As filed with the Securities and Exchange Commission on March 31, 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. 1 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 3 [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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Philip R. McLoughlin
Vice Chairman and Chief Executive Officer
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115-0479
(name and address of Agent for Service)
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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 April 1, 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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Declaration Pursuant to Rule 24f-2
Declaration Pursuant to Rule 24f-2: Registrant has chosen to register an
indefinite number of shares of beneficial interest, $1 par value, under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940 for the Registrant's fiscal year ended March 31, 1997.
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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>
<CAPTION>
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,
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 Fund
13. Investment Objective and Policies ............ Investment Objectives and Policies and
Investment Restrictions
14. Management of the Fund ..................... Trustees and Officers
15. Control Persons and Principal Holders of
Securities ................................. Trustees and Officers
16. Investment Advisory and Other Services ...... 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, Exchange
Privileges, 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 ........................ Not Applicable
</TABLE>
PART C
Information required to be included in Part C is set forth in under the
appropriate Item, so numbered, in Part C of the Registration Statement.
<PAGE>
PHOENIX
ABERDEEN
PROSPECTUS
April 1, 1997
Phoenix-Aberdeen Series Fund
NEW ASIA FUND
GLOBAL SMALL
CAP FUND
[LOGO] PHOENIX
DUFF&PHELPS
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
April 1, 1997
Phoenix-Aberdeen Series Fund (the "Fund") is an open-end management
investment company whose shares are offered in separate series. Each series
generally operates as a separate fund with its own investment objective and
policies designed to meet specific investment goals. There can be no assurance
that any series will achieve its investment objectives.
Phoenix-Aberdeen New Asia Fund (the "New Asia Series") 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 Series") 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.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. No dealer, salesperson or
other person has been authorized to give any information or to make any
representation, other than those contained in this Prospectus, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Fund, Adviser, or Distributor. This Prospectus
does not constitute an offer to sell or solicitation of an offer to buy any of
the securities offered hereby in any state in which, or to any person whom, it
is unlawful to make such offer. Neither the delivery of this Prospectus nor any
sale hereunder shall, under any circumstances, create any implication that
information herein is correct at any time subsequent to its date. Investors
should read and retain this Prospectus for future reference. Additional
information about the Fund is contained in the Statement of Additional
Information dated April 1, 1997 which has been filed with the Securities and
Exchange Commission and is available at no charge by calling (800) 243-4361 or
by writing to Phoenix Equity Planning Corporation, at 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200. The Statement of
Additional Information is incorporated herein by reference.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union or affiliated entity and are not federally
insured or otherwise protected by the Federal Deposit Insurance Corporation
(FDIC), the Federal Reserve Board or any other agency and involve investment
risk including the possible loss of principal.
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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.
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CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS/EXCHANGES: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY): (800) 243-1926
<PAGE>
TABLE OF CONTENTS
Page
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INTRODUCTION ..................................................... 3
FUND EXPENSES ..................................................... 4
FINANCIAL HIGHLIGHTS ............................................... 6
PERFORMANCE INFORMATION ......................................... 7
INVESTMENT OBJECTIVES AND POLICIES ................................ 8
INVESTMENT TECHNIQUES AND RELATED RISKS .......................... 10
INVESTMENT RESTRICTIONS ......................................... 13
MANAGEMENT OF THE FUND ............................................ 13
DISTRIBUTION PLANS ............................................... 15
HOW TO BUY SHARES ............................................... 16
NET ASSET VALUE .................................................. 22
HOW TO REDEEM SHARES ............................................ 22
DIVIDENDS, DISTRIBUTIONS AND TAXES ................................ 23
ADDITIONAL INFORMATION ............................................ 24
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of
Phoenix-Aberdeen Series Fund (the "Fund"). The Fund is an open-end management
investment company established as a business trust under the laws of the
Commonwealth of Massachusetts by an Agreement and Declaration of Fund dated May
31, 1996 (the "Declaration of Trust"). The Declaration of Trust authorizes the
assets and shares of the Fund to be divided into series (the "Series"). Each
Series has a different investment objective and invests primarily in certain
types of securities, as described on the cover page of this Prospectus, and is
designed to meet different investment needs.
Investment Adviser
The Fund is managed by Phoenix-Aberdeen International Advisors, LLC (the
"Adviser"). The Adviser is a joint venture between PM Holdings, Inc., a direct
subsidiary of Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life"),
and Aberdeen Fund Managers, Inc., a wholly-owned subsidiary of Aberdeen Trust
plc. The Adviser is entitled to a monthly management fee at an annual rate of
.85% of the average aggregate daily net asset values of the New Asia Series and
Global Series. 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 Fund's shares. See "Distribution Plans"
and the Statement of Additional Information. Equity Planning also acts as
financial agent and as such receives a fee. See "The Financial Agent." Equity
Planning also serves as the Fund's 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 Series. Pursuant to the Class A distribution plan, amounts not exceeding
0.25% annually of the average daily net assets of Class A Shares of each Series
may be reimbursed to Equity Planning to finance the distribution of Class A
Shares and for furnishing shareholder services. Pursuant to the Class B
distribution plan, amounts not exceeding 1.00% annually of the average daily net
assets of Class B Shares of each Series may be reimbursed to Equity Planning to
finance the distribution of Class B Shares and for furnishing shareholder
services. See "Distribution Plans."
Purchase of Shares
The Fund offers two classes of shares of each Series which may be purchased
at a price equal to their net asset value per share, plus a sales charge which,
at the election of the purchaser, may be imposed (i) at the time of purchase
("Class A Shares") or (ii) on a contingent deferred basis ("Class B Shares").
Completed applications for the purchase of shares should be mailed to the
Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301, Boston,
MA 02266-8301.
Class A Shares are offered to the public at the next determined net asset
value after receipt of the order by State Street Bank and Trust Company, plus a
maximum sales charge of 4.75% of the offering price (4.99% of the amount
invested) on single purchases of less than $50,000. The sales charge for Class A
Shares is reduced on a graduated scale on single purchases of $50,000 or more
and subject to other conditions stated below. See "How to Buy Shares", "How to
Obtain Reduced Sales Charges--Class A Shares" and "Net Asset Value."
Class B Shares are offered to the public at the next determined net asset
value after receipt of an order by State Street Bank and Trust Company with no
sales charge. Class B Shares are subject to a sales charge if they are redeemed
within five years of purchase. See "How to Buy Shares" and "Deferred Sales
Charge Alternative--Class B Shares."
Shares of each class represent an identical interest in the investment
portfolio of that Series and have the same rights, except that Class B Shares
bear the cost of higher distribution fees and certain other expenses resulting
from the deferred sales charge arrangements, which cause Class B Shares to have
a higher expense ratio and to pay lower dividends than Class A Shares. See "How
to Buy Shares."
Minimum Initial and Subsequent Investments
The minimum initial investment is $500 ($25 if using the bank draft
investing program designated "Investo-Matic") and the minimum subsequent
investment is $25. Exceptions to the minimum and subsequent investment amounts
for a Series are available under specific circumstances. See "How to Buy
Shares."
Redemption Price
Class A Shares may be redeemed at any time at the net asset value per share
next computed after receipt of a redemption request by Equity Planning, the
Fund's transfer agent. Class B shareholders redeeming shares within five years
of the date of purchase will normally be assessed a contingent deferred sales
charge. See "How to Redeem Shares."
3
<PAGE>
Risk Factors
There can be no assurance that any Series 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 a Series may invest. As a result of a Series' investment in
securities of foreign issuers, and, in particular, issuers located in specific
areas of the globe, Series assets may be highly susceptible to economic,
political and currency changes affecting securities of such issuers. The
securities markets of emerging market countries in which certain issuers may be
located are substantially smaller, less developed, less liquid, and more
volatile than the securities markets of the United States and other more
developed countries. The risk factors relevant to investment in each Series
should be reviewed and are set forth in the "Investment Objectives and Policies"
and "Investment Techniques and Related Risks" sections of this Prospectus and
Statement of Additional Information.
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
period ended January 31, 1997 and have been pro-rated to reflect a full year of
operation.
<TABLE>
<CAPTION>
New Asia Series
----------------------------------------------------
<S> <C> <C>
Class A Shares Class B Shares
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 2.10% 2.85%
(After Expense Reimbursement)
<CAPTION>
Global Series
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<S> <C> <C>
Class A Shares Class B Shares
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)
Total Fund Operating Expenses 2.10% 2.85%
(After Expense Reimbursement)
</TABLE>
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(a) "Rule 12b-1 Fees" represent an asset based sales charge that, for a
long-term shareholder, may be higher than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. ("NASD"). Rule 12b-1 Fees stated for Class B Shares include a
Service Fee. See "Distribution Plans."
(b) The Adviser has agreed to reimburse the New Asia Series' operating
expenses related to Class A Shares and Class B Shares for the amount, if any, by
which such other operating expenses for the fiscal year ended July 31, 1997
exceed 1.00% of average net assets of such Series. Other Operating Expenses
absent expense reimbursement are estimated to equal approximately 1.78% and
1.78%, respectively, of average net assets. Total Fund Operating Expenses are
estimated to be 2.88% and 3.63%, respectively, absent such reimbursement.
(c) The Adviser has agreed to reimburse the Global Series' operating
expenses related to Class A Shares and Class B Shares for the amount, if any, by
which such other operating expenses for the fiscal year ended July 31, 1997
exceed 1.00% of average net assets of such Series. Other Operating Expenses
absent expense reimbursement are estimated to equal approximately 1.78% and
1.78%, respectively, of average net assets. Total Fund Operating Expenses are
estimated to be 2.88% and 3.63%, respectively, absent such reimbursement.
4
<PAGE>
<TABLE>
<CAPTION>
Example* New Asia Series Global Series
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<S> <C> <C> <C> <C>
1 year 3 years 1 year 3 years
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 $68 $110
Class B Shares $69 $108 $69 $108
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 $68 $110
Class B Shares $29 $ 88 $29 $ 88
</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."
5
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables set forth certain financial information for the
respective fiscal years of the Fund. The Fund's unaudited Financial Statements
and notes thereto are incorporated by reference in the Statement of Additional
Information. The Statement of Additional Information and the Fund's most recent
Semiannual Report (containing additional information relating to each Series'
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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GLOBAL SMALL CAP FUND
<TABLE>
<CAPTION>
Class A Class B
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From Inception From Inception
9/4/96 to 9/4/96 to
1/31/97 1/31/97
(Unaudited) (Unaudited)
---------------------- ----------------------
<S> <C> <C>
Net asset value, beginning of period ...... $10.00 $10.00
Income from investment operations
Net investment income (loss) ............... (0.02)(4)(5) (0.06)(4)(5)
Net realized and unrealized gain ......... 0.60 0.61
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Total from investment operations ......... 0.58 0.55
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Less distributions
Dividends from net investment income ...... -- --
Dividends from net realized gains ......... -- --
--------- ---------
Total distributions ..................... -- --
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Change in net asset value .................. 0.58 0.55
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Net asset value, end of period ............ $10.58 $10.55
========= =========
Total return(1) .............................. 5.80% (3) 5.40% (3)
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $22,045 $14,468
Ratio to average net assets of:
Operating expenses ........................ 2.10% (2) 2.85% (2)
Net investment income (loss) ............... (0.46%)(2) (1.33%)(2)
Portfolio turnover ........................ 44% (3) 44% (3)
Average commission rate paid(6) ............ $0.0119 $0.0119
</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 $0.03
and $0.03, respectively.
(6) For fiscal years beginning on or after September 1, 1995, 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.
6
<PAGE>
NEW ASIA FUND
<TABLE>
<CAPTION>
Class A Class B
----------------- ----------------
From Inception From Inception
9/4/96 to 9/4/96 to
1/31/97 1/31/97
(Unaudited) (Unaudited)
----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period ...... $10.00 $10.00
Income from investment operations (6)
Net investment income ..................... 0.04(4) 0.01(4)
Net realized and unrealized gain ......... 0.03 0.03
------ -----
Total from investment operations ......... 0.07 0.04
------ -----
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 .................. 0.01 (0.01)
------ -----
Net asset value, end of period ............ $10.01 $ 9.99
====== ======
Total return(1) .............................. 0.66%(3) 0.35% (3)
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $10,636 $ 4,561
Ratio to average net assets of:
Operating expenses ........................ 2.10%(2) 2.85% (2)
Net investment income (loss) ............... 1.17%(2) (0.05%)(2)
Portfolio turnover ........................ 5%(3) 5% (3)
Average commission rate paid(5) ............ $0.0109 $0.0109
</TABLE>
- -----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Includes reimbursement of operating expenses by investment adviser of $0.09
and $0.09, respectively.
(5) For fiscal years beginning on or after September 1, 1995, 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.
(6) 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.
-----------
PERFORMANCE INFORMATION
The Fund may, from time to time, include the performance history of any or
all of the Series in advertisements, sales literature or reports to current or
prospective shareholders. Both yield and total return are computed separately
for Class A Shares and Class B Shares of a Series in accordance with formulas
specified by the Securities and Exchange Commission. Yield and total return are
based on a Series' past performance only and are not an indication of future
performance. Performance information about each Series is based on that Series'
past performance only and is not an indication of future performance.
Performance information may be expressed as yield of any Series or Class
thereof, and as total return of any Series or Class thereof.
The yield of each Series will be computed by dividing the Series' net
investment income over a 30-day period by an average value of invested assets
(using the average number of shares entitled to receive dividends and the
maximum offering price per share at the end of the period), all in accordance
with applicable regulatory requirements. Such amount will be compounded for six
months and then annualized for a twelve- month period to derive the Series'
yield.
Standardized quotations of average annual total return for Class A and
Class B Shares of each Series will be expressed in terms of the average annual
compounded rate of return of a hypothetical investment in either Class A or
Class B Shares of each Series over a period of 1, 5, and 10 years (or up to the
life of the class of shares). Standardized total return quotations reflect the
deduction of a proportional share of each Class' expenses of each Series (on an
annual basis), deduction of the maximum initial sales load in the case of Class
A Shares or the maximum contingent deferred sales charge applicable to a
complete redemption of the investment in the case of Class B Shares, and assume
that all dividends and distributions on Class A and Class B Shares are
reinvested when paid. It is expected that the performance of Class A Shares will
be better than that of Class B Shares as a result of lower distribution fees and
certain incrementally lower expenses paid by Class A Shares. The Fund may also
quote supplementally a rate of total return over different periods of time by
means of aggregate, average, and year-by-year or other types of total return
figures.
The Fund may also advertise performance relative to certain performance
rankings and indices compiled by independent organizations. The Fund may include
the ranking of these performance figures relative to such figures for groups of
7
<PAGE>
mutual funds having similar investment objectives as categorized by ranking
services such as Lipper Analytical Services, Inc., CDA Investment Technologies,
Inc., Weisenberger Financial Services, Inc., and Morningstar, Inc. Additionally,
the Fund may compare a Series' performance results to other investment or
savings vehicles (such as certificates of deposit) and may refer to results
published in various publications such as 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.
The 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). The
Fund may from time to time illustrate the benefits of tax deferral by comparing
taxable investments to investments made through tax-deferred retirement plans.
The total return may also be used to compare the performance of a Series with
certain widely acknowledged outside standards or indices for market performance,
such as the Standard & Poor's 500 Stock Index ("S&P 500 Index"), Dow Jones
Industrial Average, Europe Australia Far East Index (EAFE), Consumer's Price
Index, 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 the Fund or Adviser's current investment strategies and
management style. Current strategies and style may change to respond to a
changing market and economic conditions. From time to time, the Fund may discuss
specific portfolio holdings or industries in such communications. To illustrate
components of overall performance, the Fund may separate its cumulative and
average annual returns into income results and capital gains or losses; or cite
separately as a return figure the equity or bond portion of a Series' portfolio;
or compare a Series' equity or bond return figure to well-known indices of
market performance including but not limited to: the S&P 500 Index, Dow Jones
Industrial Average, 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 Series reflects only the performance of a
hypothetical investment in Class A or Class B Shares of a Series during the
particular time period on which the calculations are based. Performance
information should be considered in light of a particular Series' investment
objectives and policies, characteristics and qualities of the Series, and the
market conditions during the given time period, and should not be considered as
a representation of what may be achieved in the future. For a description of the
methods used to determine total return, see the Statement of Additional
Information.
The Fund's Annual Report, available upon request and without charge, will
contain a discussion of the performance of each Series and a comparison of that
performance to a securities market index.
INVESTMENT OBJECTIVES AND POLICIES
Each Series has a different investment objective and is designed to meet
different investment needs. The differences in objectives and policies among the
Series can be expected to affect the investment return of each Series and the
degree of market and financial risk to which each Series is subject. The
investment objective of each Series is a fundamental policy which may not be
changed without the approval of a vote of a majority of the outstanding shares
of that Series. Since certain risks are inherent in the ownership of any
security, there can be no assurance that any Series will achieve its investment
objective. The investment policies of each Series will also affect the rate of
portfolio turnover. A high rate of portfolio turnover generally involves
correspondingly greater brokerage commissions, which are paid directly by the
Series. The rates for the New Asia and Global Series are estimated to be 75% and
100%, respectively.
New Asia Series
The investment objective of the New Asia Series is to provide long term
capital appreciation. It is intended that this Series will achieve its objective
by investing under normal market conditions at least 65% of its total assets in
a diversified portfolio of 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
eponymous countries or which have at least 50% of their assets situated in such
countries) in countries throughout Asia (excluding Japan) and whose principal
securities are actively traded on recognized stock exchanges of such countries.
The Series does not intend to invest in securities which are traded in markets
in Japan or in countries organized under the laws of Japan.
The Series will invest in countries having more established markets in
regions of Asian countries. The Asian countries to be represented in the Series
will ordinarily consist of three or more of the following countries: China, Hong
Kong, India, Indonesia, South Korea, Malaysia, Pakistan, the Philippines,
Singapore, Sri Lanka, Taiwan and Thailand. From time to time the Series may
invest in South Pacific nations such as Australia and New Zealand. There is no
requirement that the Series, at any given time, invest in any one particular
country or in all of the countries listed above or in any other Asian countries
or other developing markets that are open to foreign investment. In determining
the appropriate distribution of investments among various countries and
geographic regions, the Adviser ordinarily will consider the following factors:
prospects for relative economic growth among Asian countries; expected levels of
inflation; relative price levels of the various
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capital markets; governmental policies influencing business conditions; the
outlook for currency relationships and the range of individual investment
opportunities available to the international investor. Shareholders should be
aware that the Series may make investments in developing or emerging market
countries, which involve exposure to economic structures that are generally less
diverse and mature than in the United States, and to political systems which may
be less stable. A developing country can be considered to be a country which is
in the initial stages of its industrialization cycle. In the past, markets of
developing countries have been more volatile than the markets of developed
countries; however, such markets often have provided higher rates of return to
investors.
In certain countries, investments may only be made by investing in other
investment companies that, in turn, are authorized to invest in the securities
that are issued in such countries. The Series may therefore invest in the
securities of other investment companies subject to the limitations contained in
the 1940 Act (see "Investment Restrictions" in the Statement of Additional
Information). Shareholders should recognize that a Series' purchase of the
securities of other investment companies (and closed-end companies) results in
the layering of expenses such that shareholders indirectly bear a proportionate
part of the expenses for such investment companies including operating costs,
and investment advisory and administrative fees.
The Series may establish and maintain reserves of up to 100% of its assets
for temporary defensive purposes under abnormal market or economic conditions.
The Series reserves may be invested in domestic as well as foreign short-term
money market instruments including, but not limited to, government obligations,
certificates of deposit, bankers' acceptances, time deposits, commercial paper,
short-term corporate debt securities and repurchase agreements. When the Series
assets are held in cash or cash equivalents, it is not investing in securities
intended to meet the Series' investment objective.
Risk Considerations
There are substantial and different risks involved which should be
carefully considered by any investor considering foreign investments. For
example, there is generally less publicly available information about foreign
countries than is available about companies in the United States. Foreign
companies are generally not subject to uniform audit and financial reporting
standards, practices and requirements comparable to those in the United States.
Foreign securities involve currency risks. 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 Portfolio'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 United States. In most foreign markets volume and liquidity are less than in
the United States and, at times, volatility of price can be greater than that in
the United States. Fixed commissions on foreign stock exchanges are generally
higher than the negotiated commission on United States exchanges. There is
generally less government supervision and regulation of foreign stock exchanges,
brokers and companies than in the United States. There is also the possibility
of adverse changes in investment or exchange control regulations, expropriation
or confiscatory taxation, limitations on the removal of funds or other assets,
political or social instability, or diplomatic developments which could
adversely affect investments, assets or securities transactions of the Series in
some foreign countries. See "Foreign Securities" and Statement of Additional
Information.
For many foreign securities, there are U.S. dollar- denominated American
Depository Receipts ("ADRs"), which are traded in the United States on exchanges
or over the counter and are sponsored and issued by domestic banks. ADRs
represent the right to receive securities for foreign issuers deposited in a
domestic bank or a correspondent bank. ADRs do not eliminate all the risk
inherent in investing in the securities for foreign issuers. However, by
investing in ADRs rather than directly in foreign issuers' stock, the Series can
avoid currency risks during the settlement period for either purchases or sales.
In general, there is a large, liquid market in the United States for many ADRs.
The information available for ADRs is subject to accounting, auditing and
financial reporting standards of the domestic market or exchange on which they
are traded, which standards are more uniform and more exacting than those to
which many foreign issuers may be subject. The Series may also invest in ADRs
which are not sponsored by domestic banks and present the risks of foreign
investments noted above. The Series may also invest in European Depository
Receipts ("EDRs"), which are receipts evidencing an arrangement with a European
bank similar to
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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.
The Series commenced operations on September 3, 1996 based upon an initial
capitalization of $3 million provided by Phoenix Home Life Mutual Insurance
Company. The ability of the Series to raise additional capital for investment
purposes may directly affect the spectrum of portfolio holdings and performance.
Global Series
The investment objective of the Global Series is long-term capital
appreciation. It is intended that this Series will achieve its objective by
investing at least 65% of its total assets in a globally diversified portfolio
of equity securities of small and medium sized companies.
Companies are selected on the basis of the Adviser's assessment of their
long-term potential to grow rapidly through a variety of factors including the
expansion of existing product lines, introduction of new products, geographic
expansion, market share gains, improved operating efficiency, unexploited
themes, or acquisitions. The Adviser seeks those small 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 Series should be considered as a long-term
investment and not as a vehicle for seeking short-term profits.
Under normal circumstances, business activities in a number of different
foreign countries will be represented in the Series' investments. Under normal
circumstances, at least 65% of the Series' net assets will be invested in three
different countries. The Series may, from time to time, have more than 25% of
its assets invested in any major industrial or developed country which in the
view of the Adviser poses no unique investment risk. The Series may purchase
securities of companies, wherever organized, which have their principal
activities and interests outside the United States. The Series may also invest
its reserves in domestic short-term money- market instruments. In determining
the appropriate distribution of investments among various countries and
geographic regions, the Adviser ordinarily will consider the following factors:
prospects for relative economic growth among foreign countries; expected levels
of inflation; relative price levels of the various capital markets; governmental
policies influencing business conditions; the outlook for currency relationships
and the range of individual investment opportunities available to the
international investor.
The Series may invest in stocks of all types and any variety of industries.
The Series 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 Series' assets may be held in cash or money market instruments including
U.S. Government obligations maturing within one year from the date of purchase
when the Adviser deems a temporary defensive position to be prudent. When the
Series' assets are held in cash or cash equivalents, it is not investing in
securities intended to meet the Series' investment objective.
Risk Considerations
Many of the risks associated with investments in foreign issuers are
described above. Smaller capitalization companies are often companies with
limited operating history as a public company or companies within industries
which have recently emerged due to cultural, economic, regulatory or
technological developments. Given the limited operating history and rapidly
changing fundamental prospects, investment returns from smaller capitalization
companies are highly volatile. Smaller companies may at times find their ability
to raise capital impaired by their size or lack of operating history. Product
lines are often less diversified and subject to competitive threats. Smaller
capitalization stocks are subject to varying patterns of trading volume creating
points in time when the securities are illiquid.
Other factors influencing the performance and volatility of small
capitalization stocks include industry developments within major markets, major
economic trends and developments and general market movements in both the equity
and fixed income markets. Investment in equity securities of foreign small
capitalization companies may involve special risks, particularly from political
and economic developments abroad and differences between foreign and U.S.
regulatory systems. Foreign small capitalization companies may be less liquid
and their prices more volatile than comparable domestic securities issuers.
The Series commenced operations on September 3, 1996 based upon an initial
capitalization of $5 million provided by Phoenix Home Life Mutual Insurance
Company. The ability of the Series to raise additional capital for investment
purposes may directly affect the spectrum of portfolio holdings and performance.
Additional discussion regarding risks involved in investing in each Series
are described in the "Investment Techniques and Related Risks" section below.
INVESTMENT TECHNIQUES AND RELATED RISKS
Foreign Securities. Each Series may purchase foreign securities, including
emerging market securities and those issued by foreign branches of U.S. banks.
The Fund may invest in a broad range of foreign securities including equity,
debt and convertible securities and foreign government securities. In connection
with investments in foreign securities, the Fund may enter into forward foreign
currency exchange contracts for
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the purpose of protecting against losses resulting from fluctuations in exchange
rates between the U.S. dollar and a particular foreign currency denominating a
security which the Fund holds or intends to acquire. The Fund will not speculate
in forward foreign currency exchange contracts.
Investing in the securities of foreign companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
include differences in accounting, auditing and financial reporting standards,
generally higher commission rates on foreign portfolio transactions, the
possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations, political instability which could
affect U.S. investments in foreign countries, difficulty in invoking legal
process abroad and potential restrictions on the flow of international capital.
Additionally, dividends payable on foreign securities may be subject to foreign
taxes withheld prior to distribution. Foreign securities often trade with less
frequency and volume than domestic securities and therefore may exhibit greater
price volatility. Changes in foreign exchange rates will affect the value of
those securities which are denominated or quoted in currencies other than the
U.S. dollar. Many of the foreign securities held by the Fund will not be
registered with the Securities and Exchange Commission and many of the issuers
of foreign securities will not be subject to the Commission's reporting
requirements. Accordingly, there may be less publicly available information
about the securities and about the foreign company or government issuing them
than is available about a domestic company or government entity. Moreover,
individual foreign economies may compare favorably or unfavorably with the
United States economy with respect to such factors as rate of growth, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payment positions, and economic trends in foreign countries may be difficult to
assess.
Particular risks are posed by investments in third world countries or
so-called "emerging markets." These securities may be especially volatile based
on relative economic, political and market conditions present in these
countries. These and other relevant conditions vary widely between emerging
market countries. For instance, certain emerging market countries are either
comparatively undeveloped or are in the process of becoming developed and may
consequently be economically based on a relatively few or closely interdependent
industries. A high proportion of the shares of many emerging market issuers may
also be held by a limited number of large investors trading significant blocks
of securities. While the Fund will strive to be sensitive to publicized
reversals of economic conditions, political unrest and adverse changes in
trading status, unanticipated political and social developments may affect the
values of a Series' investments in such countries and the availability of
additional investments in such countries.
The 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 Fund may use a foreign custodian in connection with its purchases of
foreign securities and may maintain cash and cash equivalents in the care of a
foreign custodian. The amount of cash or cash equivalents maintained in the care
of eligible foreign custodians will be limited to an amount reasonably necessary
to effect the Fund's foreign securities transactions. The use of a foreign
custodian invokes considerations which are not ordinarily associated with
domestic custodians. These considerations include the possibility of
expropriation, restricted access to books and records of the foreign custodian,
inability to recover assets that are lost while under the control of the foreign
custodian, and the impact of political, social or diplomatic developments.
The Fund will calculate its net asset value and complete orders to
purchase, exchange or redeem shares only on a Monday-Friday basis (excluding
holidays on which the New York Stock Exchange is closed). Foreign securities in
which the Fund may invest may be primarily listed on foreign stock exchanges
which may trade on other days (such as Saturdays). As a result, the net asset
value of a Series' portfolio may be affected by such trading on days when a
shareholder has no access to the Fund. See "Net Asset Value."
Financial Futures and Related Options. Each Series may enter into financial
contracts and related options as a hedge against anticipated changes in the
market value of their portfolio securities or securities which they intend to
purchase 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
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contract is originally struck. An option on a financial futures contract gives
the purchaser the right to assume a position in the contract (a long position if
the option is a call and a short position if the option is a put) at a specific
exercise price at any time during the period of the option.
Each Series may purchase and sell financial futures contracts which are
traded on a recognized exchange or board of trade and may purchase exchange- or
board-traded put and call options on financial futures contracts and may enter
into financial futures contracts on foreign currencies. A Series will engage in
transactions in financial futures contracts and related options only for hedging
purposes and not for speculation. In addition, a Series will not purchase or
sell any financial futures contract or related option if, immediately
thereafter, the sum of the cash or U.S. Treasury bills committed with respect to
the Series' existing futures and related options positions and the premiums paid
for related options would exceed 5% of the market value of the Series' total
assets. At the time of purchase of a futures contract or a call option on a
futures contract, 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 Series'
initial margin deposit with respect thereto, will be deposited in a segregated
account with the Fund's custodian bank to collateralize fully the position and
thereby ensure that it is not leveraged. The extent to which a Series may enter
into financial futures contracts and related options may also be limited by
requirements of the Internal Revenue Code for qualification as a regulated
investment company.
Engaging in transactions in financial futures contracts involves certain
risks, such as the possibility of an imperfect correlation between futures
market prices and cash market prices and the possibility that the Adviser could
be incorrect in its expectations as to the direction or extent of various
interest rate movements or foreign currency exchange rates, in which case a
Series' return might have been greater had hedging not taken place. There is
also the risk that a liquid secondary market may not exist, and the loss from
investing in futures contracts is potentially unlimited because the Series may
be unable to close its position. The risk in purchasing an option on a financial
futures contract is that a Series will lose the premium it paid. Also, there may
be circumstances when the purchase of an option on a financial futures contract
would result in a loss to a Series while the purchase or sale of the contract
would not have resulted in a loss.
Foreign Currency Transactions. The value of the assets of a Series as
measured in United States dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control regulations, and
each Series may incur costs in connection with conversions between various
currencies. Each Series will conduct its foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through forward contracts to purchase or sell
foreign currencies. A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. These contracts are traded
directly between currency traders (usually large commercial banks and their
customers). At the time of the purchase of a forward foreign currency exchange
contract, 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 Series' initial margin deposit with
respect thereto, will be deposited in a segregated account with the Fund's
custodian bank to collateralize fully the position and thereby ensure that it is
not leveraged.
When a Series enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may want to establish the United States
dollar cost or proceeds, as the case may be. By entering into a forward contract
in United States dollars for the purchase or sale of the amount of foreign
currency involved in the underlying security transaction, a Series is able to
protect itself against a possible loss between trade and settlement dates
resulting from an adverse change in the relationship between the United States
dollar and such foreign currency. However, this tends to limit potential gains
which might result from a positive change in such currency relationships. A
Series utilizing this investment technique may also hedge its foreign currency
exchange rate risk by engaging in currency financial futures and options
transactions.
When the Adviser believes that the currency of a particular foreign country
may suffer a substantial decline against the United States dollar, it may enter
into a forward contract to sell an amount of foreign currency approximating the
value of some or all of a Series' portfolio securities denominated in such
foreign currency. The forecasting of short-term currency market movement is
extremely difficult and whether such a short-term hedging strategy will be
successful is highly uncertain.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a contract. Accordingly, it may be necessary for
a Series utilizing this investment technique to purchase additional currency on
the spot market (and bear the expense of such purchase) if the market value of
the security is less than the amount of foreign currency the Series is obligated
to deliver when a decision is made to sell the security and make delivery of the
foreign currency in settlement of a forward contract. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received upon
the sale of the portfolio security if its market value exceeds the amount of
foreign currency the Series is obligated to deliver.
If a Series utilizing this investment technique retains the portfolio
security and engages in an offsetting transaction, the Series will incur a gain
or a loss (as described below) to the extent that there has been movement in
forward contract prices. If a Series engages in an offsetting transaction, it
may subsequently enter into a new forward contract to sell the foreign currency.
Should forward prices decline during the
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period between the Series' entering into a forward contract for the sale of a
foreign currency and the date it enters into an offsetting contract for the
purchase of the foreign currency, the Series would realize gains to the extent
the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Series
would suffer a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell. Although such
contracts tend to minimize the risk of loss due to a deadline in the value of
the hedged currency, they also tend to limit any potential gain which might
result should the value of such currency increase. A Series will have to convert
its holdings of foreign currencies into United States dollars from time to time.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies.
Repurchase Agreements. Each Series may invest in repurchase agreements,
either for temporary defensive purposes necessitated by adverse market
conditions or to generate income from its excess cash balances, provided that no
more than 15% of a Series' 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
Series acquires a money market instrument (generally a security issued by the
U.S. Government or an agency thereof, a banker's acceptance or a certificate of
deposit) from a commercial bank, a broker or a dealer, subject to resale to the
seller at an agreed upon price and date (normally the next business day). The
resale price reflects an agreed upon interest rate effective for the period the
instrument is held by the Series and is unrelated to the interest rate on the
underlying instrument. A repurchase agreement acquired by a Series will always
be fully collateralized by the underlying instrument, which will be marked to
market every business day. The underlying instrument will be held for the Fund's
account by the Fund's custodian bank until repurchased. The use of repurchase
agreements involves certain risks such as default by or the insolvency of the
other party to the repurchase agreement. Repurchase agreements will be entered
into only with commercial banks, brokers and dealers considered by the Fund to
be creditworthy.
Lending Portfolio Securities. Each Series may lend its securities to
brokers, dealers and financial institutions provided that the market value of
the securities subject to any such loans does not exceed 25% of the value of the
total assets (taken at market value) of such Series; and receive, as collateral,
cash or cash equivalents which at all times while the loan is outstanding, will
be maintained in amounts equal to at least 102% of the current market value of
the loaned securities. Any cash collateral will be invested in short-term
securities. All fees or charges earned from securities lending will inure to the
benefit of the Series. A Series will have the right to regain record ownership
of loaned securities within six business days and to exercise beneficial rights
such as voting rights and subscription rights. While a securities loan is
outstanding, the Series will receive amounts equal to any interest or other
distributions with respect to the loaned securities. Any agreement to lend
securities shall provide that borrowers are obligated to return the identical
securities or their equivalent at termination of the loan and, that the Series
shall have the right to retain any collateral or use the same to purchase
equivalent securities should the borrower fail to return securities as required.
As with any extension of credit there are risks of delay in recovery of the
loaned securities and, in some cases, loss of rights in the collateral should
the borrower of the securities fail financially. However, loans of portfolio
securities will be made only to firms considered by the Fund to be creditworthy
and when the Adviser believes the consideration to be earned justifies the
attendant risks.
Warrants and Stock Rights. A Series may invest up to 5% of its net assets
in warrants or stock rights valued at the lower of cost or market, but no more
than 2% of its net assets may be invested in warrants or stock rights not listed
on the New York Stock Exchange or American Stock Exchange.
Illiquid Securities. Subject to limitations under governing law, a Series
may invest up to 15% of its net assets (taken at market value at the time of the
investment) in "illiquid securities." For this purpose, illiquid securities
include securities the disposition of which is subject to legal or contractual
restrictions on resale; certain restricted securities salable among qualified
institutional buyers without restriction pursuant to Rule 144A under the
Securities Act of 1933 determined by the Adviser to be illiquid under guidelines
adopted by the Board of Trustees of the Fund. Liquidity relates to the ability
of a Series to sell a security in a timely manner at a price which reflects the
value of that security. Although it is generally the Series' policy to hold
securities until their maturity, the relative illiquidity of some of the Series'
portfo- lio securities may adversely affect the ability of the Series to dispose
of such securities in a timely manner and at a fair price at times when it might
be necessary or advantageous for the Series to liquidate portfolio securities.
The market for less liquid securities tends to be more volatile than the market
for more liquid securities, and market values of relatively illiquid securities
may be more susceptible to change as a result of adverse publicity and investor
perceptions than are the market values of more liquid securities.
INVESTMENT RESTRICTIONS
The investment restrictions to which the Series are subject, together with
the investment objectives of each Series, are fundamental policies of each
Series which may not be changed without the approval of the Series'
shareholders. A detailed description of each Series' investment restrictions is
contained in the Statement of Additional Information.
MANAGEMENT OF THE FUND
The Fund is a mutual fund, known as an open-end, management investment
company. The Board of Trustees ("Trustees") supervises the business affairs and
investments of
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the Fund, which is managed on a daily basis by the Fund's investment adviser.
The Fund was organized as a Massachusetts business trust on May 31, 1996. The
Fund is a series fund currently issuing two series of shares of beneficial
interest. Two classes of shares are offered by each Series.
The Adviser
The Fund's investment adviser is Phoenix-Aberdeen International Advisors,
LLC (the "Adviser"), which is Delaware limited liability company formed in 1996
and having a place of business located at One American Row, Hartford,
Connecticut 06102. The Adviser is jointly owned and managed by PM Holdings,
Inc., a direct subsidiary of Phoenix Home Life Mutual Insurance Company
("Phoenix"), and Aberdeen Fund Managers, Inc., a wholly-owned subsidiary of
Aberdeen Trust plc. Aberdeen Trust plc is a partially-owned subsidiary of
Phoenix. 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 was founded in 1851 and is currently in the business of writing
individual and group life and health insurance and annuities. Phoenix's
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 its operating subsidiaries. As of December
31, 1996, Phoenix Duff & Phelps Corporation, and its advisory subsidiaries, had
approximately $34 billion in assets under management.
Aberdeen Trust was founded in 1983 and through subsidiaries operating from
offices in Aberdeen, Scotland; London, England; Singapore and Fort Lauderdale,
Florida, provides investment management services to unit and investment trusts,
segregated pension funds and other institutional and private portfolios. As of
February 28, 1997, Aberdeen Trust, and its advisory subsidiaries, had
approximately $4.8 billion in assets under management.
The Adviser continuously furnishes an investment program for each Series
and manages the investment and reinvestment of the assets of each Series subject
at all times to the supervision of the Trustees. The Adviser, at its expense,
furnishes to the Fund adequate office space and facilities and certain
administrative services, including the services of any member of its staff who
serves as an officer or trustee of the Fund. Based upon the diverse range of
portfolio holdings contemplated and the expertise available through certain
affiliates, the Adviser 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 Trust plc, and co-owner of the Adviser. Its principal offices are
located at 1 Financial Plaza, Suite 2210, Nations Bank Tower, Fort Lauderdale,
Florida 33394.
As compensation for its services to each Series, the Adviser is entitled to
a fee, payable monthly, at an annual rate of 0.85% of the average daily net
assets of each Series. The Investment Advisory Agreement with the Fund provides
that the Adviser will reimburse the Fund for the amount, if any, by which the
total operating expenses of any Series (including the Adviser's compensation,
but excluding interest, taxes, brokerage fees and commissions and extraordinary
expenses) for any fiscal year exceed the level of expenses which such Series is
permitted to bear under the most restrictive expense limitation (which has not
been waived) imposed on mutual funds by any state in which shares of the Series
are then qualified for sale. For providing cash management and other services to
each Series, as needed, the Adviser pays a monthly fee to PIC equivalent to
0.15% of the average aggregate daily net asset value of each Series. For
providing advisory services with respect to Series' 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 Series so allocated. For
implementing certain portfolio transactions and providing research and other
services to each Series, the Adviser also pays a monthly subadvisory fee to
Aberdeen Fund Managers, Inc. equivalent to 0.40% of the average aggregate daily
net asset value of the New Asia Series and 0.40% of the average daily net asset
value of such assets of the Global Series allocated to it by the Adviser for
management. For assistance in implementing certain portfolio transactions,
providing research and other services to each Series with regard to investments
in particular geographic areas, the Aberdeen Fund Managers Inc. shall engage the
services of its affiliates Abtrust Fund Managers Ltd. and Abtrust Fund Managers
(Singapore) Limited for which such entities shall be paid a fee by Aberdeen Fund
Managers Inc. The total advisory fee of 0.85% of the average daily net assets of
each Series is greater than that for other types of mutual funds; however, the
Trustees have determined that it is similar to fees charged by other mutual
funds whose investments are similar to those of each Series.
The Portfolio Managers
New Asia Series
Mr. Hugh Young is the portfolio manager of the New Asia Series and as such
is primarily responsible for the day-to-day management of the portfolio. Mr.
Young has been employed as an investment director for Abtrust Fund Managers
(Singapore) Limited since 1988. He is also Senior Vice President and portfolio
manager for the Aberdeen New Asia Series of the Phoenix Edge Series Fund. From
1985 to 1988, Mr. Young was the Far East investment director for Sentinel Funds
Management Ltd. From 1984 to 1985, he was investment manager with Fidelity
International Ltd. From 1981 to 1984, he served as investment analyst-overseas
investment manager with MGM Assurance; and from 1980 to 1981, he was an
investment analyst with Beardsley Bishop Escombe, Stockbrokers.
Global Series
The Global Series is managed by an investment committee which is primarily
responsible for the day-to-day management of the portfolio.
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The Financial Agent and Administrator
Phoenix Equity Planning Corporation ("Equity Planning") serves as financial
agent of the Fund and, as such, performs bookkeeping and pricing services and
certain other functions for the Fund. 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 Series of the
Fund, at the following incremental annual rates:
First $100 million .05%
$100 million to $300 million .04%
$300 million to $500 million .03%
Greater than $500 million .015%
(b) a minimum fee based on the predominant type of assets of each Series; and
(c) an annual fee of $12,000 together with an additional $12,000 for any
additional class of shares created in the future. PDP serves as administrator
for the Fund, and, as such, facilitates and provides administrative services for
the Fund. 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 Fund.
The Custodian and Transfer Agent
The custodian of the assets of the Fund is Brown Brothers Harriman & Co.,
40 Water Street, Boston, Massachusetts 02109. The Fund has authorized the
custodian to appoint one or more subcustodians for the assets of the Fund held
outside the United States. The securities and other assets of each Series of the
Fund are held by the Custodian or any subcustodian(s) separate from the
securities and assets of each other series.
Pursuant to a Transfer Agency and Service Agreement with the Fund, Equity
Planning acts as transfer agent for the Fund (the "Transfer Agent") for which it
is paid $14.95 for each designated 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 Fund.
DISTRIBUTION PLANS
Equity Planning is the national distributor of the Fund's shares. Equity
Planning is an indirect, majority-owned subsidiary of Phoenix. The offices of
Equity Planning are located at 100 Bright Meadow Boulevard, P.O. Box 2200,
Enfield, Connecticut 06083-2200. Philip R. McLoughlin is a Trustee and President
of the Fund and a director and officer of Equity Planning. David R. Pepin, a
director and officer of Equity Planning, is an officer of the Fund. G. Jeffrey
Bohne, Nancy G. Curtiss, William E. Keen III, William R. Moyer, William J.
Newman, Leonard J. Saltiel and Thomas N. Steenburg are officers of the Fund and
officers of Equity Planning.
Equity Planning and the Fund have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Fund shares sold subject to an initial sales charge and those
sold subject to a contingent deferred sales charge. The Fund has granted Equity
Planning the exclusive right to purchase from the Fund and resell, as agent,
shares needed to fill unconditional orders for Fund shares. Equity Planning may
sell Fund shares through its registered representatives or through securities
dealers with whom it has sales agreements. Equity Planning may also sell Fund
shares pursuant to sales agreements entered into with banks or bank affiliated
securities brokers who, acting as agent for their customers, place orders for
Fund shares with Equity Planning. Although the Glass-Steagall Act prohibits
banks and bank affiliates from engaging in the business of underwriting,
distributing or selling securities (including mutual fund shares), banking
regulators have not indicated that such institutions are prohibited from
purchasing mutual fund shares upon the order and for the account of their
customers. If, because of changes in law or regulations, or because of new
interpretations of existing law, it is determined that agency transactions of
banks or bank affiliated securities brokers are not permitted under the
Glass-Steagall Act, the Trustees will consider what action, if any, is
appropriate. It is not anticipated that termination of sales agreements with
banks or bank affiliated securities brokers would result in a loss to their
customers or a change in the net asset value per share of a Series of the Fund.
The sale of Fund shares through a bank or a securities broker affiliated
with a bank is not expected to preclude the Fund from borrowing from such bank
or from availing itself of custodial or transfer agency services offered by such
bank.
The Fund has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each Series and each class of shares of the Fund (the plans for
Class A Shares of each Series are referred to as the "Class A Plans", the plans
for Class B Shares of each Series are referred to as the "Class B Plans" and
collectively the "Plans"). The Plans authorize a Series to reimburse Equity
Planning for expenses in connection with the sale and promotion of such Series'
shares and the furnishing of shareholder services. A 12b-1 fee paid by one
Series may be used to finance distribution of the Shares of another Series based
on the number of shareholder accounts within the Fund. Pursuant to the Class A
Plan, a Series is authorized to reimburse Equity Planning up to 0.25% annually
for the average daily net assets of Class A Shares of such Series. Pursuant to
the Class B Plans, a Series is authorized to reimburse Equity Planning monthly
for actual expenses of
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Equity Planning up to 1.00% annually for the average daily net assets of Class B
Shares of such Series.
Although under no contractual obligation to do so, the Fund intends to make
such payments to Equity Planning (i) as commissions for shares of the Series
sold, all or any part of which commissions will be paid by Equity Planning upon
receipt from the Fund to others (who may be other dealers or registered
representatives of Equity Planning), (ii) to enable Equity Planning to pay to
such others maintenance or other fees in respect of the Series' shares sold by
them and remaining outstanding on the Fund's books during the period in respect
of which the fee is paid (the "Service Fee"); and (iii) to enable Equity
Planning to pay to bank affiliated securities brokers maintenance or other fees
in respect of shares of the Series purchased by their customers and remaining
outstanding on the Fund's books during the period in respect of which the fee is
paid. The portion of the above fees paid by the Fund to Equity Planning as
"Service Fees" shall not exceed 0.25% annually of the average daily net assets
of the class to which such fee relates. Payments, less the portion thereof paid
by Equity Planning to others, will be used by Equity Planning for its expenses
of distribution of shares of the Series. If expenses of distribution of shares
of a Series or a Class of a Series exceed payments and any sales charges
retained by Equity Planning, the Fund is not required to reimburse Equity
Planning for excess expenses.
Each Plan requires that at least quarterly the Trustees of the Fund review
a written report with respect to the amounts expended under each Plan and the
purposes for which such expenditures were made. While each Plan is in effect,
the selection and nomination of candidates for Trustees who are not interested
persons of the Fund shall be committed to the discretion of other Trustees who
are not interested persons.
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 Series, the minimum initial investment is $500
and the minimum subsequent investment is $25. However, both the minimum initial
and subsequent investment amounts are $25 for investments pursuant to the
"Investo-Matic" plan, a bank draft investing program administered by Equity
Planning, or pursuant to the Systematic Exchange privilege. Completed
applications for the purchase of shares should be mailed to Phoenix Funds, c/o
State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301.
For investments in connection with a pension, profit sharing or other
employee benefit plan whether or not qualified under Section 401 of the Internal
Revenue Code, including any plan established under the Self Employed Individuals
Tax Retirement Act of 1962 (HR-10) or a program providing for the concurrent
purchase of insurance using a loan secured by shares, the minimum initial and
subsequent investment amounts for any Series are waived provided that the
monthly contribution for each participant is at least $25 per month per
participant. There is a minimum initial investment of $25 for an individual
retirement account (IRA).
In addition, there are no minimum initial and subsequent investment amounts
in connection with the dividends or other distributions from units of a limited
partnership sold by or through Equity Planning to an Individual Retirement
Account (IRA), or in connection with dividends or other distributions by a
Series under certain conditions, which have been directed to any Series for
investment. (See the Statement of Additional Information.)
The Fund offers combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange privileges.
Certain privileges may not be available in connection with Class B Shares. Under
certain circumstances, shares of any other Phoenix Fund may be exchanged for
shares of the same class on the basis of the relative net asset values per share
at the time of the exchange. Exchanges are subject to the minimum initial
investment requirement of the designated Series, Fund, or Portfolio, except if
made in connection with the Systematic Exchange privilege. Class A shareholders
may exchange shares held in book-entry form for an equivalent number (value) of
Class A Shares of any other Phoenix Fund. On Class B Share exchanges, the
contingent deferred sales charge schedule of the original shares purchased
continues to apply.
Alternative Sales Arrangements
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Fund, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the Fund,
the accumulated continuing distribution service fee and contingent deferred
sales charges on Class B Shares prior to conversion would be less than the
initial sales charge and accumulated distribution fee on Class A Shares
purchased at the same time, and to what extent such differential would be offset
by the higher yield of Class A Shares. In this regard, Class A Shares will
normally be more beneficial to the investor who qualifies for certain reduced
initial sales charges. For this reason, 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,
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<PAGE>
fund or foundation has assets of $10,000,000 or more or at least 200 participant
employees. Class B Shares will also not be sold to investors who have reached
the age of 85 because of such persons' expected distribution requirements.
Class A Shares are subject to a lower distribution fee and, accordingly,
pay correspondingly higher dividends per share. However, because initial sales
charges are deducted at the time of purchase, such investors would not have all
their funds invested initially and, therefore, would initially own fewer shares.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time might consider
purchasing Class A Shares because the accumulated continuing distribution
charges on Class B Shares may exceed the initial sales charge on Class A Shares
during the life of the investment. Again, however, such investors must weigh
this consideration against the fact that, because of such initial sales charge,
not all their funds will be invested initially. However, other investors might
determine that it would be more advantageous to purchase Class B Shares to have
all their funds invested initially, although remaining subject to higher
continuing distribution charges and, for a five-year period, being subject to a
contingent deferred sales charge.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A Shares is the net asset value plus a
sales charge, as set forth below. Offering prices become effective at the close
of the general trading session of the New York Stock Exchange. Orders received
by dealers prior to such time are confirmed at the offering price effective at
that time, provided the order is received by Equity Planning prior to its close
of business.
The sales charge varies with the size of the purchase and reduced charges
apply to the aggregate of purchases of the Fund made at one time by "any
person," which term includes an individual, an individual and his/her spouse and
their children under the age of 21, or a trustee or other fiduciary purchasing
shares for a single trust, estate or fiduciary account although more than one
beneficiary is involved.
Class A Shares of the Fund are offered to the public at the net asset value
next computed after the purchase order is received by State Street Bank and
Trust Company plus a maximum sales charge of 4.75% of the offering price (4.99%
of the amount invested) on single purchases of less than $50,000. The sales
charge is reduced on a graduated scale on single purchases of $50,000 or more as
shown below.
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*
- -------------------- ---------------- ---------------- ------------------
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**
- -----------
*Equity Planning will sponsor sales contests, training and educational meetings
and provide to all qualifying dealers, from its own profits and resources,
additional compensation in the form of trips, merchandise or expense
reimbursement. Brokers or dealers other than Equity Planning may also make
customary additional charges for their services in effecting purchases, if they
notify the Fund of their intention to do so. Equity Planning shall also pay
service and retention fees, from its own profits and resources, to qualified
wholesalers in connection with the sale of shares of funds within the Phoenix
family of funds, as defined by the 1940 Act (collectively, the "Phoenix Funds")
(exclusive of Class A Shares of Phoenix Money Market Series) by registered
financial institutions and third party marketers.
**In connection with Class A Share purchases by an account held in the name of a
qualified employee benefit plan with at least 100 eligible employees, Equity
Planning may pay broker/ dealers, from its own resources, an amount equal to 1%
of the first $3 million of purchases, 0.50% on the next $3 million, plus 0.25%
on the amount in excess of $6 million.
In connection with purchases of Class A Shares of $1,000,000 or more (or
subsequent purchases in any amount), excluding purchases by qualified employee
benefit plans as described above, Equity Planning may pay broker/dealers, from
its own profits and resources, a percentage of the net asset value of any shares
sold as set forth below:
Purchase Amount Payment to Broker/Dealer
- ----------------------- --------------------------
$1,000,000-$3,000,000 1%
$3,000,001-$6,000,000 .50 of 1%
$6,000,001 or more .25 of 1%
If part or all of such an investment, including investments by qualified
employee benefit plans, is subsequently redeemed
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within one year of the investment date, the broker/dealer will refund to Equity
Planning any such amounts paid with respect to the investment.
How To Obtain Reduced Sales Charges--Class A Shares
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
Qualified Purchasers. No sales charge will be imposed on sales of shares to
(1) any Phoenix Fund trustee, director or officer; (2) any director or officer,
or any full-time employee or sales representative (who has acted as such for at
least 90 days), of the Adviser, or of Equity Planning; (3) registered
representatives and employees of securities dealers with whom Equity Planning
has sales agreements; (4) any qualified retirement plan exclusively for persons
described above; (5) any officer, director or employee of a corporate affiliate
of the Adviser or Equity Planning; (6) any spouse, child, parent, grandparent,
brother or sister of any person named in (1), (2), (3) or (5) above; (7)
employee benefit plans for employees of the Adviser, Equity Planning and/or
their corporate affiliates; (8) any employee or agent who retires from Phoenix
Home Life, Equity Planning and/or their corporate affiliates; (9) any account
held in the name of a qualified employee benefit plan, endowment fund or
foundation if, on the date of the initial investment, the plan, fund or
foundation has assets of $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 Fund.
In addition, Class A shares purchased by the following investors are not
subject to any Class A sales charge: (1) investment advisors 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 advisors 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 advisor 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 Fund
receives the entire net asset value of its Class A Shares sold to investors.
Equity Planning's commission is the sales charge shown above less any applicable
discount or commission "re-allowed" to selected dealers and agents. Equity
Planning will re-allow discounts to selected dealers and agents in the amounts
indicated in the table above. In this regard, Equity Planning may elect to re-
allow the entire sales charge to selected dealers and agents for all sales with
respect to which orders are placed with Equity Planning. A selected dealer who
receives re-allowance in excess of 90% of such a sales charge may be deemed to
be an "underwriter" under the Securities Act of 1933.
Combination Purchase Privilege. Purchases, either singly or in any
combination, of shares of the Fund or shares of any other Phoenix Fund
(including Class B Shares but excluding Phoenix Money Market Fund Series), if
made at a single time by a single purchaser, will be combined for the purpose of
determining whether the total dollar amount of such purchases entitles the
purchaser to a reduced sales charge on any purchases of Class A Shares. Each
purchase of Class A Shares will then be made at the public offering price, as
described in the then current Prospectus relating to such shares, which at the
time of such purchase is applicable to a single transaction of the total dollar
amount of all such purchases. The term "single purchaser" includes an
individual, or an individual, his spouse and their children under the age of
majority purchasing for his or their own account (including an IRA account)
including his or their own trust, commonly known as a living trust; a trustee or
other fiduciary purchasing for a single trust, estate or single fiduciary
account, although more than one beneficiary is involved; multiple trusts or
403(b) plans for the same employer; multiple accounts (up to 200) under a
qualified employee benefit plan or administered by a third party administrator;
or trust companies, bank trust departments, registered investment advisers, and
similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority and
which are held
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<PAGE>
in a fiduciary, agency, custodial or similar capacity, provided all shares are
held in record in the name, or nominee name, of the entity placing the order.
Letter of Intent. Class A Shares or shares of any other Phoenix Fund
(including Class B Shares but excluding Class A Shares of the Phoenix Money
Market Fund Series) may be purchased by a "single purchaser" (as defined above)
within a period of thirteen months pursuant to a Letter of Intent, in the form
provided by Equity Planning, stating the investor's intention to invest in such
shares during such period an amount which, together with the value (at their
maximum offering prices on the date of the Letter) of the shares of the Fund or
shares of any other Phoenix Fund then owned by such investor, equals a specified
dollar amount. Each purchase of shares made pursuant to a Letter of Intent will
be made at the public offering price, as described in the then current
Prospectus relating to such shares, which at the time of purchase is applicable
to a single transaction of the total dollar amount specified in the Letter of
Intent.
An investor's Letter of Intent is not a binding commitment of the investor
to purchase or a binding obligation of the Fund or Equity Planning to sell a
specified dollar amount of shares qualifying for a reduced sales charge.
Accordingly, out of his initial purchase (and subsequent purchases if
necessary), 5% of the dollar amount of purchases required to complete his
investment is held in escrow in the form of shares (valued at the purchase price
thereof) registered in the investor's name until he completes his investment, at
which time escrowed shares are deposited to his account. If the investor does
not complete his investment and does not within 20 days after written request by
Equity Planning or his dealer pay the difference between the sales charge on the
dollar amount specified in his Letter of Intent and the sales charge on the
dollar amount of actual purchases, the difference will be realized through the
redemption of an appropriate number of the escrowed shares and any remaining
escrowed shares will be deposited to his account.
Right of Accumulation. "Single purchasers" (as defined above) may also
qualify for reduced sales charges based on the combined value of purchases of
either class of shares of the Fund, or any other Phoenix Fund, made over time.
Reduced sales charges are offered to investors whose shares, in the aggregate,
are valued (i.e., the dollar amount of such purchases plus the then current
value (at the public offering price as described in the then current prospectus
relating to such shares) of shares of all Phoenix Funds owned) in excess of the
threshold amounts described in the section entitled "Initial Sales Charge
Alternative--Class A Shares". To use this option, the investor must supply
sufficient account information to Equity Planning to permit verification that
one or more purchases qualify for a reduced sales charge.
Associations. A group or association may be treated as a "single purchaser"
and qualify for reduced initial sales charges under the Combination Privilege
and Right of Accumulation if the group or association (1) has been in existence
for at least six months; (2) has a legitimate purpose other than to purchase
mutual fund shares at a reduced sales charge; (3) facilitates solicitation of
the membership by the investment dealer, thus assisting in effecting economies
of sales effort; and (4) is not a group whose sole organizational nexus is that
the members are credit card holders of a company, policyholders of an insurance
company, customers of a bank or a broker-dealer or clients of an investment
adviser.
Deferred Sales Charge Alternative--Class B Shares
Investors choosing the deferred sales charge alternative purchase Class B
Shares at net asset value per share without the imposition of a sales charge at
the time of purchase. The Class B Shares are subject to a sales charge if
redeemed within five years of purchase.
The contingent deferred sales charge will be imposed on most Class B Share
redemptions made within five years of purchase. The contingent deferred sales
charge alternative permits an investor to choose the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time he
or she expects to hold the shares and other circumstances. Each class of shares
pays ongoing distribution and service fees at an annual rate (i) for Class A
Shares, of up to .25% of the Series aggregate average daily net assets
attributable to the Class A Shares, and (ii) for Class B Shares, of up to 1.00%
of the Series aggregate average daily net assets attributable to the Class B
Shares. Investors should understand that the purpose and function of the
deferred sales charge and distribution and service fees with respect to Class B
Shares are the same as those of the initial sales charge and distribution
service fees with respect to Class A Shares.
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time he or she expects to hold the shares, whether the
investor wishes to receive distributions in cash or to reinvest them in
additional shares of a Series, and other circumstances. Investors should
consider whether, during the anticipated term of their investment in a Series,
the accumulated continuing distribution and service fees and contingent deferred
sales charges on Class B Shares prior to conversion would be more than the
initial sales charge and accumulated distribution and service fees on Class A
Shares purchased at the same time. In this regard, Class A Shares will normally
be more beneficial to the investor who qualifies for reduced initial sales
charges or who maintains a large account size. For this reason, Equity Planning
intends to limit sales of Class B Shares sold to any shareholder to a maximum
total value of $250,000. Class B Shares sold to unallocated qualified employer
sponsored plans will be limited to a total value of $1,000,000. Class B Shares
sold to allocated qualified employer sponsored plans, including 401(k) plans,
will be limited to a total value of $250,000 for each participant provided such
plans utilize an approved participant tracking system. In addition, Class B
Shares will not be sold to any qualified employee benefit plan, endowment fund
or foundation if, on the date of the initial investment, the plan, fund or
foundation has assets of $10,000,000 or more or at least 200 participant
employees.
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<PAGE>
Class B Shares will also not be sold to investors who have reached the age of
85, because of such persons' expected distribution requirements.
Class A Shares are subject to a lower distribution fee and, accordingly,
pay correspondingly higher dividends per share. However, because initial sales
charges are deducted at the time of purchase, such investors do not have all
their funds invested initially and, therefore, initially own fewer shares.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time should consider
purchasing Class A Shares because the accumulated continuing distribution
charges on Class B Shares may exceed the initial sales charge on Class A Shares
during the term of the investment. An investor might determine, however, that it
would be more advantageous to purchase Class B Shares in order that all of his
or her funds be invested initially, although remaining subject to higher
continuing distribution charges and, for a five-year period, being subject to a
contingent deferred sales charge. For example, based on current fees and
expenses, an investor subject to a 4.75% initial sales charge on Class A Shares
would have to hold his investment approximately 7 years for the Class B
distribution fee to exceed the initial sales charge plus the accumulated
distribution fees of Class A Shares. In this example, an investor intending to
maintain his investment for more than 6 years might consider purchasing Class A
Shares.
Proceeds from the contingent deferred sales charge are paid to Equity
Planning and are used to defray the expenses of Equity Planning in connection
with the sale of the Class B Shares, such as the payment of compensation to
selected dealers and agents.
Contingent Deferred Sales Charge. Class B Shares redeemed within five years
of purchase will be subject to a contingent deferred sales charge at the rates
set forth below. The charge will be assessed on an amount equal to the lesser of
the current market value or the cost of the shares being redeemed. Accordingly,
no sales charge will be imposed on increases in net asset value of shares above
the initial purchase price. In addition, no charge will be assessed on shares
derived from the reinvestment of dividends or capital gains distributions.
Equity Planning intends to pay investment dealers a sales commission of 4%
of the sale price of Class B Shares sold by such dealers, subject to future
amendment or termination. Equity Planning will retain all or a portion of the
continuing distribution fee assessed to Class B shareholders and will receive
the entire amount of the contingent deferred sales charge paid by shareholders
on the redemption of shares. These amounts will be used by Equity Planning to
finance the commission plus interest and related marketing expenses.
The amount of the contingent deferred sales charge, if any, will vary
depending on the number of years from the time of payment for the Class B Shares
to the time of redemption of such shares. For the purpose of determining the
number of years from the time of any payment for the purchase of shares, all
payments made during a month will be aggregated and deemed to have been made on
the last day of the prior month.
Contingent Deferred
Sales Charge as
a Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
------------------- -------------------
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 2%
Sixth 0%
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
20
<PAGE>
an established Phoenix Fund qualified plan into a Phoenix Fund IRA by
participants terminating from the qualified plan; and (g) in accordance with the
terms specified under the Systematic Withdrawal Program. If, upon the occurrence
of a death as outlined above, the account is transferred to an account
registered in the name of the deceased's estate, the contingent deferred sales
charge will be waived on any redemption from the estate account occurring within
one year of the death. If the Class B Shares are not redeemed within one year of
the death, they will remain subject to the applicable contingent deferred sales
charge when redeemed.
Class B Shares will automatically convert to Class A Shares of the same
Series based upon relative net asset values of each class after eight years from
the acquisition of the Class B Shares, and as a result, will thereafter be
subject to the lower distribution fee paid under the Class A distribution plan.
Such conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge. The
purpose of the conversion feature is to relieve the holders of Class B Shares
that have been outstanding for a period of time sufficient for Equity Planning
to have been compensated for distribution expenses from most of the burden of
such distribution-related expenses.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares in
a shareholder's fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub- account) are converted to Class A Shares, an equal
pro rata portion of the Class B Shares in the sub-account will also be converted
to Class A Shares.
The conversion of Class B Shares to Class A Shares is subject to the
continuing availability of an opinion of counsel or a ruling of the Internal
Revenue Service ("IRS") to the effect that (i) the assessment of the higher
distribution fees and transfer agency costs with respect to Class B Shares does
not result in any dividends or distributions constituting "preferential
dividends" under the Code, and (ii) that the conversion of shares does not
constitute a taxable event under federal income tax law. The conversion of Class
B Shares to Class A Shares may be suspended if such an opinion or ruling is no
longer available. In that event, no further conversions of Class B Shares would
occur, and shares might continue to be subject to the higher distribution fee
for an indefinite period which may extend beyond the period ending eight years
after the end of the month in which affected Class B Shares were purchased. If
the Fund were unable to obtain such assurances with respect to the assessment of
distribution 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.
Exchange Privileges
Shareholders may exchange Class A or Class B Shares held in book-entry form
for shares of the same class of other Phoenix Funds, provided the following
conditions are met: (1) the shares that will be acquired in the exchange (the
"Acquired Shares") are available for sale in the shareholder's state of
residence; (2) the Acquired Shares are the same class as the shares to be
surrendered (the "Exchanged Shares"); (3) the Acquired Shares will be registered
to the same shareholder account as the Exchanged Shares; (4) the account value
of the Fund whose shares are to be acquired must equal or exceed the minimum
initial investment amount required by that Phoenix Fund after the exchange is
implemented; and (5) if a shareholder has elected not to utilize the Telephone
Exchange Privilege (see below), a properly executed exchange request must be
received by Equity Planning.
Subject to the above requirements for an exchange, a shareholder or his/her
registered representative may, by telephone or written notice, elect to have
Class A or Class B Shares of the Fund exchanged for the same class of shares of
another Phoenix Fund automatically on a monthly, quarterly, semi-annual or
annual basis or may cancel the privilege ("Systematic Exchange").
Shareholders who maintain an account balance in the Fund of at least
$5,000, or $2,000 for tax qualified retirement benefit plans (calculated on the
basis of the net asset value of the shares held in a single account), may direct
that shares of the Fund be automatically exchanged at predetermined intervals
for shares of the same class of another Phoenix Fund. If the shareholder is
participating in the Self Security program offered by Phoenix Home Life, it is
not necessary to maintain the above account balances in order to use the
Systematic Exchange privilege.
Such exchanges will be executed upon the close of business on the 10th of a
month and if the 10th falls on a holiday or weekend, then at the close of
business on the next succeeding business day. The minimum initial and subsequent
amount that may be exchanged under the Systematic Exchange is $25. Systematic
Exchange forms are available from Equity Planning.
Exchanges will be based upon each Fund's net asset value per share next
computed following receipt of a properly executed exchange request, without
sales charge. On Class B Share exchanges, the contingent deferred sales charge
schedule of the original shares purchased continues to apply.
The exchange of shares from one Phoenix Fund to another is treated as a
sale of the Exchanged Shares and a purchase of the Acquired Shares for Federal
income tax purposes. The shareholder may, therefore, realize a taxable gain or
loss. See "Dividends, Distributions and Taxes" for information concerning the
Federal income tax treatment of the disposition of shares.
Because excessive trading can hurt Fund performance and harm shareholders,
the Fund reserves the right to temporarily or permanently terminate 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 fund within any 30 day period. The Distributor
has entered into agreements
21
<PAGE>
with certain dealers and investment advisors permitting them to exchange their
clients' shares by telephone. These privileges are limited under those
agreements and the Distributor has the right to reject or suspend those
privileges. The Fund reserves the right to terminate or modify its exchange
privileges at any time upon giving prominent notice to shareholders at least 60
days in advance.
Each Phoenix Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the prospectus of the fund
into which the exchange is to be made before any exchange requests are made.
Telephone Exchanges
The Telephone Exchange Privilege is available only in States where shares
being acquired may be legally sold. Unless a shareholder elects in writing not
to participate in the Telephone Exchange Privilege, shares for which
certificates have not been issued may be exchanged by calling 800-243- 1574
provided that the exchange is made between accounts with identical
registrations. Under the Telephone Exchange Privilege, telephone exchange orders
may also be entered on behalf of the shareholder by his or her registered
representative.
The Fund and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. In addition to requiring
identical registrations on both accounts, the Transfer Agent will require
address verification and will record telephone instructions on tape. All
exchanges will be confirmed in writing to the shareholder. To the extent that
procedures reasonably designed to prevent unauthorized telephone exchanges are
not followed, the Fund and/or the Transfer Agent may be liable for following
telephone instructions for exchange transactions that prove to be fraudulent.
Broker/dealers other than Equity Planning have agreed to bear the risk of any
loss resulting from any unauthorized telephone exchange instruction from the
firm or its registered representatives. However, the shareholder would bear the
risk of loss resulting from instructions entered by an unauthorized third party
that the Fund and/or the Transfer Agent reasonably believe to be genuine. The
Telephone Exchange Privilege may be modified or terminated at any time on 60
days' notice to shareholders. In addition, during times of drastic economic or
market changes, the Telephone Exchange Privilege may be difficult to exercise or
may be suspended temporarily. In such event an exchange may be effected by
following the procedure outlined for tendering shares represented by
certificate(s).
If a shareholder elects not to use the Telephone Exchange Privilege or if
the shares being exchanged are represented by a certificate or certificates, in
order to exchange shares the shareholder must submit a written request to State
Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. If the
shares are being exchanged between accounts that are not registered identically,
the signature on such request must be guaranteed by an eligible guarantor
institution as defined by the Transfer Agent in accordance with its signature
guarantee procedures. Currently, such procedures generally permit guarantees by
banks, broker dealers, credit union, national securities exchanges, registered
securities associations, clearing agencies and savings associations. Any
outstanding certificate or certificates for the tendered shares must be duly
endorsed and submitted.
NET ASSET VALUE
The net asset value per share of each Series is determined as of the close
of regular 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 a Series is
determined by adding the values of all securities and other assets of the
Series, subtracting liabilities, and dividing by the total number of outstanding
shares of the Series. The total liability allocated to a class, plus that class'
distribution fee and any other expenses allocated solely to that class, are
deducted from the proportionate interest of such class in the assets of the
Series, and the resulting amount of each is divided by the number of shares of
that class outstanding to produce the net asset value per share.
The Series' 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, at the last bid price, generally. Since the Fund does not
price securities on weekends or United States national holidays, the net asset
value of a Series' foreign assets may be significantly affected on days when the
investor has no access to the Fund. 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
Any holder of shares of any Series may require the Fund to redeem his
shares at any time at the net asset value per share next computed after receipt
of a redemption request in proper form by State Street Bank and Trust Company,
P.O. Box 8301, Boston, MA 02266-8301. The redemption request must contain the
name of the Series, the shareholder(s') account name(s) and number(s), the
number of shares to be redeemed and the signature(s) of the registered
shareholder(s). If the shares are registered in the names of individuals singly,
jointly or as custodian under the Uniform Gifts to Minors Act or Uniform
Transfers to Minors Act and the proceeds of the redemption do not exceed $50,000
and are to be paid to the registered owner(s) at the address of record, the
signature(s) on the redemption request need not be guaranteed. Otherwise, the
signature(s) must be guaranteed by an eligible guarantor institution as defined
by the Transfer Agent in accordance with
22
<PAGE>
its signature guarantee procedures. Currently such procedures generally permit
guarantees by banks, broker-dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations. When certificates for shares are in the possession of the
shareholder, they must be mailed or presented, duly endorsed in the full name of
the account, with a written request to Equity Planning that the Fund redeem the
shares, with the signature guaranteed, if required, as described above.
Signature(s) must also be guaranteed on any change of address request submitted
in conjunction with any redemption request.
In addition, each Series maintains a continuous offer to repurchase its
shares, and shareholders may normally sell their shares through securities
dealers, brokers, or agents, who may charge customary commissions or fees for
their services. Payment will be made within seven days after receipt of the duly
endorsed share certificates or telephone request unless the repurchase or
redemption request relates to shares for which good payment has not yet been
collected. For shares purchased by check or via Invest-by-Phone service,
collection of good payment may take up to 15 days after receipt of the check.
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.
Unless a shareholder elects in writing not to participate in the Telephone
Redemption Privilege, shares for which certificates have not been issued may be
redeemed by telephoning (800) 243- 1574 and telephone redemptions will also be
accepted on behalf of the shareholder from his or her registered representative.
The Fund and the Transfer Agent will employ reasonable procedures to confirm
that telephone instructions are genuine. Address and bank account information
will be verified, telephone redemption instructions will be recorded on tape,
and all redemptions will be confirmed in writing to the shareholder. If there
has been an address change within the past 60 days, a telephone redemption will
not be authorized. To the extent that procedures reasonably designed to prevent
unauthorized telephone redemptions are not followed, the Fund and/or the
Transfer Agent may be liable for following telephone instructions for redemption
transactions that prove to be fraudulent. Broker/dealers other than Equity
Planning have agreed to bear the risk of any loss resulting from any
unauthorized telephone redemption instruction from the firm or its registered
representatives. However, the shareholder would bear the risk of loss resulting
from instructions entered by an unauthorized third party that the Fund and/or
the Transfer Agent reasonably believe to be genuine. The Telephone Redemption
Privilege may be modified or terminated at any time without prior notice to
shareholders. In addition, during times of drastic economic or market changes,
the telephone redemption privilege may be difficult to exercise and a
shareholder should submit a written redemption request, as described above.
If the amount of the redemption is $500 or more, the proceeds will be wired
to the shareholder's designated U.S. commercial bank account. If the amount of
the redemption is less than $500, the proceeds will be sent by check to the
address of record on the shareholder's account.
Telephone redemption orders received and accepted by the Transfer Agent on
any day when the Transfer Agent is open for business, will be entered at the
next determined net asset value. However, telephone redemption orders received
and accepted by the Transfer Agent after the close of trading hours on the
Exchange will be executed on the following business day. The proceeds of a
telephone redemption will normally be sent on the first business day following
receipt of the redemption request. However, with respect to the telephone
redemption of shares purchased by check, such requests will only be effected
after the Fund has assured itself that good payment has been collected for the
purchase of shares, which may take up to 15 days. This expedited redemption
privilege is not available to HR-10, IRA and 403(b)(7) Plans.
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. The Fund has elected
to pay in cash all requests for redemption by any shareholder of record, but may
limit such cash in respect to each shareholder during any 90 day period to the
lesser of $250,000 or 1% of the net asset value of the Fund at the beginning of
such period. This election has been made pursuant to Rule 18f-1 under the
Investment Company Act of 1940 and is irrevocable while the Rule is in effect
unless the Securities and Exchange Commission, by order, permits its withdrawal.
In case of a redemption in kind, securities delivered in payment for shares
would be valued at the same value assigned to them in computing the net asset
value per share of the Fund. A shareholder receiving such securities would incur
brokerage costs when he sold the securities. A complete description of
redemption procedures is contained in the Statement of Additional Information.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
Each Series intends to qualify annually as a regulated investment company
under the provisions of Subchapter M of the Internal Revenue Code, as amended
(the "Code") and to distribute annually to shareholders all or substantially all
of its net investment income and net realized capital gains, after utilization
of any capital loss carryovers. If each Series so qualifies, it generally will
not be subject to Federal income tax on the income it distributes.
Each Series will distribute its net investment income to its shareholders
on a semi-annual basis and net realized capital gains, if any, to its
shareholders on an annual basis. Distributions, whether received by shareholders
in shares or in cash, will be taxable to them as income or capital gains.
Distributions of net realized long-term capital gains, if designated as such by
a Series, are taxable to shareholders as long-term capital gains, regardless of
how long they have owned shares in the Series. Shareholders who are not subject
to tax on their income will not be required
23
<PAGE>
to pay tax on amounts distributed to them. Written notices will be sent to
shareholders following the end of each calendar year regarding the tax status of
all distributions made during each taxable year.
Each Series will be subject to a nondeductible 4% excise tax if it fails to
meet certain annual distribution requirements. In order to prevent imposition of
the excise tax, it may be necessary for each Series to make distributions more
frequently than described in the previous paragraph.
All dividends and distributions with respect to the shares of any class of
any Series will be payable in shares of such class of Series at net asset value
or, at the option of the shareholder, in cash. Any shareholder who purchases
shares of a Series prior to the close of business on the record date for a
dividend or distribution will be entitled to receive such dividend or
distribution. Dividends and distributions (whether received in shares or in
cash) are treated either as ordinary income or long- term capital gains for
Federal income tax purposes.
Investment income received by any Series from sources within foreign
countries may be subject to foreign income taxes withheld at the source. If a
Series should have more than 50% of the value of its assets invested in
securities of foreign corporations at the close of its taxable year, which is
the Fund's present intention, the Fund may elect to permit its shareholders to
take, either as a credit or a deduction, their proportionate share of the
foreign income taxes paid.
The foregoing is only a summary of some of the important tax considerations
generally affecting the Series and their shareholders. Shareholders should
consult competent tax advisers regarding specific tax situations.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS regulations, the Fund may be required to withhold 31% of
all reportable payments including any taxable dividends, capital gain
distributions or share redemption proceeds, for any account which does not have
a taxpayer identification number or social security number and certain required
certifications.
The Fund reserves the right to refuse to open an account for any person
failing to provide a taxpayer identification number along with the required
certifications.
The Fund sends to all shareholders, within 31 days after the end of the
calendar year, information which is required by the Internal Revenue Service for
preparing Federal income tax returns. Investors are urged to consult their
attorney or tax adviser regarding specific questions as to Federal, foreign,
state or local taxes.
ADDITIONAL INFORMATION
Organization of the Fund
The Fund was established on May 31, 1996 as a Massachusetts business trust.
The capitalization of the Fund consists solely of an unlimited number of shares
of beneficial interest. The Fund currently offers shares in different Series and
different classes of those Series. Holders of shares of a Series have equal
rights with regard to voting, redemptions, dividends, distributions, and
liquidations with respect to that Series, except that Class B Shares of any
Series, which bear higher distribution fees and certain incrementally higher
expenses associated with the deferred sales arrangement, pay correspondingly
lower dividends per share than Class A Shares of the same Series. Shareholders
of all Series vote on the election of Trustees. On matters affecting an
individual Series (such as approval of an investment advisory agreement or a
change in fundamental investment policies) and on matters affecting an
individual class (such as approval of matters relating to a Plan of Distribution
for a particular class of shares), a separate vote of that Series or class is
required. Trustees will call a meeting when at least 10% of the outstanding
shares so request in writing. If the Trustees fail to call a meeting after being
so notified, the Shareholders may call the meeting. The Trustees will assist the
Shareholders by identifying other shareholders or mailing communications, as
required under Section 16(c) of the Investment Company Act of 1940.
Shares are fully paid, nonassessable, redeemable and fully transferable
when they are issued. Shares do not have cumulative voting rights, preemptive
rights or subscription rights. The assets received by the Fund for the issue or
sale of shares of each Series, and any class thereof and all income, earnings,
profits and proceeds thereof, are allocated to such Series, and Class,
respectively, subject only to the rights of creditors, and constitute the
underlying assets of such Series or class. The underlying assets of each Series
are required to be segregated on the books of account, and are to be charged
with the expenses in respect to such Series and with a share of the general
expenses of the Fund. Any general expenses of the Fund not readily identifiable
as belonging to a particular Series or Class will be allocated by or under the
direction of the Trustees as they determine fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Fund may be personally liable for
debts or claims against the Fund. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Fund and that every written agreement, undertaking or
obligation made or issued by the Fund shall contain a provision to that effect.
The Declaration of Trust provides for indemnification out of the Fund property
for all losses and expenses of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability, which is considered remote, is limited
to circumstances in which the Fund itself would be unable to meet its
obligations.
Additional Inquiries
Inquiries and requests for the Statement of Additional Information, the
Annual Report to Shareholders and the SemiAnnual 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.
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:
Give Social Security Number or Tax Identification
Account Type Number of:
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
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 "Fund") which you should know before investing. Please
read it carefully and retain it for future reference.
The Fund has filed with the Securities and Exchange Commission a Statement of
Additional Information about the Fund, dated April 1, 1997. The Statement
contains more detailed information about the Fund and is incorporated into this
Prospectus by reference. You may obtain a free copy of the Statement by writing
the Fund c/o Phoenix Equity Planning Corporation, 100 Bright Meadow, P.O. Box
2200, Enfield, Connecticut 06083-2200.
Financial information relating to the Fund is contained in the Semi-annual
Report to Shareholders for the period ended January 31, 1997 and is incorporated
into the Statement of Additional Information by reference.
[recycle] Printed on recycled paper using soybean ink
<PAGE>
Phoenix-Aberdeen Series Fund
PO Box 2200
Enfield, CT 06083-2200
--------------
BULK RATE MAIL
U.S. POSTAGE
PAID
SPRINGFIELD, MA
PERMIT NO. 444
---------------
[LOGO] PHOENIX
DUFF&PHELPS
PDP 147 (4/97)
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
101 Munson Street,
Greenfield, MA 01301
Statement of Additional Information
April 1, 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 "Fund") dated April 1, 1997, and should be
read in conjunction with it. The Fund's Prospectus may be obtained by calling
Phoenix Equity Planning Corporation ("Equity Planning" or the "Distributor") at
(800) 243-4361 or by writing to Equity Planning at 100 Bright Meadow Boulevard,
P.O. Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
PAGE
THE FUND (1) ........................................................ 1
INVESTMENT OBJECTIVES AND POLICIES (8) ............................. 1
INVESTMENT RESTRICTIONS (13) ......................................... 5
PERFORMANCE INFORMATION (7) ......................................... 7
PORTFOLIO TRANSACTIONS AND BROKERAGE ................................ 7
SERVICES OF THE ADVISER (14) ......................................... 9
SERVICES OF THE ADMINISTRATOR (15) ................................... 10
NET ASSET VALUE (22) ............................................... 10
HOW TO BUY SHARES (16) ............................................... 10
EXCHANGE PRIVILEGES (21) ............................................ 11
REDEMPTION OF SHARES (22) ............................................ 11
DIVIDENDS, DISTRIBUTIONS AND TAXES (23) ............................. 12
TAX-SHELTERED RETIREMENT PLANS ...................................... 13
THE DISTRIBUTOR (15) ............................................... 13
DISTRIBUTION PLANS (15) ............................................ 14
TRUSTEES AND OFFICERS ............................................... 15
OTHER INFORMATION .................................................. 21
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
<PAGE>
THE FUND
Phoenix-Aberdeen Series Fund (the "Fund") is an open-end management
investment company established as a business trust under the laws of the
Commonwealth of Massachusetts by an Agreement and Declaration of Trust dated May
31, 1996 (the "Declaration of Trust"). The Declaration of Trust authorizes the
assets and shares of the Fund to be divided into series (the "Series"). Each
Series has a different investment objective, invests primarily in certain types
of securities, and is designed to meet different investment needs. In many
respects, each Series operates as if it were a separate mutual fund. The Fund's
Prospectus describes the investment objectives of each Series. The following
discussion supplements the description of each Series' investment policies and
investment techniques in the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of each Series are described in the
"Investment Objectives and Policies" section of the Prospectus. The following
discussion supplements the "Investment Techniques and Related Risks" section of
the Prospectus.
Financial Futures Contracts and Related Options
Each Series may use financial futures contracts and related options to
hedge against changes in the market value of their portfolio securities or
securities which they intend to purchase. A Series may use foreign currency
futures contracts to hedge against changes in the value of foreign currencies.
See "Foreign Currency Transactions" below. Hedging is accomplished when an
investor takes a position in the futures market opposite to the investor's cash
market position. There are two types of hedges-long (or buying) and short (or
selling) hedges. Historically, prices in the futures market have tended to move
in concert with (although in inverse relation to) cash market prices, and prices
in the futures market have maintained a fairly predictable relationship to
prices in the cash market. Thus, a decline in the market value of securities or
the value of foreign currencies may be protected against to a considerable
extent by gains realized on futures contracts sales. Similarly, it is possible
to protect against an increase in the market price of securities which a Series
utilizing this investment technique may wish to purchase in the future by
purchasing futures contracts.
Each Series may purchase or sell any financial futures contracts which are
traded on a recognized exchange or board of trade and may purchase exchange- or
board-traded put and call options on financial futures contracts as a hedge
against anticipated changes in the market value of its portfolio securities or
securities which it intends to purchase. Financial futures contracts consist of
interest rate futures contracts, securities index futures contracts and foreign
currency futures contracts. A clearing corporation associated with the exchange
or board of trade on which a financial futures contract trades assumes
responsibility for the completion of transactions and also guarantees that open
futures contracts will be performed.
In contrast to the situation in which a Series purchases or sells a
security, no security is delivered or received by a Series upon the purchase or
sale of a financial futures contract (although an obligation to deliver or
receive the underlying security in the future is created by such a contract).
Initially, when it enters into a financial futures contract, a Series utilizing
this investment technique will be required to deposit in a segregated account
with the Fund's custodian bank with respect to such Series an amount of cash or
U.S. Treasury bills. This amount is known as initial margin and is in the nature
of a performance bond or good faith deposit on the contract. The current initial
margin deposit required per contract is approximately 5% of the contract amount.
Brokers may establish deposit requirements higher than this minimum, however,
subsequent payments, called variation margin, will be made to and from the
account on a daily basis as the price of the futures contract fluctuates. This
process is known as marking to market.
The writer of an option on a futures contract is required to deposit margin
pursuant to requirements similar to those applicable to futures contracts. Upon
exercise of an option on a futures contract, the delivery of the futures
position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's margin
account. This amount will be equal to the amount by which the market price of
the futures contract at the time of exercise exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on the
futures contract.
Although financial futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed out
before the settlement date without the making or taking of delivery. Closing out
is accomplished by effecting an offsetting transaction. A futures contract sale
is closed out by effecting a futures contract purchase for the same aggregate
amount of securities and the same delivery date. If the sale price exceeds the
offsetting purchase price, the seller immediately would be paid the difference
and would realize a gain. If the offsetting purchase price exceeds the sale
price, the seller immediately would pay the difference and would realize a loss.
Similarly, a futures contract purchase is closed out by effecting a futures
contract sale for the same securities and the same delivery date. If the
offsetting sale price exceeds the purchase price, the purchaser would realize a
gain, whereas if the purchase price exceeds the offsetting sale price, the
purchaser would realize a loss.
Any Series utilizing this investment technique will pay commissions on
financial futures contracts and related options transactions. These commissions
may be higher than those which would apply to purchases and sales of securities
directly, and will be in addition to those paid for direct purchases and sales
of securities.
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Limitations On Futures Contracts and Related Options
Any Series utilizing this investment technique may not engage in
transactions in financial futures contracts or related options for speculative
purposes but only as a hedge against anticipated changes in the market value of
portfolio securities or securities which it intends to purchase or foreign
currencies. A Series utilizing this investment technique may not purchase or
sell financial futures contracts or related options if, immediately thereafter,
the sum of the amount of initial margin deposits on the Series' existing futures
and related options positions and the premiums paid for related options would
exceed 5% of the market value of the Series' total assets. 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 Series' initial margin deposit with
respect thereto will be deposited in a segregated account with the Fund's
custodian bank with respect to such Series to collateralize fully the position
and thereby ensure that it is not leveraged.
The extent to which a Series may enter into financial futures contracts and
related options also may be limited by the requirements of the Internal Revenue
Code of 1986 for qualification as a regulated investment company. See
"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 Series utilizing this investment technique will enter into a futures
or futures related option position only if there appears to be a liquid
secondary market. However, there can be no assurance that a liquid secondary
market will exist for any particular option or futures contract at any specific
time. Thus, it may not be possible to close out a futures or related option
position. In the case of a futures position, in the event of adverse price
movements the Series would continue to be required to make daily margin
payments. In this situation, if the Series has insufficient cash to meet daily
margin requirements, it may have to sell portfolio securities to meet its margin
obligations at a time when it may be disadvantageous to do so. In addition, the
Series may be required to take or make delivery of the securities underlying the
futures contracts it holds. The inability to close out futures positions also
could have an adverse impact on the Series' ability to hedge its positions
effectively.
There are several risks in connection with the use of futures contracts as
a hedging device. While hedging can provide protection against an adverse
movement in market prices, it can also limit a hedger's opportunity to benefit
fully from favorable market movement. In addition, investing in futures
contracts and options on futures contracts will cause a Series to incur
additional brokerage commissions and may cause an increase in a Series' turnover
rate.
The successful use of futures contracts and related options depends on the
ability of the Adviser to forecast correctly the direction and extent of market
movements, interest rates and other market factors within a given time frame. To
the extent market prices remain stable during the period a futures contract or
option is held by a Series or such prices move in a direction opposite to that
anticipated, the Series may realize a loss on the hedging transaction which is
not offset by an increase in the value of its portfolio securities. Options and
futures may also fail as a hedging technique in cases where the movements of the
securities underlying the options and futures do not follow the price movements
of the portfolio securities subject to the hedge. As a result, the Series' total
return for the period may be less than if it had not engaged in the hedging
transaction.
Utilization of futures or options contracts by a Series involves the risk
of imperfect correlation in movements in the price of futures contracts and
movements in the price of the securities or currencies which are being hedged.
If the price of the futures contract moves more or less than the price of the
securities or currency being hedged, the Series will experience a gain or loss
which will not be completely offset by movements in the price of the securities
or currency. It is possible that, where a Series has sold futures contracts to
hedge against decline in the market, the market may advance and the value of
securities held in the Series or the currencies in which its foreign securities
are denominated may decline. If this occurred, the Series would lose a
potentially unlimited amount of money on the futures contract and would also
experience a decline in value in its portfolio securities. Where futures are
purchased to hedge against a possible increase in the prices of securities or
foreign currencies before the Series is able to invest its cash (or cash
equivalents) in securities (or options) in an orderly fashion, it is possible
that the market may decline; if the Series then determines not to invest in
securities (or options) at that time because of concern as to possible further
market decline or for other reasons, the Series will realize a loss on the
futures that would not be offset by a reduction in the price of the securities
purchased.
The market prices of futures contracts may be affected if participants in
the futures market elect to close out their contracts through offsetting
transactions rather than to meet margin deposit requirements. In such cases,
distortions in the normal relationship between the cash and futures markets
could result. Price distortions could also result if investors in futures
contracts opt to make or take delivery of the underlying securities or
currencies rather than to engage in closing transactions because such action
would reduce the liquidity of the futures market. In addition, because, from the
point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the underlying securities market,
increased participation by speculators in the futures market could cause
temporary price distortions. Because of the possibility of price distortions in
the futures market and of the imperfect correlation between movements in the
prices of securities or foreign currencies and movements in the prices of
futures contracts, a correct forecast of market trends may still not result in a
successful hedging transaction.
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Repurchase Agreements
Repurchase agreements, as described in the Fund's Prospectus, will be
entered into only with commercial banks, brokers and dealers considered by the
Fund to be credit-worthy. The Trustees of the Fund will monitor each Series'
repurchase agreement transactions periodically and, with the Fund's investment
adviser will consider standards which the Fund's investment adviser will use in
reviewing the creditworthiness of any party to a repurchase agreement with a
Series. No more than an aggregate of 15% of a Series' net assets, at the time of
investment, will be invested in repurchase agreements having maturities longer
than seven days and other investments subject to legal or contractual
restrictions on resale, or for which there are not readily available market
quotations.
The use of repurchase agreements involves certain risks. For example, if
the seller under a repurchase agreement defaults on its obligation to repurchase
the underlying instrument at a time when the value of the instrument has
declined, a Series may incur a loss upon its disposition. If the seller becomes
insolvent and subject to liquidation or reorganization under bankruptcy or other
laws, a bankruptcy court may determine that the underlying instrument is
collateral for a loan by the Series and therefore is subject to sale by the
trustee in bankruptcy. Finally, it is possible that the Series may not be able
to substantiate its interest in the underlying instrument. While the Trustees of
the Fund acknowledge these risks, it is expected that they can be controlled
through careful structuring of repurchase agreement transactions to meet
requirements for treatment as a purchase and sale under the bankruptcy laws and
through monitoring procedures designed to assure the creditworthiness of
counter-parties to such transactions.
Lending Portfolio Securities
Each Series may lend portfolio securities to broker-dealers and other
financial institutions in amounts up to 25% of the market or other fair value
for its total assets provided that such loans are callable at any time by the
Series utilizing this investment technique and are at all times secured by
collateral held by the Series at least equal to 102% of the market value
determined daily of the loaned securities. The Series utilizing this investment
technique will continue to receive any income on the loaned securities and at
the same time will earn interest on cash collateral (which will be invested in
short-term debt obligations) or a securities lending fee in the case of
collateral in the form of U.S. Government securities. A loan may be terminated
at any time by either the Series or the borrower. Upon termination of a loan the
borrower will be required to return the securities to the Series and any gain or
loss in the market price during the period of the loan would accrue to the
Series. If the borrower fails to maintain the requisite amount of collateral the
loan will automatically terminate and the Series may use the collateral to
replace the loaned securities while holding the borrower liable for any excess
of the replacement cost over the amount of the collateral.
When voting or consent rights which accompany loaned securities pass to the
borrower the Series will follow the policy of calling the loan in whole or in
part as may be appropriate in order to exercise such rights if the matters
involved would have a material effect on the Series' investment in the
securities which are the subject of the loan. The Series may pay reasonable
finders administrative and custodial fees in connection with loans of its
portfolio securities.
As with any extension of credit there are risks of delay in recovery of the
loaned securities and in some cases loss of rights in the collateral should the
borrower of the securities fail financially. However loans of portfolio
securities will be made only to firms considered by the Fund to be creditworthy
and when the Adviser believes the consideration to be earned justifies the
attendant risks.
Foreign Currency Transactions
Each Series may engage in foreign currency transactions. A forward foreign
currency exchange contract involves an obligation to purchase or sell a specific
currency at a future date which may be any fixed number of days from the date of
the contract agreed upon by the parties at a price set at the time of the
contract. These contracts are traded directly between currency traders (usually
large commercial banks) and their customers. No Series intends to enter into
forward contracts if it would have more than 15% of the value of its total
assets committed to such contracts on a regular or continuous basis. No Series
will enter into such forward contracts or maintain a net exposure in such
contracts where it would be obligated to deliver an amount of foreign currency
in excess of the value of its portfolio securities and other assets denominated
in that currency. The Fund's custodian banks will segregate cash or liquid high
quality debt securities in an amount not less than the value of a Series' total
assets committed to forward foreign currency exchange contracts entered into for
the purchase of a foreign currency. If the value of the securities segregated
declines additional cash or securities will be added so that the segregated
amount is not less than the amount of the Series' commitments with respect to
such contracts. Generally, a Series will not enter into forward contracts with
terms longer than one year.
Foreign Currency Options. A foreign currency option provides the option
buyer with the right to buy or sell a stated amount of foreign currency at the
exercise price at a specified date or during the option period. A call option
gives its owner the right, but not the obligation, to buy the currency, while a
put option gives its owner the right, but not the obligation, to sell the
currency. The option seller (writer) is obligated to fulfill the terms of the
option sold if it is exercised. However, either seller or buyer may close its
position during the option period for such options any time prior to expiration.
A call rises in value if the underlying currency appreciates. Conversely, a
put rises in value if the underlying currency depreciates. While purchasing a
foreign currency option can protect a Series utilizing this technique against an
adverse movement
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in the value of a foreign currency, it does not limit the gain which might
result from a favorable movement in the value of such currency. For example, if
a Series were holding securities denominated in an appreciating foreign currency
and had purchased a foreign currency put to hedge against a decline in the value
of the currency, it would not have to exercise its put. Similarly, if a Series
had entered into a contract to purchase a security denominated in a foreign
currency and had purchased a foreign currency call to hedge against a rise in
the value of the currency but instead the currency had depreciated in value
between the date of purchase and the settlement date, the Series would not have
to exercise its call but could acquire in the spot market the amount of foreign
currency needed for settlement.
Foreign Currency Futures Transactions. Each Series may use foreign currency
futures contracts and options on such futures contracts. Through the purchase or
sale of such contracts, a Series may be able to achieve many of the same
objectives attainable through the use of foreign currency forward contracts, but
more effectively and possibly at a lower cost. Unlike forward foreign currency
exchange contracts, foreign currency futures contracts and options on foreign
currency futures contracts are standardized as to amount and delivery period and
are traded on boards of trade and commodities exchanges. It is anticipated that
such contracts may provide greater liquidity and lower cost than forward foreign
currency exchange contracts.
Regulatory Restrictions. To the extent required to comply with Securities
and Exchange Commission Release No. IC-10666, when purchasing a futures contract
or writing a put option, each Series will maintain in a segregated account 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
Series will not enter into a futures contract or purchase an option thereon if
immediately thereafter the initial margin deposits for futures contracts
(including foreign currency and all other futures contracts) held by the Series
plus premiums paid by it for open options on futures would exceed 5% of the
Series' total assets. No Series will engage in transactions in financial futures
contracts or options thereon for speculation, but only to attempt to hedge
against changes in market conditions affecting the values of securities which
the Series holds or intends to purchase. When futures contracts or options
thereon are purchased to protect against a price increase on securities intended
to be purchased later, it is anticipated that at least 75% of such intended
purchases will be completed. When other futures contracts or options thereon are
purchased, the underlying value of such contracts will at all times not exceed
the sum of: (1) accrued profit on such contracts held by the broker; (2) cash or
high quality money market instruments set aside in an identifiable manner; and
(3) cash proceeds from investments due in 30 days.
Emerging Market Securities. Each Series may invest in countries or regions
with relatively low gross national product per capita compared to the world's
major economies, and in countries or regions with the potential for rapid
economic growth (emerging markets). Emerging markets will include any country:
(i) having an "emerging stock market" as defined by the International Finance
Corporation; (ii) with low-to-middle-income economies according to the
International Bank for Reconstruction and Development (the "World Bank"); (iii)
listed in World Bank publications as developing; or (iv) determined by the
Adviser to be an emerging market as defined above. Each Series may also invest
in securities of: (i) companies the principal securities trading market for
which is an emerging market country; (ii) companies organized under the laws of,
and with a principal office in, an emerging market country, or (iii) companies
whose principal activities are located in emerging market countries.
The risks of investing in foreign securities may be intensified in the case
of investments in emerging markets. Securities of many issuers in emerging
markets may be less liquid and more volatile than securities of comparable
domestic issuers. Emerging markets also have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when a portion of the assets of a Series is not invested and
no return is earned thereon. The inability of a Series to make intended security
purchases due to settlement problems could cause a Series to miss attractive
investment opportunities. Inability to dispose of portfolio securities due to
settlement problems could result either in losses to the Fund due to subsequent
declines in value of the portfolio securities or, if the Series has entered into
a contract to sell the security, in possible liability to the purchaser.
Securities prices in emerging markets can be significantly more volatile than in
the more developed nations of the world, reflecting the greater uncertainties of
investing in less established markets and economies. In particular, countries
with emerging markets may have relatively unstable governments, present the risk
of nationalization of businesses, restrictions on foreign ownership, or
prohibitions of repatriation of assets, and may have less protection of property
rights than more developed countries. The economies of countries with emerging
markets may be predominantly based on only a few industries, may be highly
vulnerable to changes in local or global trade conditions, and may suffer from
extreme and volatile debt burdens or inflation rates. Local securities markets
may trade a small number of securities and may be unable to respond effectively
to increases in trading volume, potentially making prompt liquidation of
substantial holdings difficult or impossible at times. Securities of issuers
located in countries with emerging markets may have limited marketability and
may be subject to more abrupt or erratic price movements.
Certain emerging markets may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market's balance of payments or for other reasons, a country could
impose temporary restrictions on foreign capital remittances. A Series could be
adversely affected
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by delays in, or a refusal to grant, any required governmental approval for
repatriation of capital, as well as by the application to the Series any
restrictions on investments. Investments in certain foreign emerging market debt
obligations may be restricted or controlled to varying degrees. These
restrictions or controls may at times preclude investment in certain foreign
emerging market debt obligations and increase the expenses of a Series.
Investing in Small Cap Issuers. Under normal market conditions, the Global
Series 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
Series 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 Series should be considered as a
long-term investment and not as a vehicle for seeking short-term profits, nor
should an investment in the Series 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 Series'
shares. The Series 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 Series may receive interest or dividend payments, or the
proceeds of the sale or redemption of such securities, in the foreign currencies
in which such securities are denominated. In that event, a Series may convert
such currencies into dollars at the then current exchange rate. Under certain
circumstances, however, such as where the Adviser believes that the applicable
rate is unfavorable at the time the currencies are received or the Adviser
anticipates, for any other reason, that the exchange rate will improve, a Series
may hold such currencies for an indefinite period of time.
In addition, a Series may be required to receive delivery of the foreign
currency underlying forward foreign currency contracts it has entered into. This
could occur, for example, if an option written by the Fund is exercised or the
Fund is unable to close out a forward contract. A Series may hold foreign
currency in anticipation of purchasing foreign securities. A Series may also
elect to take delivery of the currencies underlying options or forward contracts
if, in the judgment of the Adviser, it is in the best interest of the Series to
do so. In such instances as well, the Series may convert the foreign currencies
to dollars at the then current exchange rate, or may hold such currencies for an
indefinite period of time.
While the holding of currencies will permit a Series to take advantage of
favorable movements in the applicable exchange rate, it also exposes the Series
to risk of loss if such rates move in a direction adverse to the Series'
position. Such losses could reduce any profits or increase any losses sustained
by the Series from the sale or redemption of securities, and could reduce the
dollar value of interest or dividend payments received. In addition, the holding
of currencies could adversely affect the Series' profit or loss on currency
options or forward contracts, as well as its hedging strategies.
INVESTMENT RESTRICTIONS
The Fund's fundamental policies as they affect any Series cannot be changed
without the approval vote of a majority of the outstanding shares of such
Series, which is the lesser of (i) 67% or more of the voting securities of such
Series present at a meeting if the holders of more than 50% of the outstanding
voting securities of such Series are present or represented by proxy or (ii)
more than 50% of the outstanding voting securities of such Series. A proposed
change in fundamental policy or investment objective will be deemed to have been
effectively acted upon with respect to any Series if a majority of the
outstanding voting securities of that Series votes for the approval of the
proposal as provided above, notwithstanding (1) that such matter has not been
approved by a majority of the outstanding securities of any other Series
affected by such matter and (2) that such matter has not been approved by a
majority of the outstanding voting securities of the Fund.
The following investment restrictions are fundamental policies of the Fund
with respect to all Series and may not be changed except as described above. The
Fund may not:
1. Purchase for any Series securities of any issuer, other than obligations
issued or guaranteed as to principal and interest by the United States
Government or its agencies or instrumentalities, if immediately thereafter (i)
more than 5% of such Series' total assets (taken at market value) would be
invested in the securities of such issuer or (ii) more than 10% of the
outstanding securities of any class of such issuer would be held by such Series
or by all Series of the Fund in the aggregate.
2. Act as securities underwriter except as it technically may be deemed to
be an underwriter under the Securities Act of 1933 in selling a portfolio
security.
3. Purchase securities on margin, but it may obtain short-term credit as
may be necessary for the clearance of purchases and sales of securities.
4. Make short sales of securities or maintain a short position unless
against-the-box or unless at the time of sale the Series owns an equal amount of
such securities.
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5. Make cash loans, except that the Fund may (i) purchase bonds, notes,
debentures or similar obligations which are customarily purchased by
institutional investors whether publicly distributed or not, and (ii) enter into
repurchase agreements, provided that no more than 15% of any Series' net assets
(taken at market value) may be subject to repurchase agreements maturing in more
than seven days.
6. Make securities loans, except that the Fund may make loans of the
portfolio securities of any Series, provided that the market value of the
securities subject to any such loans does not exceed 25% of the value of the
total assets (taken at market value) of such Series.
7. Make investments in real estate (including real estate limited
partnerships) or commodities or commodity contracts, although (i) the Fund may
purchase securities of issuers which deal in real estate or commodities and may
purchase securities which are secured by interests in real estate, specifically,
securities issued by real estate investment trusts and (ii) any Series may
engage in transactions in financial futures contracts and related options,
provided that the sum of the initial margin deposits on such Series' existing
futures positions and the premiums paid for related options would not exceed in
the aggregate 5% of such Series' total assets.
8. Invest in oil, gas or other mineral leases or exploration or development
programs, although the Fund may purchase securities of issuers which engage in
whole or in part in such activities.
9. Invest in puts, calls, straddles and any combination thereof, except
that any Series may (i) write (sell) exchange-traded covered call options on
portfolio securities and on securities indices and engage in related closing
purchase transactions and (ii) invest up to 2% of its total assets in
exchange-traded call and put options on securities and securities indices.
10. Purchase securities of companies for the purpose of exercising
management or control.
11. Participate in a joint or joint and several trading account in
securities.
12. Purchase or retain securities of any issuer if any officer or Trustee
of the Fund, or officer or director of its investment adviser, owns beneficially
more than 1/2 of 1% of the outstanding securities or shares, or both, of such
issuer and all such persons owning more than 1/2 of 1% of such securities or
shares together own beneficially more than 5% of such securities or shares.
13. Borrow money, except that the Fund may (i) borrow money for any Series
for temporary administrative purposes provided that any such borrowing does not
exceed 10% of the value of the total assets (taken at market value) of such
Series and (ii) borrow money for any Series for investment purposes, provided
that any such borrowing for investment purposes with respect to any such Series
is (a) authorized by the Trustees prior to any public distribution of the shares
of such Series or is authorized by the shareholders of such Series thereafter,
(b) is limited to 33 1/3% of the value of the total assets (taken at market
value) of such Series, and (c) is subject to an agreement by the lender that any
recourse is limited to the assets of that Series with respect to which the
borrowing has been made. No Series may invest in portfolio securities while the
amount of borrowing of the Series exceeds 5% of the total assets of such Series.
Borrowing for investment purposes has not been authorized for any Series whose
shares are offered by the Fund.
14. Pledge, mortgage or hypothecate the assets of any Series to an extent
greater than 10% of the total assets (taken at market value) of such Series to
secure borrowings made pursuant to the provisions of item 13 above.
15. Issue senior securities, as defined in the 1940 Act, provided, however,
that such Series may secure borrowings made pursuant to the provisions of item
13 above; and provided, further, that such Series' obligations under
interest-rate swaps, reverse repurchase agreements, when issued,
delayed-delivery and forward-commitment transactions and similar transactions
are not treated as senior securities if covering assets are appropriately
segregated; such Series may not pledge its assets other than to secure such
issuances of senior securities or such borrowings or in connection with hedging
transactions, short sales, when- issued and forward- commitment transactions and
similar investment strategies; for purposes of this restriction, the term "total
assets" includes the proceeds of senior securities issued but is reduced by any
liabilities and indebtedness not constituting senior securities or excluded from
treatment as senior securities by this restriction.
16. Purchase securities of other investment companies, except that a Series
may make such purchase (a) in the open market involving no commission or profit
to a sponsor or dealer (other than customary broker's commissions), provided
that immediately thereafter (i) not more than 10% of the Series' total assets
would be invested in such securities and (ii) not more than 3% of the stock of
another investment company would be owned by the Series, or (b) as part of a
merger, consolidation, or acquisition of assets.
17. Invest in amounts greater than 25% of a Series assets in a particular
"industry".
The Fund may purchase illiquid securities, including repurchase agreements
providing for settlement more than seven days after notice and restricted
securities (securities that must be registered with the Securities and Exchange
Commission before they can be sold to the public) deemed to be illiquid, but
such securities will not constitute more than 15% of each Series' net assets.
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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 Series, 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 Series may, from time to time, include performance information in
advertisements or reports to shareholders or prospective investors. Performance
information in advertisements and sales literature may be expressed as yield on
a class of shares of a Series and as total return for a class of shares such
Series.
Standardized quotations of average annual total return for a class of
shares of a Series will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment over periods of 1, 5 and 10 years
(or up to the life of the class of shares), calculated for each class separately
pursuant to the following formula:
P(1+T)n = ERV (where P = a hypothetical initial payment of $1,000,
T = the average annual total return,
n = the number of years, and
ERV = the ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the period).
All total return figures reflect the deduction of a proportional share of
such class's expenses (on an annual basis), deduction of the maximum initial
sales load in the case of Class A Shares and the maximum contingent deferred
sales charge applicable to a complete redemption of the investment in the case
of Class B Shares, and assume that all dividends and distributions on such class
are reinvested when paid.
Quotations of yield for a class of shares of a Series will be based on all
investment income per share earned during a particular 30-day period (including
dividends and interest), less expenses accrued during the period ("net
investment income"), and is computed by dividing net investment income by the
value of a share on the last day of the period according to the following
formula:
YIELD = 2[((a-b))+ 1)(6) -1]
---
cd
where a = dividends and interest earned during the period by the Series.
b = expenses accrued for the period (net of any reimbursements),
the average daily number of shares outstanding during the period
that were entitled to c = receive dividends, and
d = the maximum offering price per share on the last day of the period.
A Series also may quote annual, average annual and annualized total return
and aggregate total return performance data, for each class of shares of such
Series, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such data
will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate rate
of return calculations.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities,
supervises their execution and negotiates brokerage commissions on behalf of the
Fund. It is the practice of the Adviser to seek the best prices and best
execution of orders and to negotiate brokerage commissions which in the
Adviser's opinion are reasonable in relation to the value of the brokerage
services provided by the executing broker. Brokers who have executed orders for
the Fund are asked to quote a fair commission for their services. If the
execution is satisfactory and if the requested rate approximates rates currently
being quoted by the other brokers selected by the Adviser, the rate is deemed by
the Adviser to be reasonable. Brokers may ask for higher rates of commission if
all or a portion of the securities involved in the transaction are positioned by
the broker, if the broker believes it has brought the Fund an unusually
favorable trading opportunity, or if the broker regards its research services as
being of exceptional value, and payment of such commissions is authorized by the
Adviser after the transaction has been consummated. If the Adviser more than
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<PAGE>
occasionally differs with the broker's appraisal of opportunity or value, the
broker would not be selected to execute trades in the future. The Adviser
believes that the Fund benefits with a securities industry comprised of many
diverse firms and that the long-term interest of shareholders of the Fund is
best served by its brokerage policies which include paying a fair commission
rather than seeking to exploit its leverage to force the lowest possible
commission rate. The primary factors considered in determining the firms to
which brokerage orders are given are the Adviser's appraisal of the firm's
ability to execute the order in the desired manner, the value of research
services provided by the firm, and the firm's attitude toward and interest in
mutual funds in general including the sale of mutual funds managed and sponsored
by the Adviser. The Adviser does not offer or promise to any broker an amount or
percentage of brokerage commissions as an inducement or reward for the sale of
shares of the Fund. Over-the-counter purchases and sales are transacted directly
with principal market-makers except in those circumstances where in the opinion
of the Adviser better prices and execution are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. 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 Fund. While this
information may be useful in varying degrees and may tend to reduce the
Adviser's expenses, it is not possible to estimate its value and in the opinion
of the Adviser it does not reduce the Adviser's expenses in a determinable
amount. The extent to which the Adviser makes use of statistical, research and
other services furnished by brokers is considered by the Adviser in the
allocation of brokerage business but there is no formula by which such business
is allocated. The Adviser does so in accordance with its judgment of the best
interest of the Fund and its shareholders.
Purchases and sales of fixed-income securities will usually be principal
transactions. Such securities often will be purchased or sold from or to dealers
serving as market makers for the securities at a net price. The Fund will also
purchase such securities in underwritten offerings and will, on occasion,
purchase securities directly from the issuer. Generally, fixed-income securities
are traded on a net basis and do not involve brokerage commissions. The cost of
executing fixed-income securities transactions consists primarily of dealer
spreads and underwriting commissions.
In purchasing and selling fixed-income securities, it is the policy of the
Fund to obtain the best results taking into account the dealer's general
execution and operational facilities, the type of transaction involved and other
factors, such as the dealer's risk in positioning the securities involved. While
the Adviser generally seeks reasonably competitive spreads or commissions, the
Fund will not necessarily pay the lowest spread or commission available.
The Fund may, in circumstances in which two or more dealers are in a
position to offer comparable results, give preference to a dealer which has
provided statistical or other research services to the Fund. By allocating
transactions in this manner, the Adviser is able to supplement its research and
analysis with the views and information of other securities firms.
The Fund has 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 consistent with its duty to seek best
execution (which shall include the duty to seek best price) for the Fund. 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
Fund's 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 form 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.
8
<PAGE>
SERVICES OF THE ADVISER
The Fund's investment adviser is Phoenix-Aberdeen International Advisors,
LLC (the "Adviser"), which is Delaware limited liability company formed in 1996
and having a place of business located at One American Row, Hartford,
Connecticut 06102. The Adviser is jointly owned and managed by PM Holdings,
Inc., a direct subsidiary of Phoenix Home Life Mutual Insurance Company
("Phoenix Home Life"), and Aberdeen Fund Managers, Inc., a wholly-owned
subsidiary of Aberdeen Trust plc. 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 currently 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 December 31, 1996, Phoenix Duff & Phelps
corporation, and its advisory subsidiaries, had approximately $34 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 Trust 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
February 28, 1997, Aberdeen Trust, and its advisory subsidiaries, had
approximately $4.8 billion in assets under management.
The investment advisory agreements provide that the Fund will bear all
costs and expenses (other than those specifically referred to as being borne by
the Adviser) incurred in the operation of the Fund. 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 Trustee' and shareholder's meetings including the cost
of printing and mailing proxies, expenses of insurance premiums for fidelity and
other coverages, expenses of repurchases and redemption of shares, expenses of
issue and sale of shares (to the extent not borne by its national distributor
under its agreement with the Fund), expenses of printing and mailing stock
certificates representing shares of the Fund, association membership dues,
charges of custodians, transfer agents, dividend disbursing agents and financial
agents, bookkeeping, auditing and legal expenses. The Fund will also pay the
fees and bear the expense of registering and maintaining the registration of the
Fund 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 prospectus and reports to shareholders. If authorized by
the Trustees, the Fund will also 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 Fund is a party.
The Adviser continuously furnishes an investment program for each Series
and manages the investment and reinvestment of the assets of each Series subject
at all times to the supervision of the Trustees. The Adviser, at its expense,
furnishes to the Fund adequate office space and facilities and certain
administrative services, including the services of any member of its staff who
serves as an officer of the Fund.
As compensation for its services to each Series, the Adviser is entitled to
a fee, payable monthly, at an annual rate of 0.85% of the Series' average daily
net assets. For providing cash management and other services to each Series, as
needed, the Adviser pays a monthly fee to PIC equivalent to 0.15% of the average
aggregate daily net asset value of each Series. For providing advisory services
with respect to Series' 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 Series so allocated. For implementing certain
portfolio transactions and providing research and other services to each Series,
the Adviser also pays a monthly subadvisory fee to Aberdeen Fund Managers, Inc.
equivalent to 0.40% of the average aggregate daily net asset value of The New
Asia Series and 0.40% of the average daily net asset value of such assets of the
Global Series allocated to it by the Adviser for management.
The Investment Advisory Agreement with the Fund provides that the Adviser
will reimburse the Fund for the amount, if any, by which the total operating
expenses of any Series (including the Adviser's compensation, but excluding
interest, taxes, brokerage fees and commissions and extraordinary expenses) for
any fiscal year exceed the level of expenses which such Series is permitted to
bear under the most restrictive expense limitation (which has not been waived)
imposed on mutual funds by any state in which shares of the Series are then
qualified for sale. In the event legislation were to be adopted in each state so
as to eliminate this restriction, the Fund 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 Fund or any shareholder of the Fund for any error of judgment
or mistake of law or for any loss suffered by the Fund or by any shareholder of
the Fund 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 Fund on August 21, 1996. Provided it has
been approved by a vote of the majority of the outstanding shares of a Series of
the Fund
9
<PAGE>
which is subject to its terms and conditions, each agreement continues from year
to year with respect to such Series so long as (1) such continuance is approved
at least annually by the Trustees or by a vote of the majority of the
outstanding shares of such Series and (2) the terms and any renewal of the
agreement with respect to such Series 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
Fund or the relevant adviser, cast in person at a meeting called for the purpose
of voting on such approval. On sixty days' written notice and without penalty
the agreement may be terminated as to the Fund or as to a Series by the Trustees
or by the relevant adviser and may be terminated as to a Series by a vote of the
majority of the outstanding share of such Series. 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 Fund 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 Fund. 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
Fund, monitor the Funds expenses accruals and pay all expenses upon proper
authorization from the Fund, monitor the Fund's 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 Fund as set forth in the Fund's governing
documents, supervise the external audit and tax return preparation by the Fund'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 Fund.
The Agreement continues in effect from year to year provided such
continuance is specifically approved at least annually by the Fund'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 Fund. 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 Series is determined as of the close
of regular 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, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Since the Fund does not price securities on weekends or United States national
holidays, the net asset value of a Series' foreign assets may be significantly
affected on days when the investor has no access to the Fund. The net asset
value per share of a Series is determined by adding the values of all securities
and other assets of the Series, subtracting liabilities, and dividing by the
total number of outstanding shares of the Series. 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 Series, 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 Series which invests
in foreign securities contemporaneously with the determination of the prices of
the majority of the portfolio securities of such Series. 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 Series 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
Shares may be purchased from the Distributor or from investment dealers
having sales agreements with the Distributor at the public offering price (the
net asset value next computed following receipt by State Street Bank and Trust
Company of a purchase application in proper form, plus the applicable sales
charge). The minimum initial purchase is $500 ($25 if using the bank draft
investing program designated "Investo-Matic") and the minimum subsequent
investment is $25.
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EXCHANGE PRIVILEGES
Subject to limitations, shareholders may exchange Class A Shares or Class B
Shares held in book-entry form for shares of the same class of other Phoenix
Funds (as defined in the Fund's current Prospectus), provided the following
conditions are met: (1) the shares that will be acquired in the exchange (the
"Acquired Shares") are available for sale in the shareholder's state of
residence; (2) the Acquired Shares are the same class as the shares to be
surrendered (the "Exchanged Shares"); (3) the Acquired Shares will be registered
to the same shareholder account as the Exchanged Shares; (4) the account value
of the Fund whose shares are to be acquired must equal or exceed the minimum
initial investment amount required by that Fund after the exchange is
implemented; and (5) if a shareholder has elected not to utilize the Telephone
Exchange Privilege (see below), a properly executed exchange request must be
received by Equity Planning.
Subject to the above requirements for an exchange, a shareholder or his/her
registered representative may, by telephone or written notice, elect to have
Class A Shares or Class B Shares of the Fund exchanged for the same class of
shares of another Phoenix Fund automatically on a monthly, quarterly, semiannual
or annual basis or may cancel the privilege ("Systematic Exchange").
Shareholders who maintain an account balance in the Fund of at least $5,000
or $2,000 for tax qualified retirement benefit plans (calculated on the basis of
the net asset value of the shares held in a single account) may direct that
shares of the Fund be automatically exchanged at predetermined intervals for
shares of the same class of another Phoenix Fund. If the shareholder is
participating in the Self Security Program offered by Phoenix Home Life Mutual
Insurance Company, it is not necessary to maintain the above account balances in
order to use the Systematic Exchange Privilege.
Such exchanges will be executed upon the close of business on the 10th of a
month and if the 10th falls on a holiday or weekend, then at the close of
business on the next succeeding business day. The minimum initial and subsequent
amount that may be exchanged under the Systematic Exchange Privilege is $25.
Systematic Exchange Privilege forms are available from Equity Planning.
Exchanges will be based upon each Fund's net asset value per share next computed
following receipt of a properly executed exchange request, without sales charge.
On Class B Share exchanges, the contingent deferred sales charge schedule of the
original shares purchased continues to apply.
The exchange of shares from one fund to another is treated as sale of the
Exchanged Shares and a purchase of the Acquired Shares for Federal income tax
purposes. The shareholder may, therefore, realize a taxable gain or loss. See
"Dividends, Distributions and Taxes" in the Prospectus for information
concerning the Federal income tax treatment of a disposition of shares. It is
the policy of the Adviser to discourage and prevent frequent trading by
shareholders among the Fund and other Phoenix Funds in response to market
fluctuations. The Fund reserves the right to terminate or modify its exchange
privileges at any time upon giving prominent notice to shareholders at least 60
days in advance.
Each Phoenix Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the prospectus of the fund
into which the exchange is to be made before any exchange requests are made.
REDEMPTION OF SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the Exchange is closed, other
than a customary weekend and holiday closing, or, if permitted by rules of the
Securities and Exchange Commission, during periods when trading on the Exchange
is restricted or during any emergency which makes it impracticable for the Fund
to dispose of its securities or to determine fairly the value of its net assets
or during any other period permitted by order of the Securities and Exchange
Commission for the protection of investors. Furthermore, the Transfer Agent will
not mail redemption proceeds until checks received for shares purchased have
cleared, which may take up to 15 days, but payment will be forwarded immediately
upon demand. See the Fund's 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 Fund which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the giving
of not less than 60 days' written notice to the shareholder mailed to the
address of record. During the 60-day period the shareholder has the right to add
to the account to bring its value to $200 or more. See the Fund's current
Prospectus for more information.
Telephone Redemption
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Fund's current Prospectus for
additional information.
Reinvestment Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinstatement of their investment at net
asset value. See the Fund's current Prospectus for more information and
conditions attached to the privilege.
11
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
The 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 Fund 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 Fund generally
must, among other things, (a) derive in each taxable year at least 90% of its
gross income from dividends, interest payments with respect to security loans
and gains from the sale or disposition of stock or securities and certain other
items, (b) derive less than 30% of its gross income each taxable year as gains
(without deduction for losses) from the sale or other disposition of securities
held for less than three months and (c) diversify its holdings so that, at the
end of each quarter of the taxable year (i) at least 50% of the market value of
the Fund's assets are represented by cash, U.S. Government securities,
securities of other regulated investment companies and other securities, with
such other securities of any one issuer limited for purposes of this calculation
to an amount not greater than 5% of the Fund's total assets and 10% of the
outstanding voting securities of any one issuer and (ii) not more than 25% of
the value of its total assets is invested in the securities of any one issuer
(other than U.S. Government securities or the securities of other regulated
investment companies). If, in any taxable year, the Fund does not qualify as a
regulated investment company all of its taxable income will be taxed to the Fund
at corporate rates.
It is the Fund's policy to distribute to its shareholders at least 98% of
net investment taxable income due to the Code imposing a 4% nondeductible excise
tax on a regulated investment company, such as the Fund, if it does not
distribute to its shareholders during the calendar year an amount equal to 98%
of its net ordinary income, with certain adjustments, plus 98% of the Fund's net
capital gains for the 12-month period ending on March 31 of such calendar year.
In addition, an amount equal to any undistributed investment company taxable
income or capital gain net income from the previous reporting year must also be
distributed to avoid the excise tax. The excise tax is imposed on the amount by
which the regulated investment company does not meet the foregoing distribution
requirements. If the Fund has taxable income that would be subject to the excise
tax, the Fund intends to distribute such income so as to avoid payment of the
excise tax.
Under another provision of the Code, any dividend declared by the Fund to
shareholders of record in October, November or December of any year will be
deemed to have been received by, and will be taxable to shareholders as of
December 31, provided that the dividend is actually paid by the Fund in January
of the following year.
Under certain circumstances, the sales charge incurred in acquiring shares
of the Fund may not be taken into account in determining the gain or loss on the
disposition of those shares. This rule applies where shares of the Fund are
disposed of within 90 days after the date on which they were acquired and new
shares of a regulated investment company are acquired without a sales charge or
at a reduced sales charge. In that case, the gain or loss realized on the
disposition will be determined by excluding the charge incurred in acquiring
those shares. This exclusion applies to the extent that the otherwise applicable
sales charge with respect to the newly acquired shares is reduced as a result of
the shareholder having incurred a sales charge initially. The portion of the
sales charge affected by this rule will be treated as a sales charge paid for
the new shares.
Distributions by the Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value of a share below a
shareholder's cost for the share, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by the Fund. The
price of shares purchased at that time may include the amount of the forthcoming
distribution, but the distribution generally would be taxable to them.
Some shareholders may be subject to withholding of Federal income tax on
dividends and redemption payments from the Fund backup withholding at the rate
of 31%. Corporate shareholders and certain other shareholders specified in the
Code generally are exempt from such backup withholding. Generally, shareholders
subject to backup withholding will be (i) those for whom a certified taxpayer
identification number is not on file with the Fund, (ii) those about whom
notification has been received (either by the shareholder or the Fund) from the
IRS that they are subject to backup withholding or (iii) those who, to the
Fund's knowledge, have furnished an incorrect taxpayer identification number.
Generally, to avoid backup withholding, an investor must, at the time an account
is opened, certify under penalties of perjury that the taxpayer identification
number furnished is correct and that he or she is not subject to backup
withholding.
The Fund may invest in certain debt securities that are originally issued
or acquired at a discount. Special rules apply under the Code to the recognition
of income with respect to such debt securities. Under the special rules, the
Fund may recognize income for tax purposes without a corresponding current
receipt of cash. In addition, gain on a disposition of a debt security subject
to the special rules may be treated wholly or partially as ordinary income, not
capital gain.
The Fund intends to accrue dividend income for Federal income tax purposes
in accordance with the rules applicable to regulated investment companies. In
some cases, these rules may have the effect of accelerating (in comparison to
other recipients of the dividend) the time at which the dividend is taken into
account by the Fund as taxable income.
12
<PAGE>
Transactions in options on stock indexes are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by the Fund
during a taxable year or held by the Fund at the close of its taxable year, will
be treated as if sold for their market value. Generally, 60% of any net gain or
loss recognized on the deemed sale, as well as 60% of the gain or loss with
respect to any actual termination (including expiration), will be treated as
long-term capital gain or loss and the remaining 40% will be treated as
short-term capital gain or loss.
In order to qualify under Part I of Subchapter M, the Fund may be
restricted from certain activities, including (i) writing of options on
securities which have been held less than three months, (ii) writing of options
which expire in less than three months, and (iii) effecting closing purchase
transactions with respect to options which have been written less than three
months prior to such transactions.
The Fund may be subject to tax on dividend or interest income received from
securities of non-U.S. issuers withheld by a foreign country at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of tax or exemption from tax on income. It is
impossible to determine the effective rate of foreign tax in advance since the
amount of the Fund's assets to be invested within various countries is not
known. The Fund intends to operate so as to qualify for treaty tax benefits
where applicable. To the extent that the Fund is liable for foreign income taxes
withheld at the source, the Fund may operate so as to meet the requirements of
the Code to "pass through" to the Fund's shareholders tax benefits attributable
to foreign income taxes paid by the Fund. If more than 50% of the value of the
Fund's total assets at the close of its taxable year is comprised of securities
issued by foreign corporations, the Fund may elect with the IRS to "pass
through" to the Fund's shareholders the amount of foreign income taxes paid by
the Fund. Pursuant to this election, shareholders will be required to (i)
include in gross income, even though not actually received, their respective pro
rata share of foreign taxes paid by the Fund; (ii) treat their pro rata share of
foreign taxes as paid by them; (iii) either deduct their pro rata share of
foreign taxes in computing their taxable income, or use such share as foreign
tax credit against U.S. income tax (but not both). No deduction for foreign
taxes may be claimed by a non-corporate shareholder who does not itemize
deductions. The Fund may meet the requirements to "pass through" to its
shareholders foreign income taxes paid, but there can be no assurance that the
Fund will be able to do so. Each shareholder will be notified within 60 days
after the close of each taxable year of the Fund if the foreign taxes paid by
the Fund will "pass through" for that year, and, if so, the amount of each
shareholder's pro rata share (by country) of (i) the foreign taxes paid and (ii)
the Fund's gross income from foreign sources. Shareholders who are not liable
for Federal income taxes will not be affected by such "pass through" of foreign
tax credits.
If the Fund invests in stocks of certain passive foreign investment
companies, the Fund may be subject to U.S. Federal income taxation on a portion
of the "excess distribution" with respect to, or gain from, the disposition of
such stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the Fund's holding period for the stock. The distribution
or gain so allocated to any taxable year of the excess distribution or
disposition would be taxed to the Fund at the highest ordinary income rate in
effect for such year, and the tax would be further increased by an interest
charge to reflect the value of the tax deferral deemed to have resulted from
ownership of foreign company's stock. Any amount of distribution or gain
allocated to the taxable year of the distribution or disposition would be
included in the Fund's investment company taxable income and, accordingly, would
not be taxable to the Fund to the extent distributed by the Fund as a dividend
to its shareholder.
The foregoing is a general summary of the applicable provisions of the Code
and Treasury Regulations presently in effect. For the complete provisions,
reference should be made to the pertinent Code sections and the Treasury
Regulations promulgated thereunder. The Code and these Treasury Regulations are
subject to change by legislative or administrative action either prospectively
or retroactively. Distributions and the transactions referred to above may be
subject to state and local income tax, and the treatment thereof may differ from
the Federal tax treatment discussed herein. Shareholders are advised to consult
with their tax advisor or attorney.
TAX-SHELTERED RETIREMENT PLANS
Shares of the Fund and other Phoenix Funds may be offered in connection
with employer-sponsored 401(k) plans. Adviser and its affiliates may provide
administrative services to these plans and to their participants, in addition to
the services that Adviser and its affiliates provide to the Phoenix Funds, and
receive compensation therefor. For information on the terms and conditions
applicable to employee participation in such plans, including information on
applicable plan administrative charges and expenses, prospective investors
should consult the plan documentation and employee enrollment information which
is available from participating employers.
THE DISTRIBUTOR
Pursuant to a Distribution Agreement with the Fund, Phoenix Equity Planning
Corporation (the "Distributor"), a direct wholly- owned subsidiary of Phoenix
Duff & Phelps Corporation and an affiliate of Adviser, serves as distributor for
the Fund. The address of the Distributor is P.O. Box 2200, 100 Bright Meadow
Blvd., Enfield, Connecticut 06083-2200. As such, the Distributor conducts a
continuous offering pursuant to a "best efforts" arrangement requiring the
Distributor to take and pay for only such securities
13
<PAGE>
as may be sold to the public. The fees are used to compensate sales and services
person for selling shares of the Fund and for providing services to
shareholders. In addition, the fees are used to compensate the Distributor for
sales and promotional activities.
The Distribution Agreement may be terminated at any time on not more than
60 days' written notice, without payment of a penalty, by the Distributor, by
vote of a majority of the outstanding voting securities of the Fund, or by vote
of a majority of the Trustees of the Fund who are not "interested persons" of
the Fund and who have no direct or indirect financial interest in the operation
of the Distribution Plan or in any related agreements. The Distribution
Agreement will terminate automatically in the event of its assignment.
Dealers with whom the Distributor has entered into sales agreements receive
sales charges in accordance with the commission table set forth in the
Prospectus. The Distributor may from time to time pay, from its own resources or
pursuant to the Plans of Distribution described below, a bonus or other
incentive to dealers (other than the Distributor) which employ a registered
representative who sells a minimum dollar amount of the shares of the Fund
during a specific period of time. Such bonus or other incentive may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and members of their
families to places within or without the United States or other bonuses such as
gift certificates or the cash equivalent of such bonuses. The Distributor may,
from time to time, reallow the entire portion of the sales charge which it
normally retains to individual selling dealers. However, such additional
reallowance generally will be made only when the selling dealer commits to
substantial marketing support such as internal wholesaling through dedicated
personnel, internal communications and mass mailings.
Equity Planning also acts as financial agent of the Fund and as such
performs administrative, bookkeeping and pricing functions for the Fund. As
compensation for such services, effective as of January 1, 1997, Equity Planning
is entitled to a fee, payable monthly and based upon the average of the
aggregate daily net asset values of each Series, at the following incremental
annual rates:
First $100 million .05% plus a minimum fee
$100 million to $300 million .04%
$300 million to $500 million .03%
Greater than $500 million .015%
A minimum fee applies to each Series as follows:
New Asia Series $70,000
Global Small Cap Series $70,000
In addition, Equity Planning is paid $12,000 for each class of shares of
each Series beyond one.
DISTRIBUTION PLANS
The Fund has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each class of shares of the Fund (the "Class A Plan," the "Class B
Plan," and collectively the "Plans"). The Plans permit the Fund to reimburse the
Distributor for expenses incurred in connection with activities intended to
promote the sale of shares of each class of shares of the Fund.
Pursuant to the Class A Plan, each Series may reimburse the Distributor for
actual expenses of the Distributor up to 25% of the average daily net assets of
the Class A Shares for such Series. Under the Class B Plan, each Series may
reimburse the Distributor monthly for actual expense of the Distributor up to
1.00% of the average daily net assets of the Class B Shares of such Series.
Expenditures under the Plans shall consist of: (i) commissions to sales
personnel for selling shares of the Fund: (ii) compensation, sales incentives
and payments to sales, marketing and service personnel; (iii) payments to
broker-dealers and other financial institutions which have entered into
agreements with the Distributor in the form of the Dealer Agreement for Phoenix
Funds for services rendered in connection with the sale and distribution of
shares of the Fund; (iv) payment of expenses incurred in sales and promotional
activities, including advertising expenditures related to the Fund; (v) the
costs of preparing and distributing promotional materials; (vi) the cost of
printing the Fund's Prospectus and Statement of Additional Information for
distribution to potential investors; and (vii) such other similar services that
the Trustees of the Fund determines are reasonably calculated to result in the
sale of shares of the Fund; provided, however, a portion of such amount paid to
the Distributor, which portion shall be equal to or less than 0.25% annually of
the average daily net assets of the Fund's shares may be paid for reimbursing
the costs of providing services to the shareholders, including assistance in
connection with inquiries related to shareholder accounts (the "Service Fee").
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor, such
as services to the Fund's shareholders; or services providing the Fund with more
efficient methods of offering shares to coherent groups of clients, members or
prospects of a participant; or services permitting bulking of purchases or
sales, or transmission of such purchases or sales by computerized tape or other
electronic equipment; or other processing.
On a quarterly basis, the Trustees of the Fund review a report on
expenditures under the Plans and the purposes for which expenditures were made.
The Trustees conduct an additional, more extensive review annually in
determining whether the Plans
14
<PAGE>
will be continued. By its terms, continuation of the Plans from year to year is
contingent on annual approval by a majority of the Trustees of the Fund and by a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) and who have no direct or indirect financial interest in the operation
of the Plans or any related agreements (the "Plan Trustees"). The Plans provide
that they may not be amended to increase materially the costs which the Fund may
bear pursuant to the Plans without approval of the shareholders of the Fund and
that other material amendments to the Plans must be approved by a majority of
the Plan Trustees by vote cast in person at a meeting called for the purpose of
considering such amendments. The Plans further provides that while it is in
effect, the selection and nomination of Trustees who are not "interested
persons" shall be committed to the discretion of the Trustees who are not
"interested persons." The Plans may be terminated at any time by vote of a
majority of the Plan Trustees or a majority of the outstanding shares of the
Fund.
TRUSTEES AND OFFICERS
The following table sets forth information concerning the Trustees and
executive officers of the Fund, including their principal occupations during the
past five years. Unless otherwise noted, the address of each Trustee and
executive officer is One American Row, Hartford, Connecticut 06115.
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
- -------------------------- ------------------- ------------------------------------------------------------------------
<S> <C> <C>
C. Duane Blinn (69) Trustee Partner in the law firm of Day, Berry & Howard. Director/Trustee,
Day, Berry & Howard Phoenix Funds (1980-present). Trustee, Phoenix Duff & Phelps
City Place Institutional Mutual Funds (1996-present). Director/Trustee, the
Hartford, CT 06103 National Affiliated Investment Companies (until 1993).
Robert Chesek (62) Trustee Trustee/Director, Phoenix Funds (1981-present) and Chairman (1989-
49 Old Post Road 1994). Trustee, Phoenix Duff & Phelps Institutional Mutual Funds
Wethersfield, CT 06109 (1996-present). Director/Trustee, the National Affiliated Investment
Companies (until 1993). Vice President, Common Stock, Phoenix Home
Life Mutual Insurance Company (1980-1994).
E. Virgil Conway (67) Trustee Chairman (1992-present), Metropolitan Transportation Authority.
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 Fund for Fannie Mae
Mortgage Securities (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), and The Harlem Youth Development Foundation
(1987-present). Chairman, Audit Committee of the City of New York
(1981-1996). Director/Trustee, the National Affiliated Investment
Companies (until 1993). Director/Trustee, Phoenix Funds
(1993-present). Trustee, 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). Director, Accuhealth (1994-present), Trism, Inc. (1994-
present), and Realty Foundation of New York (1972-present).
Chairman, New York Housing Partnership Development Corp. (1981-
present), and Blackrock Fannie Mae Mortgage Securities Fund
(Advisory Director) (1989-1996) and Advisory Director, Fund
Directions (1993-present). Chairman, Financial Accounting Standards
Advisory Council (1992-1995).
Harry Dalzell-Payne (67) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee, Phoenix Duff
330 East 39th Street & Phelps Institutional Mutual Funds (1996-present). Director, Duff &
Apartment 29G Phelps Utilities Tax-Free Income Inc. and Duff & Phelps Utility and
New York, NY 10016 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.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
- ---------------------------- ------------------ ------------------------------------------------------------------------
<S> <C> <C>
*Francis E. Jeffries (66) Trustee Director and Chairman of the Board, Phoenix Duff & Phelps
6585 Nicholas Blvd. Corporation (1995-present). Director/Trustee, Phoenix Funds (1995-
present). Trustee, Phoenix Duff & Phelps Institutional Mutual Funds
Naples, FL 33963 (1996-present). Director, Duff & Phelps Utilities Income Fund (1987-
present), Duff & Phelps Utilities Electric Company (1984-present).
Director (1989-1995), Chairman of the Board (1993-1995), President
(1989-1993), and Chief Executive Officer (1989-1995), Duff & Phelps
Corporation.
Leroy Keith, Jr. (58) Trustee Chairman and Chief Executive Officer, Carson Products Company
64 Ross Road (1995-present). Director/Trustee, Phoenix Funds (1980-present).
Savannah, GA 31405 Trustee, Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present). Director Equifax Corp. (1991-present) and Keystone
International Fund, Inc. (1989-present). Trustee, Keystone Liquid
Trust, Keystone Tax Exempt Trust, Keystone Tax Free Fund, Master
Reserves Tax Free Trust, and Master Reserves Trust. Director/Trustee,
the National Affiliated Investment Companies (until 1993). Director,
Blue Cross/Blue Shield (1989-1993) and First Union Bank of Georgia
(1989-1993). President, Morehouse College (1987-1994). Chairman and
Chief Executive Officer, Keith Ventures (1994-1995).
*Philip R. McLoughlin (50) Trustee and Director, Vice Chairman and Chief Executive Officer, Phoenix Duff &
President Phelps Corporation (1995-present). Director (1994-present) and
Executive Vice President, Investments, Phoenix Home Life Mutual
Insurance Company (1988-present). Director/Trustee and President,
Phoenix Funds (1989-present). Trustee, 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, 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), and Director, Phoenix Charter Oak Trust Company
(1996-present). Director/ Trustee, the National Affiliated Investment
Companies (until 1993). Director (1994-present), Chairman (1996-
present) and Chief Executive Officer (1995-1996), National Securities
& Research Corporation, and Director and President, Phoenix
Securities Group, Inc. (1993-1995). Director (1992-present) and
President (1992-1994) W.S. Griffith & Co., Inc. and Director (1992-
1995) and President (1992-1994), Townsend Financial Advisers, Inc.
Director and Vice President, PM Holdings, Inc. (1985-present).
Everett L. Morris (68) Trustee Vice President, W.H. Reaves and Company (1993-present). Director/
164 Laird Road Trustee, Phoenix Funds (1995-present). Trustee, Duff & Phelps Mutual
Colts Neck, NJ 07722 Funds (1994-present). Trustee, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Director, Duff & Phelps Utilities Tax-
Free Income Inc. (1991-present), Incorporated (1989-1993). Senior
Executive Vice President and Chief Financial Officer, Public Service
Electric and Gas Company (1986-1992). Director, First Fidelity Bank,
N.A., N.J. (1984-1991).
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
- ----------------------------- ------------------ ----------------------------------------------------------------------------
<S> <C> <C>
*James M. Oates (50) Trustee Managing Director, The Wydown Group (1994-present). Chairman,
60 State Street IBEX Capital Markets LLC (1997-present). Director Phoenix Duff &
Suite 950 Phelps Corporation (1995-present). Director/Trustee, Phoenix Funds
Boston, MA 02109 Chairman, IBEX Capital Markets LLC (1987-present). Trustee, Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Govett Worldwide Opportunity Funds, Inc. (1991-present), Blue Cross
& Blue Shield of New Hampshire (1994-present), Stifel Financial
(1996-present), Investors Bank and Trust Corporation (1995-present),
Investors Financial Services Corporation (1995-present) and Plymouth
Rubber Co. (1995-present). Member, Chief Executives Organization
(1996- present). Director/Trustee, the National Affiliated Investment
Companies (until 1993). Director (1984-1994), President (1984-1994)
and Chief Executive Officer (1986-1994).
*Calvin J. Pedersen (55) Trustee Director and President, Phoenix Duff & Phelps Corporation (1995-
55 East Monroe Street present). Director/Trustee, Phoenix Funds (1984-present). Trustee,
Suite 3600 Phoenix Duff & Phelps Institutional Mutual Funds (1996-present).
Chicago, IL 60603 President and Chief Executive Officer Duff & Phelps Utilities Tax-Free
Income Inc. (1995-present), Duff & Phelps Utilities Income Fund.
(since inception), and Duff & Phelps Utility and Corporate Bond Trust
Inc. (1995-present). Director (1986-1995), President (1993-1995) and
Executive Vice President (1992-1993), Duff & Phelps Corporation.
Philip R. Reynolds (69) Trustee Director/Trustee, Phoenix Funds (1984-present). Trustee, Phoenix Duff
43 Montclair Drive & Phelps Institutional Mutual Funds (1996-present). Director, Vestaur
West Hartford, CT 06107 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. (68) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee, Phoenix Duff
134 Lake Street & Phelps Institutional Mutual Funds (1996-present). Director, Boston
P.O. Box 909 Edison Company Company (1972-present), Landauer, Inc. (medical
Sherborn, MA 01770 services) (1970-present), Tech Ops./Sevcon, Inc. (electronic controllers)
(1987-present), Key Energy Group (oil rig service) (1988-1994), and Mark IV
Industries (diversified manufacturer) (1985-present). Director/ Trustee, the
National Affiliated Investment Companies (until 1993).
Richard E. Segerson (51) Trustee Director/Trustee, Phoenix Funds, (1993-present). Trustee, Phoenix Duff
102 Valley Road & Phelps Institutional Mutual Funds (1996-present). Managing
New Canaan, CT 06840 Director, Mullin Associates (1993-present). Vice President and General
Manager, Coates & Clark, Inc. (previously Tootal American, Inc.)
(1991-1993). Director/ Trustee, the National Affiliated Investment
Companies (1984-1993).
Lowell P. Weicker, Jr. (65) Trustee Trustee/Director, the Phoenix Funds (1995-present). Trustee, Phoenix
731 Lake Avenue Duff & Phelps Institutional Mutual Funds (1995-present). Director,
Greenwich, CT 06830 UST Inc. (1995-present), HPSC Inc. (1995-present). Duty Free
International (1997-present). Compuserve (1996-present). Visiting
Professor, University of Virginia (1997-present). Chairman, Dresing,
Lierman, Weicker (1995-1996). Former Governor of the State of
Connecticut (1991-1995).
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
- ------------------------------ ------------------ -----------------------------------------------------------------------
<S> <C> <C>
Michael E. Haylon (39) Executive Director and Executive Vice President-Investments, Phoenix Duff &
Vice Phelps Corporation (1995-present). Senior Vice President, Securities
President Investments, Phoenix Home Life Mutual Insurance Company (1993-
1995). Executive Vice President, the Phoenix Funds (1995-present),
and Vice President, Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director (1994-present), President (1995-present), and
Executive Vice President (1994-1995), Phoenix Investment Counsel,
Inc. Director (1994-present), President (1996-present) and Executive
Vice President (1994-1996), National Securities & Research
Corporation. Director, Phoenix Equity Planning Corporation (1995-
present). Various other positions with Phoenix Home Life Insurance
Company (1990-1993).
David R. Pepin (54) Executive Executive Vice President, Phoenix Funds, Phoenix Duff & Phelps
Vice Institutional Mutual Funds (1996-present). Director, Phoenix
President Investment Counsel, Inc., National Securities & Research Corporation
and Phoenix Equity Planning Corporation (1996-present). Executive
Vice President, Mutual Fund Sales and Operations, Phoenix Equity
Planning Corporation (1996-present). Managing Director, Phoenix-
Aberdeen International Advisors, LLC (1996-present). Executive Vice
President (1996-present) and Director (1997-present), Phoenix Duff &
Phelps Corporation. Vice President, Phoenix Home Life Mutual
Insurance Company (1994-1995). Vice Corporation (1980-1994).
Chong Yoon Chou (29) Senior Investment Manager, Abtrust Fund Managers (Singapore) LTD (1994-
Abtrust Fund Managers Vice present).
(Singapore) LTD President
88A Circular Road
Singapore 049439
Christopher D. Fishwick (35) Senior Investment Director, Abtrust Fund Managers Limited (1991-present).
Abtrust Fund Managers LTD Vice Director, Phoenix-Aberdeen International Advisors LLC (1996-present).
99 Charterhouse Street President
London EC1M 6AB
England
Vivek Gandhi (27) Senior Investment Manager, Abtrust Fund Managers (Singapore) LTD (1994-
Abtrust Fund Managers Vice present).
(Singapore) LTD President
88A Circular Road
Singapore 049439
Peter Hames (37) Senior European Fund Manager (1992) and Far East Investment Director
Abtrust Fund Managers LTD Vice (1992-present), Abtrust Fund Managers (Singapore) Limited.
88A Circular Road President
Singapore 049439
Gawaine Lewis (33) Senior Investment Manager, Aberdeen Fund Manager, Inc. (1995-present).
Aberdeen Fund Managers Inc. Vice Investment Manager, Abtrust Fund Managers Limited (1994-1995).
1 Financial Plaza President Portfolio Manager, CIM Fund Managers (1991-1994).
Ft. Lauderdale, FL 33394
Philip Mottram (40) Senior Investment Manager, Abtrust Fund Managers Limited (1995-present).
Abtrust Fund Managers LTD Vice Portfolio Manager, Liberty Life (1991-1995).
10 Queen's Terrace President
Aberdeen AB10 1QG
Scotland
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
- -------------------------- ------------------ -------------------------------------------------------------------------
<S> <C> <C>
William J. Newman (58) Senior Executive Vice President (1995-present) and Chief Investment
Vice Strategist (1996-present), Phoenix Investment Counsel, Inc. Senior Vice
President President (1995-1996), Executive Vice President and Chief Investment
Strategist (1996-present), National Securities & Research Corporation.
Senior Vice President, Phoenix Equity Planning Corporation (1995-
1996). Vice President, Common Stock and Chief Investment Strategist,
Phoenix Home Life Insurance Company (April, 1995-November, 1995).
Senior Vice President, Phoenix Strategic Equity Series Fund (1996-
present), The Phoenix Edge Series Fund (1996-present), Phoenix
Multi-Portfolio Fund (1995-present), Phoenix Income and Growth Fund
(1996-present), Phoenix Series Fund (1995-present), Phoenix Strategic
Allocation Fund, Inc. (1996-present), Phoenix Worldwide Opportunities
Fund (1996-present), and Phoenix Duff & Phelps Institutional Funds
(1996-present). Chief Investment Strategist, Kidder, Peabody Co., Inc.
(1993-1994). Managing Director, Equities, Bankers Trust Company
(1991-1993).
Hugh Young (38) Senior Far East Investment Director, Abtrust Fund Managers (Singapore)
Abtrust Fund Managers Vice Limited (1988-present). Managing Director, Abtrust Fund Managers
(Singapore) LTD President (Singapore) Limited (1992-present). Director, Phoenix-Aberdeen
88A Circular Road International Advisors LLC (1996-present). Senior Vice President and
Singapore 049439 Portfolio Manager, The Phoenix Edge Series Fund (1996-present).
Director, Abtrust Asian 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.
Shahreza Yusof (24) Senior Investment Manager, Abtrust Fund Managers (Singapore) LTD (1994-
Abtrust Fund Managers Vice present).
(Singapore) LTD President
88A Circular Road
Singapore 049439
William E, Keen III (33) Vice Assistant Vice President, (1996-present), Director of Mutual Fund
100 Bright Meadow Blvd. President Compliance (1995-1996) Phoenix Equity Planning Corporation. Vice
PO Box 2200 President, Phoenix Funds, and Phoenix Duff & Phelps Institutional
Enfield, CT 06083-2200 Mutual Funds (1996-present). Assistant Vice President, US Affinity
Investments LP, (1994-1995). Treasurer and Secretary, US Affinity
Funds (1994-1995). Manager, Fund Administration, SEI Corporation
(1991-1994).
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
- ------------------------- ------------------ -------------------------------------------------------------------------
<S> <C> <C>
William R. Moyer (52) Vice Senior Vice President and Chief Financial Officer, Phoenix Duff &
100 Bright Meadow Blvd. President Phelps Corporation (1995-present). Vice President, Investment
PO Box 2200 Products Finance, Phoenix Home Life Mutual Insurance Company
Enfield, CT 06083-2200 (1990-1995). Senior Vice President (1990-present), Chief Financial
Officer (1996-present), Finance (until 1996) and Treasurer (1994-
1996), Phoenix Equity Planning Corporation. Senior Vice President
(1990-present), Chief Financial Officer (1996-present), Finance (until
1996) and Treasurer (1994-present), Phoenix Investment Counsel, Inc.
Senior Vice President (1994-present), Chief Financial Officer (1996-
present), Finance (until 1996), 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) and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present). Vice
President, the National Affiliated Companies (until 1993). Senior Vice
President, Finance, Phoenix Securities Group, Inc. (1993-present).
Senior Vice President and Chief Financial Officer (1993-1995) and
Treasurer (1994-1995) W.S. Griffith & Co., Inc. and Townsend
Financial Advisers, Inc.
Leonard J. Saltiel 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 National Securities
& Research Corporation (1994-present). 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).
Dorothy J. Skaret (44) 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 (44) Treasurer Treasurer (1996-present), Vice President, Fund Accounting (1994-1996),
Phoenix Equity Planning Corporation. Treasurer, Phoenix Funds (1994-
present), and Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present). Second Vice President and Treasurer, Fund Accounting, Phoenix
Home Life Mutual Insurance Company (1994-1995). Various positions
with Phoenix Home Life Mutual Insurance Company (1987-1994).
G. Jeffrey Bohne (49) Clerk and Vice President, Mutual Fund Customer Service, (1996-present), Vice
101 Munson Street Secretary President, Transfer Agent Operations (1993-1996), Phoenix Equity
Greenfield, MA 01301 Planning Corporation. Clerk, Phoenix Investment Counsel, Inc. (1995-
present). Secretary, the Phoenix Funds (1993-present) and Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present). Vice President and
General Manager, Phoenix Home Life Mutual Insurance Company (1993-
present). Assistant Vice President, Phoenix Home Life Mutual Insurance
Company (1992-1993).
</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.
20
<PAGE>
For services on the Board of Trustees of the Fund, each Trustee who is not
a full-time employee of the Adviser or any of its affiliates currently receives
a retainer at the annual rate of $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 Fund receives 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 Fund Group 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 Fund).
The foregoing does 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 Fund. Any other interested persons who are not
compensated by the Adviser receive fees from the Fund.
For the Fund'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 (11 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* $63,500
Robert Chesek $ 2,355 $55,500
E. Virgil Conway+ $ 2,745 $64,750
Harry Dalzell-Payne+ $ 2,355 $55,750
Francis E. Jeffries $1,500* $27,500
Leroy Keith, Jr. $ 2,355 None None $55,500
Philip R. McLoughlin+ -- for any for any --
Everett L. Morris+ $2,250* Trustee Trustee $53,750
James M. Oates+ $ 2,250 $56,000
Calvin J. Pedersen -- --
Philip R. Reynolds $ 2,355 $55,500
Herbert Roth, Jr.+ $ 2,850 $66,750
Richard E. Segerson $ 2,610 $62,250
Lowell P. Weicker, Jr. $ 2,700 $63,500
</TABLE>
*This compensation (and the earnings thereon) was deferred pursuant to the
Trustees Deferral Compensation Plan.
+Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
On September 3, 1996, the Trustees and officers of the Fund beneficially
owned less than 1% of the outstanding shares of the Fund.
OTHER INFORMATION
Independent Accountants
Price Waterhouse LLP has been selected as the independent accountants for
the Fund. Price Waterhouse LLP audits the Fund's annual financial statements and
expresses an opinion thereon.
Custodian and Transfer Agent
Brown Brothers Harriman & Co. serves as custodian of the Fund's assets (the
"Custodian"). Equity Planning acts as Transfer Agent for the Fund (the "Transfer
Agent").
Report to Shareholders
The fiscal year of the Fund ends on July 31. The Fund will send financial
statements to its shareholders at least semiannually. An annual report
containing financial statements audited by the Fund's independent accountants
will be sent to shareholders each year.
Financial Statements
The financial statement for the Fund as of January 31, 1997 is incorporated
herein by reference. The financial information relating to the Fund is available
by calling Equity Planning at (800) 243-4361, or by writing to Equity Planning
at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200.
21
<PAGE>
New Asia Series
- --------------------------------------------------------------------
INVESTMENTS AT JANUARY 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
------- ---------
<S> <C> <C>
COMMON STOCKS--91.6%
Australia--11.9%
Australian Gas Light Co. Ltd. (Utility-Gas).. 90,000 $ 478,847
Davids Ltd. (Retail) ..................... 250,000 339,203
Pacific BBA Ltd. (Miscellaneous) ......... 135,000 452,778
QBE Insurance Group Ltd. (Insurance) ...... 110,000 543,334
---------
1,814,162
---------
Hong Kong--21.7%
CDL Hotels International Ltd. (Hotels) ... 750,000 425,861
Giordano International Ltd. (Retail) ...... 399,000 223,984
HSBC Holdings PLC (Banks) .................. 30,000 694,928
Hongkong Electric Holdings Ltd. (Utility-
Electric) ................................ 125,000 444,412
National Mutual Asia Ltd. (Insurance) ...... 540,000 519,164
Smartone Telecommunications (Utility-
Telephone) (b) .......................... 200,000 393,599
Swire Pacific Ltd. Class B (Miscellaneous) 400,000 591,044
---------
3,292,992
---------
India--6.5%
Grasim Industries Ltd. Sponsored GDR
144A (Basic Materials) (c) .............. 35,000 498,750
Industrial Credit & Investment Corporation
of India Ltd. Sponsored GDR
(Diversified Financial Services) (b) ..... 55,000 488,125
---------
986,875
---------
Indonesia--8.3%
PT Bank Bali (Banks) ..................... 200,000 483,905
PT Duta Anggada Realty (Property) ......... 225,000 208,290
PT Indosat (Utility-Telephone) ............ 200,000 568,062
---------
1,260,257
---------
Malaysia--9.9%
AMMB Holdings Berhad
(Diversified Financial Services) ........ 70,000 619,644
Malaysian Oxygen Berhad (Chemical) ......... 95,000 496,922
Sime UEP Properties Berhad (Property) ..... 150,000 389,289
---------
1,505,855
---------
New Zealand--3.0%
Telecom Corporation of New Zealand Ltd.
(Utility-Telephone) ....................... 90,000 456,724
---------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------- -------------
<S> <C> <C>
Philippines--6.7%
Ayala Land, Inc. Class B (Property) ... 350,000 $ 425,047
Philippine Long Distance Telephone Co.
Sponsored ADR (Utility-Telephone) .. 10,000 593,750
-------------
1,018,797
-------------
Singapore--7.2%
Development Bank of Singapore Ltd.
(Banks) ............................. 31,000 429,454
Robinson & Co. Ltd. (Retail) ......... 90,000 329,284
Rothmans Industries Ltd. (Tobacco) ... 75,000 335,678
-------------
1,094,416
-------------
South Korea--7.0%
Korea Electric Power Corp. Sponsored
ADR (Utility-Electric) .............. 23,000 508,875
Samsung Electronics Sponsored GDR
144A (Electronics) (c) .............. 25,000 547,000
-------------
1,055,875
-------------
Thailand--9.4%
Ruam Pattana Fund II
(Closed End Mutual Fund) ........... 1,500,000 561,451
Siam Cement Public Co. Ltd.
(Building & Construction) ........... 11,000 342,967
Siam Commercial Bank Public Co. Ltd.
(Banks) ............................. 80,000 524,793
-------------
1,429,211
-------------
TOTAL COMMON STOCKS
(Identified cost $14,045,149) ........................ 13,915,164
-------------
PAR
VALUE
(000)
---------
SHORT-TERM OBLIGATIONS--10.5%
Brown Brothers Harriman repurchase
agreement, 5.40%, dated 1/31/97 due
2/3/97, repurchase price $1,600,720
collateralized by U.S. Treasury Bill 0%,
5/15/97, market value $1,600,000 ..... $ 1,600 1,600,000
-------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $1,600,000) ........................ 1,600,000
-------------
TOTAL INVESTMENTS--102.1%
(Identified cost $15,645,149) ........................ 15,515,164(a)
Cash and receivables, less
liabilities--(2.1%) ................................ (318,050)
-------------
NET ASSETS--100.0% ................................. $ 15,197,114
=============
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $607,691 and gross
depreciation of $737,676 for federal income tax purposes. At January 31,
1997, the aggregate cost of securities for federal income tax purposes was
$15,645,149.
(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 January 31,
1997, these securities amounted to a value of $1,045,750 or 6.9% of net
assets.
See Notes to Financial Statements
2
<PAGE>
New Asia Series
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Long-Term Investments
(Unaudited)
<S> <C>
Banks ................................................ 15.3%
Basic Materials ....................................... 3.6
Building & Construction .............................. 2.5
Chemical ............................................. 3.6
Closed End Mutual Fund ................................. 4.0
Diversified Financial Services ........................ 8.0
Electronics .......................................... 3.9
Hotels ................................................ 3.1
Insurance ............................................. 7.6
Miscellaneous .......................................... 7.5
Property ............................................. 7.3
Retail ................................................ 6.4
Tobacco ................................................ 2.4
Utility-Electric ....................................... 6.9
Utility-Gas .......................................... 3.4
Utility-Telephone .................................... 14.5
-----
100.0%
=====
</TABLE>
See Notes to Financial Statements
3
<PAGE>
New Asia Series
- --------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1997
(Unaudited)
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $15,645,149) $15,515,164
Foreign currency at value
(Identified cost $47,658) 47,328
Cash 43,364
Receivables
Investment securities sold 333,844
Fund shares sold 118,968
Interest and dividends 20,592
Receivable from adviser 32,901
Tax reclaim 107
Prepaid expenses 35,407
-----------
Total assets 16,147,675
-----------
Liabilities
Payables
Investment securities purchased 851,103
Fund shares repurchased 9,635
Transfer agent fee 14,551
Distribution fee 5,780
Trustees' fee 3,200
Administration fee 1,850
Financial agent fee 370
Accrued expenses 64,072
-----------
Total liabilities 950,561
-----------
Net Assets $15,197,114
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $15,338,149
Undistributed net investment loss (33,993)
Accumulated net realized gain 22,918
Net unrealized depreciation (129,960)
-----------
Net Assets $15,197,114
===========
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $10,636,278) 1,062,830
Net asset value per share $10.01
Offering price per share
$10.01/(1-4.75%) $10.51
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $4,560,836) 456,560
Net asset value and offering price per share $9.99
</TABLE>
STATEMENT OF OPERATIONS
FROM INCEPTION SEPTEMBER 4, 1996
TO JANUARY 31, 1997
(Unaudited)
<TABLE>
<S> <C>
Investment Income
Interest $ 65,066
Dividends 64,157
Foreign taxes withheld (8,648)
--------
Total investment income 120,575
--------
Expenses
Investment advisory fee 32,403
Distribution fee--Class A 7,397
Distribution fee--Class B 8,533
Administration fee 5,718
Financial agent fee 1,144
Registration 36,906
Custodian 35,500
Transfer agent 17,900
Professional 13,500
Printing 8,300
Trustees 6,650
Miscellaneous 1,440
--------
Total expenses 175,391
Less expenses borne by investment adviser (88,937)
--------
Net expenses 86,454
--------
Net investment income 34,121
--------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 28,549
Net realized loss on foreign currency transactions (5,631)
Net change in unrealized appreciation (depreciation)
on investments (129,985)
Net change in unrealized appreciation (depreciation) on
foreign currency and foreign currency transactions 25
--------
Net loss on investments (107,042)
--------
Net decrease in net assets resulting from
operations ($72,921)
========
</TABLE>
4
See Notes to Financial Statements
<PAGE>
New Asia Series
- --------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
September 4, 1996 to
January 31, 1997
(Unaudited)
---------------------
<S> <C>
From Operations
Net investment income $ 34,121
Net realized gain 22,918
Net change in unrealized appreciation (depreciation) (129,960)
-----------
Decrease in net assets resulting from operations (72,921)
-----------
From Distributions to Shareholders
Net investment income--Class A (52,986)
Net investment income--Class B (15,128)
-----------
Decrease in net assets from distributions to shareholders (68,114)
-----------
From Share Transactions
Class A
Proceeds from sales of shares (1,101,399 shares) 11,112,360
Net asset value of shares issued from reinvestment of distributions (4,966 shares) 49,717
Cost of shares repurchased (43,535 shares) (441,850)
-----------
Total 10,720,227
-----------
Class B
Proceeds from sales of shares (457,939 shares) 4,632,108
Net asset value of shares issued from reinvestment of distributions (1,407 shares) 14,076
Cost of shares repurchased (2,786 shares) (28,262)
-----------
Total 4,617,922
-----------
Increase in net assets from share transactions 15,338,149
-----------
Net increase in net assets 15,197,114
Net Assets
Beginning of period 0
-----------
End of period (including undistributed net investment loss of ($33,993)) $15,197,114
===========
</TABLE>
See Notes to Financial Statements
5
<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
1/31/97 1/31/97
(Unaudited) (Unaudited)
-------------- --------------
<S> <C> <C>
Net asset value, beginning of period $10.00 $10.00
Income from investment operations(6)
Net investment income 0.04(4) 0.01 (4)
Net realized and unrealized gain 0.03 0.03
------ ------
Total from investment operations 0.07 0.04
------ ------
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 0.01 (0.01)
------ ------
Net asset value, end of period $10.01 $ 9.99
====== ======
Total return(1) 0.66%(3) 0.35% (3)
Ratios/supplemental data:
Net assets, end of period (thousands) $10,636 $4,561
Ratio to average net assets of:
Operating expenses 2.10%(2) 2.85% (2)
Net investment income (loss) 1.17%(2) (0.05%)(2)
Portfolio turnover 5%(3) 5% (3)
Average commission rate paid(5) $0.0109 $0.0109
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Includes reimbursement of operating expenses by investment adviser of $0.09
and $0.09, respectively.
(5) For fiscal years beginning on or after September 1, 1995, 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.
(6) 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
6
<PAGE>
GLOBAL SMALL CAP SERIES
INVESTMENT ADVISERS' REPORT
On balance, most equity markets around the world posted strong results
during this six-month reporting period. The U.S. market surged as investors drew
encouragement from the ideal scenario of steady economic growth, low interest
rates and controlled inflation. Large company stocks, however, significantly
outperformed their small-cap counterparts for much of the period, owing to
investors' preference for liquidity and predictable earnings growth.
European markets have been dominated by two major themes. First, there is
the belief that 1997 will bring moderate economic recovery. Growth of 2% to 2.5%
is possible in Germany, which should be enough to help the rest of the European
economies. While this growth is expected to be non-inflationary, it will not be
enough to lower the high levels of unemployment across the continent. The second
major theme has been the determination of an increasing number of countries to
be ready for monetary union, although France and Italy stand out for the
questionable accounting methods they have proposed to ensure nominal
qualification.
The performance of the Far East stock markets has been very mixed. Hong
Kong was the best performer, fueled by a surge of liquidity and rising property
prices. Korea, Singapore and Thailand were extremely weak, while Japan suffered
from a lack of local buying, a weak currency and structural problems.
The major Latin American countries are all in recovery stages, with
declining inflation. Brazil, the largest market, has been the best performer
over this reporting cycle. In Mexico, which has rebounded from recession, the
market remained in a trading range, as political and currency worries continued
to dampen investor enthusiasm.
Phoenix-Aberdeen Global Small Cap Fund has had a good start. Since its
inception on September 4, 1996 through January 31, 1997, the Fund's Class A
shares returned 5.80% and Class B shares returned 5.40%. From September 30, 1996
through January 31, 1997, its benchmark, the FT/S&P--Actuaries World Index
Medium Small Component, returned 2.77%.* All of these figures assume
reinvestment of any distributions, but exclude the effect of sales charges.
The domestic segment of the portfolio had very strong contributions from
its energy and technology holdings in 1996; however, profit taking in these two
sectors in January--the final month of this reporting period--restrained
performance somewhat. We have begun to build positions in the financial services
and the health care sectors, particularly biotechnology companies, and expect
these holdings to perform well in 1997.
In the international portion of the portfolio, we have focused on the
stronger markets overall, and on areas that show signs of improvement. For
example, the portfolio has been underweighted in Japan relative to the other
Asian markets, which has been a major boost to portfolio performance in the Far
East region.
As we move into 1997, we expect increased volatility in the domestic equity
markets, with the potential for gains found in increasingly selective areas.
Accordingly, our strategy will continue to emphasize broader diversification and
the identification of small companies poised to benefit from emerging investment
themes.
In the world markets, we are encouraged by the prospects for stronger
growth in Europe. In the Asian region, we continue to avoid Japan, focusing
instead on the faster growing Asian economies. The economic background for Asia
is one of decelerating growth; nonetheless, the annualized rate of growth is
still in a healthy range of 6% to 8%. On the whole, we view the softening in
growth as a welcome breather for Asian economies. Finally, our outlook on the
U.K. is very positive, with corporate profits up significantly from a year ago
and consumer spending strengthening.
*The FT/S&P--Actuaries World Index(TM) is a broad-based global market index
consisting of over 2,400 stocks, covering 28 countries in the Pacific Basin,
Europe and the Americas markets. The index is weighted by market capitalization
and returns are calculated on a total return basis. The Medium/Small component
of the FT/S&P--Actuaries World Index consists of companies in the World Index
with market capitalization between $25 million and $13.9 billion. Performance is
reported by Goldman, Sachs & Co.
7
<PAGE>
Global Small Cap Series
- --------------------------------------------------------------------
INVESTMENTS AT JANUARY 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
--------- ---------
<S> <C> <C>
COMMON STOCKS--87.8%
Argentina--0.2%
Disco SA Sponsored ADR (Retail--
Supermarkets) (b) ........................... 3,000 $ 81,000
---------
Australia--2.5%
Davids Ltd. (Retail/Wholesale--Food) ......... 300,000 407,043
Pacific BBA Ltd. (Auto/Truck--
Replacement Parts) ........................... 150,000 503,087
---------
910,130
---------
Brazil--0.5%
Centrais Electricas de Santa Catarina GDR
(Utility--Electric Power) (b) ............... 900 99,000
TV Filme, Inc. (Media--Cable TV) ............ 8,000 100,000
---------
199,000
---------
Chile--0.3%
Santa Isabel SA Sponsored ADR
(Retail--Supermarkets) (b) .................. 4,500 120,938
---------
Denmark--3.2%
Coloplast A/S Class B (Medical--
Products) .................................... 3,488 264,133
Falck A/S (Commercial Services--
Security/Safety) .............................. 445 111,875
Oticon Holding A/S Class A (Medical--
HMO) .......................................... 2,000 400,327
Sondagsavisen A/S (Media--Newspapers) ......... 1,970 400,631
---------
1,176,966
---------
Finland--1.1%
Amer Group Ltd. Class A (Leisure--
Toys/Games/Hobby) ........................... 19,800 401,475
---------
France--3.4%
Altran Technologies SA
(Telecommunications--Services) ............... 660 235,096
Hyparlo SA (Retail--Miscellaneous/
Diversified) (b) .............................. 2,150 208,088
Penauille Polyservices (Commercial
Services--Security/Safety) .................. 1,330 336,608
Societe Industrielle D'Aviations Latecoere
SA (Aerospace/Defense) ........................ 3,600 452,630
---------
1,232,422
---------
SHARES VALUE
--------- ---------
Germany--2.4%
Apcoa Parking AG (Commercial
Services--Miscellaneous) ..................... 3,000 $ 311,431
Bien-Haus AG (Building--Mobile/
Manufacturing & RV) ........................... 550 146,770
---------
Leica Camera AG (Leisure--Photo
Equipment/Related) (b) ....................... 6,100 194,443
Puma AG (Retail--Apparel/Shoe) (b) ............ 7,300 226,899
---------
879,543
---------
Hong Kong--4.8%
Citybus Group Ltd. (Transportation--
Services) (b) ................................ 1,000,000 287,134
Giordano International Ltd. (Retail--
Apparel/Shoe) ................................ 651,000 365,447
Innovative International Holdings Ltd.
(Auto/Truck--Original Equipment) ........... 1,000,000 409,730
Magician Industries Holding Ltd.
(Household--Housewares) .................... 1,000,000 296,813
Pico Far East Holdings Ltd.
(Building--Construction
Products/Miscellaneous) .................... 1,500,000 406,504
---------
1,765,628
---------
India--2.3%
Crompton Greaves Ltd. Sponsored GDR
(Electric Products--Miscellaneous) (b) ..... 126,700 319,917
Industrial Credit & Investment Corporation of
India Ltd. Sponsored GDR
(Finance--Investment Bankers) (b) ........... 60,000 532,500
---------
852,417
---------
Indonesia--3.7%
PT Bank Bali (Banks--Foreign) ............... 200,000 483,905
PT Duta Anggada Realty (Real Estate
Development) ................................ 400,000 370,292
PT Tigaraksa Satria (Retail--
Miscellaneous/Diversified) ................. 350,000 486,009
---------
1,340,206
---------
Israel--0.4%
Tadiran Ltd. (Telecommunications--
Equipment) ................................... 32,500 139,998
---------
Italy--1.1%
Compagnia Assicuratrice Unipol SPA
(Insurance--Diversified) .................... 45,000 153,350
SAES Getters SPA (Electric--
Miscellaneous Components) .................... 14,700 258,919
---------
412,269
---------
</TABLE>
See Notes to Financial Statements
8
<PAGE>
Global Small Cap Series
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------- ---------
<S> <C> <C>
Japan--4.9%
FCC Co. Ltd. (Auto/Truck--Replacement
Parts) ................................ 25,000 $ 671,335
Kawasumi Laboratories (Medical/
Dental--Supplies) ....................... 34,000 369,687
Shinmei Electric (Electric--
Miscellaneous Components) .............. 12,000 178,913
Sodick (Electric--Miscellaneous
Components) (b) ....................... 70,000 552,965
---------
1,772,900
---------
Malaysia--1.5%
Asas Dunia Berhad (Real Estate
Development) .......................... 150,000 540,176
---------
Mexico--0.5%
Industrias CH SA Series B (Steel--
Producers) (b) .......................... 33,000 112,673
Tekchem SA (Chemicals--Specialty) (b) ... 182,000 52,133
---------
164,806
---------
Norway--2.6%
Nera ASA (Telecommunications--
Cellular) ............................. 8,000 388,559
Tomra Systems ASA (Pollution
Control--Equipment) .................... 28,000 543,983
---------
932,542
---------
Singapore--3.7%
Industrial & Commercial Bank Ltd.
(Banks--Foreign) ....................... 75,000 285,060
Robinson & Co. Ltd. (Retail--Department
Stores) ................................ 140,000 512,219
Rothmans Industries Ltd. (Tobacco) ...... 120,000 537,084
---------
1,334,363
---------
Spain--0.7%
Corp. Financiera Reunida SA
(Finance--Investment Bankers) (b) ..... 75,000 248,466
---------
Sweden--0.6%
Bure Investment Aktiebolaget (Finance--
Public Traded Investment Funds) ........ 15,000 219,874
---------
Switzerland--0.7%
Lindt & Spruengli AG (Food--
Confectionery) .......................... 15 265,599
---------
Thailand--2.5%
Bangkok First Investment & Trust Ltd.
(Finance--Investment Bankers) ........... 100,000 356,936
Hana Microelectronics Public Co. Ltd.
(Electric--Miscellaneous Components) .. 100,000 567,239
---------
924,175
---------
SHARES VALUE
------- ---------
United Kingdom--7.8%
Cedardata PLC (Computer--Software) ...... 75,000 $ 304,688
Corporate Services Group PLC
(Commercial Services--
Miscellaneous) ......................... 80,000 275,000
DCS Group PLC (Computer--Software) ...... 60,000 257,212
GWR Group PLC (Media--Radio/TV) ......... 100,000 333,333
Gerrard Group PLC (Finance--
Investment Bankers) .................... 33,592 173,613
Gresham Computing PLC (Computer--
Software) ............................. 125,000 123,197
ILP Group PLC (Containers--Paper/
Plastic) ................................ 200,000 216,346
JJB Sports PLC (Retail--Apparel/
Shoe) ................................... 55,650 294,303
Rolfe & Nolan PLC (Computer--Services) ... 59,800 400,104
St. James Beach Hotels PLC
(Leisure--Hotels & Motels) .............. 80,000 231,410
Wilmington Group PLC (Media--
Periodicals) .......................... 134,000 245,881
---------
2,855,087
---------
United States--36.4%
Commercial--Leasing Companies--0.6%
Winthrop Resources Corp. ............... 6,900 200,100
---------
Commercial Services--Miscellaneous--0.7%
Metro Networks, Inc. (b) ............... 8,000 188,000
Pediatrix Medical Group, Inc. (b) ...... 2,000 78,750
---------
266,750
---------
Commercial Services--Schools--0.4%
Computer Learning Centers, Inc. (b) ...... 3,500 101,500
---------
Strayer Education, Inc. .................. 2,000 52,500
---------
154,000
---------
Computer--Integrated Systems--0.6%
Wind River Systems (b) .................. 4,500 228,937
---------
Computer--Memory Devices--0.7%
Veritas Software Corp. (b) ............... 5,000 260,000
---------
Computer--Services--1.2%
Analysts International Corp. ............ 5,500 147,125
Computer Management
Sciences, Inc. (b) ..................... 4,000 89,000
Computer Task Group, Inc. ............... 4,500 196,312
Whittman-Hart, Inc. (b) .................. 1,000 20,250
---------
452,687
---------
</TABLE>
See Notes to Financial Statements
9
<PAGE>
Global Small Cap Series
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------- ----------
<S> <C> <C>
United States--continued
Computer--Software--2.3%
Aurum Software, Inc. (b) ..................... 3,000 $ 72,000
Clarify, Inc. (b) ........................... 7,000 252,000
Manugistics Group, Inc. (b) .................. 6,000 262,500
Pegasystems, Inc. (b) ........................ 3,200 120,800
SeaChange International, Inc. (b) ............ 5,000 136,250
----------
843,550
----------
Electric--Laser System/Component--0.5%
Cymer, Inc. (b) .............................. 3,500 180,250
----------
Electric--Miscellaneous Components--0.2%
ACT Manufacturing, Inc. (b) .................. 2,100 60,900
----------
Electric--Semiconductor Equipment--0.8%
Etec Systems, Inc. (b) ..................... 1,500 67,125
PRI Automation, Inc. (b) ..................... 2,200 132,275
Speedfam International, Inc. (b) ............ 2,500 88,750
----------
288,150
----------
Electric--Semiconductor Manufacturing--4.5%
ANADIGICS, Inc. (b) ........................ 7,000 372,750
Hadco Corp. (b) .............................. 1,500 81,375
Jabil Circuit, Inc. (b) ..................... 4,000 189,000
Sanmina Corp. (b) ........................... 3,000 178,500
Sipex Corp. (b) .............................. 6,000 184,500
Triquint Semiconductor, Inc. (b) ............ 8,000 290,000
Vitesse Semiconductor Corp. (b) ............ 6,500 356,687
----------
1,652,812
----------
Finance--Investment Bankers--0.7%
Alex Brown, Inc. ........................... 4,500 238,500
----------
Financial Services--Miscellaneous--0.3%
Hambrecht & Quist Group (b) .................. 5,000 117,500
----------
Machinery--Farm--0.4%
Lindsay Manufacturing Co. .................. 3,000 154,125
----------
Medical--Biomed/Genetics--5.3%
Agouron Pharmaceuticals, Inc. (b) ............ 4,000 343,000
Alkermes, Inc. (b) ........................... 11,500 267,375
Autoimmune, Inc. (b) ........................ 4,500 76,500
Bio-Technology General Corp. (b) ............ 11,000 185,625
Guilford Pharmaceuticals, Inc. (b) ......... 6,000 147,000
Incyte Pharmaceuticals, Inc. (b) ............ 5,000 332,500
SangStat Medical Corp. (b) .................. 10,000 305,000
Transkaryotic Therapies, Inc. (b) ............ 3,000 59,250
Vertex Pharmaceuticals, Inc. (b) ............ 4,000 196,000
----------
1,912,250
----------
Medical--Ethical Drugs--1.7%
Jones Medical Industries, Inc. ............... 4,000 152,000
Theragenics Corp. (b) ........................ 11,500 303,312
US Bioscience, Inc. (b) ..................... 10,500 152,250
----------
607,562
----------
SHARES VALUE
------- ----------
Medical--Instruments--0.4%
ADAC Laboratories ........................... 6,000 $ 149,250
----------
Medical--Output/Home Care--1.0%
Curative Health Services, Inc. (b) ......... 9,000 291,375
National Surgery Centers, Inc. (b) ......... 2,500 85,313
----------
376,688
----------
Medical--Products--0.8%
Affymetrix, Inc. (b) ........................ 3,000 87,750
Possis Corp. (b) ........................... 2,400 45,300
Sonus Pharmaceuticals, Inc. (b) ............ 6,000 168,000
----------
301,050
----------
Medical/Dental--Supplies--0.5%
Applied Analytical Industries, Inc. (b) ...... 3,000 77,625
CardioThoracic Sytems, Inc. (b) ............ 4,500 114,188
----------
191,813
----------
Oil & Gas--Drilling--2.0%
Atwood Oceanics, Inc. (b) .................. 2,500 168,438
Cliffs Drilling Co. (b) ..................... 5,500 375,375
Patterson Energy, Inc. (b) .................. 2,000 64,000
UTI Energy Corp. (b) ........................ 3,000 99,750
---------
707,563
---------
Oil & Gas--Field Services--1.7%
Hvide Marine, Inc. (b) ..................... 4,000 99,500
Pride Petroleum Services, Inc. (b) ......... 11,000 248,875
Trico Marine Services, Inc. (b) ............ 6,000 280,500
----------
628,875
----------
Oil & Gas--Machinery/Equipment--1.4%
Energy Ventures, Inc. (b) .................. 3,000 180,000
Varco International, Inc. (b) ............... 12,000 319,500
----------
499,500
----------
Oil & Gas--U.S. Exploration & Production--4.3%
Belden & Blake Corp. (b) ..................... 3,000 78,750
Devon Energy Corp. ........................ 5,000 176,875
Forcenergy, Inc. (b) ........................ 4,400 143,550
Lomak Petroleum, Inc. ..................... 8,000 178,000
Newfield Exploration Co. (b) ............... 8,000 212,000
Nuevo Energy Co. (b) ........................ 7,000 360,500
Stone Energy Corp. (b) ..................... 12,500 356,250
Swift Energy Co. (b) ........................ 1,500 54,750
----------
1,560,675
----------
Retail--Mail Order & Direct--0.4%
dELiA*s Inc. (b) ........................... 8,000 148,000
----------
</TABLE>
See Notes to Financial Statements
10
<PAGE>
Global Small Cap Series
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-------- ----------
<S> <C> <C>
Steel--Specialty Alloys--1.8%
Oregon Metallurgical Corp. (b) ...... 5,400 $ 153,900
RMI Titanium Co. (b) .................. 10,000 253,750
Titanium Metals Corp. (b) ............ 8,000 235,000
----------
642,650
----------
Telecommunications--Equipment--0.2%
MRV Communications, Inc. (b) ......... 3,000 82,875
----------
Telecommunications--Services--0.5%
Pacific Gateway Exchange, Inc. (b) ... 6,500 193,375
----------
Transportation--Ship--0.5%
Seacor Holdings, Inc. (b) ............ 3,200 188,000
----------
Total United States .................. 13,288,387
----------
TOTAL COMMON STOCKS
(Identified cost $30,386,322)..................... 32,058,367
----------
WARRANTS--0.0%
Italy--0.0%
Compagnia Assicuratrice Unipol SPA
Warrants (Insurance--Diversified) (b) 45,000 9,180
----------
TOTAL WARRANTS
(Identified cost $0).............................. 9,180
----------
TOTAL LONG-TERM INVESTMENTS--87.8%
(Identified cost $30,386,322)..................... 32,067,547
----------
</TABLE>
<TABLE>
<CAPTION>
PAR
VALUE
(000) VALUE
------ -----------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--12.3%
Brown Brothers Harriman repurchase
agreement, 5.40%, dated 1/31/97 due
2/3/97, repurchase price $4,502,025,
collateralized by U.S. Treasury Bill
0%, 5/15/97, market value $4,500,000 ...... $4,500 $ 4,500,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $4,500,000) ..................... 4,500,000
-----------
TOTAL INVESTMENTS--100.1%
(Identified cost $34,886,322) ..................... 36,567,547(a)
Cash and receivables, less
liabilities--(0.1%) ............................. (54,869)
-----------
NET ASSETS--100.0% .............................. $36,512,678
===========
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $3,122,063 and gross
depreciation of $1,440,838 for federal income tax purposes. At January 31,
1997, the aggregate cost of securities for federal income tax purposes was
$34,886,322.
(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 ................................. 1.4%
Auto/Truck--Original Equipment ..................... 1.3
Auto/Truck--Replacement Parts ..................... 3.7
Banks--Foreign .................................... 2.4
Building--Construction Products/Miscellaneous ...... 1.3
Building--Mobile/Manufacturing & RV ............... 0.5
Chemicals--Specialty .............................. 0.2
Commercial--Leasing Companies ..................... 0.6
Commercial Services--Miscellaneous .................. 2.7
Commercial Services--Schools ........................ 0.5
Commercial Services--Security/Safety ............... 1.4
Computer--Integrated Systems ........................ 0.7
Computer--Memory Devices ........................... 0.8
Computer--Services ................................. 2.7
Computer--Software ................................. 4.8
Containers--Paper/Plastic ........................... 0.7
Electric--Laser System/Component .................. 0.6
Electric--Miscellaneous Components .................. 5.0
Electric--Semiconductor Equipment .................. 0.9
Electric--Semiconductor Manufacturing ............... 5.1
Electric Products--Miscellaneous .................. 1.0
Finance--Investment Bankers ........................ 4.8
Finance--Public Traded Investment Funds ............ 0.7
Financial Services--Miscellaneous .................. 0.4
Food--Confectionery ................................. 0.8
Household--Housewares .............................. 0.9
Insurance--Diversified .............................. 0.5
Leisure--Hotels & Motels ........................... 0.7
Leisure--Photo Equipment/Related .................. 0.6
Leisure--Toys/Games/Hobby ........................... 1.2
Machinery--Farm .................................... 0.5
Media--Cable TV .................................... 0.3
Media--Newspapers ................................. 1.2
Media--Periodicals ................................. 0.8
Media--Radio/TV .................................... 1.0
Medical--Biomed/Genetics ........................... 6.0
Medical--Ethical Drugs .............................. 1.9
Medical--HMO ....................................... 1.2
Medical--Instruments .............................. 0.5
Medical--Output/Home Care ........................... 1.2
Medical--Products ................................. 1.8
Medical/Dental--Supplies ........................... 1.7
Oil & Gas--Drilling ................................. 2.2
Oil & Gas--Field Services ........................... 2.0
Oil & Gas--Machinery/Equipment ..................... 1.5
Oil & Gas--U.S. Exploration & Production ............ 4.9
Pollution Control--Equipment ........................ 1.7
Real Estate Development ........................... 2.8
Retail--Apparel/Shoe .............................. 2.7
Retail--Department Stores ........................... 1.6
Retail--Mail Order & Direct ........................ 0.5
Retail--Miscellaneous/Diversified .................. 2.2
Retail--Supermarkets .............................. 0.6
Retail/Wholesale--Food .............................. 1.3
Steel--Producers .................................... 0.3
Steel--Specialty Alloys ........................... 2.0
Telecommunications--Cellular ........................ 1.2
Telecommunications--Equipment ..................... 0.7
Telecommunications--Services ........................ 1.3
Tobacco ............................................. 1.7
Transportation--Services ........................... 0.9
Transportation--Ship .............................. 0.6
Utility--Electric Power ........................... 0.3
-----
100.0%
=====
</TABLE>
See Notes to Financial Statements
12
<PAGE>
Global Small Cap Series
- --------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1997
(Unaudited)
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $30,386,322) $32,067,547
Repurchase agreement
(Identified cost $4,500,000) 4,500,000
Foreign currency at value
(Identified cost $267,384) 263,057
Cash 64,426
Receivables
Investment securities sold 1,371,220
Fund shares sold 538,790
Interest and dividends 20,290
Receivable from adviser 17,669
Tax reclaim 2,318
Prepaid expenses 35,403
-----------
Total assets 38,880,720
-----------
Liabilities
Payables
Investment securities purchased 2,231,557
Fund shares repurchased 16,820
Transfer agent fee 17,830
Distribution fee 16,176
Administration fee 4,478
Trustees' fee 3,250
Financial agent fee 895
Accrued expenses 77,036
-----------
Total liabilities 2,368,042
-----------
Net Assets $36,512,678
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $35,480,534
Undistributed net investment loss (68,349)
Accumulated net realized loss (585,241)
Net unrealized appreciation 1,685,734
-----------
Net Assets $36,512,678
===========
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $22,044,581) 2,083,145
Net asset value per share $10.58
Offering price per share
$10.58/(1-4.75%) $11.11
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $14,468,097) 1,371,890
Net asset value and offering price per share $10.55
</TABLE>
STATEMENT OF OPERATIONS
FROM INCEPTION SEPTEMBER 4, 1996
TO JANUARY 31, 1997
(Unaudited)
<TABLE>
<S> <C>
Investment income
Interest $ 81,838
Dividends 71,383
Foreign taxes withheld (7,420)
----------
Total investment income 145,801
----------
Expenses
Investment advisory fee 77,443
Distribution fee--Class A 15,171
Distribution fee--Class B 30,427
Administration fee 13,667
Financial agent fee 2,733
Custodian 50,000
Registration 37,205
Transfer agent 21,500
Professional 13,500
Printing 9,900
Trustees 6,700
Miscellaneous 3,390
----------
Total expenses 281,636
Less expenses borne by investment adviser (67,486)
----------
Net expenses 214,150
----------
Net investment loss (68,349)
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized loss on securities (573,103)
Net realized loss on foreign currency transactions (12,138)
Net change in unrealized appreciation (depreciation)
on investments 1,681,225
Net change in unrealized appreciation (depreciation) on
foreign currency and foreign currency transactions 4,509
----------
Net gain on investments 1,100,493
----------
Net increase in net assets resulting from
operations $1,032,144
==========
</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
January 31, 1997
(Unaudited)
--------------------
<S> <C>
From Operations
Net investment loss $ (68,349)
Net realized loss (585,241)
Net change in unrealized appreciation (depreciation) 1,685,734
-----------
Increase in net assets resulting from operations 1,032,144
-----------
From Share Transactions
Class A
Proceeds from sales of shares (2,173,717 shares) 22,279,929
Net asset value of shares issued from reinvestment of distributions (0 shares) --
Cost of shares repurchased (90,572 shares) (944,456)
-----------
Total 21,335,473
-----------
Class B
Proceeds from sales of shares (1,434,240 shares) 14,806,261
Net asset value of shares issued from reinvestment of distributions (0 shares) --
Cost of shares repurchased (62,350 shares) (661,200)
-----------
Total 14,145,061
-----------
Increase in net assets from share transactions 35,480,534
-----------
Net increase in net assets 36,512,678
-----------
Net Assets
Beginning of period 0
-----------
End of period (including undistributed net investment loss of ($68,349)) $36,512,678
===========
</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
1/31/97 1/31/97
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Net asset value, beginning of period $10.00 $10.00
Income from investment operations
Net investment income (loss) (0.02) (4)(5) (0.06) (4)(5)
Net realized and unrealized gain 0.60 0.61
------ ------
Total from investment operations 0.58 0.55
------ ------
Less distributions
Dividends from net investment income -- --
Dividends from net realized gains -- --
------ ------
Total distributions -- --
------ ------
Change in net asset value 0.58 0.55
------ ------
Net asset value, end of period $10.58 $10.55
====== ======
Total return(1) 5.80% (3) 5.40% (3)
Ratios/supplemental data:
Net assets, end of period (thousands) $22,045 $14,468
Ratio to average net assets of:
Operating expenses 2.10% (2) 2.85% (2)
Net investment income (loss) (0.46%)(2) (1.33%)(2)
Portfolio turnover 44% (3) 44% (3)
Average commission rate paid(6) $0.0119 $0.0119
</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 $0.03
and $0.03, respectively.
(6) For fiscal years beginning on or after September 1, 1995, 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
January 31, 1997 (Unaudited)
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 Series 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. 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. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date or, in the case of certain foreign securities, as soon as the Series is
notified. 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:
The New Asia Series and Global Small Cap 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 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.
16
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
NOTES TO FINANCIAL STATEMENTS
January 31, 1997 (Unaudited) (Continued)
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 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, for
providing advisory services with respect to the Global Small Cap Series, assets
are allocated from time to time by PAIA. PAIA pays a fee to PIC equivalent to
0.40% of the average daily net assets of the Global Small Cap Series so
allocated by PAIA. PAIA also pays a sub-advisory fee to Aberdeen equivalent to
0.40% of the average net assets of the New Asia Series and 0.40% of the Global
Small Cap Series allocated to it 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 2.10% of the average daily net assets for Class A
and B shares for each Series.
Phoenix Equity Planning Corporation ("PEPCO"), 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 $56,940
for Class A shares and deferred sales charges of $17,034 for Class B shares for
the period ended January 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 January 31, 1997, $49,718 was retained by the Distributor and
$11,810 was paid out to unaffiliated participants.
As Financial Agent to the Fund and to each Series, PEPCO receives a fee at
an annual rate of 0.03% of the average daily net assets of each Series for
bookkeeping and pricing services. As Administrator for the Fund, Phoenix Duff &
Phelps Corporation ("PDP"), 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 for administrative services.
PEPCO serves as the Fund's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the period ended January 31, 1997, transfer
agent fees were $39,400 of which PEPCO retained $1,915 which is net of fees paid
to State Street.
At January 31, 1997, PHL and its affiliates held Phoenix-Aberdeen Series
Fund shares which aggregated the following:
<TABLE>
<CAPTION>
Aggregate
Shares Net Asset Value
------- ---------------
<S> <C> <C>
New Asia Series Class A ...... 291,622 $2,919,140
New Asia Series Class B ...... 10,045 100,350
Global Small Cap Series Class A 490,000 5,184,200
Global Small Cap Series Class B 10,000 105,400
</TABLE>
17
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
NOTES TO FINANCIAL STATEMENTS
January 31, 1997 (Unaudited) (Continued)
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the period ended January 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 ......... $14,383,539 $ 366,938
Global Small Cap Series 40,216,250 9,256,826
</TABLE>
There were no purchases or sales of long-term U.S. Government and agency
securities during the period ended January 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.
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
Semiannual Report to Shareholders dated January 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. Distribution Agreement between Registrant and Phoenix Equity Planning Corporation filed via Edgar with
the Registration Statement on June 24, 1996 and incorporated herein by reference
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 Financial Agent Agreement between Registrant and Phoenix Equity
Planning Corporation filed via Edgar with the Registration Statement on
June 24, 1996 and incorporated herein by reference
9.2 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
9.3 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 &
Trust Company
9.5* Financial Agent Agreement between Registrant and Phoenix Equity Planning Corporation dated December
11, 1996 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 with Pre-Effective Amendment No. 2 on September 4, 1996 and
incorporated herein by reference
12. None
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
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. Rule 12b-1 Distribution Plans filed via Edgar with the Registration Statement on June 24, 1996 and
incorporated herein by reference
16. Schedule for Computation of Performance Quotations
17. Financial Data Schedule filed via Edgar herewith and reflected on Edgar as Exhibit 27.
18. Rule 18f-3 Dual Distribution Plan filed via Edgar with Pre-Effective Amendment No. 1 on
August 27, 1996
18.1* 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 February 28, 1997:
Number of
Title of Class Record-holders
------------------------- ----------------
New Asia Series
Class A Shares 1,146
Class B Shares 506
Global Small Cap Series
Class A Shares 1,962
Class B Shares 1,349
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.
Item 29. Principal Underwriter.
(a) The sole principal underwriter for the Registrant is Phoenix Equity
Planning Corporation.
(b) The directors and executive officers of Phoenix Equity Planning
Corporation, the distributor for Registrant, are as follows:
C-2
<PAGE>
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Underwriter 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
100 Bright Meadow Blvd. Operations and Service
P.O. Box 2200
Enfield, CT 06083-2200
Paul A. Atkins Senior Vice President and None
56 Prospect Street Sales Manager
P.O. Box 150480
Hartford, CT 06115-0480
Maris Lambergs Senior Vice President, None
100 Bright Meadow Blvd. Insurance and Independent
P.O. Box 1900 Division
Enfield, CT 06083-1900
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
100 Bright Meadow Blvd. Fund Distribution
P.O. Box 1900
Enfield, CT 06083-1900
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, Fund Treasurer
56 Prospect Street Accounting and Treasurer
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-3
<PAGE>
Name and Position and Offices Position and Offices
Principal Address with Underwriter with Registrant
- ------------------------- ----------------------- -----------------------
Elizabeth R. Sadowinski Vice President, None
56 Prospect Street Administration
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Assistant Secretary
56 Prospect Street Counsel and Secretary
P.O. Box 150480
Hartford, CT 06115-0480
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by each principal underwriter who is not an affiliated
person of the Registrant or an affiliated person of such affiliated person,
directly or indirectly, from the Registrant during the Registrant's last fiscal
year.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by the
Registrant by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder will be maintained at the offices of the Registrant located at 56
Prospect Street, Hartford, CT 06115, or its investment adviser, Phoenix-Aberdeen
International Advisors, LLC, One American Row, Hartford, CT 06102, or the
custodian, Brown Brothers Harriman & Co., 40 Water Street, Boston, MA 02109. All
such accounts, books and other documents required to be maintained by the
principal underwriter will be maintained at Phoenix Equity Planning Corporation,
100 Bright Meadow Boulevard, Enfield, Connecticut 06083.
Item 31. Management Services.
None.
Item 32. Undertakings.
(a) 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
31st day of March, 1997.
PHOENIX-ABERDEEN SERIES FUND
ATTEST: /s/ Richard J. Wirth By: /s/ Philip R. McLoughlin
--------------------------- ---------------------------
Richard J. Wirth 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 31st day of March, 1997.
Signature Title
--------- -----
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.*
President and Director
/s/ Philip R. McLoughlin
-------------------------
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.*
*By /s/ Philip R. McLoughlin
------------------------------
*Philip R. McLoughlin pursuant
to powers of attorney previously
filed.
S-1(c)
Exhibit 9.5
FINANCIAL AGENT AGREEMENT
<PAGE>
FINANCIAL AGENT AGREEMENT
THIS AGREEMENT made and concluded as of this 11th day of December, 1996
by and between Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Financial Agent") and Phoenix-Aberdeen Series Fund, a
Massachusetts business trust having a place of business located at 101 Munson
Street, Greenfield, Massachusetts (the "Trust").
WITNESSETH THAT:
1. Financial Agent shall keep the books of the Trust and compute the
daily net asset value of shares of the Trust in accordance with instructions
received from time to time from the Board of Trustees of the Trust; which
instructions shall be certified to Financial Agent by the Trust's Secretary.
Financial Agent shall report such net asset value so determined to the Trust and
shall perform such other services as may be requested from time to time by the
Trust as are reasonably incidental to Financial Agent's duties hereunder.
2. Financial Agent shall be obligated to maintain, for the periods and
in the places required by Rule 31a-2 under the Investment Company Act of 1940,
as amended, those books and records maintained by Financial Agent. Such books
and records are the property of the Trust and shall be surrendered promptly to
the Trust upon its request. Furthermore, such books and records shall be open to
inspection and audit at reasonable times by officers and auditors of the Trust.
3. As compensation for its services hereunder during any fiscal year of
the Trust, Financial Agent shall receive, within eight days after the end of
each month, a fee as specified in Schedule A.
4. Financial Agent shall not be liable for anything done or omitted by
it in the exercise of due care in discharging its duties specifically described
hereunder and shall be answerable and accountable only for its own acts and
omissions and not for those of any agent employed by it nor for those of any
bank, trust company, broker, depository, correspondent or other person.
Financial Agent shall be protected in acting upon any instruction, notice,
request, consent, certificate, resolution, or other instrument or paper believed
by Financial Agent to be genuine, and to have been properly executed, and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained by Financial
Agent hereunder a certificate signed by the Secretary of the Trust. Financial
Agent shall be entitled, with respect to questions of law relating to its duties
hereunder, to advice of counsel (which may be counsel for the Trust) and, with
respect to anything done or omitted by it in good faith hereunder in conformity
with the advice of or based upon an opinion of counsel, to be held harmless by
the Trust from all claims of loss or damage. Nothing herein shall protect
Financial Agent against any liability to the Trust or to its respective
shareholders to which Financial Agent would otherwise be subject by reason of
its willful misfeasance, bad faith, gross negligence or reckless disregard of
its duties hereunder. Except as provided in this paragraph, Financial Agent
shall not be entitled to any indemnification by the Trust.
5. Subject to prior approval of the Board of Trustees of the Trust,
Financial Agent may appoint one or more sub-financial agents to perform any of
the functions and services which are to be provided under the terms of this
Agreement upon such terms and conditions as may be mutually agreed upon by the
Trust, Financial Agent and such sub-financial agent.
6. This Agreement shall continue in effect only so long as (a) such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or by a vote of a majority of the outstanding voting securities of
the Trust, and (b) the terms and any renewal of such Agreement have been
approved by the vote of a majority of the trustees of the Trust who are not
parties to this Agreement or interested persons, as that term is defined in the
Investment Company Act of 1940, as amended, of any such party, cast in person at
a meeting called for the purpose of voting on such approval. A "majority of the
outstanding voting securities of the Trust" shall have, for all purposes of this
Agreement, the meaning provided therefor in said Investment Company Act.
7. Either party may terminate the within Agreement by tendering written
notice to the other, whereupon Financial Agent will be relieved of the duties
described herein. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in said Investment Company Act.
8. This Agreement shall be construed and the rights and obligations of
the parties hereunder enforced in accordance with the laws of the Commonwealth
of Massachusetts.
9. This Agreement shall become effective on January 1, 1997.
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. McLoughlin
Philip R. McLoughlin
President
PHOENIX EQUITY PLANNING
CORPORATION
By: /s/ David R. Pepin
David R. Pepin
Executive Vice President
<PAGE>
SCHEDULE A
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS FINANCIAL AGENT
Annual Financial Agent Fees shall be based on the following formula:
(1) An incremental schedule applies as follows:
Up to $100 million: 5 basis points on average daily net assets
$100 million to $300 million: 4 basis points on average daily net assets
$300 million thru $500 million: 3 basis points on average daily net assets
Greater than $500 million: 1.5 basis points on average daily net assets
A minimum fee will apply as follows:
Money Market $35,000
Equity $50,000
Balanced $60,000
Fixed Income $70,000
International $70,000
REIT $70,000
(2) An additional charge of $12,000 applies for each additional class
of shares above one, over and above the minimum asset-based fee previously
noted.
The following tables indicates the classification for each of the
applicable series:
Classification Series Name
-------------- -----------
International Global Small Cap Fund
New Asia Fund
Exhibit 18.1
Amended & 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 two
classes of shares, Class A and Class B ("Multi-Class Portfolios"). Shares of the
Multi-Class Portfolios shall represent an equal pro rata interest in the
respective 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 and Class B
shares shall have the features described in Sections a, b, c and d, below.
a. Distribution Plans
The Fund has adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio, containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall
reimburse Phoenix Equity Planning Corporation (the "Distributor") for costs and
expenses incurred in connection with distribution and marketing of shares
thereof, as provided in the Class A Distribution Plan and any supplements
thereto, subject to an annual limit of 0.25% of the average daily net assets of
a Multi-Class Portfolio's Class A shares.
<PAGE>
ii. Class B shares of each Multi-Class Portfolio shall
reimburse the Distributor for costs and expenses incurred in connection with
distribution and marketing of shares thereof, as provided in the Class B
Distribution Plan and any supplements thereto, subject to an annual limit of
1.00% of the average daily net assets of a Multi-Class Portfolio's Class B
shares.
b. Allocation of Income and Expenses
i. General.
The gross income, realized and unrealized capital gains and
losses and expenses (other than Class Expenses, as defined below) of each
Multi-Class Portfolio shall be allocated to each class on the basis of its net
asset value relative to the net asset value of the Multi-Class Portfolio.
Expenses to be so allocated include expenses of the Fund that are not
attributable to a particular Multi-Class Portfolio or class of a Multi-Class
Portfolio but are allocated to a Multi-Class Portfolio ("Fund Expenses") and
expenses of a particular Multi-Class Portfolio that are not attributable to a
particular class of that Multi-Class Portfolio ("Portfolio Expenses"). Fund
Expenses include, but are not limited to, trustees' fees, insurance costs and
certain legal fees. Portfolio Expenses include, but are not limited to, certain
state registration fees, custodial fees, advisory fees and other expenses
relating to the management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (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 Expenses, if the Fund's President
and Treasurer have determined, subject to Board approval or ratification, which
of such categories of expenses will be treated as Class Expenses, consistent
with applicable legal principles under the 1940 Act and the Internal Revenue
Code of 1986, as amended ("Code"). 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.
- 2 -
<PAGE>
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 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
- 3 -
<PAGE>
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 20, 1996, 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 Funds. 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
Funds. 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.
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
September 4, 1996.
- 4 -
<PAGE>
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.
- 5 -
<PAGE>
SCHEDULE A
PHOENIX-ABERDEEN SERIES FUND
NEW ASIA SERIES
GLOBAL SMALL CAP SERIES
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> PHOENIX-ABERDEEN NEW ASIA FUND CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> SEP-04-1996
<PERIOD-END> JAN-31-1997
<INVESTMENTS-AT-COST> 15645
<INVESTMENTS-AT-VALUE> 15515
<RECEIVABLES> 507
<ASSETS-OTHER> 126
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16148
<PAYABLE-FOR-SECURITIES> 851
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100
<TOTAL-LIABILITIES> 951
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15338
<SHARES-COMMON-STOCK> 1063
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (34)
<ACCUMULATED-NET-GAINS> 23
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (130)
<NET-ASSETS> 15197
<DIVIDEND-INCOME> 55
<INTEREST-INCOME> 65
<OTHER-INCOME> 0
<EXPENSES-NET> (86)
<NET-INVESTMENT-INCOME> 34
<REALIZED-GAINS-CURRENT> 23
<APPREC-INCREASE-CURRENT> (130)
<NET-CHANGE-FROM-OPS> (73)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (53)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1101
<NUMBER-OF-SHARES-REDEEMED> (44)
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 10636
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 32
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 175
<AVERAGE-NET-ASSETS> 9276
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.03
<PER-SHARE-DIVIDEND> (0.06)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.01
<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> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> SEP-04-1996
<PERIOD-END> JAN-31-1997
<INVESTMENTS-AT-COST> 15645
<INVESTMENTS-AT-VALUE> 15515
<RECEIVABLES> 507
<ASSETS-OTHER> 126
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16148
<PAYABLE-FOR-SECURITIES> 851
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100
<TOTAL-LIABILITIES> 951
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15338
<SHARES-COMMON-STOCK> 457
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (34)
<ACCUMULATED-NET-GAINS> 23
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (130)
<NET-ASSETS> 15197
<DIVIDEND-INCOME> 55
<INTEREST-INCOME> 65
<OTHER-INCOME> 0
<EXPENSES-NET> (86)
<NET-INVESTMENT-INCOME> 34
<REALIZED-GAINS-CURRENT> 23
<APPREC-INCREASE-CURRENT> (130)
<NET-CHANGE-FROM-OPS> (73)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (15)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 458
<NUMBER-OF-SHARES-REDEEMED> (3)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 4561
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 32
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 175
<AVERAGE-NET-ASSETS> 9276
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 0.03
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.99
<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> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> SEP-04-1996
<PERIOD-END> JAN-31-1997
<INVESTMENTS-AT-COST> 34886
<INVESTMENTS-AT-VALUE> 36568
<RECEIVABLES> 1950
<ASSETS-OTHER> 363
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38881
<PAYABLE-FOR-SECURITIES> 2232
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 136
<TOTAL-LIABILITIES> 2368
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 35481
<SHARES-COMMON-STOCK> 2083
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (68)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (585)
<ACCUM-APPREC-OR-DEPREC> 1685
<NET-ASSETS> 36513
<DIVIDEND-INCOME> 64
<INTEREST-INCOME> 82
<OTHER-INCOME> 0
<EXPENSES-NET> (214)
<NET-INVESTMENT-INCOME> (68)
<REALIZED-GAINS-CURRENT> (585)
<APPREC-INCREASE-CURRENT> 1685
<NET-CHANGE-FROM-OPS> 1032
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2174
<NUMBER-OF-SHARES-REDEEMED> (91)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 22045
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 77
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 282
<AVERAGE-NET-ASSETS> 22170
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 0.60
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.58
<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> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> SEP-04-1996
<PERIOD-END> JAN-31-1997
<INVESTMENTS-AT-COST> 34886
<INVESTMENTS-AT-VALUE> 36568
<RECEIVABLES> 1950
<ASSETS-OTHER> 363
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38881
<PAYABLE-FOR-SECURITIES> 2232
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 136
<TOTAL-LIABILITIES> 2368
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 35481
<SHARES-COMMON-STOCK> 1372
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (68)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (585)
<ACCUM-APPREC-OR-DEPREC> 1685
<NET-ASSETS> 36513
<DIVIDEND-INCOME> 64
<INTEREST-INCOME> 82
<OTHER-INCOME> 0
<EXPENSES-NET> (214)
<NET-INVESTMENT-INCOME> (68)
<REALIZED-GAINS-CURRENT> (585)
<APPREC-INCREASE-CURRENT> 1685
<NET-CHANGE-FROM-OPS> 1032
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1434
<NUMBER-OF-SHARES-REDEEMED> (62)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14468
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 77
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 282
<AVERAGE-NET-ASSETS> 22170
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 0.61
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.55
<EXPENSE-RATIO> 2.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
