoenix Fund by an unallocated qualified employer
sponsored plan for less than $1,000,000 may be either of shares subject to
a front-end load (Class A shares) or subject to deferred sales charge
(Class B shares). Class B shares sold to allocated qualified employer
sponsored plans will be limited to a maximum total value of $250,000 per
participant.
3. Any purchase of a Phoenix Fund for $250,000 or more (except as noted above)
or which qualifies under the terms of the prospectus for net asset value
purchase of Class A shares should be for Class A shares.
General Guidelines
These are instances where one financing method may be more advantageous to an
investor than the other. 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 would not have all of 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 of 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 of 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
(three years for Asset Reserve).
A National Association of Securities Dealers rule specifically prohibits
"breakpoint sales" of front-end load shares. A "breakpoint sale" is a sale to
the client of an amount of front-end load (Class A) shares just below the amount
which would be subject to the next breakpoint on the fund's sales charge
schedule. Because the deferred sales charge on Class B shares is reduced by 1%
for each year the shares are held, a redemption of Class B shares just before an
"anniversary date" is in some ways analogous to a breakpoint sale. A client
might wish to redeem just before an anniversary date for tax or other reasons,
and a client who chose to wait would continue to be at market risk.
Nevertheless, investment executives should inform clients intending to redeem
Class B shares near an anniversary date that, if the redemption were delayed,
the deferred sales charge would be reduced.
Responsibilities of Branch Office Manager (or other appropriate reviewing
officer).
A dealer's branch manger or other appropriate reviewing officer ("the Reviewing
Officer") must ensure that the financial advisor/registered representative has
advised the client of the available financing methods offered by the Phoenix
Funds, and the impact of choosing one method over another. In certain instances,
it may be appropriate for the Reviewing Officer to discuss the purchase directly
with the client. The reviewing officer should review purchases for Class A or
Class B shares given the relevant facts and circumstances, including but not
limited to: (a) the specific purchase order dollar amount; (b) the length of
time the investor expects to hold his shares; and (c) any other relevant
circumstances, such as the availability of purchases under letters of intent or
pursuant to rights of accumulation and distribution requirements. The foregoing
guidelines, as well as the examples cited above, should assist the Reviewing
Officer in reviewing and supervising purchase recommendations and orders.
Effectiveness
These compliance guidelines are effective immediately with respect to any order
for shares of those Phoenix Funds which offer their shares pursuant to the
alternative purchase arrangement.
Questions relating to these compliance guidelines should be directed by the
dealer to its national mutual fund sales and market group or its legal
department or compliance director. PEPCO will advise dealers in writing of any
future changes in these guidelines.
PEP80B 11/95
PHOENIX EQUITY PLANNING CORPORATION
SUPPLEMENT TO PHOENIX FAMILY OF FUNDS
SALES AGREEMENT
It is hereby agreed that this AGREEMENT, dated this __________ day
of __________, 19__, between ________________________________________ ("Dealer")
and Phoenix Equity Planning Corporation ("Distributor"), supplements and amends
the Sales Agreement between Dealer and Distributor dated by Distributor
_______________________ 19__ ("Sales Agreement').
WHEREAS, Dealer wishes to use shares of the Funds in a fee-based
program made available by Dealer to clients of Dealer (the "Fee-Based Program");
WHEREAS, Dealer wishes to afford its fee-based clients the
opportunity to qualify for the ability to purchase shares of the Funds at net
asset value; and
WHEREAS, Distributor is willing to allow Dealer to purchase shares
of the Funds for clients in the Fee-Based Program subject to the provisions of
this agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by both parties, Dealer
and Distributor hereby agree as follows:
1. Dealer may sell shares of any Funds made available by
Distributor, from time to time, at net asset value to bona fide clients of
Dealer for use solely in their Fee-Based Program. Dealer will earn no concession
or commission on any such sale.
2. Distributor, after consulting Dealer, will determine, from time
to time, which Funds it will make available to Dealer for use in the Fee-Based
Program. Dealer will comply with all provisions of the Prospectus and Statement
of Additional Information of each Fund.
1
<PAGE>
3. All shares made available to Dealer under the Fee-Based Program
must be purchased by Dealer for the benefit of Dealer's clients participating in
its Fee-Based Program under which Dealer provides portfolio management and other
services to such clients for a fee. Such fee to be paid in connection with
investment in the Funds shall at all times be at a level acceptable to
Distributor. Dealer acknowledges that it has sent the Distributor the current
fee schedule for the Fee-Based Program and Dealer agrees to notify Distributor
at least thirty (30) days in advance in writing of any amendment to such fee
schedule. The current fee schedule is attached. Dealer shall not prepare, use or
distribute brochures, written materials or advertising in any form that refers
to sales of the Funds as no-load or at net asset value except, in the case of
brochures, it may refer to the Funds as available at net asset value under the
Fee-Based Program if the fees and expenses of the Fee-Based Program are given at
least equal prominence. Notwithstanding the foregoing, in connection with
explaining the fees and expenses of the Fee-Based Program, representatives of
Dealer may describe to customers the option of purchasing Fund shares through
the Fee-Based Program at net asset value.
4. Distributor warrants that all necessary disclosures regarding
the sale of shares at net asset value will be set forth in the Prospectus and
Statement of Additional Information of the Funds available under this Agreement.
5. Dealer may maintain either an omnibus account(s) solely for the
clients of its Fee-Based program or may maintain separate accounts for each
client of its Fee-Based Program with the Fund's transfer agent. If an omnibus
account(s) is maintained, Dealer shall be solely responsible for meeting all
legal obligations with respect to each beneficial owner including, but not
limited to, the delivery of proxies, annual and semi-annual reports and other
materials.
6. This Agreement shall be governed and interpreted in accordance
with the laws of the State of Connecticut. This Agreement shall not relieve
Dealer or Distributor from any obligations either may have under any other
agreements between them (except with respect to the payment of service fees),
including but not limited to the Sales Agreement, which is incorporated by
reference herein and shall control in case of any conflict with this Agreement.
7. Distributor is not endorsing, recommending or otherwise involved
in providing any investment product or advisory service of Dealer (including but
not limited to the Fee-Based Program). Distributor is merely affording Dealer
the opportunity to use shares of the Funds distributed by Distributor as an
investment medium for the Fee-Based Program.
8. This Agreement is not exclusive and may be terminated by either
party upon sixty (60) days prior written notice to the other party. It shall
terminate automatically upon termination of the Sales Agreement between the
parties. This Agreement may be amended only by a written instrument, signed by
both parties.
IN WITNESS WHEREOF, this Agreement has been executed as of the date set
forth above by a duly authorized officer of each party.
2
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
By: _______________________________________
John F. Sharry
Managing Director, Retail Sales
Dealer: _____________________________
By: _________________________________
Name: _______________________________
Title: ______________________________
Address: ____________________________
____________________________
____________________________
Phone: ______________________________
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P O Box 2200
Enfield, CT 06083-2200
(230) 253-1000
3
FINANCIAL INSTITUTION SALES CONTRACT
FOR THE PHOENIX FAMILY OF FUNDS
Between: and
PHOENIX EQUITY PLANNING CORPORATION
Distributor of: The Phoenix Family of Funds
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
As distributor of The Phoenix Family of Funds (the "Funds"), we agree that you
may make available to your customers, under an agency relationship with your
customers, shares of beneficial interest issued by the Funds (the "Shares"),
subject to any limitation imposed by the Funds and to confirmation by us of each
transaction. By your acceptance hereof, you agree to all of the following terms
and conditions:
I. Offering Prices and Fees
The public offering price at which you may make Shares available to your
customers is the net asset value thereof, as computed from time to time, plus
any applicable sales charge described in the then current prospectus of the
applicable Fund. In the case of purchases by you, as agent for your customers,
of shares sold with a sales charge, you will receive an agency fee consisting of
a portion of the public offering price, determined on the same basis as the
"dealer discount" described in the then current Prospectus of the Funds, and
such other compensation to dealers as may be described therein, which shall be
payable to you at the same time and on the same basis as the same is paid to
such dealers, consistent with applicable law, rules and regulations. In
determining the amount of any agency fee payable to you hereunder, we reserve
the right to revise the agency fee referred to herein upon written notice to
you. We will furnish you upon request with the public offering prices for the
Shares and you agree to quote such prices in connection with any Shares made
available by you as agent for your customers. Each purchase of Shares by your
customers is made subject to confirmation by us at the public offering price
next computed after receipt of the order. There is no sales charge or agency fee
to you on the reinvestment of dividends and distributions.
II. Manner of Making Shares Available for Purchase
We will, upon request, deliver to you a copy of each Fund's then current
Prospectus and will provide you with such number of copies of each Fund's
current Prospectus, Statement of Additional Information and shareholder reports
and of supplementary sales materials prepared by us, as you may reasonably
request. It shall be your obligation to ensure that all such information and
materials are distributed to your customers who own Shares in accordance with
securities and/or banking law and regulations and any other applicable
regulations. Neither you nor any other person is authorized to give any
information or make any representations other than those contained in such
prospectuses, Statements of Additional Information and shareholder reports or in
such supplemental sales materials. You shall not furnish or cause to be
furnished to any person, display or publish any information or materials
relating to any Fund (including, without limitation, promotional materials and
sales literature, advertisements, press releases, announcements, statements,
posters, signs or similar material), except such information and materials as
may be furnished to you by us or the Fund, and such other information and
materials as may be approved in writing by us. We reserve the right to reject
any purchases for any accounts which we reasonably determine are not made in
accordance with the terms of the applicable Fund Prospectus and the provisions
of this Agreement.
You hereby agree:
(i) to not purchase any Shares as agent for any customer, unless you
deliver or cause to be delivered to such customer, at or prior to the
time of such purchase, a copy of the then-current Prospectus of the
applicable Fund unless such customer has acknowledged receipt of the
Prospectus of such Fund. You hereby represent that you understand your
obligation to deliver a prospectus to customers who purchase Shares
pursuant to federal securities laws and you have taken all necessary
steps to comply with such prospectus delivery requirements;
PEP 613 12-92
<PAGE>
(ii) to transmit to us promptly upon receipt any and all orders received by
you, it being understood that no conditional orders will be accepted;
(iii) to obtain from each customer for whom you act as agent for the
purchase of Shares any taxpayer identification number certification
and backup withholding information required under the Internal Revenue
Code, as amended from time to time (the "Code"), and the regulations
set forth thereunder, or other sections of the Code which may become
applicable and to provide us or our designee with timely written
notice of any failure to obtain such taxpayer identification number
certification or information in order to enable the implementation of
any required backup withholding in accordance with the Code and the
regulations thereunder;
(iv) to pay to us the offering price, less any agency fee to which you are
entitled, within five (5) business days of our confirmation of your
customer's order, or such shorter time as may be required by law. You
may, subject to our approval, remit the total public offering price to
us, and we will return to you your agency fee. If such payment is not
received within said time period, we reserve the right, without prior
notice, to cancel the sale, or at our option to return the Shares to
the issuer for redemption or repurchase. In the latter case, we shall
have the right to hold you responsible for any loss resulting to us.
Should payment be made by local bank check, liquidation of Shares may
be delayed pending clearance of your check; and
(v) to offer and sell Shares, and execute telephone transactions only in
accordance with the terms and conditions of the then current
prospectuses of the relevant Funds and to make no representations not
contained in any such prospectus or in any authorized supplemental
material supplied to you. In addition, in consideration for the
extension of the right to exercise telephone transaction privileges,
you acknowledge that neither the Funds nor the Transfer Agent nor
Equity Planning will be liable for any loss, injury or damage incurred
as a result of acting upon, nor will they be responsible for the
authenticity of, any telephone instructions, and you agree to
indemnify and hold harmless the Funds, Equity Planning and the
Transfer Agent against any loss, injury or damage resulting from any
unauthorized telephone transaction instruction from you or your
representatives. (Telephone instructions will be recorded on tape).
Unless otherwise mutually agreed in writing or except as provided below, each
transaction placed by you shall be promptly confirmed by us in writing to you,
and shall be confirmed to the customer promptly upon receipt by us of
instructions from you as to such customer. In the case of a purchase order by
customer's application, each transaction shall be promptly confirmed in writing
directly to the customer and a copy of each confirmation shall be sent
simultaneously to you. You understand that in the case of an Omnibus Account we
shall send a confirmation to you as the shareholder of record only. We reserve
the right, at our discretion and without notice, to suspend the sale of Shares
or withdraw entirely the sale of Shares of any or all of the Funds. All orders
are subject to acceptance or rejection by us in our sole discretion, and by the
Funds in their sole discretion. The procedure stated herein relating to the
pricing and handling of orders shall be subject to instructions which we may
forward to you from time to time.
III. Compliance With Law
You hereby represent that you are either (1) a "bank" as defined in Section
3(a)(6) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and at the time of each transaction in shares of the Funds, are not required to
register as a broker-dealer under the Exchange Act or regulations thereunder; or
(2) registered as a broker-dealer under the Exchange Act, a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD") and
affiliated with a bank.
(i) If you are a bank, not required to register as a broker-dealer under
the Exchange Act, you further represent and warrant to us that with
respect to any sales in the United States, you will use your best
efforts to ensure that any purchase of Shares by your customers
constitutes a suitable investment for such customers. You shall not
effect any transaction in, or induce any purchase or sale of, any
Shares by means of any manipulative deceptive or other fraudulent
device or contrivance and shall otherwise deal equitable and fairly
with your customers with respect to transactions in Shares of a Fund.
-2-
<PAGE>
(ii) If you are a NASD member broker-dealer affiliated with a bank and
registered under the Exchange Act, you further represent and warrant
to us that with respect to any sales in the United States, you agree
to abide by all of the applicable laws, rules and regulations
including applicable provisions of the Securities Act of 1933 as
amended, and the applicable rules and regulations of the NASD,
including, without limitation, its Rules of Fair Practice, and the
applicable rules and regulations of any jurisdiction in which you make
Shares available for sale to your customers. You agree not to make
available for sale to your customers the Shares in any jurisdiction in
which the Shares are not qualified for sale or in which you are not
qualified as a broker-dealer. We shall have no obligation or
responsibility as to your right to make Shares of any Fund available
to your customers in any jurisdiction. You agree to notify us
immediately in the event of (a) your expulsion or suspension from the
NASD or your becoming subject to any enforcement action by the
Securities and Exchange Commission, NASD, or any other self-regulatory
organization, or (b) your violation of any applicable federal or state
law, rule or regulation including, but not limited to, those of the
SEC, NASD, or other self-regulatory organization, arising out of or in
connection with this Agreement, or which may otherwise affect in any
material way your ability to act in accordance with the terms of this
Agreement.
You shall not make Shares of any Fund available to your customers, including
your fiduciary customers, except in compliance with all federal and state laws
and rules and regulations of regulatory agencies or authorities applicable to
you, or any of your affiliates engaging in such activity, which may affect your
business practices. You confirm that you are not in violation of any banking law
or regulations to which you are subject. You agree to hold us and the Funds
harmless and indemnify us in the event that you or any of your representatives
should violate any law, rule or regulation or any provisions of this Agreement.
In the event that we determine to refund any amounts paid by a customer in
connection with any such violation on your part, you shall forfeit the right to
the amount of any agency fee allowed by us with respect to the transaction for
which the refund is made. All expenses which you incur in connection with your
activities under this Agreement shall be borne by you.
IV. Relationship With Customer
With respect to any and all transactions in the Shares of any Fund pursuant to
this Agreement, it is understood and agreed in each case that: (i) you shall be
acting solely as agent for the account of your customer; (ii) each transaction
shall be initiated solely upon the order of your customer; (iii) we shall
execute transactions only upon receiving instructions from you acting as agent
for your customer or upon receiving instructions directly from your customer;
(iv) as between you and your customer, your customer will have full beneficial
ownership of all Shares; and (v) each transaction shall be for the account of
your customer and not for your account.
Subject to the foregoing, however, you may maintain record ownership of such
customers' Shares in an "Omnibus Account" or an account registered in your name
or the name of your nominee, for the benefit of such customers. You understand
that such Shares must be held in a separate account for each shareholder of such
Funds. You represent and warrant to us that you will have full right, power and
authority to effect transactions (including, without limitation, any purchases
and redemptions) in Shares on behalf of all customer accounts provided by you.
V. Relationship With Financial Institutions
Your obligations to us under this Agreement are subject to all the provisions of
the respective distribution agreements entered into between us and each of the
Funds. You understand and agree that in performing your services under this
Agreement you are acting in the capacity of an independent contractor, and we
are in no way responsible for the manner of your performance or for any of your
acts or omissions in connection therewith. It is further understood that neither
this Agreement nor the performance of the services of the respective parties
hereunder shall be considered to constitute an exclusive arrangement, or to
create a partnership, association or joint venture between you and us. In making
available Shares of the Funds under this Agreement, nothing herein shall be
construed to constitute you or any of your agents, employees or representatives
as our agent or employee, or as an agent or employee of the Funds, and you shall
not make any representations to the contrary. As distributor of the Funds, we
shall have full authority to take such action as we may deem advisable in
respect of all matters pertaining to the distribution of the Shares. We shall
not be under any obligation to you, except for obligations expressly assumed by
us in this Agreement.
-3-
<PAGE>
VI. Termination
Either party hereto may terminate this Agreement, without cause, upon ten days'
written notice to the other party. We may terminate this Agreement for cause
upon the violation by you of any of the provisions hereof, such termination to
become effective on the date such notice of termination is mailed to you. If you
are registered as a broker-dealer and affiliated with a bank, this Agreement
shall terminate automatically if either Party ceases to be a member of the NASD.
VII. Assignability
This Agreement is not assignable or transferable, except that we may assign or
transfer this Agreement to any successor distributor of the Funds.
VIII. Miscellaneous
(i) All communications mailed to us should be sent to the above address.
Any notice to you shall be duly given if mailed or delivered to you at
the address specified by you below.
(ii) This Agreement constitutes the entire agreement and understanding
between the parties and supersedes any and all prior agreements
between the parties.
(iii) This Agreement and the rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of
Connecticut.
Very truly yours,
PHOENIX EQUITY PLANNING CORPORATION
By _________________________________________
Authorized Signature
____________________________________________
Name and Title
We accept and agree to the foregoing Agreement as of the date set forth below
Financial Institution: __________________________________
By _________________________________________
Authorized Signature, Title
____________________________________________
____________________________________________
Address
(NASD CRD # if applicable _________________ )
Date: ______________________________________
Please return the signed copy of this Sales Contract to Phoenix Equity Planning
Corporation at the above address.
Exhibit 9.4
Sub-Transfer Agent Agreement
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
PHOENIX EQUITY PLANNING CORPORATION
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
1. Terms of Appointment; Duties of the Bank and 1-4
Transfer Agent
2. Fees and Expenses 4
3. Bank as Trustee or Custodian of Retirement Plans 4-5
4. Wire Transfer Operating Guidelines 5-7
5. Data Access and Proprietary Information 7-8
6. Indemnification 8-9
7. Standard of Care 10
8. Covenants of the Transfer Agent and the Bank 10
9. Representations and Warranties of the Bank 11
10. Representations and Warranties of the Transfer Agent 11
11. Termination of Agreement 12
12. Assignment 12
13. Amendment 12
14. Massachusetts Law to Apply 13
15. Force Majeure 13
16. Consequential Damages 13
17. Limitation of Shareholder Liability 13
18. Merger of Agreement 13
19. Counterparts 13
<PAGE>
AGREEMENT effective as of the 1st day of June, 1994, by and between
PHOENIX EQUITY PLANNING CORPORATION, a Connecticut corporation, having its
principal office and place of business at 100 Bright Meadow Boulevard, Enfield,
Connecticut, 06083, (the "Transfer Agent"), and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company having its principal office and place of
business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank");
WHEREAS, the Transfer Agent has been appointed by each of the investment
companies (including each series thereof) listed on Schedule A (the "Fund(s)"),
each an open-end diversified management investment company registered under the
Investment Company Act of 1940 as amended, as transfer agent, dividend
disbursing agent and shareholder servicing agent in connection with certain
activities, and the Transfer Agent has accepted each such appointment;
WHEREAS, the Transfer Agent has entered into a Transfer Agency and Service
Agreement with each of the Funds (including each series thereof) listed on
Schedule A pursuant to which the Transfer Agent is responsible for certain
transfer agency and dividend disbursing functions for each Fund's shares
("Shares") and each Fund's shareholders ("Shareholders") and the Transfer Agent
is authorized to subcontract for the performance of its obligations and duties
thereunder in whole or in part with the Bank;
WHEREAS, the Transfer Agent desires to appoint the Bank as sub-transfer
agent, and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenant herein contained,
the parties hereto agree as follows:
1. Duties of the Bank and the Transfer Agent
1.1 Subject to the terms and conditions set forth in this Agreement, the
Bank shall act as the Transfer Agent's non-exclusive sub-transfer agent for
Shares in connection with any accumulation plan, open-account, dividend
reinvestment plan, retirement plan or similar plan provided to Shareholders and
set out in each Fund's currently effective prospectus and statement of
additional information ("Prospectus"), including without limitation any
periodic investment plan or periodic withdrawal program. As used herein the
term "Shares" means the authorized and issued shares of common stock, or shares
of beneficial interest, as the case may be, for each Fund listed in Schedule A.
In accordance with procedures established from time to time by agreement
between the Transfer Agent and the Bank, the Bank and Transfer Agent shall
provide the services listed in this Section 1.
(a) According to the service responsibility schedule attached hereto
for Shareholder accounts and record-keeping the Bank or the
Transfer Agent shall:
(i) receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the custodian of each Fund authorized pursuant
to the articles of incorporation or organization of each
Fund (the "Custodian");
(ii) pursuant to purchase orders, issue the appropriate number
of Shares and hold such Shares in the appropriate
Shareholder account;
(iii) receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation
thereof to the Custodian;
(iv) in respect to the transactions in items (i), (ii), and
(iii) above, the Bank shall execute transactions directly
with broker-dealers authorized by each Fund;
(v) at the appropriate time as and when it receives monies
paid to it by the 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 each Fund;
<PAGE>
(viii) issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon
receipt by the Bank of indemnification satisfactory to the
Bank and protecting the Bank and each Fund, and the Bank
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 Transfer
Agent and its Shareholders as to the foregoing;
(x) record the issuance of Shares of each Fund and maintain
pursuant to Rule 17Ad-10 (e) of the Securities Exchange
Act of 1934 as amended (the "Exchange Act") a record of
the total number of Shares of each Fund that are
authorized, based upon data provided to it by each Fund or
the Transfer Agent and issued and outstanding, the Bank
shall also provide each Fund on a regular basis with the
total number of Shares which are authorized and issued and
outstanding and 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
issues or sale of such Shares, which functions shall be
the sole responsibility of each Fund or the Transfer
Agent.
1.2 (a) For reports, the Bank shall:
(i) maintain all Shareholder accounts, prepare meeting, proxy,
and mailing lists, withhold taxes on U.S. resident and
non-resident alien accounts, prepare and file U.S.
Treasury reports required with respect to dividends and
distributions by federal authorities for all Shareholders,
prepare confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder account
information.
(b) For blue sky reporting the Bank shall provide a system that will
enable each Fund or the Transfer Agent to monitor the total
number of Shares sold in each State, and each Fund or the
Transfer Agency shall:
(i) identify to the Bank 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 activity for each State, the
responsibility of the Bank for each Fund's blue sky State
registration status is solely limited to the initial
establishment of transactions subject to blue sky
compliance by the Fund or the Transfer Agent and the
reporting of such transactions to the Fund as provided
above.
1.3 Per the attached service responsibility schedule procedures as to who
shall provide certain of the services in Section 1 may be established from time
to time by agreement between the Transfer Agent and the Bank. The Bank may at
times perform only a portion of these services and the Transfer Agent may
perform these services on each Fund's behalf.
1.4 The Bank shall provide additional services on behalf of the Transfer
Agent (i.e., escheat services) as may be agreed upon in writing between the Bank
and the Transfer Agent.
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement, the
Transfer Agent agrees to pay the Bank an annual maintenance fee for each
Shareholder account as set out in the initial fee schedule attached hereto. Such
fees and out-of-pocket expenses and advances identified under Section 2.2 below
may be changed from time to time subject to mutual written agreement between the
Transfer Agent and the Bank. For purposes hereof the term account should refer
to any Shareholder account designated as such on the DST mutual fund system (or
any replacement system) provided further that so called omnibus accounts shall
be considered to be a single account.
2.2 In addition to the fees paid under Section 2.1 above, the Transfer
Agent agrees to reimburse the Bank for out-of-pocket expenses, including but not
limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by the Bank at the request or with the consent of the
Transfer Agent, will be reimbursed by the Transfer Agent.
<PAGE>
2.3 The Transfer Agent agrees to pay all fees and reimbursable expenses
within five days following the receipt of the respective billing notice. Postage
for mailing of dividends, proxies, Fund reports and other mailings to all
accounts shall be advanced to the Bank by the Transfer Agent at least seven (7)
days prior to the mailing date of such materials.
3. Bank as Trustee or Custodian of Retirement Plans
As agreed upon in writing between the parties, the Bank and Transfer Agent
agree that the Bank may serve as the named custodian or trustee of individual
retirement accounts established under section 408 of the Internal Revenue Code
(the "Code"), tax-sheltered plans established under section 403 (b) of the Code,
qualified plans under section 401(a) of the Code, or money purchase plans,
pension plans or profit sharing plans with a cash deferred arrangement under
section 401(k) of the Code (collectively "Retirement Plans").
3.1 The Bank shall provide certain recordkeeping services as more fully
described in the TRAC-2000 Procedures manual provided to the Fund for
Shareholders who become plan participants of Retirement Plans using TRAC-2000
System.
3.2 The Bank shall:
(a) have no investment responsibility for the selection of
investments, no liability for any investments made for Retirement
Plans other than to maintain custody and provide recordkeeping of
the investments subject to the terms of the Agreement; and
(b) not serve as "Plan Administrator" (as defined in the Employee
Retirement Income Securities Act of 1974, as amended) of any
Retirement Plan, or in any other administrative capacity or other
capacity except as trustee or custodian thereof, the Bank shall
not keep records of Retirement Plan accounts except as provided
herein.
3.3 The Transfer Agent agrees that in any communications from the Transfer
Agent or the Funds to any prospective or actual Shareholder, neither the Funds
nor the Transfer Agent shall state or represent that the Bank has any investment
discretion or other power concerning investments of any Retirement Plan or the
Bank shall serve as plan administrator or have any administrative or other
responsibility for the administration or operation of any Retirement Plan. The
Funds, the Funds' designee, or the Transfer Agent as may be required to comply
with the Code and all other applicable federal and state laws shall:
(a) serve as third party administrators of all Retirement Plans; and
(b) provide all Retirement Plan prototype document design, tax form
preparation (excluding services performed by the Bank under
section 1.2 of this Agreement), discrimination testing and
consulting about Retirement Plan qualification and maintenance.
4. Wire Transfer Operating Guidelines/Articles 4A of the Uniform Commercial Code
4.1 The Bank is authorized to promptly debit the appropriate Transfer Agent
account(s) upon the receipt of a payment order in compliance with the selected
security procedure (the "Security Procedure") chosen for funds transfer and in
the amount of money that the Bank has been instructed to transfer. The Bank
shall execute payment orders in compliance with the Security Procedure and with
the Transfer Agent instructions on the execution date provided that such payment
order is received by the customary deadline for processing such a request,
unless the payment order specifies a later time. All payment orders and
communications received after this time-frame will be deemed to have been
received the next business day.
4.2 The Transfer Agent acknowledges that the Security Procedure it has
designated on the Transfer Agent Selection Form was selected by the Transfer
Agent from Security Procedures offered by the Bank. The Transfer Agent shall
restrict access to confidential information relating to the Security Procedure
to authorized persons as communicated to the Bank in writing. The Transfer Agent
must notify the Bank immediately if it has reason to believe unauthorized
persons may have obtained access to such information or of any change in the
Transfer Agent's authorized personnel. The Bank shall verify the authenticity of
all such instructions according to the Security Procedure.
<PAGE>
4.3 The Bank shall process all payment orders on the basis of the account
number contained in the payment order. In the event of a discrepancy between any
name indicated on the payment order and the account number, the account number
shall take precedence and govern.
4.4 When the Transfer Agent initiates or receives Automated Clearing House
("ACH") credit and debit entries pursuant to these guidelines and the rules of
the National Automated Clearing House Association and the New England Clearing
House Association, the Bank will act as an Originating Depository Financial
Institution and/or receiving depository Financial Institution, as the case may
be, with respect to such entries. Credits given by the Bank with respect to an
ACH credit entry are provisional until the Bank receives final settlement for
such entry from the Federal Reserve Bank. If the Bank does not receive such
final settlement, the Transfer Agent agrees that the Bank shall receive a refund
of the amount credited to the Transfer Agent in connection with such entry, and
the party making payment to the Transfer Agent via such entry shall not be
deemed to have paid the amount of the entry.
4.5 The Bank reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of the Bank's receipt of such payment
order; (b) if initiating such payment order would cause the Bank, in the Bank's
sole judgement, to exceed any volume, aggregate dollar, network, time, credit or
similar limits upon wire transfers which are applicable to the Bank; or (c) if
the Bank, in good faith, is unable to satisfy itself that the transaction has
been properly authorized.
4.6 The Bank shall use reasonable efforts to act on all authorized requests
to cancel or amend payment orders received in compliance with the Security
Procedure provided that such requests are received in a timely manner affording
the Bank reasonable opportunity to act. However, the Bank assumes liability if
the request for amendment or cancellation cannot be satisfied.
4.7 The Bank shall assume no responsibility for failure to detect any
erroneous payment order provided that the Bank complies with the payment order
instructions as received and the Bank complies with the Security Procedure. The
Security Procedure is established for the purpose of authenticating payment
orders only and not for the detection of errors in payment orders.
4.8 The Bank shall assume no responsibility for lost interest with respect
to the refundable amount of any unauthorized payment order unless the Bank is
notified of the unauthorized payment order within (30) days or notification by
the Bank of the acceptance of such payment order. In no event (including failure
to execute a payment order) shall the Bank be liable for special, indirect or
consequential damages, even if advised of the possibility of such damages.
4.9 Confirmation of Bank's execution of payment orders shall ordinarily be
provided within 24 hours notice of which may be delivered through the Bank's
proprietary information systems, or by facsimile or call-back. Client must
report any objections to the execution of an order within 30 days.
5. Data Access and Proprietary Information
5.1 The Transfer Agent acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and other
information furnished to the Transfer Agent by the Bank are provided solely in
connection with the services rendered under this Agreement and constitute
copyrighted trade secrets or proprietary information of substantial value to the
Bank. Such databases, programs, formats, designs, techniques and other
information are collectively referred to below as "Proprietary Information". The
Transfer Agent agrees that it shall treat all Proprietary Information as
proprietary to the Bank and further agrees that it shall not divulge any
Proprietary Information to any person or organization except as expressly
permitted hereunder. The Transfer Agent agrees for itself and its employees and
agents:
(a) to use such programs and databases (i) solely on the Transfer
Agent's computers, or (ii) solely from equipment at the locations
agreed to between the Transfer Agent and the Bank and (iii) in
accordance with the Bank's applicable user documentation;
<PAGE>
(b) to refrain from copying or duplicating in any way (other than in
the normal course of performing processing on the Transfer Agents
computers) any part of any Proprietary Information;
(c) to refrain from obtaining unauthorized access to any programs,
data or other information not owned by the Transfer Agent, and if
such access if accidently obtained, to respect and safeguard the
same Proprietary Information;
(d) to refrain from causing or allowing information transmitted from
the Bank's computer to the Transfer Agent's terminal to be
retransmitted to any other computer terminal or other device
except as expressly permitted by the Bank, such permission not to
be unreasonably withheld;
(e) that the Transfer Agent shall have access only to those
authorized transactions as agreed to between the Transfer Agent
and the Bank; and
(f) to honor reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law and under applicable statutes.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section 5 shall
survive any earlier termination of this Agreement.
6. Indemnification
6.1 The Bank shall not be responsible for, and the Transfer Agent shall
indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payment, expenses and liability arising
out of or attributable to:
(a) all actions of the Bank 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;
(b) the Transfer Agents' lack of good faith, negligence or willful
misconduct;
(c) the reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services
which (i) are received by the Bank or its agents or
subcontractors from the Transfer Agent or its duly authorized
representative, and (ii) have been prepared, maintained or
performed by the Transfer Agent including but not limited to any
previous transfer agent or registrar excluding the Bank;
(d) the reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Transfer
Agent;
(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.
6.2 At any time the Bank may apply to any officer of the Transfer Agent for
instructions, and may consult with legal counsel acceptable to the Transfer
Agent with respect to any matter arising in connection with the services to be
performed by the Bank under this Agreement, and the Bank and its agents or
subcontractors shall not be liable and shall be indemnified by the Transfer
Agent for any action taken or omitted by it in reliance upon such instructions
or upon the opinion of such counsel.
The Bank, its agents and subcontractors shall be protected and indemnified
in acting upon any paper or document furnished by or on behalf of the Transfer
Agent, 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 the Bank or its agents or subcontractors by machine readable
input, telex, tape, CRT data entry or other similar means authorized by the
Transfer Agent, and shall not be held to have notice of any change of authority
of any person, until receipt of written notice thereof from the Transfer Agent.
The Bank, 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 the Fund, and the
proper countersignature of any former transfer agent or former registrar, or of
a co-transfer agent or co-registrar.
<PAGE>
6.3 In order that the indemnification provisions contained in this Section
6 shall apply, upon the assertion of a claim for which the Transfer Agent may be
required to indemnify the Bank, the Bank shall promptly notify the Transfer
Agent of such assertion, and shall keep the Transfer Agent advised with respect
to all developments concerning such claim. The Transfer Agent shall have the
option to participate with the Bank in the defense of such claim or to defend
against said claim in its own name or in the name of the Bank.
The Bank shall in no case confess any claim or make any compromise in any
case in which the Transfer Agent may be required to indemnify the Bank except
with the Transfer Agent's prior written consent.
6.4 The indemnity provisions of Section 6 shall survive any earlier
termination of this Agreement.
7. Standard of Care
The Bank shall at all times act in good faith and agrees to use its best
efforts 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 or that of its employees.
8. Covenants of the Transfer Agent and the Bank
8.1 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Transfer Agent 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.
8.2 The Bank 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, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of each Fund or the Transfer Agent and will be
preserved, maintained and made available in accordance with such section and
rules, for monitoring by the Transfer Agent, and will be surrendered promptly to
the Transfer Agent on and in accordance with its request. The Bank shall furnish
adequate resources and office space in order to allow the Transfer Agent or any
governmental authority to inspect all books, procedures, information and records
required hereby.
8.3 The Bank and the Transfer Agent 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.
8.4 In case of any requests or demands for the inspection of the
Shareholder records of the Transfer Agent, the Bank will endeavor to notify the
Transfer Agent and to secure instructions from an authorized officer of the
Transfer Agent as to such inspection. The Bank reserves the right, however, to
exhibit the Shareholder records to any person, whenever it is advised by counsel
that it may be held liable for the failure to exhibit the Shareholder records to
such person.
9. Representations and Warranties of the Bank
The Bank represents and warrants to the Transfer Agent that:
(a) it is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts;
(b) it is duly qualified to carry on its business in the Commonwealth of
Massachusetts;
(c) it is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement;
(d) all requisite corporation proceedings have been taken to authorize it
to enter into and perform this Agreement;
(e) it has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement;
<PAGE>
(f) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act.
10. Representations and Warranties of the Transfer Agent
The Transfer Agent represents and warrants to the Bank that:
(a) it is a Connecticut corporation duly organized and existing and in
good standing under the laws of Connecticut;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(c) all corporate proceedings required by said articles of incorporation
and by-law have been taken to authorize it to enter into and perform
this Agreement;
(d) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act.
11. Termination of Agreement
11.1 This Agreement shall continue for a period of three years (the
"Initial Term") and be renewed or terminated as stated below.
11.2 This Agreement shall terminate upon the termination of the Transfer
Agency Agreement between the Funds and the Transfer Agent.
11.3 This Agreement may be terminated or renewed after the Initial Term by
either party upon ninety (90) days written notice to the other.
11.4 Should either party exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the party exercising its right to terminate. Additionally, the party receiving
the notice to terminate reserves the right to charge the terminating party for
any other reasonable expenses associated with such termination.
12. Assignment
12.1 Except as provided in Section 12.3 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
12.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
12.3 The Bank may, without further consent on the part of the Transfer
Agent, subcontract for the performance hereof with (a) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as
a transfer agent pursuant to Section 17A (c)(2) of the Exchange Act ("Section
17A (c)(2); (b) National Financial Data Services, Inc., a subsidiary of BFDS
duly registered as a transfer agent pursuant to Section 17A (c)(2) or (c) a BFDS
affiliate; provided, however, that the Bank shall be as fully responsible to the
Transfer Agent for the acts and omissions of any subcontractor as it is for its
own acts and omissions.
13. Amendment
This Agreement may be amended or modified by a written agreement executed
by both parties.
14. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
15. Force Majeure
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.
<PAGE>
16. Consequential Damages
Neither party to this agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
17. Limitations of Shareholder Liability
The Bank hereby expressly acknowledges that recourse against the Funds
shall be subject to those limitations provided by governing law and the
Declaration of Trust of the Funds, as applicable, and agrees that obligations
assumed by the Funds pursuant to the Transfer Agency Agreement shall be limited
in all cases to the Funds and their respective assets. The Bank shall not seek
satisfaction from the Shareholders or any Shareholders of the Funds, nor shall
the Bank seek satisfaction of any obligations from the Trustees/Directors or any
individual Trustee/Director of the Funds.
18. Merger of Agreement
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.
19. Counterparts
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 by and through their duly authorized
officers, as of the 21st day of July 1994.
PHOENIX EQUITY PLANNING CORPORATION
BY: /s/ William R. Moyer
---------------------------------------
William R. Moyer
Senior Vice President, Finance
ATTEST:
/s/Patricia O. McGlaughlin
- -----------------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/Donald E. Logue
---------------------------
Executive Vice President
ATTEST:
/s/S. Cesso
- -------------------------------
<PAGE>
STATE STREET BANK & TRUST COMPANY
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS PLAN
TRANSFER AND DIVIDEND DISBURSEMENT AGENT
THE PHOENIX FUNDS
PHOENIX SERIES FUNDS
PHOENIX HIGH YIELD FUND SERIES--A & B SHARES
*NATIONAL BOND FUND MERGED WITH A SHARES
PHOENIX U.S. GOVERNMENT SECURITIES FUND SERIES--A & B SHARES
*NATIONAL FEDERAL SECURITIES TRUST MERGED WITH A SHARES
PHOENIX BALANCED FUND SERIES--A & B SHARES
PHOENIX CONVERTIBLE FUND SERIES--A & B SHARES
PHOENIX GROWTH FUND SERIES--A & B SHARES
PHOENIX MONEY MARKET FUND SERIES--A & B SHARES
PHOENIX MULTI PORTFOLIO FUNDS
PHOENIX TAX EXEMPT BOND PORTFOLIO--A & B SHARES
*NATIONAL SECURITIES TAX EXEMPT BONDS MERGED WITH A SHARES
PHOENIX CAPITAL APPRECIATION PORTFOLIO--A & B SHARES
PHOENIX INTERNATIONAL PORTFOLIO--A & B SHARES
PHOENIX ENDOWMENT EQUITY PORTFOLIO
PHOENIX ENDOWMENT FIXED-INCOME PORTFOLIO
OTHER PHOENIX FUNDS
PHOENIX TOTAL RETURN FUND, INC.--A & B SHARES
*NATIONAL TOTAL RETURN MERGED WITH A SHARES
PHOENIX MULTI-SECTOR FIXED INCOME FD, INC.--A & B SHARES
*PHOENIX HIGH QUALITY MERGED WITH A SHARES
PHOENIX EQUITY OPPORTUNITIES FUND--A & B SHARES
*A SHARES FORMERLY NATIONAL STOCK FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND--A & B SHARES
PHOENIX INCOME AND GROWTH FUND--A & B SHARES
PHOENIX CALIFORNIA TAX EXEMPT BOND FUND--A & B SHARES
PHOENIX ASSET RESERVE--A & B SHARES
<PAGE>
STATE STREET BANK & TRUST COMPANY
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS PLAN
TRANSFER AND DIVIDEND DISBURSEMENT AGENT
THE PHOENIX FUNDS
State Street shall charge PEPCO an annual fee based on a per shareholder
account per fund class for the next three (3) years equal to the following:
PHOENIX FEE SCHEDULE
Annual Per Account Fee
1994 $6.75
1995-1996* 1-600,000 ACCTS $7.00
600,000-1,000,000 ACCTS $6.75
OVER 1,000,000 ACCTS $6.60
Monthly Minimum/Fund Applied to Acct. Fee $1,500.00
Annual Closed Account Fee $1.20
Checkwriting Fees:
Per Check Cleared $1.00
Privilege Set-Up $5.00
Annual 12(B)1 Fee (Billed Quarterly) $1.00
Annual Investor Processing Fee
(Per Investor) $1.80
Other Fees: (1994-1996)
Management $27.00-$37.00 Per Hr. Per FTE
Fund Administrator $29.00 Per Hr. Per FTE
All Transfer Agent Functions $22.50 Per Hr. Per FTE
Liaisons Over 4,000/mth $26.00 Per Item
[bullet] This schedule is based on 700K accounts, 26 funds, and 4,000 liaison
items.
[bullet] If the account base decreases significantly, the per account fee will
be reviewed by both parties.
[bullet] If 12(B)1 product is discontinued the annual per account fee will be
increased by $1.00 [bullet]
[bullet] Additional Fund Administrators will be added as new funds are opened
(ratio 1:8) and charged as detailed above.
[bullet] This schedule does not include fees for Image terminals, conversions,
acquisitions, customer service, audio response, 401 recordkeeping, new product
lines, and out-of-pockets.
In witness whereof, Phoenix Equity Planning Corporation and State Street
Bank and Trust Company have agreed upon this fee schedule and have caused this
fee schedule to be executed in their names and on their behalf through their
duly authorized officers for the next three years.
PHOENIX EQUITY PLANNING CORPORATION STATE STREET BANK & TRUST CO.
By /s/Edward P. Hourihan By /s/ Mark Toomey
------------------------ --------------------------
Title Vice President Title Vice President
Date 7/15/94 Date 7/12/74
*The fee for this period shall be adjusted by the parties to reflect then
prevailing levels of service furnished by State Street.
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
SERVICE RESPONSIBILITY SCHEDULE
<TABLE>
<CAPTION>
FUNCTIONAL PEPCO BFDS
RESPONSIBILITIES (Transfer Agent) (Sub Transfer Agent)
<S> <C> <C>
A. Transmission Processing:
Remittance Cash Processing X
New Account Setup
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Quality Assurance X
Transfers
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Dealer X
[bullet] Quality Assurance X
Redemptions
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Quality Assurance X
Wire Order
[bullet] Set-Up X
[bullet] Settlement X
[bullet] Quality Assurance X
[bullet] Monitoring of Outstanding Trades X
Maintenance
[bullet] Registration X
[bullet] Rep/Dealer File X *X
[bullet] Sub Files X
[bullet] Quality Assurance X
[bullet] ACH Prenote Reject X
[bullet] All Account Options X
Adjustments (through 12/94)
[bullet] Account Corrections *X
[bullet] LOI Processing *X
[bullet] Year-End Accounts Adjustments *X
[bullet] Sharelot Adjustments *X
[bullet] Bounced Checks *X
[bullet] ACH Cancellations *X
[bullet] Quality Assurance *X
B. Customer Service:
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Telephones X
[bullet] Customer Inquiry X
[bullet] Transaction Line
[bullet] Timer Exchanges *X
[bullet] Liaison Support (Through 12/4) *X
Correspondence X
[bullet] Shareholder/Dealer Letters X
[bullet] Transfer of Assets Letters/Followup X
[bullet] Notice of Levy X
Dealer Services
[bullet] FundsServ/Networking Implementation X
[bullet] Dealer Security Access X
[bullet] Enhancements-Communications/Testing X
???ent Services
[bullet] Product Development/Implementation X
[bullet] Mailings X
[bullet] Year End Reporting X
C. Support:
Image/AWD
[bullet] Scanning X X
[bullet] Work Distribution X
[bullet] Retrieval X
[bullet] Technical Support X
Microfilm/Research Prior Agent X *X
[bullet] Media Production
[bullet] Design/Printing X
[bullet] Marketing Materials X
[bullet] Forms Development X
Corporate Actions
[bullet] Report Generation X
[bullet] Proxy Solicitation X
[bullet] Periodic Financial Activities (DIVs, PACs,
SWPs, etc.) X
Compliance/Regulatory
[bullet] Escheatment X
[bullet] Tax Filings X
[bullet] Lost Shareholder Recovery X
[bullet] BNotice/CNotice Reporting *X
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[bullet] Lost Certificate Processing/SIC *X
[bullet] Reporting
Recon/Control
[bullet] Cash Settlement X
[bullet] Account Reconcilement X
[bullet] Commission Payment X
[bullet] Automated Trade Settlement X
[bullet] Balance Credit Review X
[bullet] Reclaims *X
[bullet] Dividend Processing X
Financial Reporting
[bullet] Billing to the Fund X
Will be internalized to PEPCO
</TABLE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 2 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated September 11, 1997, relating to the financial
statements and financial highlights appearing in the July 31, 1997 Annual
Report to Shareholders of the Phoenix-Aberdeen Series Fund, which are also
incorporated by reference into the Registration Statement. We also consent to
the reference to us under the heading "Financial Highlights" in the Prospectus
and under the heading "Other Information--Independent Accountants" in the
Statement of Additional Information.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
November 24, 1997
PHOENIX - ABERDEEN SERIES FUND
(the "Fund")
CLASS A SHARES
AMENDED AND RESTATED 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 pay the Distributor, at the end of each month, an amount
on an annual basis equal to 0.25% of the average daily value of the net assets
of the Fund's Class A shares, as compensation for providing personal service to
shareholders, including assistance in connection with inquiries relating to
shareholder accounts, and for maintaining 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.
<PAGE>
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).
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.
<PAGE>
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.
[Adopted at a duly held meeting of the Board of Trustees on August 27, 1997.]
PHOENIX - ABERDEEN SERIES FUND
(the "Fund")
CLASS B SHARES
AMENDED AND RESTATED 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 .75% 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 B 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. The Fund shall also pay the Distributor, at
the end of each month, an amount on an annual basis equal to 0.25% of the
average daily value of the net assets of the Fund's Class B shares, as
compensation for providing personal service to shareholders, including
assistance in connection with inquiries relating to shareholder accounts, and
for maintaining shareholder accounts (the "Service Fee").
<PAGE>
Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 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).
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.
<PAGE>
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.
[Adopted at a duly held meeting of the Board of Trustees on August 27, 1997.]
EXPLANATION OF TOTAL RETURN CALCULATION EXHIBIT 16
Phoenix-Aberdeen Series Fund
TOTAL RETURN FORMULA:
P( 1 + T )(n) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value
Since inception September 4, 1996 to July 31, 1997
<TABLE>
<CAPTION>
(a) (b) (c)=a-b (d) (e) (f) (g) (h)=f-g (i)=(h-a)/a
Front end Initial Net Number of Dividend Share Backend Ending Cumulative Average
Initial Sales Asset shares per Reinvest Value end Sales Redeemable Total Annual
Payment Charge Value Initial Payment Shares of Period Charge Value Return Return
($) ($) ($) ($) ($) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
New Asia CLASS A:
1000 47.5 952.5 95.25 0.52 999.8 0 999.8 -0.02 -0.02
New Asia CLASS B:
1000 0 1000 100 0.45 1043.7 50 993.7 -0.63 -0.63
Global Small Cap CLASS A:
1000 47.5 952.5 95.25 0 1055.2 0 1055.2 5.52 5.52
Global Small Cap CLASS B:
1000 0 1000 100 0 1100 50 1050 5 5
</TABLE>
Exhibit 18
Amended and Restated Plan
Pursuant to Rule 18f-3
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
(the "Fund")
AMENDED AND RESTATED
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 original 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 up
to four classes of shares as indicated on Schedule A: Class A, Class B, Class C
and Class M ("Multi-Class Portfolios"). Shares of the Multi-Class Portfolios
shall represent an equal pro rata interest in the respective Multi-Class
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
2(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, Class B, Class C and Class M shares shall
have the features described in Sections a, b, c and d, below.
a. Distribution Plans
------------------
The Fund have 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%, or in some cases 0.30%, of the
average daily net assets of a Multi-Class Portfolio's Class A shares.
<PAGE>
-2-
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.
iii. Class C 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 C
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 C
shares.
iv. Class M 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 M
Distribution Plan and any supplements thereto, subject to an annual limit of
0.50% of the average daily net assets of a Multi-Class Portfolio's Class M
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: (1) transfer agency fees; (2) stationery, printing,
postage, and delivery expenses relating to preparing and distributing
shareholder reports, prospectuses, and proxy statements; (3) state Blue Sky
registration fees; (4) SEC registration fees; (5) expenses of administrative
personnel and services to the extent related to another category of
class-specific expenses; (6) trustees' fees and expenses; (7) accounting
expenses, auditors' fees, litigation expenses, and legal fees and expenses; and
(8) expenses incurred in connection with shareholder meetings. Expenses
described in subsection (a) (i) and (ii) above of this paragraph must be
allocated to the class for which they are incurred. All other expenses described
in this paragraph will be allocated as Class
<PAGE>
-3-
Expenses, if a 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"). The difference
between the Class Expenses allocated to each share of a class during a year and
the Class Expenses allocated to each share of any other class during such year
shall at all times be less than .50% of the average daily net asset value of the
class of shares with the smallest average net asset value. The afore-described
description of Class Expenses and any amendment thereto shall be subject to the
continuing availability of an opinion of counsel or a ruling from the Internal
Revenue Service to the effect that any such allocation of expenses or the
assessment of higher distribution fees and transfer agency costs on any class of
shares does not result in any dividends or distributions constituting
"preferential dividends" under the 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.
--------------------------------------
Investment Advisor may waive or reimburse its management fee
in whole or in part provided that the fee is waived or reimbursed to all shares
of the Fund in proportion to the relative average daily net asset values.
Investment Advisor or a related entity who charges a fee for a
Class Expense may waive or reimburse that fee in whole or in part only if the
revised fee more accurately reflects the relative cost of providing to each
Multi-Class Portfolio the service for which the Class Expense is charged.
Distributor may waive or reimburse a Rule 12b- 1 Plan fee
payment in whole or in part.
c. 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. Each
Multi-Class
<PAGE>
-4-
Portfolio reserves the right to temporarily or permanently terminate exchange
privileges, impose conditions upon the exercision of exchange privileges, or
reject any specific order for any dealer, shareholder or person whose
transactions seem to follow a timing pattern, including those who request more
than one exchange out of a Multi-Class Portfolio within any thirty (30) day
period. Each Multi-Class Portfolio reserves the right to terminate or modify
these exchange privileges at any time upon giving prominent notice to
shareholders at least 60 days in advance.
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 the conversion of
shares does not constitute a taxable event under federal income tax law.
3. Board Review
------------
a. Approval of Amended and Restated Plan
-------------------------------------
The Board of Trustees, including a majority of the Independent
Trustees, at a meeting held on November 19, l997, approved the Amended and
Restated 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. Their determination was based on their review of
information furnished to them which they deemed reasonably necessary and
sufficient to evaluate the Plan.
b. Approval of Amendments
----------------------
The Plan may not be amended materially unless the Board of Trustees,
including a majority of 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.
Such funding shall be based on information required by the Board and furnished
to them that the Board deems reasonably necessary to evaluate the proposed
amendment.
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.
<PAGE>
-5-
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 Amended and Restated Plan, having been reviewed and approved by the
Board of Trustees and the Independent Trustees, shall take effect as of the
first day of the Fund's current fiscal year.
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.
<PAGE>
-6-
SCHEDULE A
----------
Class A Class B Class C Class M
------- ------- ------- -------
PHOENIX-ABERDEEN SERIES FUND:
NEW ASIA SERIES X X X X
GLOBAL SMALL CAP SERIES X X X X
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> PHOENIX-ABERDEEN NEW ASIA FUND CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> SEP-04-1996
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 19018
<INVESTMENTS-AT-VALUE> 19681
<RECEIVABLES> 169
<ASSETS-OTHER> 28
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19878
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 107
<TOTAL-LIABILITIES> 107
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19029
<SHARES-COMMON-STOCK> 1279
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 72
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 664
<NET-ASSETS> 19771
<DIVIDEND-INCOME> 264
<INTEREST-INCOME> 111
<OTHER-INCOME> 0
<EXPENSES-NET> (288)
<NET-INVESTMENT-INCOME> 87
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 664
<NET-CHANGE-FROM-OPS> 751
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (53)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1468
<NUMBER-OF-SHARES-REDEEMED> (194)
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 13355
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 106
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 495
<AVERAGE-NET-ASSETS> 13732
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 0.41
<PER-SHARE-DIVIDEND> (0.06)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.44
<EXPENSE-RATIO> 2.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> PHOENIX-ABERDEEN NEW ASIA FUND CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> SEP-04-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 19018
<INVESTMENTS-AT-VALUE> 19681
<RECEIVABLES> 169
<ASSETS-OTHER> 28
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19878
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 107
<TOTAL-LIABILITIES> 107
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19029
<SHARES-COMMON-STOCK> 618
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 72
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 664
<NET-ASSETS> 19771
<DIVIDEND-INCOME> 264
<INTEREST-INCOME> 111
<OTHER-INCOME> 0
<EXPENSES-NET> (288)
<NET-INVESTMENT-INCOME> 87
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 664
<NET-CHANGE-FROM-OPS> 751
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (15)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 673
<NUMBER-OF-SHARES-REDEEMED> (57)
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 6416
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 106
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 495
<AVERAGE-NET-ASSETS> 13732
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 0.43
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.39
<EXPENSE-RATIO> 2.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> PHOENIX-ABERDEEN GLOBAL SMALL CAP FUND CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> SEP-04-1996
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 37400
<INVESTMENTS-AT-VALUE> 41620
<RECEIVABLES> 832
<ASSETS-OTHER> 167
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42619
<PAYABLE-FOR-SECURITIES> 858
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 229
<TOTAL-LIABILITIES> 1087
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38520
<SHARES-COMMON-STOCK> 2154
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (163)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1045)
<ACCUM-APPREC-OR-DEPREC> 4220
<NET-ASSETS> 41532
<DIVIDEND-INCOME> 322
<INTEREST-INCOME> 181
<OTHER-INCOME> 0
<EXPENSES-NET> (676)
<NET-INVESTMENT-INCOME> (173)
<REALIZED-GAINS-CURRENT> (1106)
<APPREC-INCREASE-CURRENT> 4220
<NET-CHANGE-FROM-OPS> 2941
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2544
<NUMBER-OF-SHARES-REDEEMED> (390)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 23874
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 240
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 821
<AVERAGE-NET-ASSETS> 31144
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 1.11
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.08
<EXPENSE-RATIO> 2.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> PHOENIX-ABERDEEN GLOBAL SMALL CAP FUND CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> SEP-04-1996
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 37400
<INVESTMENTS-AT-VALUE> 41620
<RECEIVABLES> 832
<ASSETS-OTHER> 167
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42619
<PAYABLE-FOR-SECURITIES> 858
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 229
<TOTAL-LIABILITIES> 1087
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38520
<SHARES-COMMON-STOCK> 1605
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (163)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1045)
<ACCUM-APPREC-OR-DEPREC> 4220
<NET-ASSETS> 41532
<DIVIDEND-INCOME> 322
<INTEREST-INCOME> 181
<OTHER-INCOME> 0
<EXPENSES-NET> (676)
<NET-INVESTMENT-INCOME> (173)
<REALIZED-GAINS-CURRENT> (1106)
<APPREC-INCREASE-CURRENT> 4220
<NET-CHANGE-FROM-OPS> 2941
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1768
<NUMBER-OF-SHARES-REDEEMED> (163)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 17658
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 240
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 821
<AVERAGE-NET-ASSETS> 31144
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.10)
<PER-SHARE-GAIN-APPREC> 1.10
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.00
<EXPENSE-RATIO> 2.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
