As filed with the Securities and Exchange Commission on October 30, 1998
Registration No. 333-34537
File No. 811-08343
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 2 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 3 [X]
(Check appropriate box or boxes)
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Phoenix Investment Trust 97
(Exact Name of Registrant as Specified in Charter)
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101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices) (Zip Code)
(800) 243-1574
(Registrant's Telephone Number, including Area Code)
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Thomas N. Steenburg
Vice President, Counsel and Secretary
Phoenix Investment Partners, Ltd.
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)
[ ] on (date) pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed effective amendment.
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<PAGE>
PHOENIX INVESTMENT TRUST 97
Cross Reference Sheet Pursuant to Rule 404
PART A
<TABLE>
<CAPTION>
Item Number Form N-1A, Part A Prospectus Caption
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<S> <C> <C>
1. Front and Back Cover Pages ............................... Cover Page, Back Cover Page
2. Risk/Return Summary: Investments, Risks, Performance...... Investment Risk and Return Summary
3. Risk Return Summary: Fee Table ........................... Fund Expenses
4. Investment Objectives, Principal Investment Strategies, Investment Risk and Return Summary; Investment
and Related Risks ........................................ Strategies; Risks Related to Investment Strategies
5. Management's Discussion of Fund Performance .............. Performance Tables
6. Management, Organization, and Capital Structure .......... Management of the Fund
7. Shareholder Information .................................. Pricing of Fund Shares; Sales Charges; Your Account;
How to Buy Shares; How to Sell Shares; Things to
Know When Selling Shares; Account Policies; Investor
Services; Tax Status of Distributions
8. Distribution Arrangements ................................ Sales Charges
9. Financial Highlights Information ......................... Financial Highlights
PART B
Item Number Form N-1A, Part B Statement of Additional Information Caption
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10. Cover Page and Table of Contents ......................... Cover Page, Table of Contents
11. Fund History ............................................. The Fund
12. Description of the Fund and Its Investment Risks ......... Investment Objectives and Policies; Investment
Restrictions
13. Management of the Fund ................................... Management of the Trust
14. Control Persons and Principal Holders of Securities ...... Management of the Trust
15. Investment Advisory and Other Services ................... Services of the Adviser; The Distributor; Distribution
Plans; Other Information
16. Brokerage Allocation and Other Practices ................. Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities ....................... Other Information
18. Purchase, Redemption, and Pricing of Shares .............. Net Asset Value; How to Buy Shares; Investor Account
Services; Redemption of Shares; Tax Sheltered
Retirement Plans
19. Taxation of the Fund ..................................... Dividends, Distributions and Taxes
20. Underwriters ............................................. The Distributor
21. Calculation of Performance Data .......................... Performance Information
22. Financial Statements ..................................... Financial Statements
</TABLE>
<PAGE>
Phoenix Investment Partners
|
| December __, 1998
|
|
|
|
|
|
|------- Phoenix
Investment
Trust
97
Prospectus
Neither the Securities and Exchange
Commission nor any state securities
commission has approved or disapproved
of these securities or determined
if this prospectus is truthful or
complete. Any representation to the
contrary is a criminal offense.
This Prospectus contains important
information about the Phoenix
Investment Trust 97 that you
should know before investing. Please
read it carefully and retain it for
future reference.
[LOGO] PHOENIX
INVESTMENT PARTNERS, LTD.
<PAGE>
Phoenix
Investment
Trust 97
Table of Content
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<TABLE>
<S> <C>
Phoenix Small Cap Value Fund
Investment Risk and Return Summary ............. page 2
Fund Expenses .................................. page 6
Investment Strategies .......................... page 7
Risks Related to Investment Strategies ......... page 11
Management of the Fund ......................... page 16
Phoenix Value Equity Fund
Investment Risk and Return Summary ............. page 17
Fund Expenses .................................. page 21
Investment Strategies .......................... page 22
Risks Related to Investment Strategies ......... page 26
Management of the Funds ......................... page 32
Pricing of Fund Shares .......................... page 34
Sales Charges ................................... page 35
Your Account .................................... page 38
How to Buy Shares ............................... page 39
How to Sell Shares .............................. page 39
Things to Know When Selling Shares .............. page 40
Account Policies ................................ page 42
Investor Services ............................... page 43
Tax Status of Distributions ..................... page 44
Financial Highlights ............................ page 45
Additional Information .......................... page 47
</TABLE>
<PAGE>
Phoenix Small Cap Value Fund
Investment Risk and Return Summary
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Investment Objective
Phoenix Small Cap Value Fund has an investment
objective to seek long-term capital appreciation.
There is no guarantee that the fund will achieve
the objective.
Principal Investment Strategies
> The fund will invest primarily in common
stocks and securities convertible into common
stocks issued by companies with market
capitalizations of between $100 million and $1
billion. Under normal circumstances the fund
will invest at least 65% of its total assets
in securities of issuers with market
capitalizations of less than $1 billion.
> The fund's adviser uses a quantitative value
strategy that chooses stocks that meet certain
criteria relating to price, dividend yield and
the going concern value and debt levels of the
issuers. For the few hundred of the
approximately 5,000 that survive this
screening the adviser projects growth in
earnings and dividends, earnings momentum and
relative undervaluation based on a dividend
discount model. The adviser develops target
prices and value ranges, and purchases the
top-rated stocks. With certain exceptions the
adviser sells when a stock's target price is
reached, when the issuer or its industry
suffer negative changes or when there is a
change in the investment criteria that
prompted the initial purchase.
> The fund may invest in convertible securities.
Convertible securities investments will be
limited to those in one of the four highest
rating categories of convertible securities.
These are commonly called "investment grade".
> The fund may invest up to 50% of its net
assets in financial futures contracts and
options. The fund intends to invest in these
securities primarily for "hedging" purposes to
reduce the risk of holding other, related
investments. The fund may invest up to 5% of
its net assets in these securities as an
investment unrelated to any hedging purpose.
> The fund may obtain fixed interest loans
from a bank in amounts up to one-third the
value of its net assets and invest the loan
proceeds in other assets.
2 Phoenix Small Cap Value Fund
<PAGE>
> The fund may engage in "securities lending" to
increase its investment returns.
> The fund may invest up to 30% of its assets
in securities of foreign (non-U.S.) issuers.
> The fund may invest up to 15% of its assets
in securities that are not liquid, such as
private placements and repurchase agreements
that have maturities of more than seven days.
> The fund may invest up to 10% of its assets
in mutual funds. The fund may invest in mutual
funds advised by the fund's adviser or other
advisers controlled by the same persons who
control the fund's adviser.
> The fund may invest up to 5% of its assets
in a special investment company issuing
Standard & Poor's Depositary Receipts
("SPDRs").
> Temporary defensive strategy: if the adviser
believes that market conditions are not
favorable to the fund's principal strategies
the fund may invest without limit in U.S.
government securities and in money market
instruments. When this happens the fund may
not achieve its investment objective.
Principal Risks
If you invest in this fund you risk that you may
lose your investment.
The fund will seek to increase the value of your
shares by investing in securities the adviser
expects to increase in value and to provide current
income. Most of the fund's investments will be in
common stocks. Conditions affecting the overall
economy, specific industries or companies in which
the fund invests can be worse than expected. As a
result, the value of your shares may decrease.
Dividend, interest and other distributions can also
decrease or be eliminated entirely. Decreases in
share value from day to day will be "paper" losses
unless you actually sell your shares. If your
financial circumstances are likely to require you
to sell your shares at any particular time, rather
than holding them indefinitely, you run the risk
that your sale of shares will occur when share
values have declined.
Phoenix Small Cap Value Fund 3
<PAGE>
This fund will invest primarily in securities
issued by small companies. Smaller companies,
regardless of their location, may be affected to a
greater extent than larger companies by changes in
general economic conditions and conditions in
particular industries. Smaller companies may also
be relatively new and not have the same operating
history and "track record" as larger companies.
This could make future performance of smaller
companies more difficult to predict.
This fund may borrow money to purchase additional
securities. If the additional securities increase
in value the net asset value of the fund more
quickly than would occur without borrowing. If
these securities decrease in value or do not
increase enough to cover interest and other
borrowing costs the fund will suffer greater losses
than it would if no borrowing took place.
This fund may invest in financial futures contracts
and options. The adviser will make these
investments primarily to try to minimize the risk
of other investments it makes for the fund. These
investments may not protect the fund from losses,
they may decrease overall return, and they could,
in unusual circumstances, expose the fund to losses
that could be unlimited.
This fund may lend portfolio securities to
financial institutions to increase investment
return. If the borrower is unwilling or unable to
return the borrowed securities when due the fund
can suffer losses.
This fund may invest in companies in foreign
countries. Political and economic uncertainty as
well as relatively less public information about
investments may negatively impact the fund's
portfolio. Some investments may be made in
currencies other than U.S. dollars that will
fluctuate in value as a result of changes in the
currency exchange rate. Foreign markets and
currencies may not perform as well as U.S. markets.
This fund may invest in illiquid securities that
cannot be sold quickly. Illiquid securities may
have a lower value than comparable securities that
have active markets for resale, and they can lose
their value more quickly under unfavorable
conditions.
This fund may invest in other investment companies
and mutual funds, including a special fund based on
the S&P 500. Assets invested in other investment
companies and mutual funds will incur fees similar
to the investment management, custodial and other
fees that this fund charges. You will in effect
incur a second set of fees on these fund
investments.
4 Phoenix Small Cap Value Fund
<PAGE>
Performance Tables
The table below shows how the fund's annual returns
for the life of the fund compare to those of a
broad-based securities market index. The fund's
past performance is not necessarily an indication
of how the fund will perform in the future.
<TABLE>
<CAPTION>
Annual Total Returns(1) One Year(2) Life of the Fund(3)
<S> <C> <C>
Class A Shares (1.59)% (22.51)%
Class B Shares (1.85)% (22.91)%
Class C Shares 2.24% (19.89)%
Russell 2000 Value Index(4) 3.10% (16.30)%
</TABLE>
(1) The fund's annual returns in the table above reflect the deduction of the
maximum sales charge for an investment in the fund's Class A Shares and a full
redemption in the fund's Class B and C Shares.
(2) Since November 20, 1997.
(3) Period November 20, 1997 through August 31, 1998.
(4) The Russell 2000 Value Index is an unmanaged but commonly used measure of
total return performance of small-capitalization value-oriented stocks. The
index does not reflect sales charges.
Phoenix Small Cap Value Fund 5
<PAGE>
Fund Expenses
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This table illustrates all fees and expenses that
you may pay if you buy and hold shares of the fund.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
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<S> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales Charge (load) Imposed on
Purchases (as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (load) (as a None 5% during the first year, 1% during the
percentage of the lesser of the value redeemed or decreasing 1% annually first year
the amount invested) to 2% during the fourth
and fifth years;
decreasing to 0% after
the fifth year
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
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Class A Class B Class C
Shares Shares Shares
------- ------- -------
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 0.90% 0.90% 0.90%
Distribution and Service (12b-1) Fees (b) 0.25% 1.00% 1.00%
Other Expenses 1.97% 1.97% 1.97%
------- ------- -------
Total Annual Fund Operating Expenses
(before reimbursement) (a) 3.12% 3.87% 3.87%
======= ======= =======
</TABLE>
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(a) Actual Total Annual Fund Operating Expenses after expense
reimbursement are:
Class A Shares 1.40%
Class B Shares 2.15%
Class C Shares 2.15%
(b) Distribution and Service Fees represent an asset based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
Example
This example is intended to help you compare the
cost of investing in the fund with the cost of
investing in other mutual funds.
The example assumes that you invest $10,000 in the
fund for the time periods indicated and then redeem
all of your shares at the end of those periods. The
example also assumes that your investment has a 5%
return each year and that the fund's operating
expenses remain the same. In the case of Class B
Shares, it is assumed that your shares are
converted to Class A after eight years. Although
your actual costs may be higher or lower, based on
these assumptions your costs would be:
6 Phoenix Small Cap Value Fund
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $775 $1,392 $2,032 $3,742
Class B 789 1,381 1,990 3,935
Class C 489 1,185 1,990 4,096
</TABLE>
You would pay the following expenses if you did not
redeem your shares:
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $775 $1,392 $2,032 $3,742
Class B 389 1,181 1,990 3,935
Class C 389 1,181 1,990 4,896
</TABLE>
Note: Your actual expenses would be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
reimbursement of expenses over certain levels by the fund's investment adviser.
Refer to the section "Management of the Fund" for information about expense
reimbursement.
Investment Strategies
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Investment Objective
Phoenix Small Cap Value Fund has an investment
objective to seek long-term capital appreciation.
There is no guarantee that the fund will achieve
the objective. The investment objective is a
fundamental policy that cannot be changed without
shareholder approval.
Principal Investment Strategies
The fund invests in a diversified portfolio of
securities of primarily domestic (U.S.) companies
with market capitalizations of between $100 million
and $1 billion. Generally the fund will invest in
securities traded on the New York Stock Exchange,
the American Stock Exchange and in over-the-counter
markets. The fund is designed to invest in common
stocks that meet the adviser's quantitative
standards that indicate above average financial
soundness and intrinsic value relative to price.
Under normal circumstances the fund will invest at
least 65% of its total assets in securities of
issuers with capitalizations less than $1 billion
at the time of investment.
Phoenix Small Cap Value Fund 7
<PAGE>
The adviser applies a security selection process
that chooses stocks that meet certain investment
criteria relating to price, dividend yield, going
concern value and debt levels. The adviser
considers approximately 5,000 companies, but only a
few hundred meet one or more of the adviser's
criteria for selection. For those that do the
adviser projects growth in earnings and dividends,
earnings momentum and undervaluation based on a
dividend discount model. From this analysis the
adviser develops target prices and value ranges and
selects the top-rated securities for purchase.
While the adviser's strategy tends to concentrate
it investment selections in larger issuers, the
fund may invest in securities of issuers of any
size. Generally the adviser sells a fund security
when its target price is reached, when the company
or its industry suffers negative changes, or when
there is a significant change in the investment
criteria that prompted the adviser to purchase the
security. The adviser may choose to continue to
hold a security that it believes suitable for the
fund's objectives even if it no longer meets these
criteria.
The fund may also invest in convertible securities.
A convertible security is a bond, debenture, note,
preferred stock or other security that may be
converted into or exchanged for a prescribed amount
of common stock of the issuer at predetermined
time(s), price(s) or price formula. A convertible
security entitles the owner to receive interest
paid or accrued on a debt security or dividends
paid on preferred stock until the security matures
or is converted to common stock. Convertible
securities have several unique investments
characteristics, such as
> Higher yields than common stocks but lower
yields than comparable nonconvertible
securities
> Typically less fluctuation in value than the
"underlying" common stock, that is, the common
stock that the investor receives if he
converts
> The potential for capital appreciation if the
market price of the underlying common stock
increases
The fund will only invest in the four highest
rating categories of convertible securities,
commonly called "investment grade" securities. If
the fund purchases an investment grade security
that loses its investment grade rating the fund is
not required to sell the security. Ratings are
established by nationally recognized statistical
rating agencies. Please see the Statement of
Additional Information for a detailed list of
rating categories.
8 Phoenix Small Cap Value Fund
<PAGE>
The fund may invest up to 50% of its net assets
(fund assets less fund liabilities) in certain
"financial futures contracts" and "options".
Financial futures contracts consist of interest
rate futures contracts, foreign currency futures
contracts, and securities index futures contracts.
These types of securities permit an investor to
"hedge" or minimize the risk associated with owning
certain other securities. For example, the adviser
can purchase
> An interest rate futures contract that is
likely to increase in value at a time when a
security the fund owns that is significantly
affected by interest rates might decrease in
value;
> A foreign currency futures contract that is
likely to increase in value at a time when a
security owned by the fund that directly or
indirectly is affected by currency exchanges
might decrease in value because the currency
exchange rate is less favorable; or
> A securities index futures contract that is
likely to increase in value at a time when
that securities market and securities traded
on that market might decrease in value.
The fund intends to invest in financial futures
contracts and options only for hedging purposes.
However, the fund can invest up to 5% of its net
assets in initial premiums for these futures
contracts and options even if they are not
purchased for hedging purposes, that is, they are
purchased as an investment in their own right.
Please see the Statement of Additional Information
for more detailed information about futures and
options.
The fund may increase ownership of securities by
borrowing from banks at fixed interest rates and
investing the proceeds in stocks or other
investments that are consistent with these
investment techniques. Purchasing additional
securities with borrowed funds can increase the net
asset value of the fund more quickly. Total
borrowing cannot exceed 33% of the fund's net
assets, which means that after any borrowing the
value of the fund's assets (including the amount
borrowed) must be at least three times the total
amount borrowed for investment purposes. If the
value of the fund's assets decreases so that the
ratio becomes less than three to one, the fund must
reduce its outstanding loan within three business
days to bring the ratio back to three to one.
Phoenix Small Cap Value Fund 9
<PAGE>
The fund may lend portfolio securities to
broker-dealers and other financial institutions to
increase its investment returns. The total amount
of such lending can be as much as one-third of the
fund's total assets. When the fund lends securities
in this fashion the borrower returns the securities
at a pre-arranged time and pays some form of
premium or other fee for the transaction. The fund
receives all dividends and other distributions made
with respect to the loaned securities. All
securities loans are secured by other marketable
securities.
The fund may invest up to 30% of its total assets
in securities of foreign (non-U.S.) issuers.
The fund may invest up to 15% of its net assets in
securities that are not liquid. The fund considers
investments that the adviser is not likely to be
able to sell within seven days as not liquid. These
securities can include repurchase agreements with
maturities of more than seven days and private
placements. Repurchase agreements are contracts
under which the fund will buy securities and
simultaneously agree to resell them at a later date
for an agreed, higher price. Private placements are
securities that are not sold to investors through a
public offering but instead are sold in direct,
private transactions.
The fund may invest in Standard & Poor's Depositary
Receipts ("SPDRs"), shares of a unit investment
trust that is traded on the American Stock
Exchange. The fund may not invest more than 5% of
its assets in SPDRs. Each SPDR represents a
proportionate interest, in substantially the same
weighting, as the stocks that make up the Standard
& Poor's 500 Index ("S&P 500").
The fund may also invest up to 10% of its assets in
mutual funds, including mutual funds managed by the
adviser or another adviser controlled by the same
persons as the adviser. No more than 5% of its
assets will be invested in any one money market
mutual fund. Investments in SPDRs count toward the
10% limitation.
Note: If the fund's adviser determines that market
conditions are not favorable to the types of
investments the adviser ordinarily intends to hold,
the fund may invest without limitation in any
combination of U.S. Government securities and money
market securities. In such instances, the fund may
not achieve its stated investment objective.
Please refer to the Statement of Additional
Information for more detailed information about
these and other investment techniques.
10 Phoenix Small Cap Value Fund
<PAGE>
Risks Related to Investment Strategies
- --------------------------------------------------------------------------
General
The fund's primary focus is long-term capital
appreciation. Its secondary objective is current
income. The adviser intends to invest fund assets
so that your shares increase in value and so that
your shares earn current income through dividends,
interest or other current distributions. However,
the value of the fund's investments that support
your share value can decrease as well as increase.
If between the time you purchase shares and the
time you sell shares the value of the fund's
investments decreases you will lose money. The
value of the fund's investments can decrease for a
number of reasons. For example, changing economic
conditions may cause a decline in the value of many
or even most equity and fixed income investments.
Particular industries can face poor markets for
their products or services so that companies
engaged in those businesses do not do as well as
companies in other industries. Interest rate
changes may improve prospects for certain types of
businesses and they may worsen prospects for
others. To the extent that the fund's investments
are affected by general economic declines, declines
in industries, and interest rate changes that
negatively affect the companies in which the fund
invests, fund share values may decline. Share
values can also decline if the specific companies
selected for fund investment fail to perform as the
adviser expects, regardless of general economic
trends, industry trends, interest rates and other
economic factors. When companies owned by the fund
encounter negative conditions they may be unable to
continue to pay dividends or interest at expected
levels. Finally, decreases in share value from day
to day will be "paper" losses unless you actually
sell your shares. If your financial circumstances
are likely to require you to sell your shares at
any particular time, rather than holding them
indefinitely, you run the risk that your sale of
shares will occur when share values have declined.
If between the time you purchase shares and the
time you sell shares the value of the fund's
investments decreases you will lose money.
In addition to these general risks of investing in
the fund, there are several specific risks of
investing in the fund that you should note.
Small Market Capitalization Investing
The fund will concentrate its investments in
smaller companies. Companies with small
capitalization are often companies with a limited
operating history or companies in industries that
have recently emerged due to cultural, economic,
regulatory or
Phoenix Small Cap Value Fund 11
<PAGE>
technological developments. Such developments can
have a significant positive or negative effect on
small capitalization companies and their stock
performance. Given the limited operating history
and rapidly changing fundamental prospects,
investment returns from smaller capitalization
companies can be highly volatile. Smaller companies
may 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
and may, at times, be illiquid (difficult to sell).
Futures Contracts and Options
The fund may invest in financial futures contracts
and options. The adviser intends to invest in such
securities primarily to hedge or reduce the risk of
holding other investments. If the prices for
futures contracts and prices in the cash market do
not correlate as expected or if the advisers
expectations about interest rate, exchange rate or
general market movements are incorrect, the fund's
returns may not be as high as they would be if the
adviser did not invest in these securities. There
is also a risk that the market for reselling
financial futures contracts and options may be
limited or nonexistent. The fund could incur
unlimited losses if it cannot liquidate certain
futures contracts. The adviser's decisions about
the nature and timing of futures contract and
options transaction may result in losses when other
investors' decisions about the same contracts and
options result in gains.
Leverage
If the fund borrows money to make additional
investments it must pay interest on the borrowed
funds. The interest paid will decrease the fund's
net investment income. The adviser may borrow funds
to make additional investments expecting that those
investments will increase in value sufficient to
cover borrowing costs and produce additional gain
for the fund. If those investments decrease in
value or do not increase in value sufficient to
cover borrowing costs the fund will suffer greater
losses than would take place if no borrowing took
place. In addition, because the fund must maintain
a three to one ratio of net assets to debt, in a
declining market it may have to sell securities
under poor market conditions to maintain the
required ratio.
12 Phoenix Small Cap Value Fund
<PAGE>
Securities Lending
When the fund lends portfolio securities it runs
the risk that the borrower will be unable or
unwilling to return the securities and the agreed
fee or premium. The value of the collateral taken
as security for the securities loaned may decline
in value or may be difficult to convert to cash in
the event that the fund must rely on the collateral
to recover the value of its securities. In these
circumstances the fund will suffer losses.
Foreign Investing
The fund may invest in non-U.S. companies.
Investing in the securities of non-U.S. 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,
> differences and inefficiencies in transaction
settlement systems,
> the possibility of expropriation or
confiscatory taxation,
> adverse changes in investment or exchange
control regulations,
> political instability, and
> potential restrictions on the flow of
international capital.
Political and economic uncertainty as well as
relatively less public information about
investments may negatively impact the fund's
portfolio.
Foreign securities often trade with less frequency
and volume than domestic securities and therefore
may exhibit greater price volatility. Additionally,
dividends and interest payable on foreign
securities may be subject to foreign taxes withheld
prior to receipt by the fund.
Many of the foreign securities held by the fund
will not be registered with, nor will the issuers
of those securities be subject to the reporting
requirements of, the U.S. Securities and Exchange
Commission. Accordingly, there may be less publicly
available
Phoenix Small Cap Value Fund 13
<PAGE>
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
differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross
national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance
of payment positions.
Foreign Currency
Portions of the fund's assets may be invested in
securities denominated in foreign currencies.
Changes in foreign exchange rates will affect the
value of those securities denominated or quoted in
currencies other than the U.S. dollar. The forces
of supply and demand in the foreign exchange
markets determine exchange rates and these forces
are in turn affected by a range of economic,
political, financial, governmental and other
factors. Exchange rate fluctuations can affect the
fund's net asset value (share price) 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 terms.
Effective January 1, 1999, eleven European
countries will begin converting from their
sovereign currency to the European Union common
currency called the "Euro." This conversion may
expose the fund to certain risks including the
reliability and timely reporting of pricing
information of the fund's portfolio holdings. In
addition, one or more of the following may
adversely affect specific securities in the fund's
portfolio:
> known trends or uncertainties related to the
Euro conversion that an issuer reasonably
expects will have a material impact on
revenues, expenses or income from its
operations;
> competitive implications of increased price
transparency of European Union markets
(including labor markets) resulting from
adoption of a common currency and issuers'
plans for pricing their own products and
services in the Euro;
> issuers' ability to make required information
technology updates on a timely basis, and
costs associated with the conversion
(including costs of dual currency operations
through January 1, 2002);
14 Phoenix Small Cap Value Fund
<PAGE>
> currency exchange rate risk and derivatives
exposure (including the disappearance of price
sources, such as certain interest rate
indices); and
> potential tax consequences.
The adviser does not expect to invest in any
securities that may be adversely effected by the
conversion to the Euro.
Illiquid Securities
Securities owned by the fund that are not liquid
may be difficult to sell because there may be no
active markets for resale and fewer potential
buyers. This can make illiquid investments more
likely than other types of investments to lose
value. In extreme cases it may be impossible to
resell them and they can become almost worthless to
the fund.
Mutual Fund Investing
The fund may invest in mutual funds, including
mutual funds managed by the adviser or other
advisers controlled by the same persons who control
the adviser. When the fund purchases shares of
another mutual fund the assets it invests in the
other mutual fund incur expenses such as operating
costs, advisory fees, and administrative fees.
These expenses reduce the return the fund receives.
In effect, there is a layering of expenses: to the
extent the fund invests in other mutual funds there
are two sets of operating costs, advisory fees and
administrative fees to be paid. If the fund invests
in a mutual fund managed by the adviser this can
mean that the adviser receives advisory fees twice
for managing essentially the same assets.
SPDRs
The same types of events and circumstances
affecting stocks generally can affect the value of
SPDRs. General market conditions, conditions
affecting the S&P 500 stocks, governmental fiscal
or monetary and other factors may cause the S&P 500
stocks to decrease in value. If these stocks
decrease in value the SPDRs will also decrease.
SPDRs are not actively managed. This means that the
unit investment trust that issues SPDRs does not
buy or sell stocks comprising the S&P 500 in
reaction to market events or occurrences affecting
some or all of the component stocks. Unless and
until the composition of the S&P 500 itself
changes, the value of SPDRs will be based on the
experience, positive or negative, of its component
stocks.
Phoenix Small Cap Value Fund 15
<PAGE>
Impact of the Year 2000 Issue
The Year 2000 issue is the result of computer
programs being written using two rather than four
digits to define the applicable year. There is the
possibility that some or all of a company's
computer programs that have date-sensitive software
may recognize a date using "00" as the year 1900
rather than the year 2000. If a company whose
securities are held by the fund does not "fix" its
Year 2000 issue it is possible that its operations
and financial results would be hurt. Also, the cost
of modifying computer programs to become Year 2000
compliant may hurt the financial performance and
market price of companies whose securities are held
by the fund.
Management of The Fund
- -----------------------------------------------------------
Please refer to "Management of the Funds" on page
32 for a description of the adviser, management
fees and the portfolio manager.
16 Phoenix Small Cap Value Fund
<PAGE>
Phoenix Value Equity Fund
Investment Risk and Return Summary
- -------------------------------------------------------------------------
Investment Objectives
Phoenix Value Equity Fund has a primary investment
objective to seek long-term capital appreciation.
The fund has a secondary investment objective to
seek current income by investing in a diversified
portfolio of common stocks. There is no guarantee
that the fund will achieve either objective.
Principal Investment Strategies
> The fund will invest primarily in common
stocks. Under normal circumstances the fund
will invest at least 65% of its total assets
in common stocks.
> The fund's adviser uses a quantitative value
strategy that choose stocks that meet certain
criteria relating to price, dividend yield and
the going concern value and debt levels of the
issuers. For the few hundred of the
approximately 2,500 that survive this
screening the adviser projects growth in
earnings and dividends, earnings momentum and
relative undervaluation based on a dividend
discount model. The adviser develops target
prices and value ranges, and purchases the
top-rated stocks. With certain exceptions the
adviser sells when a stock's target price is
reached, when the issuer or its industry
suffer negative changes or when there is a
change in the investment criteria that
prompted the initial purchase.
> The fund may invest in convertible securities.
Convertible securities investments will be
limited to those in one of the four highest
rating categories of convertible securities.
These are commonly called "investment grade".
> The fund may invest up to 50% of its net
assets in financial futures contracts and
options. The fund intends to invest in these
securities primarily for "hedging" purposes to
reduce the risk of holding other, related
investments. The fund may invest up to 5% of
its net assets in these securities as an
investment unrelated to any hedging purpose.
> The fund may obtain fixed interest loans from
a bank in amounts up to one-third the value of
its net assets and invest the loan proceeds in
other assets.
Phoenix Value Equity Fund 17
<PAGE>
> The fund may engage in "securities lending"
to increase its investment returns.
> The fund may invest up to 30% of its assets
in securities of foreign (non-U.S.) issuers.
> The fund may invest up to 15% of its assets
in securities that are not liquid, such as
private placements and repurchase agreements
that have maturities of more than seven days.
> The fund may invest up to 10% of its assets
in mutual funds. The fund may invest in mutual
funds advised by the fund's adviser or other
advisers controlled by the same persons who
control the fund's adviser.
> The fund may invest up to 5% of its assets in
a special investment company issuing Standard
& Poor's Depositary Receipts ("SPDRs").
> Temporary defensive strategy: if the adviser
believes that market conditions are not
favorable to the fund's principal strategies
the fund may invest without limit in U.S.
government securities and in money market
instruments. When this happens the fund may
not achieve its investment objective.
Principal Risks
If you invest in this fund you risk that you may
lose your investment.
The fund will seek to increase the value of your
shares by investing in securities the adviser
expects to increase in value and to provide current
income. Most of the fund's investments will be in
common stocks. Conditions affecting the overall
economy, specific industries or companies in which
the fund invests can be worse than expected. As a
result, the value of your shares may decrease.
Dividend, interest and other distributions can also
decrease or be eliminated entirely. Decreases in
share value from day to day will be "paper" losses
unless you actually sell your shares. If your
financial circumstances are likely to require you
to sell your shares at any particular time, rather
than holding them indefinitely, you run the risk
that your sale of shares will occur when share
values have declined.
18 Phoenix Value Equity Fund
<PAGE>
This fund may also invest in small companies as
well as larger companies. Smaller companies,
regardless of their location, may be affected to a
greater extent than larger companies by changes in
general economic conditions and conditions in
particular industries. Smaller companies may also
be relatively new and not have the same operating
history and "track record" as larger companies.
This could make future performance of smaller
companies more difficult to predict.
This fund may borrow money to purchase additional
securities. If the additional securities increase
in value the net asset value of the fund more
quickly than would occur without borrowing. If
these securities decrease in value of do not
increase enough to cover interest and other
borrowing costs the fund will suffer greater losses
than it would if no borrowing took place.
This fund may invest in financial futures contracts
and options. The adviser will make these
investments primarily to try to minimize the risk
of other investments it makes for the fund. These
investments may not protect the fund from losses,
they may decrease overall return, and they could,
in unusual circumstances, expose the fund to losses
that could be unlimited.
This fund may lend portfolio securities to
financial institutions to increase investment
return. If the borrower is unwilling or unable to
return the borrowed securities when due the fund
can suffer losses.
This fund may invest in companies in foreign
countries. Political and economic uncertainty as
well as relatively less public information about
investments may negatively impact the fund's
portfolio. Some investments may be made in
currencies other than U.S. dollars that will
fluctuate in value as a result of changes in the
currency exchange rate. Foreign markets and
currencies may not perform as well as U.S. markets.
This fund may invest in illiquid securities that
cannot be sold quickly. Illiquid securities may
have a lower value than comparable securities that
have active markets for resale, and they can lose
their value more quickly under unfavorable
conditions.
This fund may invest in other investment companies
and mutual funds, including a special fund based on
the S&P 500. Assets invested in other investment
companies and mutual funds will incur fees similar
to the investment management, custodial and other
fees that this fund charges. You will in effect
incur a second set of fees on these fund
investments.
Phoenix Value Equity Fund 19
<PAGE>
Performance Tables
The table below shows how the fund's annual returns
for the life of the fund compare to those of a
broad-based securities market index. The fund's
past performance is not necessarily an indication
of how the fund will perform in the future.
<TABLE>
<CAPTION>
Annual Total Returns(1) One Year(2) Life of the Fund(3)
<S> <C> <C>
Class A Shares (4.05)% (14.56)%
Class B Shares (4.32)% (15.15)%
Class C Shares (0.34)% (11.74)%
S&P 500 Stock Index(4) 3.44% 3.10%
</TABLE>
(1) The fund's annual returns in the table above reflect the deduction of the
maximum sales charge for an investment in the fund's Class A Shares and a full
redemption in the fund's Class B Shares.
(2) Since November 5, 1997.
(3) Period November 5, 1997 through August 31, 1998.
(4) The S&P 500 Stock Index is an unmanaged but commonly used measure of common
stock total return performance. The S&P 500's performance does not reflect sales
charges.
20 Phoenix Value Equity Fund
<PAGE>
Fund Expenses
- ----------------------------------------------
This table illustrates all fees and expenses that
you may pay if you buy and hold shares of the fund.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
------- ------- -------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales Charge (load) Imposed on
Purchases (as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (load) (as a None 5% during the first year, 1% during the
percentage of the lesser of the value redeemed or decreasing 1% annually first year
the amount invested) to 2% during the fourth
and fifth years;
decreasing to 0% after
the fifth year
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
- ---------------------------------------------------------------------------------------------------------
Class A Class B Class C
Shares Shares Shares
------- ------- -------
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees (b) 0.25% 1.00% 1.00%
Other Expenses (b) 1.96% 1.96% 1.96%
------ ------ ------
Total Annual Fund Operating Expenses
(before reimbursement) (a) 2.96% 3.71% 3.71%
====== ====== ======
</TABLE>
- ------------------
(a) Actual Total Annual Fund Operating Expenses after expense reimbursement are:
Class A Shares 1.25%
Class B Shares 2.00%
Class C Shares 2.00%
(b) Distribution and Service Fees represent an asset based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
Example
This example is intended to help you compare the
cost of investing in the fund with the cost of
investing in other mutual funds.
The example assumes that you invest $10,000 in the
fund for the time periods indicated and then redeem
all of your shares at the end of those periods. The
example also assumes that your investment has a 5%
return each year and that the fund's operating
expenses remain the same. In the case of Class B
Shares, it is assumed that your shares are
converted to Class A after eight years. Although
your actual costs may be higher or lower, based on
these assumptions your costs would be:
Phoenix Value Equity Fund 21
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $760 $1,347 $1,958 $3,599
Class B 773 1,335 1,916 3,795
Class C 473 1,335 1,916 3,958
</TABLE>
You would pay the following expenses if you did not
redeem your shares:
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $760 $1,397 $1,958 $3,599
Class B 373 1,135 1,916 3,795
Class C 373 1,135 1,916 3,958
</TABLE>
Note: Your actual expenses would be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
reimbursement of expenses over certain levels by the fund's investment adviser.
Refer to the section "Management of the Fund" for information about expense
reimbursement.
Investment Strategies
- ------------------------------------------------------
Investment Objectives
The fund has a primary investment objective to seek
long-term capital appreciation. The fund has a
secondary investment objective to seek current
income by investing in a diversified portfolio of
common stocks. There is no guarantee that the fund
will achieve either objective. The investment
objectives are a fundamental policy that cannot be
changed without shareholder approval.
Principal Investment Strategies
The fund invests in a diversified portfolio of
securities of primarily domestic (U.S.) companies.
Generally the fund will invest in securities traded
on the New York Stock Exchange, the American Stock
Exchange and in over-the-counter markets. The fund
is designed to invest in common stocks that meet
the adviser's quantitative standards that indicate
above average financial soundness and intrinsic
value relative to price. Under normal circumstances
the fund will invest at least 65% of its total
assets in common stocks.
22 Phoenix Value Equity Fund
<PAGE>
The adviser applies a security selection process
that chooses stocks that meet certain investment
criteria relating to price, dividend yield, going
concern value and debt levels. The adviser
considers approximately 2,500 companies, but only a
few hundred meet one or more of the adviser's
criteria for selection. For those that do the
adviser projects growth in earnings and dividends,
earnings momentum and undervaluation based on a
dividend discount model. From this analysis the
adviser develops target prices and value ranges and
selects the top-rated securities for purchase.
While the adviser's strategy tends to concentrate
its investment selections in larger issuers, the
fund may invest in securities of issuers of any
size. Generally the adviser sells a fund security
when its target price is reached, when the company
or its industry suffers negative changes, or when
there is a significant change in the investment
criteria that prompted the adviser to purchase the
security. The adviser may choose to continue to
hold a security that it believes suitable for the
fund's objectives even if it no longer meets these
criteria.
The fund may also invest in convertible securities.
A convertible security is a bond, debenture, note,
preferred stock or other security that may be
converted into or exchanged for a prescribed amount
of common stock of the issuer at predetermined
time(s), price(s) or price formula. A convertible
security entitles the owner to receive interest
paid or accrued on a debt security or dividends
paid on preferred stock until the security matures
or is converted to common stock. Convertible
securities have several unique investments
characteristics, such as
> Higher yields than common stocks but lower
yields than comparable nonconvertible
securities
> Typically less fluctuation in value than the
"underlying" common stock, that is, the common
stock that the investor receives if he
converts
> The potential for capital appreciation if the
market price of the underlying common stock
increases
The fund will only invest in the four highest
rating categories of convertible securities,
commonly called "investment grade" securities. If
the fund purchases an investment grade security
that loses its investment grade rating the fund is
not required to sell the security. Ratings are
established by nationally recognized statistical
rating agencies. Please see the Statement of
Additional Information for a detailed list of
rating categories.
Phoenix Value Equity Fund 23
<PAGE>
The fund may invest up to 50% of its net assets
(fund assets less fund liabilities) in certain
"financial futures contracts" and "options".
Financial futures contracts consist of interest
rate futures contracts, foreign currency futures
contracts, and securities index futures contracts.
These types of securities permit an investor to
"hedge" or minimize the risk associated with owning
certain other securities. For example, the adviser
can purchase
> An interest rate futures contract that is
likely to increase in value at a time when a
security the fund owns that is significantly
affected by interest rates might decrease in
value;
> A foreign currency futures contract that is
likely to increase in value at a time when a
security owned by the fund that directly or
indirectly is affected by currency exchanges
might decrease in value because the currency
exchange rate is less favorable; or
> A securities index futures contract that is
likely to increase in value at a time when
that securities market and securities traded
on that market might decrease in value.
The fund intends to invest in financial futures
contracts and options only for hedging purposes.
However, the fund can invest up to 5% of its net
assets in initial premiums for these futures
contracts and options even if they are not
purchased for hedging purposes, that is, they are
purchased as an investment in their own right.
Please see the Statement of Additional Information
for more detailed information about futures and
options.
The fund may increase ownership of securities by
borrowing from banks at fixed interest rates and
investing the proceeds in stocks or other
investments that are consistent with these
investment techniques. Purchasing additional
securities with borrowed funds can increase the net
asset value of the fund more quickly. Total
borrowing cannot exceed 33% of the fund's net
assets, which means that after any borrowing the
value of the fund's assets (including the amount
borrowed) must be at least three times the total
amount borrowed for investment purposes. If the
value of the fund's assets decreases so that the
ratio becomes less than three to one, the fund must
reduce its outstanding loan within three business
days to bring the ratio back to three to one.
24 Phoenix Value Equity Fund
<PAGE>
The fund may lend portfolio securities to
broker-dealers and other financial institutions to
increase its investment returns. The total amount
of such lending can be as much as one-third of the
fund's total assets. When the fund lends securities
in this fashion the borrower returns the securities
at a pre-arranged time and pays some form of
premium or other fee for the transaction. The fund
receives all dividends and other distributions made
with respect to the loaned securities. All
securities loans are secured by other marketable
securities.
The fund may invest up to 30% of its total assets
in securities of foreign (non-U.S.) issuers.
The fund may invest up to 15% of its net assets in
securities that are not liquid. The fund considers
investments that the adviser is not likely to be
able to sell within seven days as not liquid. These
securities can include repurchase agreements with
maturities of more than seven days and private
placements. Repurchase agreements are contracts
under which the fund will buy securities and
simultaneously agree to resell them at a later date
for an agreed, higher price. Private placements are
securities that are not sold to investors through a
public offering but instead are sold in direct,
private transactions.
The fund may invest in Standard & Poor's Depositary
Receipts ("SPDRs"), shares of a unit investment
trust that is traded on the American Stock
Exchange. The fund may not invest more than 5% of
its assets in SPDRs. Each SPDR represents a
proportionate interest, in substantially the same
weighting, as the stocks that make up the Standard
& Poor's 500 Index ("S&P 500").
The fund may also invest up to 10% of its assets in
mutual funds, including mutual funds managed by the
adviser or another adviser controlled by the same
persons as the adviser. No more than 5% of its
assets will be invested in any one money market
mutual fund. Investments in SPDRs count toward the
10% limitation.
Note: If the fund's adviser determines that market
conditions are not favorable to the types of
investments the adviser ordinarily intends to hold,
the fund may invest without limitation in any
combination of U.S. Government securities and money
market securities. In such instances, the fund may
not achieve its stated investment objective.
Please refer to the Statement of Additional
Information for more detailed information about
these and other investment techniques.
Phoenix Value Equity Fund 25
<PAGE>
Risks Related to Investment Strategies
- --------------------------------------------------------------------------
General
The fund's primary focus is long-term capital
appreciation. Its secondary objective is current
income. The adviser intends to invest fund assets
so that your shares increase in value and so that
your shares earn current income through dividends,
interest or other current distributions. However,
the value of the fund's investments that support
your share value can decrease as well as increase.
If between the time you purchase shares and the
time you sell shares the value of the fund's
investments decreases you will lose money. The
value of the fund's investments can decrease for a
number of reasons. For example, changing economic
conditions may cause a decline in the value of many
or even most equity and fixed income investments.
Particular industries can face poor markets for
their products or services so that companies
engaged in those businesses do not do as well as
companies in other industries. Interest rate
changes may improve prospects for certain types of
businesses and they may worsen prospects for
others. To the extent that the fund's investments
are affected by general economic declines, declines
in industries, and interest rate changes that
negatively affect the companies in which the fund
invests, fund share values may decline. Share
values can also decline if the specific companies
selected for fund investment fail to perform as the
adviser expects, regardless of general economic
trends, industry trends, interest rates and other
economic factors. When companies owned by the fund
encounter negative conditions they may be unable to
continue to pay dividends or interest at expected
levels. Finally, decreases in share value from day
to day will be "paper" losses unless you actually
sell your shares. If your financial circumstances
are likely to require you to sell your shares at
any particular time, rather than holding them
indefinitely, you run the risk that your sale of
shares will occur when share values have declined.
If between the time you purchase shares and the
time you sell shares the value of the fund's
investments decreases you will lose money.
In addition to these general risks of investing in
the fund, there are several specific risks of
investing in the fund that you should note.
Small Market Capitalization Investing
The fund may invest in some smaller companies.
Companies with small capitalization are often
companies with a limited operating history or
companies in industries that have recently emerged
due to cultural, economic, regulatory or
technological developments.
26 Phoenix Value Equity Fund
<PAGE>
Such developments can have a significant positive
or negative effect on small capitalization
companies and their stock performance. Given the
limited operating history and rapidly changing
fundamental prospects, investment returns from
smaller capitalization companies can be highly
volatile. Smaller companies may 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 and may, at
times, be difficult to sell.
Futures Contracts and Options
The fund may invest in financial futures contracts
and options. The adviser intends to invest in such
securities primarily to hedge or reduce the risk of
holding other investments. If the prices for
futures contracts and prices in the cash market do
not correlate as expected or if the advisers
expectations about interest rate, exchange rate or
general market movements are incorrect, the fund's
returns may not be as high as they would be if the
adviser did not invest in these securities. There
is also a risk that the market for reselling
financial futures contracts and options may be
limited or nonexistent. The fund could incur
unlimited losses if it cannot liquidate certain
futures contracts. The adviser's decisions about
the nature and timing of futures contract and
options transaction may result in losses when other
investors' decisions about the same contracts and
options result in gains.
Leverage
If the fund borrows money to make additional
investments it must pay interest on the borrowed
funds. The interest paid will decrease the fund's
net investment income. The adviser may borrow funds
to make additional investments expecting that those
investments will increase in value sufficient to
cover borrowing costs and produce additional gain
for the fund. If those investments decrease in
value or do not increase in value sufficient to
cover borrowing costs the fund will suffer greater
losses than would take place if no borrowing took
place. In addition, because the fund must maintain
a three to one ratio of net assets to debt, in a
declining market it may have to sell securities
under poor market conditions to maintain the
required ratio.
Phoenix Value Equity Fund 27
<PAGE>
Securities Lending
When the fund lends portfolio securities it runs
the risk that the borrower will be unable or
unwilling to return the securities and the agreed
fee or premium. The value of the collateral taken
as security for the securities loaned may decline
in value or may be difficult to convert to cash in
the event that the fund must rely on the collateral
to recover the value of its securities. In these
circumstances the fund will suffer losses.
Foreign Investing
The fund may invest in non-U.S. companies.
Investing in the securities of non-U.S. 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,
> differences and inefficiencies in transaction
settlement systems,
> the possibility of expropriation or
confiscatory taxation,
> adverse changes in investment or exchange
control regulations,
> political instability, and
> potential restrictions on the flow of
international capital.
Political and economic uncertainty as well as
relatively less public information about
investments may negatively impact the fund's
portfolio.
Foreign securities often trade with less frequency
and volume than domestic securities and therefore
may exhibit greater price volatility. Additionally,
dividends and interest payable on foreign
securities may be subject to foreign taxes withheld
prior to receipt by the fund.
Many of the foreign securities held by the fund
will not be registered with, nor will the issuers
of those securities be subject to the reporting
requirements of, the U.S. Securities and Exchange
Commission. Accordingly, there may be less publicly
available
28 Phoenix Value Equity Fund
<PAGE>
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
differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross
national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance
of payment positions.
Foreign Currency
Portions of the fund's assets may be invested in
securities denominated in foreign currencies.
Changes in foreign exchange rates will affect the
value of those securities denominated or quoted in
currencies other than the U.S. dollar. The forces
of supply and demand in the foreign exchange
markets determine exchange rates and these forces
are in turn affected by a range of economic,
political, financial, governmental and other
factors. Exchange rate fluctuations can affect the
fund's net asset value (share price) 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 terms.
Effective January 1, 1999, eleven European
countries will begin converting from their
sovereign currency to the European Union common
currency called the "Euro." This conversion may
expose the fund to certain risks including the
reliability and timely reporting of pricing
information of the fund's portfolio holdings. In
addition, one or more of the following may
adversely affect specific securities in the fund's
portfolio:
> known trends or uncertainties related to the
Euro conversion that an issuer reasonably
expects will have a material impact on
revenues, expenses or income from its
operations;
> competitive implications of increased price
transparency of European Union markets
(including labor markets) resulting from
adoption of a common currency and issuers'
plans for pricing their own products and
services in the Euro;
> issuers' ability to make required
information technology updates on a timely
basis, and costs associated with the
conversion (including costs of dual currency
operations through January 1, 2002);
Phoenix Value Equity Fund 29
<PAGE>
> currency exchange rate risk and derivatives
exposure (including the disappearance of price
sources, such as certain interest rate
indices); and
> potential tax consequences.
The adviser does not expect to invest in any
securities that may be adversely effected by the
conversion to the Euro.
Illiquid Securities
Securities owned by the fund that are not liquid
may be difficult to sell because there may be no
active markets for resale and fewer potential
buyers. This can make illiquid investments more
likely than other types of investments to lose
value. In extreme cases it may be impossible to
resell them and they can become almost worthless to
the fund.
Mutual Fund Investing
The fund may invest in mutual funds, including
mutual funds managed by the adviser or other
advisers controlled by the same persons who control
the adviser. When the fund purchases shares of
another mutual fund the assets it invests in the
other mutual fund incur expenses such as operating
costs, advisory fees, and administrative fees.
These expenses reduce the return the fund receives.
In effect, there is a layering of expenses: to the
extent the fund invests in other mutual funds there
are two sets of operating costs, advisory fees and
administrative fees to be paid. If the fund invests
in a mutual fund managed by the adviser this can
mean that the adviser receives advisory fees twice
for managing essentially the same assets.
SPDRs
The same types of events and circumstances
affecting stocks generally can affect the value of
SPDRs. General market conditions, conditions
affecting the S&P 500 stocks, governmental fiscal
or monetary and other factors may cause the S&P 500
stocks to decrease in value. If these stocks
decrease in value the SPDRs will also decrease.
SPDRs are not actively managed. This means that he
unit investment trust that issues SPDRs does not
buy or sell stocks comprising the S&P 500 in
reaction to market events or occurrences affecting
some or all of the component stocks. Unless and
until the composition of the S&P 500 itself
changes, the value of SPDRs will be based on the
experience, positive or negative, of its component
stocks.
30 Phoenix Value Equity Fund
<PAGE>
Impact of the Year 2000 Issue
The Year 2000 issue is the result of computer
programs being written using two rather than four
digits to define the applicable year. There is the
possibility that some or all of a company's
computer programs that have date-sensitive software
may recognize a date using "00" as the year 1900
rather than the year 2000. If a company whose
securities are held by the fund does not "fix" its
Year 2000 issue it is possible that its operations
and financial results would be hurt. Also, the cost
of modifying computer programs to become Year 2000
compliant may hurt the financial performance and
market price of companies whose securities are held
by the fund.
Phoenix Value Equity Fund 31
<PAGE>
Management of The Funds
- ------------------------------------------------------------
The Adviser
Phoenix Investment Counsel, Inc. ("Phoenix") is the
investment adviser to the funds and is located at
56 Prospect Street, Hartford, CT 06115. Phoenix
also acts as the investment adviser for 14 other
mutual funds, as subadviser to three additional
mutual funds and as adviser to institutional
clients. As of September 30, 1998, Phoenix had
$21.3 billion in assets under management. Phoenix
has acted as an investment adviser for over sixty
years.
Subject to the direction of the fund's Board of
Trustees, Phoenix is responsible for managing each
fund's investment program and the day-to-day
management of each fund's portfolio. Phoenix
manages each fund's assets to conform with the
investment policies as described in this
prospectus. Each fund pays Phoenix a monthly
investment management fee that is accrued daily
against the value of the fund's net assets at the
following rates.
<TABLE>
<CAPTION>
1st billion $1+ billion through $2 billion $2+ billion
<S> <C> <C> <C>
Phoenix Small Cap Value Fund 0.90% 0.85% 0.80%
Phoenix Value Equity Fund 0.75% 0.70% 0.65%
</TABLE>
Phoenix has voluntarily agreed to assume total
fund operating expenses of each fund excluding
interest, taxes, brokerage fees, commissions and
extraordinary expenses, until August 31, 1999, to
the extent that such expenses exceed the following
percentages of the average annual net asset values
for each fund:
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
<S> <C> <C> <C>
Phoenix Small Cap Value Fund 1.40% 2.15% 2.15%
Phoenix Value Equity Fund 1.25 2.00 2.00
</TABLE>
During the fund's last fiscal year, the funds paid
total management fees of $269,984. The ratio of
management fees to average net assets for the
fiscal year ended August 31, 1998, for Phoenix
Small Cap Value was 0.90% and for Phoenix Value
Equity Fund was 0.75%. The total advisory fees as
listed in the table above are
32 Phoenix Investment Trust 97
<PAGE>
greater than that for most mutual funds; however,
the Trustees have determined that they are
comparable to fees charged by other mutual funds
whose investment objectives are similar to those of
the funds.
Portfolio Management
Mr. Christian C. Bertelsen serves as Portfolio
Manager of both the Small Cap Value Fund and Value
Equity Fund, and as such is primarily responsible
for the day to day management of the funds'
investments. Mr. Bertelsen joined Phoenix
Investment Partners, Ltd. in July 1997. Previously,
from 1996 to July 1997, Mr. Bertelsen was employed
by Dreman Value Advisors where he served as chief
investment officer and portfolio manager of the
Kemper-Dreman Contrarian and Small Cap Value Funds.
From 1993 to 1996, Mr. Bertelsen was a Senior Vice
President of Eagle Asset Management where he
managed private and institutional assets, as well
as the Heritage Value Equity Fund.
Impact of the Year 2000 Issue
The Trustees have directed management to ensure
that the systems used by service providers (Phoenix
and its affiliates) in support of the funds'
operations be assessed and brought into Year 2000
compliance. Based upon preliminary assessments,
Phoenix has determined that it will be required to
modify or replace portions of its software so that
its computer systems will properly utilize dates
beyond December 31, 1999. Phoenix management
believes that the majority of these systems are
already Year 2000 compliant. Phoenix believes that
with modifications to existing software and
conversions to new software, the Year 2000 issue
will be mitigated. It is anticipated that such
modifications and conversions will be completed on
a timely basis. It is not known at this time if
there could be a material impact on the operations
of Phoenix or its affiliates or the fund if such
modifications and conversions are not completed
timely.
Phoenix will utilize both internal and external
resources to reprogram, or replace, and test the
software for Year 2000 modifications. Certain
systems are already in the process of being
converted due to previous initiatives and it is
expected that all core systems will be remediated
by December 31, 1998 and tested by June 1999. The
total cost to become Year 2000 compliant is not an
expense of the fund and is not expected to have a
material impact on the operating results of
Phoenix.
Phoenix Investment Trust 97 33
<PAGE>
Pricing of Fund Shares
- -------------------------------------------------------
How is the Share Price determined? The fund
calculates a share price for each class of its
shares. The share price is based on the net assets
of the fund and the number of outstanding shares.
In general, the fund calculates net asset value by:
> adding the values of all securities and
other assets of the fund,
> subtracting liabilities, and
> dividing by the total number of outstanding
shares of the fund.
Asset Value: The fund's investments are valued
at market value. If market quotations are not
available, the fund determines a "fair value"
for an investment according to rules and
procedures approved by the Trustees. 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. Short-term investments having a
remaining maturity of sixty days or less are
valued at amortized cost, which the Trustees
have determined approximates market value.
Liabilities: Class specific expenses,
distribution fees, service fees and other
liabilities are deducted from the assets of
each class. Expenses and liabilities that are
not class specific (such as management fees)
are allocated to each class in proportion to
each class's net assets.
Net Asset Value: The liability allocated to a
class plus any other expenses are deducted
from the proportionate interest of such class
in the assets of the fund. The resulting
amount for each class is then divided by the
number of shares outstanding of that class to
produce each class's net asset value per
share.
The net asset value per share of each class of
the fund is determined on days when the New
York Stock Exchange (the "NYSE") is open for
trading as of the close of trading (normally
4:00 PM eastern time). The fund will not
calculate its net asset
34 Phoenix Investment Trust 97
<PAGE>
values per share on days when the NYSE is
closed for trading. Trading of securities held
by the fund in foreign markets may negatively
or positively impact the value of such
securities on days when the fund neither
trades securities nor calculates its net asset
values (i.e., weekends and certain holidays).
At what price are shares purchased?
All investments received by the fund's
authorized agents prior to the close of
regular trading on the NYSE (normally 4:00 PM
eastern time) will be executed based on that
day's net asset value. Shares credited to your
account from the reinvestment of fund
distributions will be in full and fractional
shares that are purchased at the closing net
asset value on the next business day on which
the fund's net asset value is calculated
following the dividend record date.
Sales Charges
- ---------------------------------------------
What are the classes and how do they differ?
The fund presently offers three classes of
shares that have different sales and
distribution charges (see "Fund Expenses"
previously in this prospectus). The fund has
adopted distribution and service plans allowed
under Rule 12b-1 of the Investment Company Act
of 1940 that authorize the fund to pay
distribution and service fees for the sale of
its shares and for services provided to
shareholders.
What arrangement is best for you?
The different classes permit you to choose the
method of purchasing shares that is most
beneficial to you. In choosing a class,
consider the amount of your investment, the
length of time you expect to hold the shares,
whether you decide to receive distributions in
cash or to reinvest them in additional shares,
and any other personal circumstances.
Depending upon these considerations, the
accumulated distribution and service fees and
contingent deferred sales charges of one class
may be more or less than the initial sales
charge and accumulated distribution and
service fees of another class of shares bought
at the same time. Because distribution and
service fees are paid out of the fund's assets
on an ongoing basis, over time these fees will
increase the cost of your investment and may
cost you more than paying other types of sales
charges.
Phoenix Investment Trust 97 35
<PAGE>
Class A Shares. If you purchase Class A
Shares, you will pay a sales charge at the
time of purchase equal to 4.75% of the
offering price (4.99% of the amount invested).
The sales charge may be reduced or waived
under certain conditions. Class A Shares are
not subject to any charges by the fund when
redeemed. Class A Shares have lower
distribution and service fees (0.25%) and pay
higher dividends than any other class.
Class B Shares. If you purchase Class B
Shares, you will not pay a sales charge at the
time of purchase. If you sell your Class B
Shares within the first 5 years after they are
purchased, you will pay a sales charge of up
to 5% of your shares' value. See "Deferred
Sales Charge Alternative--Class B and C
Shares" below. This charge declines to 0% over
a period of 5 years and may be waived under
certain conditions. Class B shares have higher
distribution and service fees (1.00%) and pay
lower dividends than Class A Shares. Class B
Shares automatically convert to Class A Shares
eight years after purchase. Purchases of Class
B Shares may be inappropriate for any investor
who may qualify for reduced sales charges of
Class A Shares and anyone who is over 85 years
of age. The underwriter may decline purchases
in such situations.
Class C Shares. If you purchase Class C
Shares, you will not pay a sales charge at the
time of purchase. If you sell your Class C
Shares within the first year after they are
purchased, you will pay a sales charge of 1%.
See "Deferred Sales Charge Alternative--Class
B and C Shares" below. Class C Shares have the
same distribution and service fees (1.00%) and
pay comparable dividends as Class B Shares.
Class C Shares do not convert to any other
class of shares of the fund.
Initial Sales Charge Alternative--Class A
Shares
The public offering price of Class A Shares is
the net asset value plus a sales charge that
varies depending on the size of your purchase
(see "Class A Shares--Reduced Sales Charges:
Combination Purchase Privilege" in the
Statement of Additional Information). Shares
purchased based on the automatic reinvestment
of income dividends or capital gains
distributions are not subject to any sales
charges. The sales charge is divided between
your investment dealer and the fund's
underwriter (Phoenix Equity Planning
Corporation or "PEPCO").
36 Phoenix Investment Trust 97
<PAGE>
Sales Charge you may pay to purchase Class A Shares
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
---------------------------
Amount of Net
Transaction Offering Amount
at Offering Price Price Invested
- -----------------------------------------------------------
<S> <C> <C>
Under $50,000 4.75% 4.99%
$50,000 but under $100,000 4.50 4.71
$100,000 but under $250,000 3.50 3.63
$250,000 but under $500,000 3.00 3.09
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
</TABLE>
Deferred Sales Charge Alternative--
Class B and C Shares
Class B and C Shares are purchased without an
initial sales charge; however, shares sold within a
specified time period are subject to a declining
contingent deferred sales charge ("CDSC") at the
rates listed below. The sales charge will be
multiplied by the then current market value or the
initial cost of the shares being redeemed,
whichever is less. No sales charge will be imposed
on increases in net asset value or on shares
purchased through the reinvestment of income
dividends or capital gains distributions. To
minimize the sales charge, shares not subject to
any charge will be redeemed first, followed by
shares held the longest time. To calculate the
amount of shares owned and time period held, all
Class B Shares purchased in any month are
considered purchased on the last day of the
preceding month, and all Class C Shares are
considered purchased on the trade date.
Deferred Sales charge you may pay to sell Class B
Shares
Year 1 2 3 4 5 6+
--------------------------------------------------
CDSC 5% 4% 3% 2% 2% 0%
Deferred Sales charge you may pay to sell Class C
Shares
Year 1 2+
--------------------------------------------------
CDSC 1% 0%
Phoenix Investment Trust 97 37
<PAGE>
Your Account
- --------------------------------------------
Opening an Account
Your financial advisor can assist you with your
initial purchase as well as all phases of your
investment program. If you are opening an account
by yourself, please follow the instructions
outlined below.
Step 1.
Your first choice will be the initial amount you
intend to invest.
Minimum initial investments:
> $25 for individual retirement accounts, or
accounts that use the systematic exchange
privilege, or accounts that use the
Investo-Matic program (see below for more
information on the Investo-Matic program).
> There is no initial dollar requirement for
defined contribution plans, profit-sharing
plans, or employee benefit plans. There is
also no minimum for reinvesting dividends and
capital gains into another account.
> $500 for all other accounts.
Minimum additional investments:
> $25 for any account.
> There is no minimum for defined contribution
plans, profit-sharing plans, or employee
benefit plans. There is also no minimum for
reinvesting dividends and capital gains into
an existing account.
Step 2.
Your second choice will be what class of shares to
buy. The fund offers three classes of shares for
individual investors. Each has different sales and
distribution charges. Because all future
investments in your account will be made in the
share class you choose when you open your account,
you should make your decision carefully. Your
financial advisor can help you pick the share class
that makes the most sense for your situation.
38 Phoenix Investment Trust 97
<PAGE>
Step 3.
Your next choice will be how you want to receive
any dividends and capital gain distributions. Your
options are:
> Receive both dividends and capital gain
distributions in additional shares
> Receive dividends in cash and capital gain
distributions in additional shares
> Receive both dividends and capital gain
distributions in cash
No interest will be paid on uncashed distribution
checks.
How To Buy Shares
- ---------------------------------------------------
<TABLE>
<CAPTION>
To Open An Account
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
Through the mail Complete a New Account Application and send it with a check
payable to the fund. Mail them to: State Street Bank, P.O. Box
8301, Boston, MA 02266-8301.
By Federal Funds wire Call us at 1-800-243-1574 (press 1, then 0).
By Investo-Matic Complete the appropriate section on the application and send it
with your initial investment payable to the fund. Mail them to:
State Street Bank, P.O. Box 8301, Boston, MA 02266-8301.
By telephone exchange Call us at 1-800-243-1574 (press 1, then 0).
</TABLE>
How to Sell Shares
- ---------------------------------------------------
You have the right to have the fund buy back shares
at the net asset value next determined after
receipt of a redemption order by the fund's
Transfer Agent or an authorized agent. In the case
of a Class B or C Share redemption, you will be
subject to the applicable deferred sales charge, if
any, for such shares. Subject to certain
restrictions, shares may be redeemed by telephone
or in writing. In addition, shares may be sold
through securities dealers, brokers or
Phoenix Investment Trust 97 39
<PAGE>
agents who may charge customary commissions or fees
for their services. The fund does not charge any
redemption fees. Payment for shares redeemed is
made within seven days; however, redemption
proceeds will not be disbursed until each check
used for purchases of shares has been cleared for
payment by your bank, which may take up to 15 days
after receipt of the check.
<TABLE>
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
Send a letter of instruction and any share certificates (if you
hold certificate shares) to: State Street Bank, P.O. Box 8301,
Through the mail Boston, MA 02266-8301. Be sure to include the registered owner's
name, fund and account number, number of shares or dollar value
you wish to sell.
By telephone For sales up to $50,000, requests can be made by
calling 1-800-243-1574.
By telephone exchange Call us at 1-800-243-1574 (press 1, then 0).
</TABLE>
Things You Should Know When Selling Shares
- -------------------------------------------------------------------------------
The fund reserves the right to pay large
redemptions "in-kind" (in securities owned by the
fund rather than in cash). Large redemptions are
those over $250,000 or 1% of the fund's net assets.
Additional documentation will be required for
redemptions by organizations, fiduciaries, or
retirement plans, or if redemption is requested by
anyone but the shareholder(s) of record. Transfers
between broker-dealer "street" accounts are
governed by the accepting broker-dealer. Questions
regarding this type of transfer should be directed
to your financial advisor. Redemption requests will
not be honored until all required documents in
proper form have been received. To avoid delay in
redemption or transfer, shareholders having
questions about specific requirements should
contact the fund's Transfer Agent at (800)
243-1574.
Redemptions by Mail
> Send a clear letter of instructions if all
of these apply:
o Your shares are registered individually,
jointly, or as custodian under the Uniform
Gifts to Minors Act or Uniform Transfers to
Minors Act.
40 Phoenix Investment Trust 97
<PAGE>
o The proceeds do not exceed $50,000.
o The proceeds are payable to the registered
owner at the address on record.
> Send a clear letter of instructions with a
signature guarantee when any of these apply:
o You are selling more than $50,000 worth of
shares.
o The name or address on the account has
changed within the last 60 days.
o You want the proceeds to go to a different
name or address than on the account.
If you are selling shares held in a corporate or
fiduciary account, please contact the fund's
Transfer Agent at 1-800-243-1574.
The signature on your request must be guaranteed by
an eligible guarantor institution as defined by the
fund's Transfer Agent in accordance with its
signature guarantee procedures. Currently, such
procedures generally permit guarantees by banks,
broker dealers, credit unions, national securities
exchanges, registered securities associations,
clearing agencies and savings associations.
Selling Shares by Telephone
The Transfer Agent will use reasonable procedures
to confirm that telephone instructions are genuine.
Address and bank account information are verified,
redemption instructions are taped, and all
redemptions are confirmed in writing.
The individual investor bears the risk from
instructions given by an unauthorized third party
that the Transfer Agent reasonably believed to be
genuine.
The Transfer Agent may modify or terminate the
telephone redemption privilege at any time with 60
days notice to shareholders.
During times of drastic economic or market changes,
telephone redemptions may be difficult to make or
temporarily suspended.
Phoenix Investment Trust 97 41
<PAGE>
Account Policies
- ------------------------------------------------
Account Reinstatement Privilege
For 180 days after you sell your Class A, B, or C
shares, you can purchase Class A Shares of any fund
at net asset value, with no sales charge, by
reinvesting all or part of your proceeds, but not
more. Send your written request to State Street
Bank, P.O. Box 8301, Boston, MA 02266-8301. You can
call us at 1-800-243-1574 for more information.
Please remember, a redemption and reinvestment are
considered to be a sale and purchase for
tax-reporting purposes. Class B shareholders who
have had the contingent deferred sales charge
waived because they are in the Systematic
Withdrawal Program are not eligible for this
reinstatement privilege.
Redemption of Small Accounts
Due to the high cost of maintaining small accounts,
if your account balance is less than $200, you may
receive a notice requesting you to bring the
balance up to $200 within 60 days. If you do not,
the shares in the account will be sold at net asset
value, and a check will be mailed to the address of
record.
Exchange Privileges
You should read the prospectus carefully before
deciding to make an exchange. You can obtain a
prospectus from your financial advisor or by
calling us at 1-800-243-4361 or accessing our Web
site at www.phoenixinvestments.com.
o You may exchange shares for another fund in
the same class of shares; e.g., Class A for
Class A.
o Exchanges may be made by phone
(1-800-243-1574) or by mail (State Street
Bank, P.O. Box 8301, Boston, MA 02266-8301).
o The amount of the exchange must be equal to
the minimum initial investment required.
o Because excessive trading can hurt fund
performance and harm other shareholders, the
Fund reserves the right to temporarily or
permanently end exchange privileges or reject
an order from anyone who appears to be
attempting to time the market, including
investors who request more than one exchange
in any 30-day period. The fund's underwriter
has
42 Phoenix Investment Trust 97
<PAGE>
entered into agreements with certain market
timing firms permitting them to exchange by
telephone. These privileges are limited, and
the fund distributor has the right to reject
or suspend them.
Dividends and Distributions
Unless you elect to receive distributions in cash,
dividends and capital gain distributions are paid
in additional shares. All distributions, cash or
additional shares, are subject to federal income
tax and may be subject to state, local and other
taxes.
Retirement Plans
Shares of the fund may be used as investments under
the following qualified prototype retirement plans:
traditional IRA, rollover IRA, SIMPLE IRA, Roth
IRA, 401(k) plans, profit-sharing, money purchase
plans, and 403(b) plans. For more information, call
1-800-243-4361.
Investor Services
- -------------------------------------------------
Investo-Matic is a systematic investment plan that
allows you to have a specified amount automatically
deducted from your checking or savings account and
then deposited into your mutual fund account. Just
complete the Investo-Matic Section on the
application and include a voided check.
Systematic Exchange allows you to automatically
move money from one Phoenix Fund to another on a
monthly, quarterly, semi-annual or annual basis.
Shares of one Phoenix Fund will be exchanged for
shares of the same class of another fund at the
interval you select. To sign up, just complete the
Systematic Exchange Section on the application.
Telephone Exchange lets you exchange shares of one
fund for the same class of shares in another fund,
using our customer service telephone service. See
the Telephone Exchange Section on the application.
Systematic Withdrawal Program allows you to
periodically redeem a portion of your account on a
predetermined monthly, quarterly, semiannual, or
annual basis. Sufficient shares will be redeemed on
the 15th of the month at the closing net asset
value so that the payment is made about the 20th of
the month. The program also provides for
redemptions on or about the 10th, 15th, or 25th
with
Phoenix Investment Trust 97 43
<PAGE>
proceeds directed through Automated Clearing House
(ACH) to your bank. The minimum withdrawal is
$25.00, and minimum account balance requirements
continue. Shareholders in the program must own fund
shares worth at least $5,000.
Tax Status of Distributions
- ------------------------------------------------------------
The fund plans to make distributions from net
investment income semiannually, and to distribute
net realized capital gains, if any, at least
annually. Distributions of short-term capital gains
and net investment income are taxable to
shareholders as ordinary income. Long-term capital
gains, if any, distributed to shareholders and
which are designated by the fund as capital gain
distributions, are taxable to shareholders as
long-term capital gain distributions regardless of
the length of time you have owned your shares.
44 Phoenix Investment Trust 97
<PAGE>
Financial Highlights
- ----------------------------------------------------
These tables are intended to help you understand
the funds' financial performance since inception.
Certain information reflects financial results for
a single fund share. The total returns in the table
represent the rate that an investor would have
earned on an investment in the fund (assuming
reinvestment of all dividends and distributions).
This information has been audited by
PricewaterhouseCoopers LLP, independent
accountants. Their report, together with the funds'
financial statements, are included in the funds'
most recent Annual Report.
Phoenix Small Cap Value Fund
<TABLE>
<CAPTION>
Class A Class B Class C
---------------------- ---------------------- ----------------------
From Inception From Inception From Inception
11/20/97 to 11/20/97 to 11/20/97 to
8/31/98 8/31/98 8/31/98
---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00
Income from investment operations
Net investment income (loss) (0.01)(4)(5) (0.08)(4)(5) (0.08)(4)(5)
Net realized and unrealized gain (loss) (1.85) (1.82) (1.82)
---------- ---------- ----------
Total from investment operations (1.86) (1.90) (1.90)
---------- ---------- ----------
Less distributions
Dividends from net investment income -- -- --
In excess of net investment income (0.03) (0.03) (0.03)
---------- ---------- ----------
Total distributions (0.03) (0.03) (0.03)
---------- ---------- ----------
Change in net asset value (1.89) (1.93) (1.93)
---------- ---------- ----------
Net asset value, end of period $ 8.11 $ 8.07 $ 8.07
========== ========== ==========
Total return(1) (18.64)%(3) (19.07)%(3) (19.09)%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 14,519 $ 5,922 $ 2,770
Ratio to average net assets of:
Operating expenses 1.40%(2) 2.15%(2) 2.15%(2)
Net investment income (loss) (0.14)%(2) (1.01)%(2) (0.98)%(2)
Portfolio turnover 105%(3) 105%(3) 105%(3)
</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 $0.14,
$0.14 and $0.14, respectively.
Phoenix Investment Trust 97 45
<PAGE>
Financial Highlights (continued)
- --------------------------------------------------------------
Phoenix Value Equity Fund
<TABLE>
<CAPTION>
Class A Class B Class C
---------------------- ---------------------- ----------------------
From Inception From Inception From Inception
11/5/97 to 11/5/97 to 11/5/97 to
8/31/98 8/31/98 8/31/98
---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00
Income from investment operations
Net investment income (loss) 0.03 (4)(5) (0.04)(4)(5) (0.04)(4)(5)
Net realized and unrealized gain (loss) (1.07) (1.05) (1.05)
----------- ---------- ----------
Total from investment operations (1.04) (1.09) (1.09)
----------- ---------- ----------
Less distributions
Dividends from net investment income (0.01) (0.01) (0.01)
In excess of net investment income (0.01) (0.01) (0.01)
----------- ---------- ----------
Total distributions (0.02) (0.02) (0.02)
----------- ---------- ----------
Change in net asset value (1.06) (1.11) (1.11)
----------- ---------- ----------
Net asset value, end of period $ 8.94 $ 8.89 $ 8.89
=========== ========== ==========
Total return(1) (10.28)%(3) (10.92)%(3) (10.86)%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 19,766 $ 5,291 $ 2,005
Ratio to average net assets of:
Operating expenses 1.25%(2) 2.00%(2) 2.00%(2)
Net investment income (loss) 0.31%(2) (0.45)%(2) (0.45)%(2)
Portfolio turnover 59%(3) 59%(3) 59%(3)
</TABLE>
- ------------------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of
$0.15, $0.15 and $0.15, respectively.
46 Phoenix Investment Trust 97
<PAGE>
Additional Information
- -------------------------------------------------------
Statement of Additional Information
The fund has filed a Statement of Additional Information about the fund,
dated December , 1998 with the Securities and Exchange Commission. The
Statement contains more detailed information about the fund. It is
incorporated into this prospectus by reference and is legally part of the
prospectus. You may obtain a free copy of the Statement:
> by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
> by calling (800) 243-4361.
You may also obtain information about the fund from the Securities and
Exchange Commission:
> through its internet site (http://www.sec.gov),
> by visiting its Public Reference Room in Washington, DC or
> by writing to its Public Reference Section, Washington, DC 20549-6009
(a fee may be charged).
Information about the operation of the Public Reference Room may be
obtained by calling (800) SEC-0330.
Shareholder Reports
The fund semiannually mails to its shareholders detailed reports containing
information about the fund's investments. The fund's Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the fund's performance from September 1 through August
31. You may request a free copy of the fund's Annual and Semiannual Reports:
> by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
> by calling (800) 243-4361.
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunication Device (TTY): (800) 243-1926r
SEC File Nos. 333-34537 & 811-08343
Printed on recycled paper using soybean ink
Phoenix Investment Trust 97 47
<PAGE>
Phoenix Equity Planning Corporation --------------
PO Box 2200 Bulk Rate Mail
Enfield, CT 06083-2200 U.S. Postage
PAID
Springfield, MA
Permit No. 444
---------------
[LOGO] PHOENIX
INVESTMENT PARTNERS, LTD.
PXP ??? (12/98)
<PAGE>
PHOENIX SMALL CAP VALUE FUND
PHOENIX VALUE EQUITY FUND
101 Munson Street
Greenfield, MA 01301
Statement of Additional Information
December __, 1998
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current prospectus of the
Phoenix Small Cap Value Fund and Phoenix Value Equity Fund, dated December __,
1998 (the "Prospectus"), and should be read in conjunction with it. The
prospectus may be obtained by calling Phoenix Equity Planning Corporation
("Equity Planning") at (800) 243-4361 or by writing to Equity Planning at 100
Bright Meadow Boulevard, P.O. Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE TRUST ..................................... 1
INVESTMENT OBJECTIVES AND POLICIES ............ 1
INVESTMENT RESTRICTIONS ....................... 1
PERFORMANCE INFORMATION ....................... 7
PORTFOLIO TRANSACTIONS AND BROKERAGE .......... 8
THE INVESTMENT ADVISER ........................ 9
NET ASSET VALUE ............................... 10
HOW TO BUY SHARES ............................. 10
ALTERNATIVE PURCHASE ARRANGEMENTS ............. 11
INVESTOR ACCOUNT SERVICES ..................... 14
HOW TO REDEEM SHARES .......................... 14
DIVIDENDS, DISTRIBUTIONS AND TAXES ............ 15
TAX SHELTERED RETIREMENT PLANS ................ 16
THE DISTRIBUTOR ............................... 16
DISTRIBUTION PLANS ............................ 17
MANAGEMENT OF THE TRUST ....................... 18
OTHER INFORMATION ............................. 25
</TABLE>
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PXP 2053B (12/98)
<PAGE>
THE TRUST
Phoenix Investment Trust 97 (the "Trust") is a diversified open-end
management investment company which was organized under Massachusetts law in
1997 as a business trust. The Trust presently comprises two series: the Phoenix
Small Cap Value Fund and Phoenix Value Equity Fund, each a "Fund" and
collectively the "Funds."
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Fund is deemed to be a fundamental policy
which may not be changed without the approval of the holders of a majority of
the outstanding shares of each Fund. Investment restrictions described in this
Statement of Additional Information are fundamental policies of each Fund and
may not be changed without the approval of each Fund's shareholders.
Notwithstanding the foregoing, certain investment restrictions affect more than
one series of the Trust and therefore modifications may require the consent of
other shareholders. There is no assurance that any Fund will meet its investment
objective.
INVESTMENT RESTRICTIONS
Fundamental Policies
The following investment restrictions constitute fundamental policies of
each Fund which may be changed only upon approval by the holders of a majority
of the outstanding shares of such Fund's shareholders. Each Fund may not:
(1) issue senior securities, as such term is defined in the Investment
Company Act of 1940, as amended, except as otherwise permitted under these
fundamental investment restrictions;
(2) make short sales of securities or purchase any securities on margin,
except for such short-term credits as are necessary for the clearance of
transactions; provided, however, the deposit or payment of an initial or
maintenance margin in connection with financial futures contracts or
related options transactions is not considered the purchase of a security
on margin;
(3) borrow money in excess of 25% of the value of its total assets
(including any borrowings). Any such borrowings shall be from banks subject
to an agreement by the lender that any recourse is limited to the value of
the assets of the Fund with respect to which the borrowing has been made.
Deposits in escrow in connection with the writing of covered call options
or in connection with the purchase or sale of financial futures contracts
and related options shall not be deemed to be a pledge or other
encumbrance;
(4) engage in the business of underwriting the securities of others;
(5) concentrate its investments in the securities of issuers all of which
conduct their principal business activities in the same industry provided
that this restriction shall not apply to obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities;
(6) make any investment in real estate, real estate mortgage loans and/or
commodities, except that the Fund may (a) purchase or sell readily
marketable securities which are secured by interests in real estate, or
issued by companies which deal in real estate including real estate
investment and mortgage investment trusts, and (b) engage in financial
futures contracts and related options transactions, provided that the sum
of the initial margin deposits on the Fund's futures and related options
positions and the premiums paid for related options do not exceed 5% of the
value of the Fund's net assets;
(7) make loans, except that the Fund may (a) invest up to 15% of its total
assets in repurchase agreements of a type regarded as "liquid" which are
fully collateralized as to principal and interest and which are entered
into only with commercial banks, brokers and dealers considered by the Fund
to be creditworthy and (b) loan its portfolio securities in amounts up to
one-third of the value of its total assets; and
(8) purchase securities which are not deemed liquid pursuant to procedures
adopted by the Board of Trustees if as a result of such purchase more than
15% of the Fund's net assets would be invested in the aggregate in such
securities.
If a percentage restriction on investment or utilization of assets as set
forth is adhered to at the time an investment is made, a later change in the
percentage resulting from a change in the values or costs of the Fund's assets
will not be considered violate of the restriction with the exception of the
Fund's policy on borrowing.
Investment Techniques
The Funds may utilize the following practices or techniques in pursuing its
investment objectives.
U.S. Government Securities. Each Fund may invest in U.S. government
securities, including bills, notes and bonds issued by the U.S. Treasury and
securities issued or guaranteed by agencies or instrumentalities of the U.S.
government. Some U.S. government securities are supported by the direct full
faith and credit pledge of the U.S. government; others are supported by the
right of the issuer to borrow from the U.S. Treasury; others such as securities
issued by the Federal National Mortgage Association, are supported by the
discretionary authority of the U.S. government to purchase the agencies'
obligations; and others
1
<PAGE>
are supported only by the credit of the issuing or guaranteeing instrumentality.
There is no assurance that the U.S. government will provide financial support to
an instrumentality it sponsors when it is not obligated by law to do so.
Repurchase Agreements. Repurchase Agreements are agreements by which a Fund
purchases a security and obtains a simultaneous commitment from the seller (a
member bank of the Federal Reserve System or, to the extent permitted by the
Investment Company Act of 1940, a recognized securities dealer) that the seller
will repurchase the security at an agreed upon price and date. The resale price
is in excess of the purchase price and reflects an agreed upon market rate
unrelated to the coupon rate on the purchased security.
A repurchase transaction is usually accomplished either by crediting the
amount of securities purchased to the account of the custodian of the Fund
maintained in a central depository of book-entry system or by physical delivery
of the securities to the Fund's custodian in return for delivery of the purchase
price to the seller. Repurchase transactions are intended to be short-term
transactions with the seller repurchasing the securities, usually within seven
days.
Even though repurchase transactions usually do not impose market risks on
the purchasing Fund, if the seller of the repurchase agreement defaults and does
not repurchase the underlying securities, the Fund might incur a loss if the
value of the underlying securities declines, and disposition costs may be
incurred in connection with liquidating the underlying securities. In addition,
if bankruptcy proceedings are commenced regarding the seller, realization upon
the underlying securities may be delayed or limited, and a loss may be incurred
if the underlying securities decline in value.
Securities and Index Options. Each Fund may write covered call options and
purchase call and put options. Options and the related risks are summarized
below.
Writing and Purchasing Options. Call options written by the Funds normally
will have expiration dates between three and nine months from the date written.
During the option period the Funds may be assigned an exercise notice by the
broker-dealer through which the call option was sold, requiring the Funds to
deliver the underlying security (or cash in the case of securities index calls)
against payment of the exercise price. This obligation is terminated upon the
expiration of the option period or at such earlier time as a Fund effects a
closing purchase transaction. A closing purchase transaction cannot be effected
with respect to an option once a Fund has received an exercise notice.
The exercise price of a call option written by a Fund may be below, equal
to or above the current market value of the underlying security or securities
index at the time the option is written.
A multiplier for an index option performs a function similar to the unit of
trading for an option on an individual security. It determines the total dollar
value per contract of each point between the exercise price of the option and
the current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Options on different indices may have
different multipliers.
Securities indices for which options are currently traded include the
Standard & Poor's 100 and 500 Composite Stock Price Indices, Computer/Business
Equipment Index, Major Market Index, Amex Market Value Index, Computer
Technology Index, Oil and Gas Index, NYSE Options Index, Gaming/Hotel Index,
Telephone Index, Transportation Index, Technology Index, and Gold/ Silver Index.
Each Fund may write call options and purchase call and put options on any other
indices traded on a recognized exchange.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option written by a Fund to prevent an underlying
security from being called, or to enable a Fund to write another call option
with either a different exercise price or expiration date or both. The Fund may
realize a net gain or loss from a closing purchase transaction depending upon
whether the amount of the premium received on the call option is more or less
than the cost of effecting the closing purchase transaction. If a call option
written by a Fund expires unexercised, the Fund will realize a gain in the
amount of the premium on the option less the commission paid.
Limitations on Options. Each Fund may write call options only if they are
covered and if they remain covered so long as the Fund is obligated as a writer.
If the Fund writes a call option on an individual security, the Fund will own
the underlying security at all times during the option period. Each Fund will
write call options on indices only to hedge in an economically appropriate way
portfolio securities which are not otherwise hedged with options or financial
futures contracts. Call options on securities indices written by a Fund will be
"covered" by identifying the specific portfolio securities being hedged.
To secure the obligation to deliver the underlying security, the writer of
a covered call option on an individual security is required to deposit the
underlying security or other assets in escrow with the broker in accordance with
clearing corporation and exchange rules. In the case of an index call option
written by a Fund, the Fund will be required to deposit qualified securities. A
"qualified security" is a security against which the Fund has not written a call
option and which has not been hedged by the Fund by the sale of a financial
futures contract. If at the close of business on any day the market value of the
qualified securities falls below 100% of the current index value times the
multiplier times the number of contracts, the Fund will deposit any asset,
including equity securities and non-investment grade debt so long as the asset
is liquid, unencumbered and marked to market daily, equal
2
<PAGE>
in value to the difference. In addition, when the Funds write a call on an index
which is "in-the-money" at the time the call is written, the Funds will pledge
with its custodian bank any asset, including equity securities and
non-investment grade debt so long as the asset is liquid, unencumbered and
marked to market daily, equal in value to the amount by which the call is
"in-the-money" times the multiplier times the number of contracts. Any amount
pledged may be applied to the Fund's obligation to pledge additional amounts in
the event that the market value of the qualified securities falls below 100% of
the current index value times the multiplier times the number of contracts.
Each Fund may sell a call option or a put option which it has previously
purchased prior to the purchase (in the case of a call) or the sale (in the case
of a put) of the underlying security. Any such sale of a call option or a put
option would result in a net gain or loss, depending on whether the amount
received on the sale is more or less than the premium and other transaction
costs paid.
Each Fund may enter into futures contracts and options, provided that such
obligations represent no more than 50% of the Fund's net assets. Under the
Commodity Exchange Act, a Fund may enter into futures and options transactions
for hedging purposes without regard to the percentage of assets committed to
initial margin and option premiums and for other than hedging purposes provided
that assets committed to initial margin and option premiums do not exceed 5% of
the Fund's net assets. To the extent required by law, each Fund will set aside
cash and appropriate liquid assets in a pledged account to cover its obligations
related to futures contracts and options. In connection with each Fund
qualifying as a regulated investment company under the Internal Revenue Code,
other restrictions on the Funds' ability to enter into option transactions may
apply from time to time. See "Dividends, Distributions and Taxes."
Risks Relating to Options. During the option period, the writer of a call
option has, in return for the premium received on the option, given up the
opportunity for capital appreciation above the exercise price should the market
price of the underlying security increase, but has retained the risk of loss
should the price of the underlying security decline. The writer has no control
over the time when it may be required to fulfill its obligation as a writer of
the option.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. Although the Funds will write
and purchase options only when the Adviser believes that a liquid secondary
market will exist for options of the same series, there can be no assurance that
a liquid secondary market will exist for a particular option at a particular
time and that the Fund, if it so desires, can close out its position by
effecting a closing transaction. If the writer of a covered call option is
unable to effect a closing purchase transaction, it cannot sell the underlying
security until the option expires or the option is exercised. Accordingly, a
covered call writer may not be able to sell the underlying security at a time
when it might otherwise be advantageous to do so.
Possible reasons for the absence of a liquid secondary market on an
exchange include: (i) insufficient trading interest in certain options; (ii)
restrictions on transactions imposed by an exchange; (iii) trading halts,
suspensions or other restrictions imposed with respect to particular classes or
series of options or underlying securities; (iv) inadequacy of the facilities of
an exchange or the clearing corporation to handle trading volume; and (v) a
decision by one or more exchanges to discontinue the trading of options or
impose restrictions on orders.
Each exchange has established limitations governing the maximum number of
call options, whether or not covered, which may be written by a single investor
acting alone or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written on one or more
accounts or through one or more brokers). An exchange may order the liquidation
of positions found to be in violation of these limits and it may impose other
sanctions or restrictions.
Risks of Options on Indices. Because the value of an index option depends
upon movements in the level of the index rather than movements in the price of a
particular security, whether each Fund will realize a gain or loss on the
purchase or sale of an option on an index depends upon movements in the level of
prices in the market generally or in an industry or market segment rather than
upon movements in the price of an individual security. Accordingly, successful
use by the Funds of options on indices will be subject to the Adviser's ability
to predict correctly movements in the direction of the market generally or in
the direction of a particular industry. This requires different skills and
techniques than predicting changes in the prices of individual securities.
Index prices may be distorted if trading of certain securities included in
the index is interrupted. Trading in index options also may be interrupted in
certain circumstances, such as if trading were halted in a substantial number of
securities included in the index. If this occurred, the Fund would not be able
to close out options which it had written or purchased and, if restrictions on
exercise were imposed, might be unable to exercise an option it purchased, which
would result in substantial losses to the Fund. However, it is the Trust's
policy to write or purchase options only on indices which include a sufficient
number of securities so that the likelihood of a trading halt in the index is
minimized.
Because the exercise of an index option is settled in cash, an index call
writer cannot determine the amount of its settlement obligation in advance and,
unlike call writing on portfolio securities, cannot provide in advance for its
potential settlement obligation by holding the underlying securities.
Consequently, the Funds will write call options on indices only subject to the
limitations described above.
3
<PAGE>
Price movements in securities in the Funds' portfolios will not correlate
perfectly with movements in the level of the index and, therefore, the Funds
bear the risk that the price of the securities held by a Fund may not increase
as much as the level of the index. In this event, the Fund would bear a loss on
the call which would not be completely offset by movements in the prices of the
Fund's portfolio securities. It is also possible that the index may rise when
the value of the Fund's portfolio securities does not. If this occurred, the
Fund would experience a loss on the call which would not be offset by an
increase in the value of its portfolio and might also experience a loss in the
market value of portfolio securities.
Unless the Fund has other liquid assets which are sufficient to satisfy the
exercise of a call on an index, the Fund will be required to liquidate portfolio
securities in order to satisfy the exercise. Because an exercise must be settled
within hours after receiving the notice of exercise, if the Fund fails to
anticipate an exercise, to the extent permissible, it may have to borrow from a
bank pending settlement of the sale of securities in its portfolio and pay
interest on such borrowing.
When a Fund has written a call on an index, there is also a risk that the
market may decline between the time the Fund has the call exercised against it,
at a price which is fixed as of the closing level of the index on the date of
exercise, and the time the Fund is able to sell securities in its portfolio. As
with options on portfolio securities, the Fund will not learn that a call has
been exercised until the day following the exercise date but, unlike a call on a
portfolio security where the Fund would be able to deliver the underlying
security in settlement, the Fund may have to sell part of its portfolio
securities in order to make settlement in cash, and the price of such securities
might decline before they could be sold.
If a Fund exercises a put option on an index which it has purchased before
final determination of the closing index value for that day, it runs the risk
that the level of the underlying index may change before closing. If this change
causes the exercised option to fall "out-of-the-money" the Fund will be required
to pay the difference between the closing index value and the exercise price of
the option (multiplied by the applicable multiplier) to the assigned writer.
Although the Fund may be able to minimize this risk by withholding exercise
instructions until just before the daily cutoff time or by selling rather than
exercising an option when the index level is close to the exercise price, it may
not be possible to eliminate this risk entirely because the cutoff times for
index options may be earlier than those fixed for other types of options and may
occur before definitive closing index values are announced.
Financial Futures Contracts and Related Options. Each Fund may use
financial futures contracts to hedge against changes in the market value of its
portfolio securities or securities which it intends to purchase. Hedging is
accomplished when an investor takes a position in the futures market opposite to
his 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 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 in a Fund's portfolio
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 the Fund may wish to purchase in the future by
purchasing futures contracts.
The Funds may purchase or sell any financial futures contracts which are
traded on a recognized exchange or board of trade. Financial futures contracts
consist of interest rate futures contracts and securities index futures
contracts. A public market presently exists in interest rate futures contracts
covering long-term U.S. Treasury bonds, U.S. Treasury notes, three-month U.S.
Treasury bills and GNMA certificates. Securities index futures contracts are
currently traded with respect to the Standard & Poor's 500 Composite Stock Price
Index and such other broad-based stock market indices as the New York Stock
Exchange Composite Stock Index and the Value Line Composite Stock Price Index. 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 when a Fund purchases or sells a security, no
security is delivered or received by the Fund upon the purchase or sale of a
financial futures contract. Initially, the Fund will be required to deposit in a
pledged account with its custodian bank any asset, including equity securities
and non-investment grade debt so long as the asset is liquid, unencumbered and
marked to market daily. 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.
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
4
<PAGE>
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.
The Funds 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.
Limitations on Futures Contracts. Each Fund may enter into futures
contracts, provided that such obligations represent no more than 50% of the
Fund's net assets. Under the Commodity Exchange Act, a Fund may enter into
futures and options transactions for hedging purposes without regard to the
percentage of assets committed to initial margin and option premiums and for
other than hedging purposes provided that assets committed to initial margin and
option premiums do not exceed 5% of the Fund's net assets. To the extent
required by law, the Fund will set aside cash and appropriate liquid assets in a
pledged account to cover its obligations related to futures contracts and
options.
The extent to which the Funds may enter into financial futures contracts
and related options also may be limited by the requirements of the Internal
Revenue Code for qualifications as a regulated investment company. See
"Dividends, Distributions and Taxes."
Risks Relating to Futures Contracts. Positions in futures contracts may be
closed out only on an exchange which provides a secondary market for such
contracts or options. Each Fund will enter into a futures 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 futures contract at any
specific time. Thus, it may not be possible to close out a futures position. In
the case of a futures position, in the event of adverse price movements each
Fund would continue to be required to make daily margin payments. In this
situation, if each Fund has insufficient cash to meet daily margin requirements
it may have to sell portfolio securities at a time when it may be
disadvantageous to do so. In addition, each Fund may be required to take or make
delivery of the securities underlying the futures contracts it holds. The
inability to close out futures positions also could have an adverse impact on
the Fund's ability to hedge its portfolio 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 preclude a hedger's opportunity to
benefit from a favorable market movement. In addition, investing in futures
contracts will cause the Fund to incur additional brokerage commissions and may
cause an increase in the Fund's portfolio turnover rate.
The successful use of futures contracts also depends on the ability of the
Adviser to forecast correctly the direction and extent of market movements
within a given time frame. To the extent market prices remain stable during the
period a futures contract is held by the Fund or such prices move in a direction
opposite to that anticipated, the Fund may realize a potential unlimited loss on
the hedging transaction which is not offset by an increase in the value of its
portfolio securities. As a result, the Fund's return for the period may be less
than if it had not engaged in the hedging transaction.
Utilization of futures contracts by the Fund involves the risk of imperfect
correlation in movements in the price of futures contracts and movements in the
price of the securities which are being hedged. If the price of the futures
contract moves more or less than the price of the securities being hedged, the
Fund will experience a gain or loss which will not be completely offset by
movements in the price of the securities. It is possible that, where the Fund
has sold futures contracts to hedge its portfolio against decline in the market,
the market may advance and the value of securities held in the Fund's portfolio
may decline. If this occurred, the Fund would lose 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 before the Fund is able to invest its cash (or cash equivalents) in
securities (or options) in an orderly fashion, it is possible that the market
may decline; if the Fund then determines not to invest in securities (or
options) at that time because of concern as to possible further market decline
or for other reasons, the Fund will realize a loss on the futures that would not
be offset by a reduction in the price of the securities purchased.
The market prices of futures contracts may be affected if participants in
the futures market also elect to close out their contracts through off-setting
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 rather than
to engage in closing transactions due to the resultant reduction in the
liquidity of the futures market. In addition, due to the fact that, from the
point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the cash market, increased
participation by speculators in the futures market could cause temporary price
distortions. Due to the possibility of price distortions in the futures market
and because of the imperfect correlation between movements in the prices of
securities 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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Leverage. Each Fund may borrow for temporary, extraordinary or emergency
purposes. Each Fund will borrow only from banks, and only if immediately after
such borrowing the value of the assets of the Fund (including the amount
borrowed) less its liabilities (not including any borrowings) is at least three
times the amount of funds borrowed. The effect of this provision is to permit
the Fund to borrow up to 25% of the total assets (including any borrowings) of
the Fund. If, due to market fluctuations or other reasons, the value of the
Fund's assets computed as provided above becomes at any time less than three
times the amount of the borrowings, the Fund, within three business days, is
required to reduce bank debt to the extent necessary to meet the required 300%
asset coverage.
Interest on money borrowed will be an expense of the Fund with respect to
which the borrowing has been made. Because such expense would not otherwise be
incurred, the net investment income of the Fund is not expected to be as high as
it otherwise would be during periods when borrowings for investment purposes are
substantial. Bank borrowings must be obtained on an unsecured basis. Any such
borrowing must also be made subject to an agreement by the lender that any
recourse is limited to the assets of the Fund with respect to which the
borrowing has been made.
Foreign Securities. Each Fund may purchase foreign securities, including
those issued by foreign branches of U.S. banks. In any event, such investments
in foreign securities will be limited to 30% of the total assets of each Fund.
Investments in foreign securities, particularly those of non-governmental
issuers, involve considerations which are not ordinarily associated with
investing in domestic issues. These considerations include changes in currency
rates, currency exchange control regulations, the possibility of expropriation,
the unavailability of financial information, the difficulty of interpreting
financial information prepared under foreign securities markets, the impact of
political, social or diplomatic developments, difficulties in invoking legal
process abroad and the difficulty of assessing economic trends in foreign
countries.
The Funds may use a foreign custodian in connection with its purchases of
foreign securities and may maintain cash and cash equivalents in the care of a
foreign custodian. The amount of cash or cash equivalents maintained in the care
of eligible foreign custodians will be limited to an amount reasonably necessary
to effect the Funds' 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
expropriations, 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.
Although the Funds may buy securities of foreign issuers in foreign
markets, most of their foreign securities investments are made by purchasing
American Depositary Receipts (ADRs), "ordinary shares," or "New York Shares."
The Funds may invest in foreign-currency-denominated securities that trade in
foreign markets if the Adviser believes that such investments will be
advantageous to the Funds.
ADRs are dollar-denominated receipts representing interests in the
securities of a foreign issuer. They are issued by U.S. banks and traded on
exchanges or over the counter in the United States. Ordinary shares are shares
of foreign issuers that are traded abroad and on a U.S. exchange. New York
shares are shares that a foreign issuer has allocated for trading in the United
States. ADRs, ordinary shares, and New York shares all may be purchased with and
sold for U.S. dollars, which protects the Fund from the foreign settlement risks
described below.
Lending Portfolio Securities. In order to increase its return on
investments, each Fund may make loans of its portfolio securities, as long as
the market value of the loaned securities does not exceed one-third of the value
of the Fund's total assets. Loans of portfolio securities will always be fully
collateralized by cash or securities issued or guaranteed by the U.S. Government
and marked to market daily, at no less than 100% of the market value of the
loaned securities (as marked to market daily) and made only to borrowers
considered by the Adviser to be creditworthy. Lending portfolio securities
involves a risk of delay in the recovery of the loaned securities and possibly
the loss of the collateral if the borrower fails financially.
Forward Foreign Currency Exchange Contracts. 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 ("Term") 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. These contracts will only be used
to facilitate settlements.
Each Fund does not intend to enter into such forward contracts if it would
have more than 5% of the value of its net assets committed to the initial margin
and option premiums on such contracts on a regular or continuous basis. A Fund
will not 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 Adviser believes that it is important to have the
flexibility to enter into such forward contracts when it determines that to do
so is in the best interests of the Fund. The Funds' custodian bank will pledge
any asset, including equity securities and non-investment grade debt so long as
the asset is liquid, unencumbered and marked to market daily, in an amount not
less than the value of the Fund's total assets committed to forward foreign
currency exchange contracts entered into for the purchase of a foreign currency.
If the value of the securities pledged declines, additional cash or securities
will be added so that the pledged amount is not less than the amount of the
Fund's commitments with respect to such contracts. Generally, the Funds will not
enter into forward contracts with a term longer than one year.
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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 Fund against an adverse movement in the
value of a foreign currency, it does not limit the gain which might result from
a favorable movement in the value of such currency. For example, if a Fund were
holding securities denominated in an appreciating foreign currency and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, it would not have to exercise its put. Similarly, if a Fund had
entered into a contract to purchase a security denominated in a foreign currency
and had purchased a foreign currency call to hedge against a rise in the value
of the currency but instead the currency had depreciated in value between the
date of purchase and the settlement date, the Fund would not have to exercise
its call but could acquire in the spot market the amount of foreign currency
needed for settlement.
Foreign Currency Futures Transactions. Each Fund may use foreign currency
futures contracts and options on such futures contracts. Through the purchase or
sale of such contracts, a Fund may be able to achieve many of the same
objectives attainable through the use of foreign currency forward contracts, but
more effectively and possibly at a lower cost.
Unlike forward foreign currency exchange contracts, foreign currency
futures contracts and options on foreign currency futures contracts are
standardized as to amount and delivery period and are traded on boards of trade
and commodities exchanges. It is anticipated that such contracts may provide
greater liquidity and lower cost than forward foreign currency exchange
contracts.
Regulatory Restrictions. To the extent required to comply with Securities
and Exchange Commission Release No. IC-10666, when purchasing a futures contract
or writing a put option, each Fund will maintain in a pledged account any asset,
including equity securities and non-investment grade debt so long as the asset
is liquid, unencumbered and marked to market daily, equal to the value of such
contracts.
Each Fund may enter into futures contracts and options, provided that such
obligations represent no more than 50% of a Fund's net assets. Under the
Commodity Exchange Act, a Fund may enter into futures and options transactions
for hedging purposes without regard to the percentage of assets committed to
initial margin and option premiums and for other than hedging purposes provided
that assets committed to initial margin and option premiums do not exceed 5% of
a Fund's net assets. To the extent required by law, the Funds will set aside
cash and appropriate liquid assets in a pledged account to cover its obligations
related to futures contracts and options.
Derivative Investments. In order to hedge various portfolio positions,
including to hedge against price movements in markets in which the Funds
anticipate increasing their exposure, the Funds may invest in certain
instruments which may be characterized as derivative investments. These
investments include various types of interest rate transactions, options and
futures. Such investments also may consist of indexed securities. Other of such
investments have no express quantitative limitations, although they may be made
solely for hedging purposes, not for speculation, and may in some cases be
limited as to the type of counter-party permitted. Interest rate transactions
involve the risk of an imperfect correlation between the index used in the
hedging transactions and that pertaining to the securities which are the subject
of such transactions. Similarly, utilization of options and futures transactions
involves the risk of imperfect correlation in movements in the price of options
and futures and movements in the price of the securities or interest rates which
are the subject of the hedge. Investments in indexed securities, including
inverse securities, subject the Funds to the risks associated with changes in
the particular indices, which may include reduced or eliminated interest
payments and losses of invested principal.
PERFORMANCE INFORMATION
The Funds may, from time to time, include total return in advertisements,
sales literature or reports to shareholders or prospective investors.
Performance information in advertisements and sales literature may be expressed
as yield of a class or Fund and as total return of any Class or Fund.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in either Class A, Class B or Class
C Shares of a Fund over periods of 1, 5 and 10 years or up to the life of the
class of shares of a Fund, 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 each 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 and C Shares, and assume that all dividends
and distributions are reinvested when paid.
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<PAGE>
The Funds may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc.
Additionally, the Funds may compare performance results to other investment or
savings vehicles (such as certificates of deposit) and may refer to results
published in various publications such as Changing Times, Forbes, Fortune,
Money, Barrons, Business Week, Investor's Daily, Stanger's Mutual Fund Monitor,
The Stanger Register, Stanger's Investment Adviser, The Wall Street Journal, The
New York Times, Consumer Reports, Registered Representative, Financial Planning,
Financial Services Weekly, Financial World, U.S. News and World Report, Standard
& Poor's The Outlook, and Personal Investor. The Funds may from time to time
illustrate the benefits of tax deferral by comparing taxable investments to
investments made through tax-deferred retirement plans. The total return may
also be used to compare the performance of the Funds against certain widely
acknowledged outside standards or indices for stock and bond market performance,
such as the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"),
Russell 1000 Value Index, Russell 2000 Value Index, Dow Jones Industrial
Average, Europe Australia Far East Index (EAFE), Consumer Price Index, Lehman
Brothers Corporate Index and Lehman Brothers T-Bond Index.
Advertisements, sales literature and other communications may contain
information about the Funds and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Funds to
respond quickly to changing market and economic conditions. From time to time
the Funds may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Funds may
separate its cumulative and average annual returns into income and capital gains
components.
Phoenix Small Cap Value Fund's average annual total return since inception
November 20, 1997 through August 31, 1998 for Class A Shares was %, for Class B
Shares was % and for Class C Shares was %. Phoenix Value Equity Fund's average
annual total return since inception November 5, 1997 through August 31, 1998 for
Class A Shares was %, for Class B Shares was % and for Class C Shares was %.
Performance information reflects only the performance of a hypothetical
investment in each class during the particular time period on which the
calculations are based. Performance information should be considered in light of
each Fund's investment objectives and policies, characteristics and quality of
the portfolio, and the market condition during the given time period, and should
not be considered as a representation of what may be achieved in the future.
The Funds may also compute aggregate cumulative total return for specified
periods based on a hypothetical Class A, Class B or Class C account with an
assumed initial investment of $10,000. The aggregate total return is determined
by dividing the net asset value of this account at the end of the specified
period by the value of the initial investment and is expressed as a percentage.
Calculation of aggregate total return reflects payment of the Class A Shares'
maximum sales charge of 4.75%, and assumes reinvestment of all income dividends
and capital gain distributions during the period.
The Funds also may quote annual, average annual and annualized total return
and aggregate total return performance data, for each class of shares of the
Funds, 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
Funds. It is the practice of the Adviser to seek the best prices and execution
of orders and to negotiate brokerage commissions which in the Adviser's opinion
are reasonable in relation to the value of the brokerage services provided by
the executing broker. Brokers who have executed orders for the Funds are asked
to quote a fair commission for their services. If the execution is satisfactory
and if the requested rate approximates rates currently being quoted by the other
brokers selected by the Adviser, the rate is deemed by the Adviser to be
reasonable. Brokers may ask for higher rates of commission if all or a portion
of the securities involved in the transaction are positioned by the broker, if
the broker believes it has brought the Funds an unusually favorable trading
opportunity, or if the broker regards its research services as being of
exceptional value, and payment of such commissions is authorized by the Adviser
after the transaction has been consummated. If the Adviser more than
occasionally differs with the broker's appraisal of opportunity or value, the
broker would not be selected to execute trades in the future. The Adviser
believes that the Funds benefit with a securities industry comprised of many and
diverse firms and that the long-term interest of shareholders of the Funds is
best served by 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
Funds. 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.
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<PAGE>
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 Funds. While
this information may be useful in varying degrees and may tend to reduce the
Adviser's expenses, it is not possible to estimate its value and in the opinion
of the Adviser it does not reduce the Adviser's expenses in a determinable
amount. The extent to which the Adviser makes use of statistical, research and
other services furnished by brokers is considered by the Adviser in the
allocation of brokerage business but there is no formula by which such business
is allocated. The Adviser does so in accordance with its judgment of the best
interest of the Funds and shareholders.
A high rate of portfolio turnover involves a correspondingly higher amount
of brokerage commissions and other costs which must be borne directly by the
Funds and indirectly by shareholders.
The Funds have adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to lower
commission costs on a per-share and per-dollar basis. According to the bunching
procedures, the Adviser shall aggregate transactions unless it believes in its
sole discretion that such aggregation is inconsistent with its duty to seek best
execution (which shall include the duty to seek best price) for the Funds. No
advisory account of the Adviser is to be favored over any other account and each
account that participates in an aggregated order is expected to participate at
the average share price for all transactions of the Adviser in that security on
a given business day, with all transaction costs shared pro rata based on the
Funds' participation in the transaction. If the aggregated order is filled in
its entirety, it shall be allocated among the Adviser's accounts in accordance
with the allocation order, and if the order is partially filled, it shall be
allocated pro rata based on the allocation order. Notwithstanding the foregoing,
the order may be allocated on a basis different from that specified in the
allocation order if all accounts of the Adviser whose orders are allocated
receive fair and equitable treatment and the reason for such different
allocation is explained in writing and is approved in writing by the Adviser's
compliance officer as soon as practicable after the opening of the markets on
the trading day following the day on which the order is executed. If an
aggregated order is partially filled and allocated on a basis different from
that specified in the allocation order, no account that is benefited by such
different allocation may intentionally and knowingly effect any purchase or sale
for a reasonable period following the execution of the aggregated order that
would result in it receiving or selling more shares than the amount of shares it
would have received or sold had the aggregated order been completely filled. The
Trustees will annually review these procedures or as frequently as shall appear
appropriate.
THE INVESTMENT ADVISER
The offices of Phoenix Investment Counsel, Inc. ("PIC" or the "Adviser")
are located at 56 Prospect Street, Hartford, Connecticut 06115-0480. PIC was
organized in 1932 as John P. Chase, Inc. All of the outstanding shares of PIC
are owned by Phoenix Equity Planning Corporation ("Equity Planning"). All of the
outstanding shares of Equity Planning are owned by Phoenix Investment Partners,
Ltd. (previously known as Phoenix Duff & Phelps Corporation). A majority of the
outstanding shares of Phoenix Investment Partners, Ltd. are owned by PM
Holdings, Inc. ("Holdings"), a wholly-owned subsidiary of Phoenix Home Life
Mutual Insurance Company ("Phoenix Home Life").
Philip R. McLoughlin, a director and officer of the Fund, is also a
director of the Adviser. Michael E. Haylon, an officer of the Fund, is also a
director and officer of the Adviser. Christian C. Bertelsen, G. Jeffrey Bohne,
William E. Keen, III and William R. Moyer, officers of the Fund, are officers of
the Adviser.
The Adviser provides certain services and facilities required to carry on
the day-to-day operations of the Funds (for which it receives management fees)
other than the costs of printing and mailing proxy materials, reports and
notices to shareholders; legal, auditing and accounting services; regulatory
filing fees and expenses of printing the Funds' registration statement (but the
Distributor purchases such copies of the Funds' prospectuses and reports and
communications to shareholders as it may require for sales purposes); insurance
expense; association membership dues; brokerage fees; and taxes.
All costs and expenses (other than those specifically referred to as being
borne by the Adviser) incurred in the operation of the Funds are borne by the
Funds. Each Fund pays expenses incurred in its own operation and also pays a
portion of the Trust's general administration expenses allocated on the basis of
the asset size of the respective Fund, except where an allocation using an
alternative method can be more fairly made. Such expenses include, but shall not
be limited to, all expenses incurred in the operation of the Funds and any
public offering of its shares, including, among others, interest, taxes,
brokerage fees and
9
<PAGE>
commissions, fees of Trustees who are not employees of the Adviser or any
of its affiliates, expenses of Trustees' and shareholders' meetings, including
the cost of printing and mailing proxies, expenses of insurance premiums for
fidelity and other coverage, expenses of repurchase and redemption of shares,
expenses of issue and sale of shares (to the extent not borne by Equity Planning
under its agreement with the Funds), association membership dues, charges of
custodians, transfer agents, dividend disbursing agents and financial agents,
bookkeeping, auditing, and legal expenses. The Funds will also pay the fees and
bear the expense of registering and maintaining the registration of the Trust
and its shares with the Securities and Exchange Commission and registering or
qualifying its shares under state or other securities laws and the expense of
preparing and mailing prospectuses and reports to shareholders.
The investment advisory agreement provides that the Adviser shall not be
liable to the Funds or to any shareholder of the Funds for any error of judgment
or mistake of law or for any loss suffered by the Funds or by any shareholder of
the Funds in connection with the matters to which the investment advisory
agreement relates, except a loss resulting from willful misfeasance, bad faith,
gross negligence or reckless disregard on the part of the Adviser in the
performance of its duties thereunder.
As full compensation for the services and facilities furnished to the
Funds, the Adviser is entitled to a fee, payable monthly, as described in the
prospectus. Total management fees for the fiscal year ended August 31, 1998
amounted to $ . There is no assurance that the Funds will reach net asset levels
high enough to realize reductions in the rates of the advisory fees. Any
reduction in the rate of the advisory fee on each Fund will be in proportion to
the averages of the aggregate daily net asset values for each class of shares
for the period for which the fee had been paid.
The advisory agreement continues in force from year to year for each Fund,
provided that, with respect to each Fund, the agreement must be approved at
least annually by the Trustees or by vote of a majority of the outstanding
voting securities of each Fund. In addition, and in either event, the terms of
the agreement and any renewal thereof must be 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 any such party,
cast in person at a meeting called for the purpose of voting on such approval.
The agreement will terminate automatically if assigned and may be terminated at
any time, without payment of any penalty, either by the Trust or by the Adviser,
on sixty (60) days written notice.
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Funds do not price securities on
weekends or United States national holidays, the net asset value of a Fund's
foreign assets may be significantly affected on days when the investor has no
access to the Funds. The net asset value per share of a Fund is determined by
adding the values of all securities and other assets of the Fund, subtracting
liabilities, and dividing by the total number of outstanding shares of the Fund.
Assets and liabilities are determined in accordance with generally accepted
accounting principles and applicable rules and regulations of the Securities and
Exchange Commission. The total liability allocated to a class, plus that class's
distribution fee and any other expenses allocated solely to that class, are
deducted from the proportionate interest of such class in the assets of the
Fund, and the resulting amount of each is divided by the number of shares of
that class outstanding to produce the net asset value per share.
A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world, the
calculation of net asset value may not take place for any Fund which invests in
foreign securities contemporaneously with the determination of the prices of the
majority of the portfolio securities of such Fund. All assets and liabilities
initially expressed in foreign currency values will be converted into United
States dollar values at the mean between the bid and ask quotations of such
currencies against United States dollars as last quoted by any recognized
dealer. If an event were to occur after the value of an investment was so
established but before the net asset value per share was determined, which was
likely to materially change the net asset value, then the instrument would be
valued using fair value considerations by the Trustees or their delegates. If at
any time a Fund has investments where market quotations are not readily
available, such investments are valued at the fair value thereof as determined
in good faith by the Trustees although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent
investment is $25. However, both the minimum initial and subsequent investment
amounts are $25 for investments pursuant to the "Investo-Matic" plan, a bank
draft investing program administered by Distributor, or pursuant to the
Systematic Exchange privilege or for an individual retirement account (IRA). In
addition, there are no subsequent investment minimum amounts in connection with
the reinvestment of dividend or capital gain distributions. Completed
applications for the purchase of shares should be mailed to: Phoenix Funds, c/o
State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301.
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The Funds have authorized one or more brokers to accept on their behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Funds' behalf.
The Funds will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased from investment dealers at a price equal to their
net asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a contingent deferred basis (the "deferred
sales charge alternative"). Orders received by dealers prior to the close of
trading on the New York Stock Exchange are confirmed at the offering price
effective at that time, provided the order is received by the Distributor prior
to its close of business.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Funds, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the Funds,
the accumulated continuing distribution plan fees and contingent deferred sales
charges on Class B or C Shares would be less than the initial sales charge and
accumulated distribution plan fees on Class A Shares purchased at the same time.
Dividends paid by the Funds, if any, with respect to each Class of Shares
will be calculated in the same manner at the same time on the same day, except
that fees such as higher distribution plan fees and any incremental transfer
agency costs relating to each Class of Shares will be borne exclusively by that
class. See "Dividends, Distributions and Taxes."
Class A Shares
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed. Class A
Shares are subject to an ongoing distribution services fee at an annual rate of
0.25% of the Funds' aggregate average daily net assets attributable to the Class
A Shares. In addition, certain purchases of Class A Shares qualify for reduced
initial sales charges. See the Funds' current Prospectus for additional
information.
Class B Shares
Class B Shares do not incur a sales charge when they are purchased, but
they are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions. See the Funds' current Prospectus for additional
information.
Class B Shares are subject to an ongoing distribution services fee at an
annual rate of up to 1.00% of the Fund's aggregate average daily net assets
attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment is
made. The higher ongoing distribution plan fees paid by Class B Shares will
cause such shares to have a higher expense ratio and to pay lower dividends, to
the extent any dividends are paid, than those related to Class A Shares. Class B
Shares will automatically convert to Class A Shares eight years after the end of
the calendar month in which the shareholder's order to purchase was accepted, in
the circumstances and subject to the qualifications described in the Funds'
Prospectus. The purpose of the conversion feature is to relieve the holders of
the Class B Shares that have been outstanding for a period of time sufficient
for the adviser and the Distributor to have been compensated for distribution
expenses related to the Class B Shares from most of the burden of such
distribution related expenses.
Class B Shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution plan fees. 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.
For purposes of conversion to Class A Shares, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares in
a shareholder's Trust account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Trust account
(other than those in the sub-account) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the sub-account will also convert to
Class A Shares.
Class C Shares
Class C Shares are purchased without an initial sales charge but are
subject to a deferred sales charge if redeemed within one year of purchase. The
deferred sales charge may be waived in connection with certain qualifying
redemptions. Shares issued in conjunction with the automatic reinvestment of
income distributions and capital gain distributions are not subject to any sales
charges. Class C Shares are subject to an ongoing distribution services fee of
up to 1.00% of the Funds' aggregate average daily net assets attributable to
Class C Shares. See the Funds' current Prospectus for more information.
11
<PAGE>
Class A Shares -- Reduced Sales Charges
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 trustee, director or officer of the Phoenix Funds, Phoenix-Engemann
Funds, Phoenix-Seneca Funds or other mutual funds advised, subadvised or
distributed by the Adviser, Distributor or any of their corporate affiliates (an
"Affiliated Phoenix Fund"); (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 Mutual Insurance
Company or Equity Planning; (9) any account held in the name of a qualified
employee benefit plan, endowment fund or foundation if, on the date of 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 Affiliated 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,
instrumentality, department, authority or agency prohibited by law from paying a
sales charge; (13) any fully matriculated student in a U.S. service academy;
(14) any unallocated accounts 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 Affiliated 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 Affiliated Phoenix Fund purchase and that a sales
charge was paid; or (16) any deferred compensation plan established for the
benefit of any Affiliated Phoenix Fund trustee or director; provided that sales
made to persons listed in (1) through (16) 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 advisers and financial
planners who charge an advisory, consulting or other fee for their services and
buy shares for their own accounts or the accounts of their clients, and (2)
retirement plans and deferred compensation plans and trusts used to fund those
plans (including, for example, plans qualified or created under sections 401(a),
403(b) or 457 of the Internal Revenue Code), and "rabbi trusts" that buy shares
for their own accounts, in each case if those purchases are made through a
broker or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; (3) clients of such
investment advisers or financial planners who buy shares for their own accounts
may also purchase shares without sales charge but only if their accounts are
linked to a master account of their investment adviser or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of these investors may
be charged a fee by the broker, agent or financial intermediary for purchasing
shares).
Combination Purchase Privilege. Purchases, either singly or in any
combination, of shares of the Fund or shares of any other Affiliated Phoenix
Fund, (including Class B Shares and excluding Money Market Fund Series Class A
Shares) 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 such purchases of Class
A Shares. Each purchase of Class A Shares will then be made at the public
offering price, as described in the then current Prospectus relating to such
shares, which at the time of such purchase is applicable to a single transaction
of the total dollar amount of all such purchases. The term "single purchaser"
includes an individual, or an individual, his spouse and their children under
the age of majority purchasing for his or their own account (including an IRA
account) including his or their own trust, commonly known as a living trust; a
trustee or other fiduciary purchasing for a single trust, estate or single
fiduciary account, although more than one beneficiary is involved; multiple
trusts or 403(b) plans for the same employer; multiple accounts (up to 200)
under a qualified employee benefit plan or administered by a third party
administrator; or trust companies, bank trust departments, registered investment
advisers, and similar entities placing orders or providing administrative
services with respect to funds over which they exercise discretionary investment
authority and which are held in a fiduciary, agency, custodial or similar
capacity, provided all shares are held in record in the name, or nominee name,
of the entity placing the order.
Letter of Intent. Class A Shares or shares of any other Affiliated Phoenix
Fund (including Class B Shares and excluding Money Market Fund Series Class A
Shares) 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 Class A Shares of the Fund or
Class A or Class B Shares of any other Affiliated 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.
12
<PAGE>
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 an initial purchase (and subsequent purchases if necessary),
5% of the dollar amount of purchases required to complete his investment (valued
at the purchase price thereof) is held in escrow in the form of shares
registered in the investor's name until completion of the investment, at which
time escrowed shares are deposited to the investor's account. If the investor
does not complete the investment and does not within 20 days after written
request by Equity Planning or the 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 Affiliated 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 Affiliated 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 information as to account registrations and
account numbers to permit verification that one or more of the purchases
qualifies 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 Purchase
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) gives its
endorsements or authorization to the investment program to facilitate
solicitation of the membership by the investment dealer, thus 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.
Class B and C Shares -- Waiver of Sales Charges
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 701/2 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 Class B
or Class C Shares of the Fund and Class B or Class C Shares of other Affiliated
Phoenix Funds; (f) in connection with any direct rollover transfer of shares
from an established Affiliated Phoenix Fund qualified plan into a Affiliated
Phoenix Fund IRA by participants terminating from the qualifying 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 Class B Shares and be subject to
the applicable contingent deferred sales charge when redeemed.
Automatic Conversion of Class B Shares
Class B Shares of the Fund will automatically convert to Class A Shares
without a sales charge at the relative net asset values of each of the classes
after eight years from the acquisition of the Class B Shares, and as a result,
will thereafter be subject to the lower distribution and services fee under the
Class A 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 the
Distributor to have been compensated for distribution related expenses from 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 from the Internal
Revenue Service ("IRS") to the effect: (i) that the conversion of shares does
not constitute a taxable event under federal income tax law; and (ii) the
assessment of higher distribution and services fees and transfer agency costs
with respect to Class B Shares does not result in dividends or distributions
constituting "preferential dividends" under the Code. 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 conversion of Class B Shares would
occur, and shares might continue to be subject to the higher distribution and
services fee
13
<PAGE>
for an indefinite period which may extend beyond the period ending eight (8)
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 and services 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 Fund's general practice of distributing sufficient
income to reduce or eliminate U.S. federal taxes.
INVESTOR ACCOUNT SERVICES
The Funds offer accumulation plans, withdrawal plans and reinvestment and
exchange privileges. Certain privileges may not be available in connection with
all classes. In most cases, changes to account services may be accomplished over
the phone. Inquiries regarding policies and procedures relating to shareholder
account services should be directed to Shareholder Services at (800) 243-1574.
Exchanges. Under certain circumstances, shares of any Phoenix Fund may be
exchanged for shares of the same Class of another Phoenix Fund or any other
Affiliated Phoenix Fund 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 Fund, Series, or Portfolio, except if
made in connection with the Systematic Exchange privilege. Shareholders may
exchange shares held in book-entry form for an equivalent number (value) of the
same class of shares of any other Affiliated Phoenix Fund, if currently offered.
On exchanges with share classes that carry a contingent deferred sales charge,
the CDSC schedule of the original shares purchased continues to apply. The
exchange of shares is treated as a sale and purchase for federal income tax
purposes (see also "Dividends, Distributions and Taxes").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Affiliated Phoenix Fund automatically on a
monthly, quarterly, semi-annual or annual basis or may cancel this privilege at
any time. If you maintain an account balance of at least $5,000, or $2,000 for
tax qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that shares be
automatically exchanged at predetermined intervals for shares of the same class
of another Affiliated Phoenix Fund. This requirement does not apply to Phoenix
"Self Security" program participants. Systematic exchanges will be executed upon
the close of business on the 10th day of each month or the next succeeding
business day. Systematic exchange forms are available from the Distributor.
Exchanges will be based upon each Fund's net asset value per share next computed
after the close of business on the 10th day of each month (or next succeeding
business day), without sales charge.
Dividend Reinvestment Across Accounts. If you maintain an account balance
of at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account of one
of the other Phoenix Fund or any other Affiliated Phoenix Fund at net asset
value. You should obtain a current prospectus and consider the objectives and
policies of each Fund carefully before directing dividends and distributions to
another Fund. Reinvestment election forms and prospectuses are available from
Equity Planning. Distributions may also be mailed to a second payee and/or
address. Requests for directing distributions to an alternate payee must be made
in writing with a signature guarantee of the registered owner(s). To be
effective with respect to a particular dividend or distribution, notification of
the new distribution option must be received by the Transfer Agent at least
three days prior to the record date of such dividend or distribution. If all
shares in your account are repurchased or redeemed or transferred between the
record date and the payment date of a dividend or distribution, you will receive
cash for the dividend or distribution regardless of the distribution option
selected.
HOW TO REDEEM 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 New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Fund to dispose of its securities or to determine fairly the value of
its net assets or during any other period permitted by order of the Securities
and Exchange Commission for the protection of investors. Furthermore, the
Transfer Agent will not mail redemption proceeds until checks received for
shares purchased have cleared, which may take up to 15 days or more. See the
Funds' current Prospectus for further information. Redemptions by Class B and C
shareholders will be subject to the applicable deferred sales charge, if any.
The Funds have authorized one or more brokers to accept on their behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Funds' behalf.
The Funds will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Redemption of Small Accounts
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the giving
of not less than 30 days written notice to the shareholder mailed to the address
of record. During the 30-day period the shareholder has the right to add to the
account to bring its value to $200 or more.
14
<PAGE>
By Mail
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds, c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, 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 Trust redeem the shares. See the Funds' current
Prospectus for more information.
Telephone Redemptions
Shareholders may redeem up to $50,000 worth of their shares by telephone.
See the Funds' current Prospectus for additional information.
Redemption in Kind
To the extent consistent with state and federal law, the Funds may make
payment of the redemption price either in cash or in kind. However, the Funds
have elected to pay in cash all requests for redemption by any shareholder of
record, limited 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 the withdrawal
thereof. In case of a redemption in kind, securities delivered in payment for
shares would be readily marketable and 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 selling the securities.
Reinvestment Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinvestment of their investment at net
asset value. See the Funds' current Prospectus for more information and
conditions attached to this privilege.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
Each Fund intends to elect to be treated as a regulated investment company
("RIC") and qualify annually as such under certain provisions of the Internal
Revenue Code (the "Code"). Under such provisions, each 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, each Fund must, among other things, derive in each taxable year at
least 90% of its gross income from dividends, interest and gains from the sale
or other disposition of securities. If in any taxable year each Fund does not
qualify as a regulated investment company, all of its taxable income will be
taxed at corporate rates.
The Code imposes a 4% nondeductible excise tax on a regulated investment
company if it does not distribute to its shareholders during the calendar year
an amount equal to 98% of the Fund's net ordinary income, with certain
adjustments, for such calendar year, plus 98% of each Fund' net capital gains
for the 12-month period ending on October 31 of such calendar year. In addition,
an amount equal to any undistributed investment company taxable income or
capital gain net income from the previous calendar year must also be distributed
to avoid the excise tax. The excise tax is imposed on the amount by which the
regulated investment company does not meet the foregoing distribution
requirements. If each Fund has taxable income that would be subject to the
excise tax, each Fund intends to distribute such income so as to avoid payment
of the excise tax.
Under another provision of the Code, any dividend declared by each Fund to
shareholders of record in October, November and December of any year will be
deemed to have been received by, and will be taxable to shareholders as of
December 31 of such year, provided that the dividend is actually paid by each
Fund before February 1, of the following year.
The Funds' policy is to distribute to its shareholders substantially all
investment company taxable income as defined in the Code and any net realized
capital gains for each year and consistent therewith to meet the distribution
requirements of Part I of subchapter M of the Code. The Funds intend to meet the
other requirements of Part I of subchapter M, including the requirements with
respect to diversification of assets and sources of income, so that the Funds
will pay no taxes on net investment income and net realized capital gains
distributed to shareholders.
Under certain circumstances, the sales charge incurred in acquiring shares
of the Funds may not be taken into account in determining the gain or loss on
the disposition of those shares. This rule applies where shares of the Funds are
disposed of within 90 days after the date on which they were acquired and new
shares of a regulated investment company are acquired without a sales charge or
at a reduced sales charge. In that case, the gain or loss realized on the
disposition will be determined by excluding from the tax basis of the shares
disposed of all or a portion of the sales 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.
15
<PAGE>
Distributions by the Funds reduce the net asset value of the Funds' shares.
Should a distribution reduce the net asset value of a share below a
shareholder's cost for the shares, 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 a 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.
Transactions in options on stock indices are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by the Funds
during a taxable year or held by the Funds at the close of its taxable year,
will be treated as if sold for their market value, with 40% of any resulting
gain or loss treated as short-term and 60% long-term.
A high portfolio turnover rate may result in the realization of larger
amounts of short-term gains, which are taxable to shareholders as ordinary
income.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS Regulations, the Funds may be required to withhold 31% of
all reportable payments including any taxable dividends, capital gains
distributions or share redemption proceeds, for an account which does not have a
taxpayer identification number or social security number and certain required
certifications. The Funds reserve the right to refuse to open an account for any
person failing to provide a taxpayer identification number along with the
required certifications.
The Funds will furnish shareholders, within 31 days after the end of the
calendar year, with information which is required by the Internal Revenue
Service for preparing income tax returns. Investors are urged to consult their
attorney or tax adviser regarding specific questions as to federal, foreign,
state or local taxes.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund are offered in connection with the following retirement
plans or programs: IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Roth IRA, 401(k),
Profit-Sharing, Money Purchase Pension Plans, and 403(b) Retirement Programs.
Write or call Equity Planning (800) 243-4361 for further information about the
plans.
THE DISTRIBUTOR
Pursuant to an Underwriting Agreement with the Funds, Phoenix Equity
Planning Corporation (the "Distributor"), an indirect wholly-owned subsidiary of
Phoenix Investment Partners, Ltd., serves as distributor for the Funds. As such,
the Distributor conducts a continuous offering pursuant to a "best efforts"
arrangement requiring the Distributor to take and pay for only such securities
as may be sold to the public. The address of the Distributor is 100 Bright
Meadow Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200.
The Underwriting Agreement may be terminated at any time on not more than
60 days written notice, without payment of a penalty, by the Distributor, by
vote of a majority of the outstanding voting securities of the Funds, or by vote
of a majority of the Funds' Trustees who are not "interested persons" of the
Funds and who have no direct or indirect financial interest in the operation of
the Distribution Plan or in any related agreements. The Underwriting Agreement
will terminate automatically in the event of its assignment.
Dealers with whom the Distributor has entered into sales agreements receive
a discount or commission as set forth below.
<TABLE>
<CAPTION>
Dealer Discount
Sales Charge Sales Charge or Agency Fee
Amount of Transaction as Percentage as Percentage as Percentage of
at Offering Price of Offering Price of Amount Invested Offering Price
- ---------------------------------- ------------------- -------------------- -----------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under $100,000 4.50% 4.71% 4.00%
$100,000 but under $250,000 3.50% 3.63% 3.00%
$250,000 but under $500,000 3.00% 3.09% 2.75%
$500,000 but under $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. Your broker, dealer or investment adviser
may also charge you additional commissions or fees for their services in selling
shares to you provided they notify the Distributor of their intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Funds and/or for providing other shareholder services. Depending on the nature
of the services, these fees
16
<PAGE>
may be paid either from the Funds through distribution fees, service fees or
transfer agent fees or in some cases, the Distributor may pay certain fees from
its own profits and resources. From its own profits and resources, the
Distributor does intend to: (a) sponsor sales contests, training and educational
meetings and provide additional compensation to qualifying dealers in the form
of trips, merchandise or expense reimbursements; (b) from time to time pay
special incentive and retention fees to qualified wholesalers, registered
financial institutions and third party marketers; (c) pay broker/dealers an
amount equal to 1% of the first $3 million of Class A Share purchases by an
account held in the name of a qualified employee benefit plan with at least 100
eligible employees, 0.50% on the next $3 million, plus 0.25% on the amount in
excess of $6 million; and (d) excluding purchases as described in (c) above, pay
broker/dealers an amount equal to 1% of the amount of Class A Shares sold above
$1 million but under $3 million, 0.50% on the next $3 million, plus 0.25% on the
amount in excess of $6 million. If part or all of such investment, including
investments by qualified employee benefit plans, is subsequently redeemed within
one year of the investment date, the broker-dealer will refund to the
Distributor such amounts paid with respect to the investment. In addition, the
Distributor may pay the entire applicable sales charge on purchases of Class A
Shares to selected dealers and agents. Any dealer who receives more than 90% of
a sales charge may be deemed to be an "underwriter" under the Securities Act of
1933.
Administrative Services
Equity Planning also acts as administrative agent of the Funds and as such
performs administrative, bookkeeping and pricing functions for the Funds. For
its services, Equity Planning will be paid a fee equal to the sum of (1) the
documented cost of fund accounting and related services provided by PFPC, Inc.,
as subagent, plus (2) the documented cost to Equity Planning to provide
financial reporting and tax services and to oversee the subagent's performance.
The current fee schedule of PFPC, Inc. is based upon the average of the
aggregate daily net asset values of the Funds, at the following incremental
annual rates.
<TABLE>
<S> <C>
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .015%
Greater than $1 billion .0125%
</TABLE>
Percentage rates are applied to the aggregate daily net asset values of the
Funds. PFPC, Inc. also charges minimum fees and additional fees for each
additional class of fund shares. Equity Planning retains PFPC, Inc. as subagent
for each of the funds for which Equity Planning serves as administrative agent.
PFPC, Inc. agreed to a modified fee structure and waived certain charges.
Because PFPC, Inc.'s arrangement would have favored smaller funds over larger
funds, Equity Planning reallocates PFPC, Inc.'s overall asset-based charges
among all funds for which it serves as administrative agent on the basis of the
relative net assets of each fund. As a result, the PFPC, Inc. charges to the
Fund are expected to be slightly less than the amount that would be found
through direct application of the table illustrated above. For its services
during the Fund's fiscal year ended August 31, 1998, Equity Planning received $
.
DISTRIBUTION PLANS
The Trust has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each class of shares of each series of the Trust (the "Class A
Plan," the "Class B Plan," the "Class C Plan," and collectively the "Plans").
The Plans permit the Funds to reimburse the Distributor for expenses incurred in
connection with activities intended to promote the sale of shares of each class
of shares of the Funds.
Pursuant to the Plans, the Funds will pay the Distributor 0.25% of the
average daily net assets of the Funds for providing services to shareholders,
including assistance with inquiries related to shareholder accounts (the
"Service Fee"). Pursuant to the Plans, the Funds may reimburse the Distributor
monthly for actual expenses of the Distributor up to 0.75% of the average daily
net assets of the Funds' Class B and of Class C Shares. Expenditures under the
Plans shall consist of: (i) commissions to sales personnel for selling shares of
the Funds (including underwriting fees and financing expenses incurred in
connection with the payment of commissions); (ii) compensation, sales incentives
and payments to sales, marketing and service personnel; (iii) payments to
broker-dealers and other financial institutions which have entered into
agreements with the Distributor in the form of the Dealer Agreement for Phoenix
Funds for services rendered in connection with the sale and distribution of
shares of the Funds; (iv) payment of expenses incurred in sales and promotional
activities, including advertising expenditures related to the Funds; (v) the
costs of preparing and distributing promotional materials; (vi) the cost of
printing the Funds' Prospectuses and Statements of Additional Information for
distribution to potential investors; and (vii) such other similar services that
the Trustees of the Funds determine are reasonably calculated to result in the
sale of shares of the Funds.
From the Service Fee the Distributor expects to pay a quarterly fee to
qualifying broker/dealer firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such firms. This fee will not exceed on an annual basis 0.25% of the average
annual net asset value of such shares, and will be in addition to sales charges
on Fund shares which are re-allowed to such firms. To the extent that the entire
amount of the Service Fee is not paid to such firms, the balance will serve as
compensation for personal and account maintenance services furnished by the
Distributor.
17
<PAGE>
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor, such
as services to the Funds' shareholders; or services providing the Funds with
more efficient methods of 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.
For the fiscal year ended August 31, 1998 the Funds paid Rule 12b-1 Fees in
the amount of $ of which the Distributor received $ , W.S. Griffith & Co., an
affiliate, received $ and unaffiliated broker-dealers received $ . The Rule
12b-1 payments were used for (1) compensation to dealers ($ ), (2) compensation
to sales personnel ($ ), (3) advertising ($ ), (4) service costs ($ ), (5)
printing and mailing of prospectuses to other than current shareholders ($ ) and
(6) other ($ ). The Distributor's expenses from selling and servicing Class B
Shares may be more than the payments received from contingent deferred sales
charges collected on redeemed shares and from the Fund under the Class B Plan.
Those expenses may be carried over and paid in future years. At August 31, 1998,
the end of the last Plan year, the Distributor had incurred unreimbursed
expenses under the Class B Plan of $ (equal to % of the Fund's net assets) which
have been carried over into the present Class B Plan year.
The fee received by the Distributor under the early years of the Plans is
not likely to reimburse the Distributor for the total distribution expenses it
will actually incur as a result of the Funds having fewer assets and the
Distributor incurring greater promotional expenses during the start-up phase. If
the Plans are terminated in accordance with their terms, the obligations of the
Funds to make payments to the Distributor pursuant to the Plans will cease and
the Funds will not be required to make any payments past the date on which each
Plan terminates.
On a quarterly basis, the Funds' Trustees review a report on expenditures
under the Plans and the purposes for which expenditures were made. The Trustees
conduct an additional, more extensive review annually in determining whether the
Plans will be continued. By its terms, continuation of the Plans from year to
year is contingent on annual approval by a majority of the Funds' Trustees and
by a majority of the Trustees who are not "interested persons" (as defined in
the 1940 Act) and who have no direct or indirect financial interest in the
operation of the Plans or any related agreements (the "Plan Trustees"). The
Plans provide that they may not be amended to increase materially the costs
which the Funds may bear pursuant to the Plans without approval of the
shareholders of the Funds and that other material amendments to the Plans must
be approved by a majority of the Plan Trustees by vote cast in person at a
meeting called for the purpose of considering such amendments. The Plans further
provide that while they are in effect, the selection and nomination of Trustees
who are not "interested persons" shall be committed to the discretion of the
Trustees who are not "interested persons." The Plans may be terminated at any
time by vote of a majority of the Plan Trustees or a majority of the outstanding
shares of the Funds. The Trustees have concluded that there is a reasonable
likelihood that the Plans will benefit the Fund and all classes of shareholders.
The National Association of Securities Dealers, Inc. (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 the Plans.
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for the overall supervision of
the operations of the Trust and perform the various duties imposed on Trustees
by the 1940 Act and Massachusetts business trust law.
Trustees and Officers
The Trustees and Officers of the Trust and their business affiliations for
the past five years are set forth below and, unless otherwise noted, the address
of each executive officer and Trustee is 56 Prospect Street, Hartford,
Connecticut, 06115-0480.
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- ------------------------ ---------------- -----------------------------------------------------------
<S> <C> <C>
Robert Chesek (63) Trustee Trustee/Director (1981-present) and Chairman (1989-1994),
49 Old Post Road Phoenix Funds. Trustee, Phoenix-Aberdeen Series Fund and
Wethersfield, CT 06109 Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present). Vice President, Common Stock, Phoenix Home Life
Mutual Insurance Company (1980-1994). Director/Trustee,
the National Affiliated Investment Companies (until 1993).
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- --------------------------- ---------------- ----------------------------------------------------------------
<S> <C> <C>
E. Virgil Conway (68) Trustee Chairman, Metropolitan Transportation Authority (1992-
9 Rittenhouse Road present). Trustee/Director, Consolidated Edison Company
Bronxville, NY 10708 of New York, Inc. (1970-present), Pace University (1978-
present), Atlantic Mutual Insurance Company (1974-present),
HRE Properties (1989-present), Greater New York Councils,
Boy Scouts of America (1985-present), Union Pacific Corp.
(1978-present), Blackrock Freddie Mac Mortgage Securities
Fund (Advisory Director) (1990-present), Centennial Insurance
Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), The Harlem Youth Development Foundation
(1987-present), Accuhealth (1994-present), Trism, Inc. (1994-
present), Realty Foundation of New York (1972-present), New
York Housing Partnership Development Corp. (Chairman)
(1981-present) and Fund Directions (Advisory Director)
(1993-present). Director/Trustee, Phoenix Funds (1993-
present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present).
Director, Duff & Phelps Utilities Tax-Free Income Inc. and
Duff & Phelps Utility and Corporate Bond Trust Inc. (1995-
present). Chairman, Audit Committee of the City of New York
(1981-1996). Advisory Director, Blackrock Fannie Mae
Mortgage Securities Fund (1989-1996). Chairman, Financial
Accounting Standards Advisory Council (1992-1995).
Director/Trustee, the National Affiliated Investment Companies
(until 1993).
Harry Dalzell-Payne (68) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
330 East 39th Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Apartment 29G Institutional Mutual Funds (1996-present). Director, Duff &
New York, NY 10016 Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present). Director,
Farragut Mortgage Co., Inc. (1991-1994). Director/Trustee,
the National Affiliated Investment Companies (1983-1993).
Formerly a Major General of the British Army.
*Francis E. Jeffries (67) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
6585 Nicholas Blvd. Phoenix-Aberdeen Series Inc. and Phoenix Duff & Phelps
Apt. 1601 Institutional Mutual Funds (1996-present). Director, Duff &
Naples, FL 33963 Phelps Utilities Income Inc. (1987-present), Duff & Phelps
Utilities Tax-Free Income Inc. (1991-present) and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1993-present).
Director, The Empire District Electric Company (1984-
present). Director (1989-1997), Chairman of the Board (1993-
1997), President (1989-1993), and Chief Executive Officer
(1989-1995), Phoenix Investment Partners, Ltd.
Leroy Keith, Jr. (59) Trustee Chairman and Chief Executive Officer, Carson Products
Chairman and Chief Company (1995-present). Director/Trustee, Phoenix Funds
Executive Officer (1980-present). Trustee, Phoenix-Aberdeen Series Fund and
Carson Product Company Phoenix Duff & Phelps Institutional Mutual Funds (1996-
64 Ross Road present). Director, Equifax Corp. (1991-present) and
Savannah, GA 30750 Evergreen International Fund, Inc. (1989-present). Trustee,
Evergreen Liquid Trust, Evergreen Tax Exempt Trust,
Evergreen Tax Free Fund, Master Reserves Tax Free Trust,
and Master Reserves Trust. President, Morehouse College
(1987-1994). Chairman and Chief Executive Officer, Keith
Ventures (1992-1994). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- ---------------------------- ---------------- -----------------------------------------------------------------
<S> <C> <C>
*Philip R. McLoughlin (51) Trustee and Chairman (1997-present), Director (1995-present), Vice
President Chairman (1995-1997) and Chief Executive Officer (1995-
present), Phoenix Investment Partners, Ltd. Director (1994-
present) and Executive Vice President, Investments (1988-
present), Phoenix Home Life Mutual Insurance Company.
Director/Trustee and President, Phoenix Funds (1989-present).
Trustee and President, Phoenix-Aberdeen Series Fund and
Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present). Director, Duff & Phelps Utilities Tax-Free Income Inc.
(1995-present) and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1995-present). Director (1983-present) and Chairman
(1995-present), Phoenix Investment Counsel, Inc. Director
(1984-present) and President (1990- present), Phoenix Equity
Planning Corporation. Director (1993-present), Chairman (1993-
present) and Chief Executive Officer (1993-1995), National
Securities & Research Corporation. Director, Phoenix Realty
Group, Inc. (1994-present), Phoenix Realty Advisors, Inc. (1987-
present), Phoenix Realty Investors, Inc. (1994-present), Phoenix
Realty Securities, Inc. (1994-present), PXRE Corporation
(Delaware) (1985-present), and World Trust Fund (1991-present).
Director and Executive Vice President, Phoenix Life and Annuity
Company (1996-present). Director and Executive Vice President,
PHL Variable Insurance Company (1995-present). Director,
Phoenix Charter Oak Trust Company (1996-present). Director
and Vice President, PM Holdings, Inc. (1985-present). Director
and President, Phoenix Securities Group, Inc. (1993-1995).
Director (1992-present) and President (1992-1994), W.S. Griffith
& Co., Inc. Director, PHL Associates, Inc. (1995-present).
Director/Trustee, the National Affiliated Investment Companies
(until 1993).
**Everett L. Morris (69) Trustee Vice President, W.H. Reaves and Company (1993-present).
164 Laird Road Director/Trustee, Phoenix Funds (1995-present). Trustee,
Colts Neck, NJ 07722 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director, Duff &
Phelps Utilities Tax-Free Income Inc. (1991-present) and
Duff & Phelps Utility and Corporate Bond Trust Inc.
(1993-present). Director, Public Service Enterprise Group,
Incorporated (1986-1993). President and Chief Operating
Officer, Enterprise Diversified Holdings, Incorporated
(1989-1993).
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- ----------------------------- ---------------- ---------------------------------------------------------------
<S> <C> <C>
*James M. Oates (51) Trustee Chairman, IBEX Capital Markets LLC (1997-present).
Managing Director Managing Director, Wydown Group (1994-present). Director,
The Wydown Group Phoenix Investment Partners, Ltd. (1995-present). Director/
IBEX Capital Markets LLC Trustee, Phoenix Funds (1987-present). Trustee, Phoenix-
60 State Street Aberdeen Series Fund and Phoenix Duff & Phelps
Suite 950 Institutional Mutual Funds (1996-present). Director, AIB
Boston, MA 02109 Govett Funds (1991-present), Blue Cross and Blue Shield of
New Hampshire (1994-present), Investors Financial Service
Corporation (1995-present), Investors Bank & Trust
Corporation (1995-present), Plymouth Rubber Co. (1995-
present) Stifel Financial (1996-present) and Command
Systems, Inc. (1998-present). Vice Chairman, Massachusetts
Housing Partnership (1998-present). Member, Chief
Executives Organization (1996-present). Director (1984-1994),
President (1984-1994) and Chief Executive Officer (1986-
1994), Neworld Bank. Director/Trustee, the National Affiliated
Investment Companies (until 1993).
*Calvin J. Pedersen (56) Trustee Director (1986-present), President (1993-present) and
Phoenix Duff & Phelps Executive Vice President (1992-1993), Phoenix Investment
Corporation Partners, Ltd. Director/Trustee, Phoenix Funds (1995-present).
55 East Monroe Street Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Suite 3600 Phelps Institutional Mutual Funds (1996-present). President
Chicago, IL 60603 and Chief Executive Officer, Duff & Phelps Utilities Tax-Free
Income Inc. (1995-present), Duff & Phelps Utilities Income
Inc. (1994-present) and Duff & Phelps Utility and Corporate
Bond Trust Inc. (1995-present).
**Herbert Roth, Jr. (69) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present). Director, Boston
Sherborn, MA 01770 Edison Company (1978-present), Phoenix Home Life Mutual
Insurance Company (1972-1998), Landauer, Inc. (medical
services) (1970-present),Tech Ops./Sevcon, Inc. (electronic
controllers) (1987-present), and Mark IV Industries
(diversified manufacturer) (1985-present). Member, Directors
Advisory Council, Phoenix Home Life Mutual Insurance
Company (1998-present). Director, Key Energy Group (oil rig
service) (1988-1994) and Director/Trustee, the National
Affiliated Investment Companies (until 1993).
Richard E. Segerson (52) Managing Director, Mullin Associates (1993-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 07840 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director/Trustee,
the National Affiliated Investment Companies (1984-1993).
Lowell P. Weicker, Jr. (66) Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Greenwich, CT 06830 Institutional Mutual Funds (1996-present). Director, UST Inc.
(1995-present), Burroughs Wellcome Fund (1996-present),
HPSC Inc. (1995-present), Duty Free International, Inc.
(1997-1998) and Compuware (1996-present). Visiting
Professor, University of Virginia (1997-present). Chairman,
Dresing, Lierman, Weicker (1995-1996). Governor of the State
of Connecticut (1991-1995).
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- ----------------------------- ---------------- ------------------------------------------------------------------
<S> <C> <C>
Michael E. Haylon (40) Executive Director and Executive Vice President--Investments, Phoenix
Vice Investment Partners, Ltd. (1995-present). Executive Vice
President President, Phoenix Funds (1993-present) and Phoenix-Aberdeen
Series Fund (1996-present). Executive Vice President (1997-
present), Vice President (1996-1997), Phoenix Duff & Phelps
Institutional Mutual Funds. Director (1994-present), President
(1995-present), Executive Vice President (1994-1995), Vice
President (1991-1994), Phoenix Investment Counsel, Inc.
Director (1994-present), President (1996-present), Executive Vice
President (1994-1996), Vice President (1993-1994), National
Securities & Research Corporation. Director, Phoenix Equity
Planning Corporation (1995-present). Senior Vice President,
Securities Investments, Phoenix Home Life Mutual Insurance
Company (1993-1995).
Christian C. Bertelsen (55) Vice Managing Director, Value Equities, Phoenix Investment
President Counsel, Inc. (1997-present). Senior Vice President and Chief
Investment Officer, Zurich Kemper (1996-1997). Vice
President and Portfolio Manager, Zurich Kemper Small Cap
Fund and Zurich Kemper Contrarian Fund (1996-1997).
Senior Vice President, Eagle Asset Management (1993-1996).
Vice President and Portfolio Manager, Heritage Value Fund
and Golden Select Variable Annuity Value Trust (1995-1996).
William E. Keen, III (34) Vice Assistant Vice President, Phoenix Equity Planning
100 Bright Meadow Blvd. President Corporation (1996-present). Vice President, Phoenix Funds,
P.O. Box 2200 Phoenix Duff & Phelps Institutional Mutual Funds and
Enfield, CT 06083-2200 Phoenix-Aberdeen Series Fund (1996-present). Assistant Vice
President, USAffinity Investments LP (1994-1995). Treasurer
and Secretary, USAffinity Funds (1994-1995). Manager, Fund
Administration, SEI Corporation (1991-1994).
William R. Moyer (53) Vice Senior Vice President and Chief Financial Officer, Phoenix
100 Bright Meadow Blvd. President Investment Partners, Ltd. (1995-present). Director (1998-
P.O. Box 2200 present), Senior Vice President, Finance (1990-present), Chief
Enfield, CT 06083-2200 Financial Officer (1996-present), and Treasurer (1994-1996
and 1998-present), Phoenix Equity Planning Corporation.
Director (1998-present), Senior Vice President (1990-present),
Chief Financial Officer (1996-present) and Treasurer (1994-
present), Phoenix Investment Counsel, Inc. Director (1998-
present), Senior Vice President, Finance (1993-present), Chief
Financial Officer (1996-present), and Treasurer (1994-
present), National Securities & Research Corporation. Senior
Vice President and Chief Financial Officer, Duff & Phelps
Investment Management Co. (1996-present). Vice President,
Phoenix Funds (1990-present), Phoenix-Duff & Phelps
Institutional Mutual Funds (1996-present) and Phoenix-
Aberdeen Series Fund (1996-present). Senior Vice President
and Chief Financial Officer, W. S. Griffith & Co., Inc. (1992-
1995) and Townsend Financial Advisers, Inc. (1993-1995).
Vice President, the National Affiliated Investment Companies
(until 1993). Vice President, Investment Products Finance,
Phoenix Home Life Mutual Insurance Company (1990-1995).
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- ------------------------- ---------------- ----------------------------------------------------------------
<S> <C> <C>
Leonard J. Saltiel (44) Vice Managing Director, Operations and Service (1996-present),
President Senior Vice President (1994-1996), Phoenix Equity Planning
Corporation. Vice President, Phoenix Funds (1994-present),
Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present) and Phoenix-Aberdeen Series Fund (1996-present).
Vice President, 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).
Nancy G. Curtiss (45) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer
(1996-present), Phoenix Equity Planning Corporation. Treasurer,
Phoenix Funds (1994-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1995-present) and Phoenix-Aberdeen
Series Fund (1996-present). Second Vice President and
Treasurer, Fund Accounting, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions with Phoenix
Home Life Insurance Company (1987-1994).
G. Jeffrey Bohne (50) Secretary Vice President and General Manager, Phoenix Home Life
101 Munson Street Mutual Insurance Co. (1993-present). Vice President, Transfer
Greenfield, MA 01301 Agent Operations (1993-1996), Vice President, Mutual Fund
Customer Service (1996-present), Phoenix Equity Planning
Corporation. Secretary/Clerk, Phoenix Funds (1993-present).
Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present) and Phoenix-Aberdeen Series Fund (1996-present).
Vice President, Home Life of New York Insurance Company
(1984-1992).
</TABLE>
- -----------
* Indicates that the Trustee is an "interested person" of the Trust within the
meaning of the definition set forth in Section 2(a)(19) of the Investment
Company Act of 1940.
**Pursuant to the retirement policy of the Phoenix Funds, Messrs. Morris and
Roth will retire from the Board of Trustees effective January 1, 1999.
For services on the Boards of Directors/Trustees of the Phoenix Funds, each
Trustee who is not a full-time employee of the Adviser or any of its affiliates
currently receives a retainer at the annual rate of $40,000 and a fee of $2,500
per joint meeting of the Boards. Each Trustee who serves on the Audit Committee
receives a retainer at the annual rate of $2,000 and a fee of $2,000 per joint
Audit Committee meeting attended. Each Trustee who serves on the Nominating
Committee receives a 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 $2,000 and $2,000 per joint Executive Committee
meeting attended. The function of the Executive Committee is to serve as a
contract review, compliance review and performance review delegate of the full
Board of Trustees. Trustee costs are allocated equally to each of the Series and
Funds within the Fund complex. The foregoing fees do not include the
reimbursement of expenses incurred in connection with meeting attendance.
Officers and employees of the Adviser who are interested persons are compensated
by the Adviser and receive no compensation from the Fund.
23
<PAGE>
For the Funds' last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
Total
Compensation
Pension or From Fund and
Aggregate Retirement Benefits Estimated Fund Complex
Compensation Accrued as Part Annual Benefits (14 Funds)
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
- ------------------------ -------------- --------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Robert Chesek $ None None $
for any for any
E. Virgil Conway+ $ Trustee Trustee $
Harry Dalzell-Payne+ $ $
Francis E. Jeffries $ $
Leroy Keith, Jr. $ $
Philip R. McLoughlin+ $ $
Everett L. Morris+ $ $
James M. Oates+ $ $
Calvin Pedersen $ $
Herbert Roth, Jr.+ $ $
Richard E. Segerson $ $
Lowell P. Weicker, Jr. $ $
</TABLE>
*This compensation (and the earnings thereon) paid to Messrs. Jeffries and Roth,
will be deferred pursuant to the Directors' Deferred Compensation Plan. At
October 1, 1998, the total amount of deferred compensation (including interest
and other accumulation earned on the original amounts deferred) accrued for
Messrs. Jeffries, Morris and Roth was $ , $ and $ , respectively. At present,
by agreement among the Trust, the Distributor and the electing director,
director fees that are deferred are paid by the Trust to the Distributor. The
liability for the deferred compensation obligation appears only as a liability
of the Distributor.
+Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
At October 26, 1998, the trustees and officers as a group owned less than 1% of
the outstanding shares of the Trust.
Principal Shareholders
The following table sets forth information as of October 26, 1998 with
respect to each person who owns of record or is known by the Funds to own of
record or beneficially own 5% or more of any class of each Fund's equity
securities.
<TABLE>
<CAPTION>
Name of Shareholder Class Number of Shares Percent of Class
- ---------------------------- --------- ------------------ -----------------
<S> <C> <C> <C>
Small Cap Value Fund
Phoenix Home Life Class A 471,505.506 25.69%
56 Prospect St.
Hartford, CT 06103-2818
MLPF&S For The Sole Class B 85,265.480 11.24%
Benefit of its Customers
ATTN: Fund Administration
4800 Deer Lake Dr. E 3rd Fl
Jacksonville, FL 32246-6484
MLPF&S For The Sole Class C 103,487.892 28.11%
Benefit of its Customers
ATTN: Fund Administration
4800 Deer Lake Dr. E 3rd Fl
Jacksonville, FL 32246-6484
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Name of Shareholder Class Number of Shares Percent of Class
- ---------------------------- --------- ------------------ -----------------
<S> <C> <C> <C>
Phoenix Value Equity Fund
Phoenix Home Life Class A 1,313,244.657 59.69%
56 Prospect St.
Hartford, CT 06103-2818
MLPF&S For The Sole Class B 62,326.153 10.18%
Benefit of its Customers
ATTN: Fund Administration
4800 Deer Lake Dr. E 3rd Fl
Jacksonville, FL 32246-6484
MLPF&S For the Sole Class C 46,903.000 19.19%
Benefit of its Customers
ATTN: Fund Administration
4800 Deer Lake Dr. E 3rd Fl
Jacksonville, FL 32246-6484
John M. Crosby Class C 13,631.407 5.58%
Michelle L. Crosby JTROS
27409 Diane Marie Circle
Santa Clara, CA 91350-1733
</TABLE>
OTHER INFORMATION
Capital Stock
The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest. The Trust currently offers shares in different
Funds and different classes of those Funds. Holders of shares of a Fund have
equal rights with regard to voting, redemptions, dividends, distributions, and
liquidations with respect to that Fund, except that Class B and C Shares of any
Fund, which bear higher distribution plan fees and certain incrementally higher
expenses associated with the deferred sales arrangement, pay correspondingly
lower dividends per share than Class A Shares of the same Fund. Shareholders of
all Funds vote on the election of Trustees. On matters affecting an individual
Fund (such as approval of an investment advisory agreement or a change in
fundamental investment policies) and on matters affecting an individual class
(such as approval of matters relating to a Plan of Distribution for a particular
class of shares), a separate vote of that Fund or class is required. Trustees
will call a meeting when at least 10% of the outstanding shares so request in
writing. If the Trustees fail to call a meeting after being so notified, the
Shareholders may call the meeting. The Trustees will assist the Shareholders by
identifying other shareholders or mailing communications, as required under
Section 16(c) of the Investment Company Act of 1940.
Shares are fully paid, nonassessable, redeemable and fully transferable
when they are issued. Shares do not have cumulative voting rights, preemptive
rights or subscription rights. The assets received by the Funds for the issue or
sale of shares of each Fund, and any class thereof and all income, earnings,
profits and proceeds thereof, are allocated to such Fund, and class,
respectively, subject only to the rights of creditors, and constitute the
underlying assets of such Fund or class. The underlying assets of each Fund are
required to be segregated on the books of account, and are to be charged with
the expenses in respect to such Fund and with a share of the general expenses of
the Trust. Any general expenses of the Trust not readily identifiable as
belonging to a particular Fund or class will be allocated by or under the
direction of the Trustees as they determine fair and equitable.
25
<PAGE>
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Trust may be personally liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Trust and that every written agreement, undertaking or
obligation made or issued by the Trust shall contain a provision to that effect.
The Declaration of Trust provides for indemnification out of the Trust property
for all losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability, which is considered remote, is limited
to circumstances in which the Trust itself would be unable to meet its
obligations.
Independent Accountants
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, has been
selected as the independent accountants for the Funds. PricewaterhouseCoopers
LLP audits the Funds' annual financial statements and expresses an opinion
thereon.
Custodian and Transfer Agent
State Street Bank and Trust Company ("State Street"), P.O. Box 351, Boston,
MA 02101, serves as custodian of the Funds' assets (the "Custodian"). Equity
Planning, 100 Bright Meadow Blvd., P.O. Box 2200, Enfield, CT 06083-2250, acts
as Transfer Agent for the Funds (the "Transfer Agent"). As compensation, Equity
Planning receives a fee equivalent to $14.95 for each designated shareholder
account, plus out-of-pocket expenses. Transfer Agent fees are also utilized to
offset costs and fees paid to subtransfer agents employed by Equity Planning.
State Street Bank and Trust Company serves as a subtransfer agent pursuant to a
Subtransfer Agency Agreement.
Report to Shareholders
The fiscal year of the Funds ends on August 31. The Funds will send
financial statements to shareholders at least semi-annually. An annual report,
containing financial statements, audited by independent accountants, will be
sent to shareholders each year.
Financial Statements
The Financial Statements for the Fund's fiscal year ended August 31, 1998,
appearing in the Fund's 1998 Annual Report to Shareholders, are incorporated
herein by reference.
26
<PAGE>
PHOENIX INVESTMENT TRUST 97
PART C--OTHER INFORMATION
Item 23. Exhibits
<TABLE>
<S> <C>
a.1 Declaration of Trust of the Registrant previously filed as Exhibit 1.1 via EDGAR with Pre-Effective
Amendment No. 1 on November 3, 1997 and incorporated by reference.
b. None.
c.1 Reference is hereby made to Article IV of Registrant's Declaration of Trust.
d.1 Investment Advisory Agreement between Registrant and Phoenix Investment Counsel, Inc. filed as Exhibit
5.1 via EDGAR with Pre-Effective Amendment No. 1 on November 3, 1997 and incorporated by reference.
e.1 Underwriting Agreement between Registrant and Phoenix Equity Planning Corporation ("Equity Planning")
dated November 19, 1997 filed as Exhibit 6.1 via EDGAR with Post-Effective Amendment No. 1 on May 15, 1998
and incorporated by reference.
e.2 Form of Sales Agreement between Phoenix Equity Planning Corporation and dealers filed as Exhibit 6.2
via EDGAR with Post-Effective Amendment No. 1 on May 15, 1998 and incorporated by reference.
e.3 Form of Supplement to Phoenix Family of Funds Sales Agreement filed as Exhibit 6.3 via EDGAR with
Post-Effective Amendment No. 1 on May 15, 1998 and incorporated by reference.
e.4 Form of Financial Institution Sales Contract for the Phoenix Family of Funds filed as Exhibit 6.4 via
EDGAR with Post-Effective Amendment No. 1 on May 15, 1998 and incorporated by reference.
f. None.
g.1 Master Custodian Contract between Registrant and State Street Bank and Trust Company dated May 1, 1997
filed as Exhibit 8.1 via EDGAR with Pre-Effective Amendment No. 1 on November 3, 1997 and incorporated by
reference.
h.1 Transfer Agency and Service Agreement between Registrant and Equity Planning filed as Exhibit 9.1 via
EDGAR with Pre-Effective Amendment No. 1 on November 3, 1997 and incorporated by reference.
h.2 Sub-Transfer Agency Agreement between Registrant and Phoenix Equity Planning Corporation dated June
1, 1994 filed as Exhibit 9.2 via EDGAR with Post-Effective Amendment No. 1 on May 15, 1998 and
incorporated by reference.
h.3 Amended and Restated Financial Agent Agreement between Registrant and Phoenix Equity Planning
Corporation dated November 19, 1997 filed as Exhibit 9.3 via EDGAR with Post-Effective Amendment No.
1 on May 15, 1998 and incorporated by reference.
h.4 First Amendment to the Amended and Restated Financial Agreement between Registrant and
Phoenix Equity Planning Corporation effective as of February 27, 1998 filed as Exhibit
9.4 via EDGAR with Post-Effective Amendment No. 1 on May 15, 1998 and incorporated by
reference.
h.5* Second Amendment to Amended and Restated Financial Agent Agreement between Registrant
and Phoenix Equity Planning Corporation dated July 31, 1998 filed via EDGAR herewith.
i. Opinion of Counsel as to legality of the shares filed as Exhibit 10 via EDGAR with
Pre-Effective Amendment No. 1 on November 3, 1997 and incorporated by reference.
j. Consent of Independent Accountant. [To be filed by amendment.]
k. Not applicable.
l. Initial Capital Agreement filed as Exhibit 13 via EDGAR with Pre-Effective Amendment No. 1 on
November 3, 1997 and incorporated by reference.
m.1 Distribution Plan for Class A Shares filed as Exhibit 15.1 via EDGAR with Pre-Effective Amendment
No. 1 on November 3, 1997 and incorporated by reference.
m.2 Distribution Plan for Class B Shares filed as Exhibit 15.2 via EDGAR with Pre-Effective Amendment No.
1 on November 3, 1997 and incorporated by reference.
m.3 Distribution Plan for Class C Shares filed as Exhibit 15.3 via EDGAR with Pre-Effective Amendment No.
1 on November 3, 1997 and incorporated by reference.
n. Financial Data Schedules, reflected on EDGAR as exhibit 27. [To be filed by amendment].
o.1 Amended and Restated Plan pursuant to Rule 18f-3 effective November 5, 1997 filed as Exhibit 18 via
EDGAR with Post-Effective Amendment No. 1 on May 15, 1998 and incorporated by reference.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
o.2* First Amendment to Amended and Restated Plan Pursuant to Rule 18f-3 effective August 26, 1998 filed via
EDGAR herewith.
p.1 Powers of Attorney for Messrs. Conway, Dalzell-Payne, Morris, Oates and Roth and Ms. Curtiss filed as
Exhibit 19 via EDGAR with Pre-Effective Amendment No. 1 on November 3, 1997 and incorporated by
reference.
p.2 Powers of Attorney for Messrs. Chesek, Keith, Jeffries, Pedersen, Segerson and Weicker filed as Exhibit 19
with Post-Effective Amendment No. 1 on May 15, 1998 and incorporated by reference.
</TABLE>
- ---------
*Filed herewith.
Item 24. Persons Controlled by or Under Common Control With Registrant
No person is controlled by, or under common control, with the Registrant.
Item 25. 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 provide 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 adviser 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 26. Business and Other Connections of Investment Adviser
See "Management of the Funds" in the Prospectus and "The Investment
Adviser" and "Management of the Trust" in the Statement of Additional
Information which is included in this Post-Effective Amendment. 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 No. 801-5995) filed under the Investment Advisers Act
of 1940, incorporated herein by reference.
Item 27. Principal Distributor
(a) Equity Planning also serves as the principal underwriter for the following
other registrants:
Phoenix-Aberdeen Series Fund, Phoenix California Tax Exempt Bonds, Inc.,
Phoenix Duff & Phelps Institutional Mutual Funds, Phoenix-Engemann Funds,
Phoenix Equity Series Fund, Phoenix Income and Growth Fund, Phoenix
Multi-Portfolio Fund, Phoenix Multi-Sector Fixed Income Fund, Inc., Phoenix
Multi-Sector Short Term Bond Fund, Phoenix-Seneca Funds, Phoenix Series
Fund, Phoenix Strategic Allocation Fund, Inc., Phoenix Strategic Equity
Series Fund, Phoenix Worldwide Opportunities Fund, Phoenix Home Life
Variable Universal Life Account, Phoenix Home Life Variable Accumulation
Account, PHL Variable Accumulation Account, Phoenix Life and Annuity
Variable Universal Life Account and PHL Variable Separate Account MVAI.
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Distributor with Registrant
- ------------------------ ------------------------ -------------------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director, Chairman and Trustee and President
56 Prospect Street President
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Distributor with Registrant
- -------------------------- ------------------------------- -------------------------
<S> <C> <C>
William R. Moyer Director, Senior Vice Vice President
100 Bright Meadow Blvd. President, Chief Financial
P.O. Box 2200 Officer and Treasurer
Enfield, CT 06083-2200
John F. Sharry Executive Vice President, Executive Vice President
56 Prospect Street Retail Distribution
P.O. Box 150480
Hartford, CT 06115-0480
Leonard J. Saltiel Managing Director, Vice President
56 Prospect Street Operations and Service
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Clerk and
101 Munson Street Mutual Fund Secretary
P.O. Box 810 Customer Service and Clerk
Greenfield, MA 01302-0810
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Assistant Clerk and
56 Prospect Street Counsel and Secretary Assistant Secretary
P.O. Box 150480
Hartford, CT 06115-0480
William E. Keen, III Assistant Vice President, Vice President
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 2200
Enfield, CT 06083-2200
Jacqueline M. Porter Assistant Vice President, Assistant Treasurer
56 Prospect Street Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any 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 28. 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 101
Munson Street, P.O. Box 810, Greenfield, Massachusetts 01302, or its investment
adviser, Phoenix Investment Counsel, Inc., 56 Prospect Street, Hartford,
Connecticut 06115, or the custodian, State Street Bank and Trust Company, 1
Heritage Drive, P2N, North Quincy, MA 02171. 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 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
its registration statement to be signed on its behalf by the undersigned, duly
authorized, in the City of Hartford, and State of Connecticut on the 30th day of
October, 1998.
PHOENIX INVESTMENT TRUST 97
ATTEST: /s/ Thomas N. Steenburg By: /s/ Philip R. McLoughlin
------------------------------- -----------------------------------
Thomas N. Steenburg Philip R. McLoughlin
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following person in
the capacity indicated, on this 30th day of October, 1998.
<TABLE>
<CAPTION>
Signature Title
- ------------------------------------------- ---------------------------------
<S> <C>
- ---------------------------- Trustee
Robert Chesek**
- ---------------------------- Trustee
E. Virgil Conway*
/s/ Nancy G. Curtiss Treasurer (Principal Financial
- ---------------------------- and Accounting Officer)
Nancy G. Curtiss*
- ---------------------------- Trustee
Harry Dalzell-Payne*
- ---------------------------- Trustee
Francis E. Jeffries**
- ---------------------------- Trustee
Leroy Keith, Jr.**
/s/ Philip R. McLoughlin President and Trustee (Principal
- ---------------------------- Executive Officer)
Philip R. McLoughlin*
- ---------------------------- Trustee
Everett L. Morris*
- ---------------------------- Trustee
James M. Oates*
- ---------------------------- Trustee
Calvin J. Pedersen**
- ---------------------------- Trustee
Herbert Roth, Jr.*
- ---------------------------- Trustee
Richard E. Segerson*
- ----------------------------
Lowell P. Weicker, Jr.** Trustee
By /s/ Philip R. McLoughlin
- ----------------------------
*Philip R. McLoughlin pursuant to powers
of attorney previously filed.
</TABLE>
S-1
Exhibit 99.Bh.5
SECOND AMENDMENT TO
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
<PAGE>
SECOND AMENDMENT TO
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
THIS AMENDMENT made effective as of the 1st day of June, 1998 amends that
certain Amended and Restated Financial Agent Agreement dated November 19, 1997,
as amended March 23, 1998, by and among the following parties (the "Agreement")
as hereinbelow provided.
W I T N E S S E T H:
WHEREAS, the parties hereto wish to amend Schedule A of the Agreement to
reflect the recently approved fee structure:
NOW, THEREFORE, in consideration of the foregoing premise, Schedule A is
hereby replaced with the Schedule A attached hereto and made a part hereof.
Except as hereinabove provided, the Agreement shall be and remain unmodified and
in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized officers on this 31st day of July, 1998.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX EQUITY SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX INVESTMENT TRUST 97
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Michael E. Haylon
------------------------------
Michael E. Haylon
Executive Vice President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Philip R. McLoughlin
------------------------------
Philip R. McLoughlin
President
<PAGE>
Schedule A
Revised Fee Schedule
Fee Information For Services as Financial Agent
For its services hereunder Financial Agent shall be paid a fee equal to the sum
of (1) the documented cost of fund accounting and related services provided by
PFPC, Inc., as subagent, to Financial Agent, plus (2) the documented cost to
Financial Agent to provide financial reporting and tax services and oversight
of subagent's performance.
The current PFPC fees are attached hereto and made a part hereof.
<PAGE>
PFPC Fee Schedule
<TABLE>
<CAPTION>
Assets Under Management Fees
---------------------------------------------------------
<S> <C>
$0 - $200,000,000 0.0850%
---------------------------------------------------------
$200 - $400,000,000 0.0500%
---------------------------------------------------------
$400 - $600,000,000 0.0300%
---------------------------------------------------------
$600 - $800,000,000 0.0200%
---------------------------------------------------------
$800 - $1,000,000,000 0.0150%
---------------------------------------------------------
greater than $1,000,000,000 0.0125%
---------------------------------------------------------
Minimum Fund Fee $84,000
---------------------------------------------------------
Additional Class $12,000
---------------------------------------------------------
</TABLE>
Existing Portfolios:
- --------------------
Asset Based Fees less than $50MM WAIVED
Class Fees - WAIVED
Minimum Fund Fees - WAIVED
New Portfolios (First Year):
- ----------------------------
Asset Based Fees less than $50MM - 50% WAIVED
Class Fees less than $25MM per Class - WAIVED
Minimum Fund Fees - WAIVED
New Portfolios (There After):
- -----------------------------
Asset Based Fees less than $50MM - 25% WAIVED
Class Fees less than $25MM per Class - 50% WAIVED
Minimum Fund Fees less than $50MM - 50% WAIVED
Minimum Fund Fees $50-100MM - 25% WAIVED
Variable Unit Investment Trust Valuation and Reporting
- ------------------------------------------------------
$1,500 per Unit Investment Trust
Exhibit 99.Bo.2
FIRST AMENDMENT TO THE AMENDED AND RESTATED PLAN PURSUANT TO RULE 18f-3
<PAGE>
PHOENIX FUNDS
(the "Funds")
FIRST AMENDMENT TO THE
AMENDED AND RESTATED PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
That certain Amended and Restated Plan Pursuant to Rule 18f-3 under the
Investment Company Act of 1940 duly adopted by the Board of Directors/Trustees
of the Funds on November 19, 1997, is hereby amended as follows:
The Board of Directors/Trustees has granted authority for the following
additional Funds to issue Class C Shares:
Phoenix Income and Growth Fund
Phoenix Multi-Portfolio Fund: Phoenix International Fund
Phoenix Worldwide Opportunities Fund
Accordingly, Schedule A is amended as attached hereto.
This Amendment was approved by the Board of Directors/Trustees at a
meeting held on August 26, 1998.
/s/ Thomas N. Steenburg
---------------------------
Assistant Secretary
<PAGE>
SCHEDULE A
----------
<TABLE>
<CAPTION>
Class A Class B Class C Class M
------- ------- ------- -------
<S> <C> <C> <C> <C>
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC. X X -- --
PHOENIX EQUITY SERIES FUND:
PHOENIX CORE EQUITY FUND X X X X
PHOENIX GROWTH AND INCOME FUND X X X X
PHOENIX INCOME AND GROWTH FUND X X X --
PHOENIX INVESTMENT TRUST 97:
PHOENIX SMALL CAP VALUE FUND X X X X
PHOENIX VALUE EQUITY FUND X X X X
PHOENIX MULTI-PORTFOLIO FUND:
EMERGING MARKETS BOND PORTFOLIO X X X X
INTERNATIONAL PORTFOLIO X X X --
MID CAP PORTFOLIO X X -- --
REAL ESTATE SECURITIES PORTFOLIO X X -- --
STRATEGIC INCOME PORTFOLIO X X X X
TAX-EXEMPT BOND PORTFOLIO X X -- --
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC. X X X X
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND X X X --
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES X X -- --
BALANCED FUND SERIES X X -- --
CONVERTIBLE FUND SERIES X X -- --
GROWTH FUND SERIES X X -- --
HIGH YIELD FUND SERIES X X X X
MONEY MARKET FUND SERIES X X X X
U.S. GOVERNMENT SECURITIES FUND X X -- --
SERIES
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND X X -- --
MICRO CAP FUND X X -- --
SMALL CAP FUND X X -- --
STRATEGIC THEME FUND X X X X
PHOENIX STRATEGIC ALLOCATION FUND, INC. X X -- --
PHOENIX WORLDWIDE OPPORTUNITIES FUND X X X --
</TABLE>
