As filed with the Securities and Exchange Commission on May 15, 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. 1 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 2 [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)
[X] on May 19, 1998 pursuant to paragraph (b)
[ ] 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 495
Under the Securities Act of 1993
PART A
Information Required in Prospectus
<TABLE>
<CAPTION>
Item Number Prospectus Caption
- --------------------------------------------------------------- -----------------------------------------------------
<S> <C> <C>
1. Cover Page ........................................... Cover Page
2. Synopsis ............................................. Introduction; Fund Expenses
3. Condensed Financial Information ...................... Financial Highlights
4. General Description of Registrant .................... Cover Page; Introduction; Investment Objective
and Policies; Additional Information
5. Management of the Funds .............................. Management of the Funds
5A. Management's Discussion of Fund Performance .......... Performance Information
6. Capital Stock and Other Securities ................... Dividends, Distributions and Taxes; Net Asset Value;
How to Buy Shares; Additional Information
7. Purchase of Securities Being Offered ................. How to Buy Shares; Distribution Plans; Net Asset
Value; Investor Account Services
8. Redemption or Repurchase ............................. How to Redeem Shares
9. Pending Legal Proceeding ............................. Not Applicable
</TABLE>
PART B
Information Required in Statement of Additional Information
<TABLE>
<CAPTION>
Item Number Statement of Additional Information Caption
- ---------------------------------------------------------------------- -----------------------------------------------------
<S> <C> <C>
10. Cover Page ................................................... Cover Page
11. Table of Contents ............................................ Table of Contents
12. General Information and History .............................. Cover Page; The Trust
13. Investment Objectives and Policies ........................... Investment Objectives and Policies;
Investment Restrictions
14. Management of the Funds ...................................... The Investment Adviser; Trustees and Officers; Other
Information
15. Control Persons and Principal Holders of Securities .......... Directors and Officers; Principal Shareholders
16. Investment Advisory and Other Services ....................... The Investment Adviser
17. Brokerage Allocation ......................................... Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities ........................... Net Asset Value; How to Buy Shares
19. Purchase, Redemption and Pricing of Securities How to Buy Shares; Investor Account Services;
Being Offered ................................................ Redemption of Shares; Net Asset Value
20. Tax Status ................................................... Dividends, Distributions and Taxes
21. Underwriter .................................................. The Distributor
22. Calculations of Performance Data ............................. Performance Information
23. Financial Statements ......................................... Not Applicable
</TABLE>
PART C
The information required to be in Part C is set forth under the appropriate
item, so numbered, in Part C of this Registration Statement.
<PAGE>
P H O E N I X
FUNDS
Prospectus May 19, 1998
[Arrow Graphic] PHOENIX VALUE
[Arrow Graphic] EQUITY FUND
-- PHOENIX SMALL CAP
VALUE FUND
[logo] PHOENIX
INVESTMENT PARTNERS
<PAGE>
PHOENIX VALUE EQUITY FUND
PHOENIX SMALL CAP VALUE FUND
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
May 19, 1998
Phoenix Value Equity Fund's (the "Value Equity Fund" or "Fund") primary
investment objective is to seek long-term capital appreciation and its
secondary objective is to seek current income by investing in a diversified
portfolio of common stocks.
Phoenix Small Cap Value Fund (the "Small Cap Value Fund" or "Fund") seeks
long-term capital appreciation.
Phoenix Investment Trust 97 (the "Trust") is an open-end management
investment company whose shares are offered in two series (each a "Fund" and
collectively the "Funds"). Each Fund represents an investment in a separate
diversified fund with its own investment objectives and policies designed to
meet its specific investment goals. There can be no assurance that any Fund
will achieve its objective.
This Prospectus sets forth concisely the information about the Funds that
a prospective investor should know before investing. No dealer, salesperson or
any other person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given or
made, such information or representations must not be relied upon as having
been authorized by the Funds, Adviser or Distributor. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state in which, or to any person to whom, it
is unlawful to make such offer. Neither the delivery of this Prospectus nor any
sale hereunder shall, under any circumstances, create any implication that
information herein is correct at any time subsequent to its date. Investors
should read and retain this Prospectus for future reference. Additional
information about the Funds and the Trust is contained in the Statement of
Additional Information, dated May 19, 1998, which has been filed with the
Securities and Exchange Commission (the "Commission") and is available upon
request at no charge by calling (800) 243-4361 or by writing to Phoenix Equity
Planning Corporation at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. The Statement of Additional Information is incorporated
herein by reference.
The Commission maintains a Web site (http://www.sec.gov) that contains
this Prospectus, the Statement of Additional Information, material incorporated
by reference, and other information regarding registrants that file
electronically with the Commission.
Shares of the Trust are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union, or affiliated entity, and are not
federally insured or otherwise protected by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board, or any other agency, and involve
investment risk, including possible loss of principal.
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LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY) (800) 243-1926
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
INTRODUCTION ..................................... 3
FUND EXPENSES .................................... 4
FINANCIAL HIGHLIGHTS ............................. 6
PERFORMANCE INFORMATION .......................... 8
INVESTMENT OBJECTIVES AND POLICIES ............... 8
INVESTMENT TECHNIQUES AND RELATED RISKS .......... 9
INVESTMENT RESTRICTIONS .......................... 14
PORTFOLIO TURNOVER ............................... 14
MANAGEMENT OF THE FUNDS .......................... 14
DISTRIBUTION PLANS ............................... 15
HOW TO BUY SHARES ................................ 16
INVESTOR ACCOUNT SERVICES ........................ 20
NET ASSET VALUE .................................. 21
HOW TO REDEEM SHARES ............................. 22
DIVIDENDS, DISTRIBUTIONS AND TAXES ............... 23
ADDITIONAL INFORMATION ........................... 24
</TABLE>
2
<PAGE>
INTRODUCTION
This Prospectus describes certain of the shares offered by and the
operations of Phoenix Investment Trust 97 (the "Trust"). The Trust is a
diversified, open-end management investment company established as a
Massachusetts business trust. Shares of the Trust are divided into two series,
each a "Fund" and collectively the "Funds." Each Fund has a different
investment objective, and is designed to meet different investment needs.
The Investment Advisers
Phoenix Investment Counsel, Inc. ("PIC" or the "Adviser") serves as
investment adviser to the Funds. PIC is a subsidiary of Phoenix Investment
Partners, LTD. (previously known as Phoenix Duff & Phelps Corporation). See
"Management of the Fund" for a description of the Investment Advisory Agreement
and management fees.
Distributor and Distribution Plans
Phoenix Equity Planning Corporation ("Equity Planning" or the
"Distributor"), serves as national distributor of the Funds' shares. See
"Distribution Plans" and the Statement of Additional Information. Equity
Planning also acts as financial agent of the Funds and as such receives a fee.
See "The Financial Agent." Equity Planning also serves as the Funds' transfer
agent. See "The Custodian and Transfer Agent."
The Funds have adopted distribution plans pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act") for all classes of
all Funds. Pursuant to the distribution plan adopted for Class A Shares, Class
B Shares, Class C Shares and Class M Shares, the Funds pay the Distributor
0.25% of the average daily net assets of each Class for furnishing shareholder
services (the "Service Fee") and for Class B, C and M Shares the Funds will
reimburse the Distributor up to a maximum annual rate of 0.75%, 0.75% and
0.25%, respectively, of the average daily net assets of each Class for
distribution expenditures incurred in connection with the sale and promotion of
each Class of Shares of each Fund. See "Distribution Plans."
Purchase of Shares
Each Fund currently offers four classes of shares which may be purchased
at a price equal to their net asset value per share, plus a sales charge which,
at the election of the purchaser, may be imposed (i) at the time of the
purchase ("Class A Shares" and "Class M Shares") or (ii) on a contingent
deferred basis ("Class B Shares" and "Class C Shares"). Class M Shares are
currently closed to new investors.
Class A and M Shares are offered to the public at the next determined net
asset value after receipt of the order by State Street Bank and Trust Company
("State Street Bank"), or an authorized agent, plus a sales charge. The maximum
initial sales charge is 4.75% and 3.50%, respectively, of the offering price on
single purchases of less than $50,000. The sales charges are reduced on a
graduated scale on single purchases of $50,000 or more.
Class B and C Shares are offered to the public at the next determined net
asset value after receipt of an order by State Street Bank, or an authorized
agent, with no sales charge. Class B Shares are subject to a sales charge if
they are redeemed within five years of purchase. Class C Shares redeemed within
one year of purchase are subject to a 1% sales charge.
Shares of each Class represent an identical interest in the investment
portfolio of a Fund and have the same rights. For more information on fees and
charges applicable for each Fund and Class, refer to "Fund Expenses" and "How
to Buy Shares."
Completed applications for the purchase of shares should be mailed to the
Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301, Boston,
MA 02266-8301.
Minimum Initial and Subsequent Investments
The minimum initial investment is $500 ($25 if using the bank draft
investment program designated "Investo-Matic") and the minimum subsequent
investment is $25. Exceptions to the minimum and subsequent investment amounts
are available under certain circumstances. See "How to Buy Shares."
Redemption of Shares
Class A and M Shares of a Fund may be redeemed at any time at the net
asset value per share next computed after receipt of a redemption request by
State Street Bank or an authorized agent. Class B and C shareholders redeeming
shares within certain time periods of the date of purchase will normally be
assessed a contingent deferred sales charge. See "How to Redeem Shares."
Risk Factors
There can be no assurances that a Fund will achieve its investment
objectives. As a result of each Fund's substantial investment in the stock
market, the net asset value of a Fund's shares will fluctuate significantly in
response to changes in market and economic conditions, as well as the financial
condition and prospects of issuers in which each Fund invests. In addition, the
Funds may borrow from banks at fixed amounts of interest to increase their
ownership of securities. There can be no assurance, however, that the income
earned from the additional securities purchased will cover the cost of the
borrowed funds.
See "Investment Objectives and Policies" and "Investment Techniques and
Related Risks" for more information on relevant risks.
3
<PAGE>
FUND EXPENSES
The following table illustrates all fees and expenses a shareholder is
expected to incur. In the table the expenses and fees set forth were for the
period ended February 28, 1998 and have been pro-rated to reflect a full year
of operation.
<TABLE>
<CAPTION>
Value Equity Fund
----------------------------------------------------------------------------------
Class A Class B Class C Class M
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Shareholder Transaction
Expenses
Maximum Sales Load Imposed
on Purchases (as a percentage
of offering price) 4.75% None None 3.50%
Maximum Sales Load Imposed
on Reinvested Dividends None None None None
Deferred Sales Load (as a None 5% during the first year, 1% during the None
percentage of original decreasing 1% annually to 2% first year
purchase price or during the fourth and fifth
redemption proceeds, years; decreasing to 0% after
as applicable) the fifth year
Redemption Fee None None None None
Exchange Fee None None None None
Annual Fund Operating
Expenses
(as a percentage of average net
assets)
Management Fees 0.75% 0.75% 0.75% 0.75%
12b-1 Fees (a) 0.25% 1.00% 1.00% 0.50%
Other Expenses (After Expense
Reimbursement) (b) 0.25% 0.25% 0.25% 0.25%
----- ---- ---- -----
Total Fund Operating Expenses 1.25% 2.00% 2.00% 1.50%
===== ==== ==== =====
</TABLE>
<TABLE>
<CAPTION>
Small Cap Value Fund
----------------------------------------------------------------------------------
Class A Class B Class C Class M
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Shareholder Transaction
Expenses
Maximum Sales Load Imposed
on Purchases (as a percentage
of offering price) 4.75% None None 3.50%
Maximum Sales Load Imposed
on Reinvested Dividends None None None None
Deferred Sales Load (as a None 5% during the first year, 1% during the None
percentage of original decreasing 1% annually to 2% first year
purchase price or during the fourth and fifth
redemption proceeds, years; decreasing to 0% after
as applicable) the fifth year
Redemption Fee None None None None
Exchange Fee None None None None
Annual Fund Operating
Expenses
(as a percentage of average net
assets)
Management Fees 0.90% 0.90% 0.90% 0.90%
12b-1 Fees (b) 0.25% 1.00% 1.00% 0.50%
Other Expenses (After Expense
Reimbursement) (c) 0.25% 0.25% 0.25% 0.25%
----- ---- ---- -----
Total Fund Operating Expenses 1.40% 2.15% 2.15% 1.65%
===== ==== ==== =====
</TABLE>
- -----------
(a) "12b-1 Fees" represent an asset based sales charge that, for a long
term shareholder, may be higher than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. ("NASD"). 12b-1 Fees as stated include a Service Fee. See
"Distribution Plans."
(b) The Adviser has agreed to reimburse the Value Equity Fund's operating
expenses other than Management Fees and Rule 12b-1 Fees for the amount by which
such operating expenses of each Class of shares exceed 0.25% of the average net
assets of each Class of shares through the fiscal year ended August 31, 1998.
Other expenses are estimated to be 0.60% for each Class of shares, absent such
waiver or reimbursement for the fiscal year ended August 31, 1998. Total Fund
Operating Expenses for Class A, Class B, Class C and Class M shares are
estimated to be 1.60%, 2.35%, 2.35% and 1.85%, respectively, absent such waiver
or reimbursement for the fiscal year ended August 31, 1998.
(c) The Adviser has agreed to reimburse the Small Cap Value Fund's
operating expenses other than Management Fees and Rule 12b-1 Fees for the
amount by which such operating expenses of each Class of shares exceed 0.25% of
the average net assets of each Class of shares through the fiscal year ended
August 31, 1998. Other expenses are estimated to be 0.60% for each Class of
shares, absent such waiver or reimbursement for the fiscal year ended August
31, 1998. Total Fund Operating Expenses for Class A, Class B, Class C and Class
M shares are estimated to be 1.75%, 2.50%, 2.50% and 2.00%, respectively,
absent such waiver or reimbursement for the fiscal year ended August 31, 1998.
4
<PAGE>
<TABLE>
<CAPTION>
Cumulative Expenses
Paid for the Period
Value Equity Small Cap Value
Fund Fund
-------------------- -------------------
Example* 1 year 3 years 1 year 3 years
- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a hypothetical $1,000
investment assuming (1) a 5% annual return and (2) redemption at
the end of each time period.
Class A Shares $60 $85 $61 $90
Class B Shares $60 $83 $62 $87
Class C Shares $30 $63 $32 $67
Class M Shares $50 $81 $51 $85
An investor would pay the following expenses on the same $1,000
investment assuming no redemption at the end of each period:
Class A Shares $60 $85 $61 $90
Class B Shares $20 $63 $22 $67
Class C Shares $20 $63 $22 $67
Class M Shares $50 $81 $51 $85
</TABLE>
*The purpose of the table above is to help the investor understand the various
costs and expenses that the investor will bear directly or indirectly. The
Example should not be considered a representation of past or future expenses.
Actual expenses may be greater or less than those shown. See "Management of the
Funds", "Distribution Plans" and "How to Buy Shares."
5
<PAGE>
FINANCIAL HIGHLIGHTS
The following table sets forth certain financial information of the Trust.
The Funds' unaudited Financial Statements and notes thereto are incorporated by
reference in the Statement of Additional Information. The Statement of
Additional Information and the Funds' most recent Semiannual Report (containing
additional information relating to each Fund's performance) are available at no
charge upon request by calling (800) 243-4361.
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
Value Equity Fund
<TABLE>
<CAPTION>
Class A
----------------------
From Inception
11/5/97 to
2/28/98
(Unaudited)
----------------------
<S> <C>
Net asset value, beginning of period $ 10.00
Income from investment operations
Net investment income (loss) 0.02(4)(5)
Net realized and unrealized gain 0.87
-------
Total from investment operations 0.89
-------
Less distributions
Dividends from net investment income (0.02)
-------
Total distributions (0.02)
-------
Change in net asset value 0.87
-------
Net asset value, end of period $ 10.87
=======
Total return(1) 8.96%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $10,086
Ratio to average net assets of:
Operating expenses 1.25%(2)
Net investment income (loss) 0.61%(2)
Portfolio turnover 31%(3)
Average commission rate paid(6) $0.0326
<CAPTION>
Class B Class C Class M
---------------------- ---------------------- ----------------------
From Inception From Inception From Inception
11/5/97 to 11/5/97 to 11/5/97 to
2/28/98 2/28/98 2/28/98
(Unaudited) (Unaudited) (Unaudited)
---------------------- ---------------------- ----------------------
<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) (0.01)(4)(5) 0.01(4)(5)
Net realized and unrealized gain 0.88 0.89 0.88
------- ------- --------
Total from investment operations 0.87 0.88 0.89
------- ------- --------
Less distributions
Dividends from net investment income (0.02) (0.02) (0.01)
------- ------- --------
Total distributions (0.02) (0.02) (0.01)
------- ------- --------
Change in net asset value 0.85 0.86 0.88
------- ------- --------
Net asset value, end of period $ 10.85 $ 10.86 $ 10.88
======= ======= ========
Total return(1) 8.72%(3) 8.78%(3) 8.95%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 4,079 $ 1,396 $ 133
Ratio to average net assets of:
Operating expenses 2.00%(2) 2.00%(2) 1.50%(2)
Net investment income (loss) (0.28%)(2) (0.28%)(2) 0.44%(2)
Portfolio turnover 31%(3) 31%(3) 31%(3)
Average commission rate paid(6) $0.0326 $0.0326 $0.0326
</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
$0.11, $0.11, $0.11 and $0.11, respectively.
(6) A fund is required to disclose its average commission rate per share for
securities trades on which commissions are charged. This rate generally does
not reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
6
<PAGE>
Small Cap Value Fund
<TABLE>
<CAPTION>
Class A
------------------------
From Inception
11/20/97 to
2/28/98
(Unaudited)
------------------------
<S> <C>
Net asset value, beginning of period $ 10.00
Income from investment operations
Net investment income (loss) 0.01(4)(5)
Net realized and unrealized gain 0.85
-------
Total from investment operations 0.86
-------
Less distributions
Dividends from net investment income (0.03)
-------
Total distributions (0.03)
-------
Change in net asset value 0.83
-------
Net asset value, end of period $ 10.83
=======
Total return(1) 8.45%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $12,869
Ratio to average net assets of:
Operating expenses 1.40%(2)
Net investment income 0.44%(2)
Portfolio turnover 38%(3)
Average commission rate paid(6) $0.0377
<CAPTION>
Class B Class C Class M
------------------------ ------------------------ ------------------------
From Inception From Inception From Inception
11/20/97 to 11/20/97 to 11/20/97 to
2/28/98 2/28/98 2/28/98
(Unaudited) (Unaudited) (Unaudited)
------------------------ ------------------------ ------------------------
<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) (0.01)(4)(5) 0.01(4)(5)
Net realized and unrealized gain 0.85 0.85 0.85
------- ------- -------
Total from investment operations 0.84 0.84 0.86
------- ------- -------
Less distributions
Dividends from net investment income (0.03) (0.03) (0.03)
------- ------- -------
Total distributions (0.03) (0.03) (0.03)
------- ------- -------
Change in net asset value 0.81 0.81 0.83
------- ------- -------
Net asset value, end of period $ 10.81 $ 10.81 $ 10.83
======= ======= =======
Total return(1) 8.21%(3) 8.18%(3) 8.37%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 3,460 $ 1,740 $ 148
Ratio to average net assets of:
Operating expenses 2.15%(2) 2.15%(2) 1.65%(2)
Net investment income (0.53%)(2) (0.50%)(2) 0.25%(2)
Portfolio turnover 38%(3) 38%(3) 38%(3)
Average commission rate paid(6) $0.0377 $0.0377 $0.0377
</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
$0.09, $0.09, $0.09 and $0.09, respectively.
(6) A fund is required to disclose its average commission rate per share for
securities trades on which commissions are charged. This rate generally does
not reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
7
<PAGE>
PERFORMANCE INFORMATION
Each Fund may, from time to time, include its yield and total return in
advertisements, sales literature or reports to shareholders or prospective
investors. Both yield and total return figures are computed separately for each
Class of Shares of each Fund in accordance with formulas specified by the
Securities and Exchange Commission and are based on historical earnings and are
not intended to indicate future performance.
The yield of each Fund will be computed by dividing the Fund's net
investment income over a 30-day period by an average value of invested assets
(using the average number of shares entitled to receive dividends and the
maximum offering price per share at the end of the period), all in accordance
with applicable regulatory requirements. Such amount will be compounded for six
months and then annualized for a twelve-month period to derive the Fund's
yield.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compound rate
of return of a hypothetical investment in such Class of Shares over a period of
1, 5 and 10 years (or up to the life of the Fund). Standardized total return
quotations 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 and M 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. Each Fund may also quote supplementally a rate of total
return over different periods of time by means of aggregate, average, and
year-by-year or other types of total return figures. In addition, each Fund may
from time to time publish materials citing historical volatility for shares of
that Fund.
Each Fund 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, each Fund may compare that Fund's performance results to other
investment or savings vehicles (such as certificates of deposit) and may refer
to results published in various publications such as 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 each Fund
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. The S&P 500 is a commonly quoted measure of stock market
performance and represents common stocks of companies of varying sizes
segmented across 90 different industries which are listed on the New York Stock
Exchange, the American Stock Exchange or traded over the NASDAQ National Market
System.
Advertisements, sales literature and other communications may contain
information about a Fund or the Adviser's current investment strategies and
management style. Current strategies and style may change to allow a Fund to
respond quickly to changing market and economic conditions. From time to time,
a Fund may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, a Fund may
separate its cumulative and average annual returns into income and capital
gains components.
Performance information for a Fund reflects only the performance of a
hypothetical investment in Class A, Class B, Class C or Class M Shares of the
Fund during the particular time period in which the calculations are based.
Performance information should be considered in light of each Fund's investment
objectives and policies, characteristics and quality of its portfolio, and the
market conditions during the given time period, and should not be considered as
a representation of what may be achieved in the future. For a description of
the methods used to determine total return for each Fund, see the Statement of
Additional Information.
The Trust's Annual Report, available upon request and without charge, will
contain a discussion of the performance of each Fund and a comparison of that
performance to a securities market index.
INVESTMENT OBJECTIVES
AND POLICIES
The investment objective of each Fund is a fundamental policy and may not
be changed without the approval of a majority of the outstanding shares of each
Fund. There can be no assurance that either Fund will achieve its investment
objective.
Value Equity Fund
The Value Equity Fund's primary investment objective is to seek long-term
capital appreciation and its secondary objective is to seek current income by
investing in a diversified portfolio of common stocks. The Fund seeks to
achieve its objective by investing in common stocks that meet certain
quantitative standards that in the judgment of the Adviser indicates above
average financial soundness and intrinsic value relative to price. Under normal
market conditions, at least 65% of the Fund's total assets will be invested in
common stocks.
Small Cap Value Fund
The Small Cap Value Fund's investment objective is to seek long-term
capital appreciation. The Fund seeks to achieve its
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objective by investing in a diversified portfolio of common stocks and
securities convertible into common stocks of small companies with market
capitalization ranging from $100 million to $1 billion that the Adviser
believes to be undervalued. Under normal market conditions, at least 65% of the
Fund's total assets will be invested in securities of companies whose market
capitalization is less than $1 billion at the time of acquisition.
The Trust commenced operations on November 5, 1997 based on initial
capitalization of $400,000 provided by Phoenix Home Life Mutual Insurance
Company. The experience of the Trust in raising additional capital for
investment purposes may directly affect the spectrum of portfolio holdings and
performance of each Fund.
Selection of Investments
In each of the Funds, the Adviser applies a selection process which
selects stocks that, at the time of purchase, meet certain investment criteria
relating to price, dividend yield, going concern value and debt levels. In
selecting the securities, the Adviser screens a universe of over 2500 companies
for the Value Equity Fund and 5,000 for the Small Cap Value Fund. From this
universe, the Adviser anticipates that only a few hundred companies will meet
one or more of its investment criteria. Each of these companies is analyzed on
the basis of the Adviser's projections of the companies' growth in earnings and
dividends, earnings momentum, and undervaluation based on a dividend discount
model. Target prices and value ranges are developed from this analysis and
portfolio selection is made from among the top-rated securities. The securities
selected for the Funds are generally traded on the New York Stock exchange, the
American Stock Exchange and in over-the-counter markets.
A security normally will be sold once it reaches its target price, when
negative changes occur with respect to the company or its industry, or when
there is significant change in the security with respect to one or more of the
investment criteria. The Funds may at times continue to hold equity securities
that no longer meet the criteria but that are believed suitable in view of the
Fund's objectives.
INVESTMENT TECHNIQUES
AND RELATED RISKS
In addition to the investment policies described above, the Trust may
utilize the following investment practices.
Convertible Securities
The Funds may 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 same
or a different issuer within a particular period of time at a specified price
or formula. A convertible security entitles the holder to receive interest
generally paid or accrued on debt or the dividend paid on preferred stock until
the convertible security matures or is redeemed, converted or exchanged.
Convertible securities have several unique investment characteristics such as
(1) higher yields than common stocks, but lower yields than comparable
nonconvertible securities, (2) a lesser degree of fluctuation in value than the
underlying stock since they have fixed income characteristics, and (3) the
potential for capital appreciation if the market price of the underlying common
stock increases. A convertible security might be subject to redemption at the
option of the issuer at a price established in the convertible security's
governing instrument. If a convertible security held by a Fund is called for
redemption, the Fund may be required to permit the issuer to redeem the
security, convert it into the underlying common stock or sell it to a third
party. The Funds will invest in convertible securities rated in the four
highest categories which are commonly called "investment grade" securities. The
Fund may, but is not required to, dispose of convertible securities whose
rating falls below investment grade.
Investment Companies
Each Fund may invest for liquidity purposes up to 10% of its total assets
in the shares of other investment companies, however, no more than 5% of a
Fund's assets will be invested in any one investment company. Investors should
recognize that a Fund's purchase of the securities of other investment
companies results in the layering of expenses, including operating costs,
advisory fees and administrative fees, that investors indirectly bear.
Standard & Poor's Depositary Receipts. Standard & Poor's Depositary
Receipts ("SPDRs") are shares of a unit investment trust that are traded on the
American Stock Exchange. SPDRs represent a proportionate interest, in
substantially the same weighting, as the component common stocks of the
Standard & Poor's 500 Index ("S&P 500"). SPDR's trade much like common stock.
SPDRs seek to provide investment results that generally correspond to the yield
and price performance of the component stocks of the S&P 500. The unit
investment trust from which SPDR's are issued is a form of an investment
company, and each Fund is subject to the limitations pertaining to investing in
other investment companies described above.
SPDRs are subject to the risk that the financial condition of the issuers
of the component stocks of the S&P 500 may deteriorate, which may impact such
issuers ability to pay dividends or the value of its common stock. General
market risks will also exist including market confidence, economic, political,
monetary and fiscal policies. As SPDRs are not actively "managed," common
stocks held by the trust will not be disposed of as the result of any market
fluctuations.
While most of the common stocks in the S&P 500 are actively traded, there
can be no assurance that a liquid market will continue to exist for all of the
common stocks represented in the index. The price at which the component S&P
500 common stocks are purchased and/or sold may adversely affect SPDRs if
trading markets in those stocks are limited or absent.
The S&P 500 itself is subject to periodic review by the Standard & Poor's
Committee, who may choose to replace component stocks. Any such changes will
require the
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rebalancing of the SPDRs portfolio to match the weighting and composition of
the S&P 500. The transaction costs of SPDRs will reduce their total return and
prevent them from exactly replicating the performance of the S&P 500.
Each Fund may invest in other unit investment trusts (such as Diamonds and
S&P 400 Mid-Cap Depositary Receipts) that have similar characteristics and
risks to SPDRs. S&P 400 Mid-Cap Depositary Receipts represent a proportionate
interest in substantially the same weighting, as the component stocks in the
Standard & Poor's Mid-Cap 400 Index. Diamonds are a unit investment trust which
represents a proportionate, weighted interest in the component stocks of the
Dow Jones Industrial Average.
Futures and Options Transactions
Financial Futures. Each Fund may enter into financial futures contracts as
a hedge against anticipated changes in the market value of the Fund's portfolio
securities or securities which it intends to purchase or in the exchange rate
of foreign currencies. Hedging is the initiation of an offsetting position in
the futures market which is intended to minimize the risk associated with a
position's underlying securities in the cash market. Investment techniques
related to financial futures and options are summarized below and are described
more fully in the Statement of Additional Information.
Financial futures contracts consist of interest rate futures contracts,
foreign currency futures contracts and securities index futures contracts. An
interest rate futures contract obligates the seller of the contract to deliver,
and the purchaser to take delivery of, the interest rate securities called for
in the contract at a specified future time and a specified price. A foreign
currency futures contract obligates the seller of the contract to deliver, and
the purchaser to take delivery of, the foreign currency called for in the
contract at a specified future time and at a specified price. See "Foreign
Currency Transactions." A securities index assigns relative values to the
securities included in the index, and the index fluctuates with changes in the
market values of the securities so included. A securities index futures
contract is a bilateral agreement pursuant to which two parties agree to take
or make delivery of an amount of cash equal to a specified dollar amount times
the difference between the index value at the close of the last trading day of
the contract and the price at which the futures contract is originally struck.
Each Fund may purchase and sell financial futures contracts which are
traded on a recognized exchange or board of trade and may enter into financial
futures contracts on foreign currencies.
Engaging in transactions in financial futures contracts involves certain
risks, such as the possibility of an imperfect correlation between futures
market prices and cash market prices and the possibility that the Adviser could
be incorrect in its expectation as to the direction or extent of various
interest rate movements or foreign currency exchange rates, in which case the
return might have been greater had hedging not taken place. There is also the
risk that a liquid secondary market may not exist, and the loss from investing
in futures contracts is potentially unlimited because the Fund may be unable to
close its position.
Writing Covered Options. Each Fund may, from time to time, write covered
call option contracts as a means of increasing the yield on the Fund's
portfolio and also as a means of providing limited protection against decreases
in the market value of the Fund's portfolio. Options are technically forms of
"derivatives" in that their value is dependent upon fluctuations in the value
of other securities. Such contracts will be written on securities in which the
Fund has authority to invest and on securities indices listed on an organized
national securities exchange.
A call option on a security gives the purchaser of the option the right to
buy the underlying security from the writer at the exercise price at any time
prior to the expiration of the contract, regardless of the market price of the
security during the option period. A call option is "covered" if, throughout
the life of the option, (1) the Fund owns the optioned securities, (2) the Fund
maintains in a pledged account with its Custodian, any asset, including equity
securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily, with a value sufficient to meet its
obligations under the call, or (3) if the Fund owns an offsetting call option.
The premium paid to the writer is the consideration for undertaking the
obligations under the option contract. The writer forgoes the opportunity to
profit from any increase in the market price of the underlying security above
the exercise price except insofar as the premium represents such a profit. The
Fund will write only call option contracts when it is believed that the total
return to the Fund can be increased through such premiums consistent with the
Fund's investment objective.
Each Fund may also write covered call options on securities indices.
Through the writing of call index options the Fund can achieve many of the same
objectives as through the use of call options on individual securities. Call
options on securities indices are similar to call options on a security except
that, rather than the right to take delivery of a security at a specified
price, a call option on a securities index gives the holder the right to
receive, upon exercise of the option, an amount of cash if the closing level of
the securities index upon which the call option is based is greater than the
exercise price of the option. The writing of option contracts is a highly
specialized activity which involves investment techniques and risks different
from those ordinarily associated with investment companies, and the
restrictions listed above would tend to reduce such risks.
Each Fund may purchase options to close out a position (i.e., enter into a
"closing purchase transaction" (the purchase of a call option on the same
security with the same exercise price and expiration date as the call option
which it has previously written on any particular security)). When a security
is sold from the Fund's portfolio, the Fund will effect a closing purchase
transaction so as to close out any existing call option on that security,
realizing a profit or loss depending on whether the amount paid to purchase a
call option is less or more than the amount received from the sale thereof. In
addition, each Fund
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may wish to purchase a call option to hedge its portfolio against an
anticipated increase in the price of securities it intends to purchase or to
purchase a put option to hedge its portfolio against an anticipated decline in
securities prices.
Purchasing Call and Put Options, Warrants and Stock Rights. Each Fund may
invest in exchange-traded or over-the-counter call and put options on
securities and securities indices and foreign currencies. Purchases of such
options may be made for the purpose of hedging against changes in the market
value of the underlying securities or foreign currencies or if in the opinion
of the Adviser, a hedging transaction is consistent with the Fund's investment
objectives. The 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 or foreign currency. Any such
sale 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 on the call or put which is sold. Purchasing a call or put option
involves the risk that the Fund may lose the premium it paid plus transaction
costs.
Warrants and stock rights are almost identical to call options in their
nature, use and effect except that they are issued by the issuer of the
underlying security, rather than an option writer, and they generally have
longer expiration dates than call options.
Over-the-Counter ("OTC") Options. OTC options differ from exchange-traded
options in several respects. They are transacted directly with dealers and not
with a clearing corporation, and there is a risk of non-performance by the
dealer. However, the premium is paid in advance by the dealer. OTC options are
available for a greater variety of securities, and in a wider range of
expiration dates and exercise prices, than exchange-traded options. Since there
is no exchange, pricing is normally done by reference to information from a
market maker, which information is carefully monitored or caused to be
monitored by the Adviser and verified in appropriate cases.
A writer or purchaser of a put or call option can terminate it voluntarily
only by entering into a closing transaction. In the case of OTC options, there
can be no assurance that a continuous liquid secondary market will exist for
any particular option at any specific time. Consequently, the Fund may be able
to realize the value of an OTC option it has purchased only by exercising its
OTC option or entering into a closing sale transaction with the dealer that
issued it. Similarly, when the Fund writes an OTC option, it generally can
close out that option prior to its expiration only by entering into a closing
purchase transaction with the dealer to which the Fund originally wrote the
option. If a covered call option writer cannot effect a closing transaction, it
cannot sell the underlying security or foreign currency until the option
expires or the option is exercised. Therefore, the writer of a covered OTC call
option may not be able to sell an underlying security even though it might
otherwise be advantageous to do so. Likewise, the writer of a secured OTC put
option may be unable to sell the securities pledged to secure the put for other
investment purposes while it is obligated as a put writer. Similarly, a
purchaser of an OTC put or call option might also find it difficult to
terminate its position on a timely basis in the absence of a secondary market.
Restrictions on Use of Futures and Options. Each Fund may enter into
futures contracts and options, provided that such obligations represent no more
than 50% of such 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 Fund may enter into financial
futures contracts and related options may also be limited by requirements of
the Internal Revenue Code for qualification as a regulated investment company.
Short-Term Instruments
For liquidity purposes, each Fund may invest in high-quality money market
instruments with remaining maturities of one year or less. Such instruments may
include U.S. Government Securities, Certificates of Deposit, Commercial Paper
and Bankers Acceptances. Each Fund may also invest in repurchase agreements
with maturities of seven days or less to generate income from its excess cash
balances. Each Fund may invest up to 15% of its net assets in repurchase
agreements having maturities of more than seven days (together with any other
illiquid securities held). Securities acquired through repurchase agreements
will be subject to resale to the seller at an agreed upon price and date
(normally the next business day). The resale price reflects an agreed upon
interest rate effective for the period the instrument is held by the Fund and
is unrelated to the interest rate on the underlying instrument. A repurchase
agreement acquired by the Fund will always be fully collateralized by the
underlying instrument, which will be marked to market every business day. The
underlying instrument will be held for the Fund's account by the Funds'
custodian bank until repurchased.
The use of repurchase agreements involves certain risks such as default by
or the insolvency of the other party to the repurchase agreement. Repurchase
agreements will be entered into only with commercial banks, brokers and dealers
considered by the Adviser to be creditworthy.
Lending Portfolio Securities
In order to increase the return on its investment, each Fund may lend its
portfolio securities to broker-dealers and other financial institutions in
amounts up to one-third of the value of its total assets. Loans of portfolio
securities will always be fully collateralized and will be made only to
borrowers considered by the Adviser to be credit-worthy. Lending portfolio
securities involves risk of delay in the recovery of the
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loaned securities and in some cases the loss of rights in the collateral should
the borrower fail financially.
Foreign Securities
Each Fund may invest up to 30% of total assets in the securities of
foreign issuers. Investing in the securities of foreign companies involves
special risks and considerations not typically associated with investing in
U.S. companies. These include differences in accounting, auditing and financial
reporting standards, generally higher commission rates on foreign portfolio
transactions, differences and inefficiencies in transaction settlement systems,
the possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations, political instability which could
affect U.S. investment or exchange control regulations, political instability
which could affect U.S. investments in foreign countries, and potential
restrictions on the flow of international capital. Additionally, dividends
payable on foreign securities may be subject to foreign taxes withheld prior to
distribution. Foreign securities often trade with less frequency and volume
than domestic securities and therefore may exhibit greater price volatility,
and changes in foreign exchange rates will affect the value of those securities
which are denominated or quoted in currencies other than the U.S. dollar.
Exchange rates are determined by forces of supply and demand in the foreign
exchange markets, and these forces are in turn affected by a range of economic,
political, financial, governmental and other factors. Exchange rate
fluctuations can affect the Fund's net asset value and dividends either
positively or negatively depending upon whether foreign currencies are
appreciating or depreciating in value relative to the U.S. dollar. Exchange
rates fluctuate over both the short and long term.
Foreign securities held by the Fund may not be registered with the
Securities and Exchange Commission ("SEC") and the issuers thereof will not be
subject to the SEC's reporting requirements. Accordingly, there may be less
publicly available information about the securities and about the foreign
company or government issuing them than is available about a domestic company
or government entity. Moreover, individual foreign economies may differ
favorably or unfavorably from the United States economy in such respects as
growth of Gross National Product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payment positions.
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."
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.
In investing in securities denominated in foreign currencies, the Fund
will be subject to the additional risk of currency fluctuations. An adverse
change in the value of a particular foreign currency as against the U.S.
dollar, to the extent that such change is not offset by a gain in other foreign
currencies, will result in a decrease in the Fund's assets. Any such change may
also have the effect of decreasing or limiting the income available for
distribution. Foreign currencies may be affected by revaluation, adverse
political and economic developments, and governmental restrictions. Although
the Fund will invest only in securities denominated in foreign currencies that
are fully convertible into U.S. dollars without legal restriction at the time
of investment, no assurance can be given that currency exchange controls will
not be imposed on any particular currency at a later date.
Securities of U.S. issuers denominated in foreign currencies may be less
liquid and their prices more volatile than securities issued by domestic
issuers and denominated in U.S. dollars. In addition, investing in securities
denominated in foreign currencies often entails costs not associated with
investment in U.S. dollar-denominated securities of U.S. issuers, such as the
cost of converting foreign currency to U.S. dollars, higher brokerage
commissions, custodial expenses and other fees. Non-U.S. dollar denominated
securities may be subject to certain withholding and other taxes of the
relevant jurisdiction, which may reduce the yield on the securities to the Fund
and which may not be recoverable by the Fund or its investors.
Each Fund will calculate its net asset value and complete orders to
purchase, exchange or redeem shares only on a Monday-Friday basis (excluding
holidays on which the New York Stock Exchange is closed). Foreign securities in
which a Fund may invest may be primarily listed on foreign stock exchanges
which may trade on other days (such as Saturdays). As a result, the net asset
value of the Fund's portfolio may be affected by such trading on days when a
shareholder has no access to the Fund.
Investment income received by the Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. If a
Fund should have more than 50% of the value of its assets invested in
securities of foreign corporations at the close of its taxable year, the Fund
may elect to pass through to its shareholders their proportionate shares of
foreign income taxes paid. Investors are urged to consult their tax attorney
with respect to specific questions regarding foreign, federal, state or local
taxes.
Foreign Currency Transactions
The value of the assets of each Fund, as measured in United States
dollars, may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations, and may incur costs
in connection with conversions between various currencies. Each Fund may
conduct foreign currency exchange transactions either on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign currency exchange market, or
through forward contracts to purchase or sell foreign currencies. A forward
foreign currency
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exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded directly between currency traders (usually
large commercial banks) and their customers. At the time of the purchase of a
forward foreign currency exchange contract, any asset, including equity
securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily equal to the market value of the
contract, minus the Fund's initial margin deposit with respect thereto, will be
deposited in a pledged account with the Fund's custodian bank to collateralize
fully the position and thereby ensure that it is not leveraged.
When a Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may want to establish the United States
dollar cost or proceeds, as the case may be. By entering into a forward
contract in United States dollars for the purchase or sale of the amount of
foreign currency involved in the underlying security transaction, it is able to
protect itself against a possible loss between trade and settlement dates
resulting from an adverse change in the relationship between the United States
dollar and such foreign currency. However, this tends to limit potential gains
which might result from a positive change in such currency relationships.
Utilizing this investment technique may also hedge the foreign currency
exchange rate risk by engaging in currency financial futures and options
transactions.
When the Adviser believes that the currency of a particular foreign
country may suffer a substantial decline against the United States dollar, it
may enter into a forward contract to sell an amount of foreign currency
approximating the value of some or all of a Fund's portfolio securities
denominated in such foreign currency. The forecasting of short-term currency
market movement is extremely difficult and whether such a short-term hedging
strategy will be successful is highly uncertain.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a contract. Accordingly, it may be necessary to
purchase additional currency on the spot market (and bear the expense of such
purchase) if the market value of the security is less than the amount of
foreign currency the Fund is obligated to deliver when a decision is made to
sell the security and make delivery of the foreign currency in settlement of a
forward contract. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security
if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver.
If a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between the Fund entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, the Fund would realize gains to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund
would suffer a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell. Although such
contracts tend to minimize the risk of loss due to a decline in the value of
the hedged currency, they also tend to limit any potential gain which might
result should the value of such currency increase. The Fund will have to
convert its holdings of foreign currencies into United States dollars from time
to time. Although foreign exchange dealers do not charge a fee for conversion,
they do realize a profit based on the difference (the "spread") between the
prices at which they are buying and selling various currencies.
Private Placements
"Private Placement" securities are those that are not sold to investors
through a public offering but instead are sold in direct, private transactions.
Federal and state law imposes restrictions on the resale of private placements.
Securities such as private placements and other restricted securities tend
to be illiquid. Illiquid securities are those that the Funds would not likely
be able to sell in any given seven day period and are limited to no more than
15% of each Fund's net assets. The Board of Trustees of the Funds have adopted
procedures for evaluating the liquidity of securities. The procedures take into
account the frequency of trades and quotes for the security, the number of
dealers willing to purchase and sell the security and the number of other,
qualified purchasers, dealer undertakings to make a market in the security, and
the nature of the marketplace for effecting trades (i.e. the time needed to
dispose of the security, the method of soliciting offers, and the mechanics of
transfer).
Such securities may ordinarily be re-sold in privately negotiated
transactions to a limited number of purchasers or in a public offering made
pursuant to an effective registration statement under the Securities Act of
1933. Public sales of such securities may involve significant delays and
expense. Private sales often require negotiation with one or more purchasers
and may produce less favorable prices than the sale of similar unrestricted
securities. Public sales generally involve the time and expense of the
preparation and processing of a registration statement under the 1933 Act (and
the possible decline in value of the securities during such period) and may
involve the payment of underwriting commissions.
Leverage
The Funds may from time to time increase their ownership of securities
holdings above the amounts otherwise possible by borrowing from banks at fixed
amounts of interest and investing the borrowed funds. The Funds will borrow
only from banks, and only if immediately after such borrowing the value of the
assets of each Fund (including the amount borrowed) less its liabilities (not
including any borrowings) is at least three times the amount of funds borrowed
for investment purposes. The effect of this provision is to permit each Fund to
borrow up to 331/3% of the net assets of such Fund, not
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including the proceeds of any such borrowings. However, the amount of the
borrowings will be dependent upon the availability and cost of credit from time
to time. If, due to market fluctuations or other reasons, the value of such
Fund's assets computed as provided above become less than three times the
amount of the borrowings for investment purposes, 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 each Fund with respect to
which the borrowing has been made. Because such expense would not otherwise be
incurred, the net investment income of such Fund is not expected to be as high
as it otherwise would be during periods when borrowings for investment purposes
are substantial.
Bank borrowings for investment purposes 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 such Fund with respect to
which the borrowing has been made.
Any investment gains made with the additional monies borrowed in excess of
interest paid will cause the net asset value of such Fund's shares to rise
faster than would otherwise be the case. On the other hand, if the investment
performance of the additional securities purchased fails to cover their cost
(including any interest paid on the monies borrowed) to such Fund, the net
asset value of the Fund will decrease faster than would otherwise be the case.
Other Techniques
The Adviser may buy other types of securities or employ other portfolio
management techniques on behalf of each Fund. See the Statement of Additional
Information for more information on these investment techniques and their
related risks.
INVESTMENT RESTRICTIONS
The investment restrictions to which each Fund is subject, together with
the investment objective of each Fund, are fundamental policies of the Funds
which may not be changed without the approval of such Fund's shareholders.
There is no assurance that any Fund will be able to meet its investment
objective. A detailed description of the investment restrictions for each Fund
is contained in the Statement of Additional Information.
PORTFOLIO TURNOVER
The Funds pay brokerage commissions for purchases and sales of portfolio
securities. A high rate of portfolio turnover involves a correspondingly
greater amount of brokerage commissions and other costs which must be borne
directly by a Fund and thus indirectly by its shareholders. It may also result
in the realization of larger amounts of short-term capital gains, which are
taxable to shareholders as ordinary income.
The rate of portfolio turnover is not a limiting factor when the Adviser
deems changes appropriate. Although the portfolio turnover rate of each Fund
cannot be accurately predicted, it is anticipated that the annual turnover rate
will likely not exceed 100%. Portfolio turnover rate is calculated by dividing
the lesser of purchases or sales of portfolio securities during the fiscal year
by the monthly average of the value of each Fund's securities (excluding
short-term securities). The turnover rate may vary greatly from year to year
and may be affected by cash requirements for redemptions of shares of each Fund
and by compliance with provisions of the Internal Revenue Code, relieving
investment companies which distribute substantially all of their net income
from federal income taxation on the amounts distributed. For more information
regarding the consequences relating to a high portfolio turnover rate, see
"Portfolio Transactions and Brokerage" and "Dividends, Distributions and Taxes"
in the Statement of Additional Information.
MANAGEMENT OF THE FUNDS
The Trust is an open-end management investment company known as a mutual
fund. The Trustees of the Trust are responsible for the overall supervision of
the Funds and perform the various duties imposed on Trustees by the 1940 Act
and Massachusetts business trust law.
The Adviser
Phoenix Investment Counsel, Inc. ("PIC") is the investment adviser for the
Funds. PIC is located at 56 Prospect Street, Hartford, Connecticut 06115-0480.
PIC was originally organized in 1932 as John P. Chase, Inc. In addition to
these Funds, PIC also serves as investment adviser to other entities including
Phoenix Duff & Phelps Institutional Mutual Funds (except Real Estate Equity
Securities Portfolio, Enhanced Reserves Portfolio and Core Equity Portfolio),
Phoenix Series Fund, Phoenix Multi-Portfolio Fund (all portfolios other than
the Phoenix Real Estate Securities Portfolio), Phoenix Growth and Income Fund
of the Phoenix Equity Series Fund, Phoenix Strategic Allocation Fund, Inc.,
Phoenix Strategic Equity Series Fund (all funds except Phoenix Equity
Opportunities Fund) and The Phoenix Edge Series Fund (all series other than the
Phoenix Real Estate Securities Series and Phoenix-Aberdeen New Asia Series)
and as subadviser to the SunAmerica Series Trust, among other investment
advisory clients. As of December 31, 1997, PIC had approximately $20.5 billion
in assets under management.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning"), a subsidiary of Phoenix Investment Partners,
LTD., each indirect subsidiaries of Phoenix Home Life Mutual Insurance Company
("Phoenix Home Life") of Hartford, Connecticut. Phoenix Home Life is a majority
shareholder of Phoenix Investment Partners, LTD. and is in the business of
writing ordinary and group life and health insurance and annuities. Its
principal offices are located at One American Row, Hartford, Connecticut 06115.
Phoenix Investment Partners, LTD. is a New York Stock Exchange traded company
that provides various financial advisory services to institutional investors,
corporations and individuals through operating subsidiaries.
14
<PAGE>
Management Fees
The Adviser continuously furnishes an investment program for each Fund and
manages the investment and reinvestment of the assets subject at all times to
the supervision of the Trustees. Under the terms of the Investment Advisory
Agreement, the Adviser is entitled to a prescribed fee, payable monthly, at the
following annual rates based on the aggregate net asset values of each Fund.
<TABLE>
<CAPTION>
1st Billion 1-2 Billion 2+ Billion
------------- ------------- -----------
<S> <C> <C> <C>
Value Equity Fund 0.75% 0.70% 0.65%
Small Cap Value Fund 0.90 0.85 0.80
</TABLE>
The Adviser has voluntarily agreed to assume Total Fund Operating Expenses
of each Fund excluding interest, taxes, brokerage fees, commissions and
extraordinary expenses, until August 31, 1998, 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 Class M
Shares Shares Shares Shares
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Value Equity Fund 1.25% 2.00% 2.00% 1.50%
Small Cap Value Fund 1.40 2.15 2.15 1.65
</TABLE>
The Portfolio Manager
Mr. Christian C. Bertelsen serves as Portfolio Manager of both the Value
Equity Fund and Small Cap Value 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.
The Financial Agent
Equity Planning also acts as financial agent of the Funds and, as such,
performs administrative, bookkeeping and pricing functions for the Funds. As
compensation, Equity Planning is entitled to a fee, payable monthly and based
upon (a) the average of the aggregate daily net asset values of each Fund, at
the following incremental annual rates:
<TABLE>
<S> <C>
First $100 million .05%
$100 million to $300 million .04%
$300 million through $500 million .03%
Greater than $500 million .015%
</TABLE>
(b) a minimum fee of $50,000 for each Fund; and (c) an annual fee of
$12,000 for each class of shares beyond one.
PFPC has been retained by Equity Planning to perform certain
administrative and pricing services for the funds for which Equity Planning
pays PFPC a fee. While Equity Planning has delegated certain responsibilities
to PFPC, Equity Planning retains full responsibility for performance of all
duties as financial agent.
The Custodian and Transfer Agent
The custodian of the assets of the Funds is State Street Bank and Trust
Company, P.O. Box 351, Boston, Massachusetts 02101 (the "Custodian").
Pursuant to a Transfer Agent and Service Agreement with the Phoenix Funds,
Equity Planning acts as transfer agent for the Funds (the "Transfer Agent"). As
compensation, Equity Planning receives a fee equivalent to $14.95 for each
designated daily dividend shareholder account and $14.95 plus certain out of
pocket expenses for each designated shareholder account. The Transfer Agent
engages sub-agents to perform certain shareholder servicing functions for which
such agents are paid a fee by Equity Planning.
Brokerage Commissions
Although the Conduct Rules of the National Association of Securities
Dealers, Inc. ("NASD") prohibit its members from seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such Rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Funds.
DISTRIBUTION PLANS
The offices of Equity Planning, the national distributor of the Funds'
shares, are located at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. Philip R. McLoughlin is a Trustee and President of the
Funds and a director and officer of Equity Planning. Michael E. Haylon and
William R. Moyer directors of Equity Planning, are officers of the Funds. G.
Jeffrey Bohne, Nancy G. Curtiss, William E. Keen, III, Jacqueline M. Porter,
Leonard J. Saltiel and Thomas N. Steenburg are officers of the Funds and
officers of Equity Planning.
Equity Planning and the Funds have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Funds shares sold subject to an initial sales charge and those
sold subject to a contingent deferred sales charge. The Funds have granted
Equity Planning the exclusive right to purchase from the Funds and resell, as
principal, shares needed to fill unconditional orders for Funds shares. Equity
Planning may sell Funds shares through its registered representatives or
through securities dealers with whom it has sales agreements. Equity Planning
may also sell Funds shares pursuant to sales agreements entered into with banks
or bank-affiliated securities brokers who, acting as agent for their customers,
place orders for Funds shares with Equity Planning. Although the Glass-Steagall
Act prohibits banks and bank affiliates from engaging in the business of
underwriting, distributing or selling securities (including mutual fund
shares), banking regulators have not indicated that such institutions are
prohibited from purchasing mutual fund shares upon the orderand for the account
of their customers. If, because of
15
<PAGE>
changes in law or regulations, or because of new interpretations of existing
law, it is determined that agency transactions of banks or bank-affiliated
securities brokers are not permitted under the Glass-Steagall Act, the Trustees
will consider what action, if any, is appropriate. It is not anticipated that
termination of sales agreements with banks or bank-affiliated securities
brokers would result in a loss to their customers or a change in the net asset
value per share of a Fund.
The sale of Fund shares through a securities broker affiliated with a
particular bank is not expected to preclude the Funds from borrowing from such
bank or from availing itself of custodial or transfer agency services offered
by such bank.
The Trustees have adopted separate distribution plans under Rule 12b-1 of
the 1940 Act for each class of shares of each Fund of the Trust (the "Class A
Plan," the "Class B Plan," the "Class C Plan," the "Class M Plan," and
collectively the "Plans"). The Plans permit the Funds to reimburse the
Distributor for expenses incurred in connection with the sale and promotion of
Fund shares and the furnishing of shareholder services. A 12b-1 fee paid by one
Fund may be used to finance distribution of the shares of another Fund based on
the number of shareholder accounts within the Funds. Pursuant to the Plans, the
Funds will pay the Distributor 0.25% annually of the average daily net assets
of the Funds for providing services to shareholders, including assistance in
connection with inquiries related to shareholder accounts (the "Service Fee").
Pursuant to the Class B, Class C and Class M Plans, the Funds may reimburse the
Distributor monthly for actual expenses of the Distributor up to 0.75% annually
for the average daily net assets of the Funds' Class B and C Shares, and up to
0.25% annually for the average daily net assets of the Funds' Class M Shares.
Expenditures incurred under the Plans may consist of: (i) commissions to
sales personnel for selling shares of the Funds (including underwriting
commissions and finance charges related to the payment of commissions; (ii)
compensation, sales incentives and payments to sales, marketing and service
personnel; (iii) payments to broker-dealers and other financial institutions
which have entered into agreements with the Distributor for services rendered
in connection with the sale and distribution of shares of the Funds and
provision of shareholder services; (iv) payment of expenses incurred in sales
and promotional activities, including advertising expenditures related to the
Funds; (v) the costs of preparing and distributing promotional materials; (vi)
the cost of printing the Funds' Prospectus and Statement of Additional
Information for distribution to potential investors; (vii) such other similar
services that the Trustees 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 to shareholders and/or maintaining 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 reallowed to
such firms. To the extent that the entire amount of the Service Fee is not paid
to such firms, the balance will serve as compensation for personal and account
maintenance services furnished by the Distributor. The Distributor also pays to
dealers, as additional compensation with respect to sales of Class C and M
shares, 0.75% and 0.25% of the average annual net asset value of each class,
respectively.
In order to receive payments under the Plans, participants must meet such
qualifications as are to be established in the sole discretion of the
Distributor, such as services to the Funds' shareholders; or services providing
the Funds with more efficient methods of offering shares to groups of clients,
members or prospects of a participant; or services permitting bulking of
purchases or sales, or transmission of such purchases or sales by computerized
tape or other electronic equipment; or other batch processing.
On a quarterly basis, the Funds' Trustees review a report on expenditures
under each Plan and the purposes for which expenditures were made. The Trustees
conduct an additional, more extensive review annually in determining whether
each Plan will be continued. By its terms, continuation of each Plan from year
to year is contingent on annual approval by a majority of the Trustees and by a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) and who have no direct or indirect financial interest in the
operation of any Plan or any related agreements (the "Plan Trustees"). Each
Plan provides that it may not be amended to increase materially the costs which
the Funds may bear without approval of the applicable class of shareholders of
the affected Fund of the Trust and that other material amendments must be
approved by a majority of the Plan Trustees by vote cast in person at a meeting
called for the purpose of considering such amendments. Each Plan further
provides that while it is in effect, the selection and nomination of Trustees
who are not "interested persons" shall be committed to the discretion of the
Trustees who are not "interested persons." Each Plan may be terminated at any
time by vote of a majority of the Plan Trustees or a majority of the applicable
class of outstanding shares of each Fund.
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 any or all of the
Plans.
HOW TO BUY SHARES
How do you invest?
You may open a fund account with an initial investment of $500. This
amount is reduced to $25 for investments made under the "Investo-Matic" plan
(see the Funds' Application), individual retirement accounts or under the
systematic exchange privilege described below. The initial investment
requirement is waived for investments made under pension, profit sharing or
employee benefit plans as well as in connection with reinvested dividends and
distributions.
16
<PAGE>
You may make additional investments at any time with at least $25. The
subsequent investment minimum is waived for investments made under pension,
profit sharing or employee benefit plans as well as in connection with
reinvested dividends and distributions.
An application should be completed to open a new Phoenix Funds account. A
check for the amount you wish to invest, made payable to the "Phoenix Funds,"
(along with the completed application if opening a new account), must be sent
to: Phoenix Funds, c/o State Street Bank and Trust Company ("State Street
Bank"), P.O. Box 8301, Boston, MA 02266-8301. You may contact the Distributor
at 100 Bright Meadow Boulevard, Enfield, Connecticut 06083-2200 or call (800)
243-1574 with any questions relating to establishing a Phoenix Fund account.
Shares are sold at the public offering price based on the net asset value
for the class of shares bought next determined after State Street Bank or an
authorized agent receives your order. In most cases, in order to receive that
day's public offering price, State Street Bank or an authorized agent must
receive your order before the close of trading on the New York Stock Exchange
(normally 4:00 PM eastern time). See "Net Asset Value." Shares purchased will
be recorded electronically in book-entry form by the Transfer Agent. No share
certificates are available.
What are the classes and how do they differ?
Each Fund presently offers investors four classes of shares which bear
sales and distribution charges in different amounts.
Class A Shares. If you buy 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 they are sold.
Class A Shares have lower Rule 12b-1 fees and pay higher dividends than any
other class.
Class B Shares. If you buy 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 bought, you will pay a sales charge of up to 5% of your
shares' value. See "Deferred Sales Charge Alternative--Class B and C Shares."
This charge declines to zero over a five year period and may be waived under
certain conditions. Class B shares have higher Rule 12b-1 fees and pay lower
dividends than Class A and M Shares. Class B Shares automatically convert to
Class A Shares eight years after purchase. The Distributor intends to limit
investments in Class B Shares to: (a) $250,000 for any person; (b) $1 million
for any unallocated employer sponsored plan; and (c) $250,000 for each
participant in any allocated qualified employer sponsored plan, including
401(k) plans, provided such plan uses an approved participant tracking system.
Class B Shares will not be sold to any qualified employee benefit plan,
endowment fund or foundation if, on the date of the initial investment, such
entity has assets of over $10 million or more than 200 participant employees.
Class B Shares will not be sold to anyone who is over 85 years old.
Class C Shares. If you buy 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 bought, you will pay a sales charge of 1% of your shares' value.
See "Deferred Sales Charge Alternative--Class B and C Shares." Class C Shares
have the same Rule 12b-1 fees and pay comparable dividends as Class B Shares.
Class C Shares do not convert to any other class of shares of the Funds. Class
C Shares are not currently offered for all Phoenix Funds.
Class M Shares. Class M Shares are currently closed to new investors. If
you buy Class M Shares, you will pay a sales charge at the time of purchase
equal to 3.50% of the offering price (3.63% of the amount invested). Class M
Shares are not subject to any charges by the Fund when they are sold. Class M
Shares have lower Rule 12b-1 fees and pay higher dividends than Class B and C
Shares. Class M Shares do not convert to any other class of shares of the Fund.
Class M Shares are not currently offered for all Phoenix Funds.
What arrangement is best for you?
The alternative purchase arrangement permits you to choose the method of
buying shares that is most beneficial to you given the amount of the purchase,
the length of time you expect to hold the shares, whether you wish to receive
distributions in cash or to reinvest them in additional shares, and other
circumstances. You should consider whether, during the anticipated term of your
investment, the accumulated continuing distribution and service fees and
contingent deferred sales charges of one class would be more than the initial
sales charge and accumulated distribution and service fees of another class of
shares bought at the same time. See "Distribution Plans" and "Fund Expenses."
Initial Sales Charge Alternative--Class A and M Shares
The public offering price of Class A and M Shares is the net asset value
plus a sales charge that varies depending on the size of any "person's" (see
"How To Obtain Reduced Initial Sales Charges--Class A and M Shares: Combination
Purchase Privilege") purchase. Shares issued 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 Distributor as shown on the following tables.
Class A Shares
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
-----------------------------------
Amount of Net Dealer Discount
Transaction Offering Amount Percentage of
at Offering Price Price Invested Offering Price
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Under $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>
17
<PAGE>
Class M Shares (closed to new investors)
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
-----------------------------------
Amount of Net Dealer Discount
Transaction Offering Amount Percentage of
at Offering Price Price Invested Offering Price
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Under $50,000 3.50% 3.63% 3.00%
$50,000 but under
$100,000 2.50 2.56 2.00
$100,000 but under
$250,000 1.50 1.52 1.00
$250,000 but under
$500,000 1.00 1.01 1.00
$500,000 or more None 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 (the "CDSC") at the rates set forth below. The
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. In addition, shares issued based on
the automatic reinvestment of income dividends or capital gains distributions
are not subject to any sales charges. To minimize the CDSC, shares not subject
to any charge will be redeemed first, followed by shares held the longest time.
The Distributor will add up all shares bought in any month and use the last day
of the preceding month in calculating the amount of shares owned and time
period held for Class B Shares. The trade date will be used for purposes of
aging Class C Share investments.
Deferred Sales charge you may pay to sell Class B Shares
<TABLE>
<CAPTION>
Year 1 2 3 4 5 6+
- -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CDSC 5% 4% 3% 2% 2% 0%
</TABLE>
Deferred Sales charge you may pay to sell Class C Shares
<TABLE>
<CAPTION>
Year 1 2+
- -------------------
<S> <C> <C>
CDSC 1% 0%
</TABLE>
Dealer Concessions
In addition to the dealer discount on purchases of Class A and M 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 may be paid either from the Trust 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.
How To Obtain Reduced Initial Sales Charges--Class A and M Shares
Investors choosing Class A or M Shares may be entitled to reduced sales
charges. The five ways in which sales charges may be avoided or reduced are
described below.
Qualified Purchasers. If you fall within any one of the following
categories, you will not have to pay a sales charge on your purchase of Class A
or M Shares: (1) trustee, director or officer of the Phoenix Funds,
Phoenix-Engemann Funds, Phoenix-Seneca Funds or any other mutual fund 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 (for at least 90 days), of the
Adviser or Distributor; (3) registered representatives and employees of
securities dealers with whom the Distributor 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
Distributor; (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, Distributor and/or their corporate affiliates; (8)
any employee or agent who retires from Phoenix Home Life, Distributor and/or
their corporate affiliates; (9) any account held in the name of a qualified
employee benefit plan, endowment fund or foundation if, on the date of the
initial investment, the plan, fund or foundation has assets of $10,000,000 or
more or at least 100 eligible employees; (10) any person with a direct rollover
transfer of shares from an established Phoenix Fund, Phoenix-Engemann Fund or
Phoenix-Seneca Fund qualified plan; (11) any Phoenix Home Life separate account
which funds group annuity contracts offered to qualified employee benefit
plans; (12) any state, county, city, department, authority or similar agency
prohibited by law from paying a sales charge; (13) any fully matriculated
student in any U.S. service academy; (14) any unallocated account held by a
third party administrator,
18
<PAGE>
registered investment adviser, trust company, or bank trust department which
exercises discretionary authority and holds the account in a fiduciary, agency,
custodial or similar capacity, if in the aggregate such accounts held by such
entity equal or exceed $1,000,000; (15) any person who is investing redemption
proceeds from investment companies other than the Phoenix Funds,
Phoenix-Engemann Fund or Phoenix-Seneca Fund if, in connection with the
purchases or redemption of the redeemed shares, the investor paid a prior sales
charge provided such investor supplies verification that the redemption
occurred within 90 days of the Phoenix Fund purchase and that a sales charge
was paid; (16) any deferred compensation plan established for the benefit of
any Phoenix Fund, Phoenix-Engemann Fund or Phoenix-Seneca Fund trustee or
director; provided that sales to persons listed in (1) through (15) above are
made upon the written assurance of the purchaser that the purchase is made for
investment purposes and that the shares so acquired will not be resold except
to the Fund; (17) purchasers of Class A or M Shares bought through investment
advisors and financial planners who charge an advisory, consulting or other fee
for their services and buy shares for their own accounts or the accounts of
their clients; (18) 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 such purchases; or (19)
clients of investment advisors or financial planners who buy shares for their
own accounts but only if their accounts are linked to a master account of their
investment advisor or financial planner on the books and records of the broker,
agent or financial intermediary with which the Distributor has made such
special arrangements (each of the investors described in (17) through (19) may
be charged a fee by the broker, agent or financial intermediary for purchasing
shares).
Combination Purchase Privilege. Your purchase of any class of shares of
this or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 403(b)
plans for the same employer; (d) multiple accounts (up to 200) under a
qualified employee benefit plan or administered by a third party administrator;
or (e) 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 of record in the name, or nominee name, of the
entity placing the order.
Letter of Intent. If you sign a Letter of Intent, your purchase of any
class of shares of this or any other Affiliated Phoenix Fund (other than
Phoenix Money Market Fund Series Class A Shares), if made by the same person
within a thirteen month period, will be added together to determine whether you
are entitled to an immediate reduction in sales charges. Sales charges are
reduced based on the overall amount you indicate that you will buy under the
Letter of Intent. The Letter of Intent is a mutually non-binding arrangement
between you and the Distributor. Since the Distributor doesn't know whether you
will ultimately fulfill the Letter of Intent, shares worth 5% of the amount of
each purchase will be set aside until you fulfill the Letter of Intent. When
you buy enough shares to fulfill the Letter of Intent, these shares will no
longer be restricted. If, on the other hand, you do not satisfy the Letter of
Intent, or otherwise wish to sell any restricted shares, you will be given the
choice of either buying enough shares to fulfill the Letter of Intent or paying
the difference between any sales charge you previously paid and the otherwise
applicable sales charge based on the intended aggregate purchases described in
the Letter of Intent. You will be given 20 days to make this decision. If you
do not exercise either election, the Distributor will automatically redeem the
number of your restricted shares needed to make up the deficiency in sales
charges received. The Distributor will redeem restricted Class A or M Shares
before Class C or B Shares, respectively. Oldest shares will be redeemed before
selling newer shares. Any remaining shares will then be deposited to your
account.
Right of Accumulation. Your purchase of any class of shares of this or any
other Affiliated Phoenix Fund, if made over time by the same person may be
added together to determine whether the combined sum entitles you to a
prospective reduction in sales charges. You must provide certain account
information to the Distributor to exercise this right.
Associations. Certain groups or associations may be treated as a "person"
and qualify for reduced Class A Share sales charges. The group or association
must: (1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge;
(3) work through an investment dealer; or (4) not be a group whose sole reason
for existing is to consist of members who are credit card holders of a
particular company, policyholders of an insurance company, customers of a bank
or a broker-dealer or clients of an investment adviser.
How To Obtain Reduced Deferred Sales Charges--
Class B and C Shares
The CDSC is waived on the redemption (sale) of Class B and C Shares if the
redemption is made (a) 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
19
<PAGE>
(UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial account; (b)
within one year of disability, as defined in Code Section 72(m)(7); (c) as a
mandatory distribution upon reaching age 701/2 under any retirement plan
qualified under Code Sections 401, 408 or 403(b) or resulting from the tax-free
return of an excess contribution to an IRA; (d) 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)
based on the exercise of exchange privileges among Class B and C Shares of this
or any other Affiliated Phoenix Fund; (f) based on any direct rollover transfer
of shares from an established Affiliated Phoenix Fund qualified plan into an
Affiliated Phoenix Fund IRA by participants terminating from the qualified
plan; and (g) based on the systematic withdrawal program (Class B Shares only).
If, as described in condition (a) above, an account is transferred to an
account registered in the name of a deceased's estate, the CDSC will be waived
on any redemption from the estate account occurring within one year of the
death. If the Class B or C Shares are not redeemed within one year of the
death, they will remain subject to the applicable CDSC.
Conversion Feature--Class B Shares
Class B Shares will automatically convert to Class A Shares of the same
Fund eight years after they are bought. Conversion will be on the basis of the
then prevailing net asset value of Class A and B Shares. There is no sales
load, fee or other charge for this feature. Class B Shares acquired through
dividend or distribution reinvestments will be converted into Class A Shares at
the same time that other Class B Shares are converted based on the proportion
that the reinvested shares bear to purchased Class B Shares. The conversion
feature is subject to the continuing availability of an opinion of counsel or a
ruling of the Internal Revenue Service that the assessment of the higher
distribution fees and associated costs with respect to Class B Shares does not
result in any dividends or distributions constituting "preferential dividends"
under the Code, and that the conversion of shares does not constitute a taxable
event under federal income tax law. If the conversion feature is suspended,
Class B Shares would continue to be subject to the higher distribution fee for
an indefinite period. Even if the Funds were unable to obtain such assurances,
it might continue to make distributions if doing so would assist in complying
with its general practice of distributing sufficient income to reduce or
eliminate federal taxes otherwise payable by the Funds.
INVESTOR ACCOUNT SERVICES
The Funds mail periodic statements and reports to shareholders. In order
to reduce the volume and cost of mailings, to the extent possible, only one
copy of most Fund reports will be mailed to households for multiple accounts
with the same surname at the same household address. Please contact Equity
Planning to request additional copies of shareholder reports toll free at (800)
243-4361.
In most cases, changes to any shareholder account may be accomplished by
calling Shareholder Services at (800) 243-1574. More information relating to
the shareholder account services can be found in the Fund's Statement of
Additional Information ("SAI").
Bank Draft Investing Program (Investo-Matic Plan). By completing the
Investo-Matic Section of the New Account Application, you may authorize the
bank named in the form to draw $25 or more from your personal checking or
savings account to be used to purchase additional shares for your account. The
amount you designate will be made available, in form payable to the order of
the Transfer Agent, by the bank on the date the bank draws on your account and
will be used to purchase shares at the applicable offering price.
Distribution Option. The Funds currently declare all income dividends and
all capital gain distributions, if any, payable in shares of the Fund at net
asset value or, at your option, in cash. By exercising the distribution option,
you may elect to: (1) receive both dividends and capital gain distributions in
additional shares or (2) receive dividends in cash and capital gain
distributions in additional shares or (3) receive both dividends and capital
gain distributions in cash. If you elect to receive dividends and/or
distributions in cash and the check cannot be delivered or remains uncashed due
to an invalid address, then the dividend and/or distribution will be reinvested
after the Transfer Agent has been informed that the proceeds are undeliverable.
Additional shares will be purchased in your account at the then current net
asset value. Dividends and capital gain distributions received in shares are
taxable to you and credited to your account in full and fractional shares
computed at the closing net asset value on the next business day after the
record date. No interest will accrue on amounts represented by uncashed
distribution or redemption checks.
Systematic Withdrawal Program. The Systematic Withdrawal Program allows
you to periodically redeem a portion of your account on a predetermined
monthly, quarterly, semiannual or annual basis. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the month
at the closing net asset value on the date of redemption. The Systematic
Withdrawal Program also provides for redemptions to be tendered on or about the
10th, 15th or 25th of the month with proceeds to be directed through Automated
Clearing House (ACH) to your bank account. In addition to the limitations
stated below, withdrawals may not be less than $25 and minimum account balance
requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Fund worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. Participants
in the Program redeeming Class C Shares will be subject to any applicable
contingent deferred sales charge. The purchase of shares while participating in
the withdrawal program will ordinarily be disadvantageous to the Class A or M
Shares investor since a sales charge will be paid by the investor on the
purchase of Class A
20
<PAGE>
or M Shares at the same time as other shares are being redeemed. For this
reason, investors in Class A or M Shares may not participate in an automatic
investment program while participating in the Systematic Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any
applicable contingent deferred sales charge on all shares redeemed.
Accordingly, the purchase of Class B Shares will generally not be suitable for
an investor who anticipates withdrawing sums in excess of the above limits
shortly after purchase.
Tax Sheltered Retirement Plans. Shares of the Funds are offered in
connection with the following 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 at (800)
243-4361 for further information about the plans.
Exchange Privileges
You may exchange shares of one Phoenix Fund for shares of another Phoenix
Fund or any other Affiliated Phoenix Fund without paying any fees or sales
charges. On exchanges with share classes that carry a contingent deferred sales
charge, the CDSC schedule of the original shares purchased continues to apply.
Shares held in book-entry form may be exchanged for shares of the same class of
other Phoenix Funds or any other Affiliated Phoenix Fund, provided the
following conditions are met: (1) the shares that will be acquired in the
exchange (the "Acquired Shares") are available for sale; (2) the Acquired
Shares are the same class as the shares to be surrendered (the "Exchanged
Shares"); (3) the Acquired Shares will be registered to the same shareholder
account as the Exchanged Shares; (4) the account value of the Fund whose shares
are to be acquired must equal or exceed the minimum initial investment amount
required by that Phoenix Fund after the exchange is made; and (5) if you have
elected not to use the telephone exchange privilege (see below), a properly
executed exchange request must be received by the Distributor. Exchanges may be
made over the telephone or in writing and may be made at one time or
systematically over a period of time. Note, each Phoenix Fund has different
investment objectives and policies. You should read the prospectus of the Fund
into which the exchange is to be made before making any exchanges. This
privilege may be modified or terminated at any time on 60 days' notice.
Market Timer Restrictions. Because excessive trading can hurt Fund
performance and harm shareholders, the Funds reserve the right to temporarily
or permanently terminate exchange privileges or reject any specific order from
anyone whose transactions seem to follow a timing pattern, including those who
request more than one exchange out of a fund within any 30-day period. The
Distributor has entered into agreements with certain market timer entities
permitting them to exchange their clients' shares by telephone. These
privileges are limited under those agreements. The Distributor has the right to
reject or suspend these privileges upon reasonable notice.
Telephone Exchanges. If permitted in your state and unless you waive this
privilege in writing, you or your broker may sell or exchange your shares over
the phone by calling the Distributor at (800) 243-1574. Reasonable procedures
will be used to confirm that telephone instructions are genuine. In addition to
requiring that the exchange is only made between accounts with identical
registrations, the Distributor may require address or other forms of
identification and will record telephone instructions. All exchanges will be
confirmed in writing to you. If procedures reasonably designed to prevent
unauthorized telephone exchanges are not followed, the Funds and/or Distributor
may be liable for following telephone instructions that prove to be fraudulent.
Broker/dealers other than the Distributor assume the risk of any loss resulting
from any unauthorized telephone exchange instructions from their firm or their
registered representatives. You assume the risk if the Distributor acts upon
unauthorized instructions it reasonably believes to be genuine. During times of
severe economic or market changes, this privilege may be difficult to exercise
or may be temporarily suspended. In such event, an exchange may be effected by
written request by the registered shareowner(s).
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close
of trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The net asset value per share of 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. 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.
The Funds' investments are valued at market value or, where market
quotations are not available, at fair value as determined in good faith by the
Trustees or their delegates. Foreign and domestic debt securities (other than
short-term investments) are valued on the basis of broker quotations or
valuations provided by a pricing service approved by the Trustees when such
prices are believed to reflect the fair value of such securities. Foreign and
domestic equity securities are valued at the last sale price or, if there has
been no sale that day, at the last bid price, generally. Short-term investments
having a remaining maturity of less than sixty-one days are
21
<PAGE>
valued at amortized cost, which the Trustees have determined approximates
market value. For further information about security valuations, see the
Statement of Additional Information.
HOW TO REDEEM SHARES
You have the right to have the Funds buy back shares at the net asset
value next determined after receipt of a redemption order, and any other
required documentation in proper form, by Phoenix Funds, c/o State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301, 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 (see "Deferred
Sales Charge Alternative--Class B and C Shares," above). Subject to certain
restrictions, shares may be redeemed by telephone or in writing. In addition,
shares may be sold through securities dealers, brokers or agents who may charge
customary commissions or fees for their services. The Funds do not charge any
redemption fees. Payment for shares redeemed is made within seven days,
provided that redemption proceeds will not be disbursed until each check used
for purchases of shares has been cleared for payment by your bank, which may
take up to 15 days after receipt of the check.
The requirements to redeem shares are outlined in the table below.
Additional documentation may be required for redemptions by corporations,
partnerships or other organizations, executors, administrators, trustees,
custodians, guardians, or from IRA's or other retirement plans, or if
redemption is requested by anyone but the shareholder(s) of record. To avoid
delay in redemption or transfer, shareholders having questions about specific
requirements should contact the Funds at (800) 243-1574. Redemption requests
will not be honored until all required documents in proper form have been
received.
How can I sell my Shares?
<TABLE>
<S> <C>
[icon of phone]
By Phone [bullet] Sales up to $50,000
[bullet] Not available on most retirement accounts
(800) 243-1574 [bullet] Requests received after 4PM will be
executed on the following business day
[icon of envelope]
In Writing [bullet] Letter of instruction from the registered
owner including the fund and account
number and the number of shares or dollar
amount you wish to sell
[bullet] No signature guarantee is required if your
shares are registered individually, jointly, or
as custodian under the Uniform Gifts to
Minors Act or Uniform Transfers to Minors
Act, the proceeds of the redemption do not
exceed $50,000, and the proceeds are
payable to the registered owner(s) at the
address of record
</TABLE>
Telephone Redemptions. The Funds and the Transfer Agent will employ
reasonable procedures to confirm that telephone instructions are genuine.
Address and bank account information will be verified, telephone redemption
instructions will be recorded on tape, and all redemptions will be confirmed in
writing to you. If there has been an address change within the past 60 days, a
telephone redemption will not be authorized. To the extent that procedures
reasonably designed to prevent unauthorized telephone redemptions are not
followed, the Funds and/or the Transfer Agent may be liable for following
telephone instructions for redemption transactions that prove to be fraudulent.
Broker/dealers other than Equity Planning have agreed to bear the risk of any
loss resulting from any unauthorized telephone redemption instruction from the
firm or its registered representatives. However, you would bear the risk of
loss resulting from instructions entered by an unauthorized third party that
the Funds and/or the Transfer Agent reasonably believe to be genuine. The
Telephone Redemption Privilege may be modified or terminated at any time on 60
days' notice to shareholders. In addition, during times of drastic economic or
market changes, the Telephone Redemption Privilege may be difficult to exercise
or may be temporarily suspended. In such event, a redemption may be effected by
written request by following the procedure outlined above.
Written Redemptions. If you elect not to use the telephone redemption or
telephone exchange privileges, you must submit your request in writing. If the
shares are being exchanged between accounts that are not identically
registered, the signature on such request must be guaranteed by an eligible
guarantor institution as defined by the Transfer Agent in accordance with its
signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
Account Reinstatement Privilege
You have a one time privilege of using redemption proceeds from Class A,
B, C and M Shares to purchase Class A Shares of any Phoenix Fund with no sales
charge (at net asset value next determined after the request for reinvestment
is made). For Federal income tax purposes, a redemption and reinvestment will
be treated as a sale and purchase of shares. Special rules may apply in
computing the amount of gain or loss in these situations. (See "Dividends,
Distributions and Taxes" for information on the Federal income tax treatment of
a disposition of shares.) A written request to reinstate your account must be
received by the Transfer Agent within 180 days of the redemption, accompanied
by payment for the shares (not in excess of the redemption value). Class B
shareholders who have had the contingent deferred sales charge waived through
participation in the Systematic Withdrawal Program are not eligible to use the
Reinstatement Privilege.
Redemption of Small Accounts
Due to the relatively high cost of maintaining small accounts, the Funds
reserve the right to redeem, at net asset value, the shares of any shareholder
whose account has a value, due to redemptions, of less than $200. Before the
Funds redeem these shares, the shareholder will be given notice that
22
<PAGE>
the value of the shares in the account is less than the minimum amount and will
be allowed 30 days to make an additional investment in an amount which will
increase the value of the account to at least $200.
Redemption in Kind
To the extent consistent with state and federal law, the Trust may make
payment of the redemption price either in cash or in kind. However, the Trust
has 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 Trust at the beginning
of such period. This election has been made pursuant to Rule 18f-1 under the
Investment Company Act of 1940 Act 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 a Portfolio. A
shareholder receiving such securities would incur brokerage costs when he sold
the securities.
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 Subchapter M of the Internal Revenue
Code (the "Code"). In addition, each Fund intends to distribute annually to
shareholders all or substantially all of its net investment income and net
realized capital gains, after utilization of any capital loss carryover. As a
result, each Fund will not be subject to Federal income tax on the net
investment income and net capital gains that it distributes. The discussion
below is based upon the assumption that each Fund will qualify as a RIC.
Each Fund intends to make distributions from net investment income
semi-annually, and intends to distribute net realized capital gains, if any, on
an annual basis.
Each Fund will be subject to a nondeductible 4% excise tax if it fails to
meet certain calendar year distribution requirements. In order to prevent
imposition of the excise tax, it may be necessary for the Funds to make
distributions more frequently than described in the previous paragraph.
Unless a shareholder elects to receive distributions in cash, dividends
and capital gain distributions will be paid in additional shares of the Funds
credited at the net asset value per share on the ex-date. Dividends and
distributions, whether received in cash or in additional shares of the Funds,
generally are subject to Federal income tax and may be subject to state, local,
and other taxes. Shareholders will be notified annually about the amount and
character of distributions made to them by the Funds.
Long-term capital gains, if any, distributed to shareholders and which are
designated by the Funds as capital gain distributions, are taxable to
shareholders as long-term capital gain distributions regardless of the length
of time shares of the Funds have been held by the shareholder. Distributions of
short-term capital gains and net investment income, if any, are taxable to
shareholders as ordinary income.
Dividends and distributions generally will be taxable to shareholders in
the taxable year in which they are received. However, dividends and
distributions declared by the Funds in October, November or December of any
calendar year, with a record date in such a month, and paid during the
following January, will be treated as if they were paid by the Funds and
received by shareholders on December 31 of the calendar year in which they were
declared.
A redemption or other disposition (including an exchange) of shares of the
Funds generally will result in the recognition of a taxable gain or loss, which
will be a long- or short-term capital gain or loss (assuming the shares were a
capital asset in the hands of the shareholder), depending upon a shareholder's
holding period for his or her shares. In addition, if shares of a Fund are
disposed of at a loss and are replaced (either through purchases or through
reinvestment of dividends) within a period commencing thirty days before and
ending thirty days after the disposition of such shares, the realized loss will
be disallowed and appropriate adjustments to the tax basis of the new shares
will be made. In addition, special rules may apply to determine the amount of
gain or loss realized on any exchange.
The foregoing is only a summary of some of the important tax
considerations generally affecting a Fund and its shareholders. In addition to
the Federal income tax consequences described above, which are applicable to
any investment in a Fund, there may be state or local tax considerations, and
estate tax considerations, applicable to the circumstances of a particular
investor. Also, legislation may be enacted in the future that could affect the
tax consequences described above. Investors are urged to consult their
attorneys or tax advisers regarding specific questions as to Federal, foreign,
state or local taxes. Foreign shareholders may be subject to U.S. Federal
income tax rules that differ from those described above. For more information
regarding distributions and taxes, see "Dividends, Distributions and Taxes" in
the Statement of Additional Information.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS regulations, the Funds may be required to withhold 31% of
all reportable payments including any taxable dividends, capital gain
distributions or share redemption proceeds for any account which does not have
a taxpayer identification number or social security number and certain required
certifications.
The Funds reserve the right to refuse to open an account for any person
failing to provide a taxpayer identification number along with the required
certifications.
Each Fund will send to its shareholders, within 31 days after the end of
the calendar year, information which is required by the Internal Revenue
Service for preparing federal income tax
23
<PAGE>
returns. Investors are urged to consult their attorney or tax adviser regarding
specific questions as to federal, foreign, state or local taxes.
ADDITIONAL INFORMATION
Description of Shares
The Trust was established on August 25, 1997 as a Massachusetts business
trust. The capitalization of the Trust consists solely of an unlimited number
of shares of beneficial interest. The Trust currently offers shares in
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 and M 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.
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.
Registration Statement
This Prospectus omits certain information included in the Statement of
Additional Information and Part C of the Registration Statement filed with the
Securities and Exchange Commission under the Securities Act of 1933 and the
1940 Act. A copy of the Registration Statement may be obtained from the
Securities and Exchange Commission in Washington, D.C.
24
<PAGE>
BACKUP WITHHOLDING INFORMATION
Step 1. Please make sure that the social security number or taxpayer
identification number (TIN) which appears on the Application complies
with the following guidelines:
<TABLE>
<CAPTION>
Account Type Give Social Security Number or Tax Identification Number of:
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Individual Individual
- -------------------------------------------------------------------------------------------------------------
Joint (or Joint Tenant) Owner who will be paying tax
- -------------------------------------------------------------------------------------------------------------
Uniform Gifts to Minors Minor
- -------------------------------------------------------------------------------------------------------------
Legal Guardian Ward, Minor or Incompetent
- -------------------------------------------------------------------------------------------------------------
Sole Proprietor Owner of Business (also provide owner's name)
- -------------------------------------------------------------------------------------------------------------
Trust, Estate, Pension Plan Trust Trust, Estate, Pension Plan Trust (not personal TIN of fiduciary)
- -------------------------------------------------------------------------------------------------------------
Corporation, Partnership,
Other Organization Corporation, Partnership, Other Organization
- -------------------------------------------------------------------------------------------------------------
Broker/Nominee Broker/Nominee
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Step 2. If you do not have a TIN, you must obtain Form SS-5 (Application for
Social Security Number) or Form SS-4 (Application for Employer
Identification Number) from your local Social Security or IRS office and
apply for one. Write "Applied For" in the space on the application.
Step 3. If you are one of the entities listed below, you are exempt from backup
withholding.
[bullet] A corporation
[bullet] Financial institution
[bullet] Section 501(a) exempt organization (IRA, Corporate Retirement
Plan, 403(b), Keogh)
[bullet] United States or any agency or instrumentality thereof
[bullet] A State, the District of Columbia, a possession of the United
States, or any subdivision or instrumentality thereof
[bullet] International organization or any agency or instrumentality
thereof
[bullet] Registered dealer in securities or commodities registered in
the U.S. or a possession of the U.S.
[bullet] Real estate investment trust
[bullet] Common trust fund operated by a bank under section 584(a)
[bullet] An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1)
[bullet] Regulated Investment Company
If you are in doubt as to whether you are exempt, please contact the Internal
Revenue Service.
Step 4. IRS Penalties--If you do not supply us with your TIN, you will be
subject to an IRS $50 penalty unless your failure is due to reasonable
cause and not willful neglect. If you fail to report interest, dividend
or patronage dividend income on your federal income tax return, you will
be treated as negligent and subject to an IRS 5% penalty tax on any
resulting underpayment of tax unless there is clear and convincing
evidence to the contrary. If you falsify information on this form or
make any other false statement resulting in no backup withholding on an
account which should be subject to a backup withholding, you may be
subject to an IRS $500 penalty and certain criminal penalties including
fines and imprisonment.
- -----------
This Prospectus sets forth concisely the information about the Phoenix
Investment Trust 97 (the "Trust") which you should know before investing.
Please read it carefully and retain it for future reference.
Phoenix Investment Trust 97 has filed with the Securities and Exchange
Commission a Statement of Additional Information about the Trust, dated May 19,
1998. The Statement contains more detailed information about the Trust and is
incorporated into this Prospectus by reference. You may obtain a free copy of
the Statement by writing the Trust c/o Phoenix Equity Planning Corporation, 100
Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200 or by
calling (800) 243-4361.
Financial information relating to the Trust is contained in the Semiannual
Report to Shareholders for the period ended February 28, 1998 and is
incorporated into the Statement of Additional Information by reference.
[recycle symbol]Printed on recycled paper using soybean ink
<PAGE>
Phoenix Funds
PO Box 2200
Enfield CT 06083-2200
[logo] PHOENIX
INVESTMENT PARTNERS
PXP 2053 (5/98)
<PAGE>
PHOENIX VALUE EQUITY FUND
PHOENIX SMALL CAP VALUE FUND
101 Munson Street
Greenfield, MA 01301
Statement of Additional Information
May 19, 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 Value Equity Fund and Phoenix Small Cap Value Fund, dated May 19, 1998
(the "Prospectus"), and should be read in conjunction with it. Such 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 ..................... 12
HOW TO REDEEM SHARES .......................... 12
DIVIDENDS, DISTRIBUTIONS AND TAXES ............ 13
TAX SHELTERED RETIREMENT PLANS ................ 14
THE DISTRIBUTOR ............................... 14
PLANS OF DISTRIBUTION ......................... 15
TRUSTEES AND OFFICERS ......................... 15
OTHER INFORMATION ............................. 23
</TABLE>
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PXP 2053B (5/98)
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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
Value Equity Fund and Phoenix Small Cap Value 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
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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
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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.
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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
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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, Class
C or Class M 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 and
M 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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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.
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, Class C or Class M 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 and M Shares' maximum sales charge of 4.75% and 3.50%, respectively, 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.
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
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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") 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 the Investment Adviser 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"). In addition to the Funds, PIC
also serves as investment adviser to The Phoenix Edge Series Fund (all Series
other than Phoenix Real Estate Securities Series and Aberdeen New Asia Series),
Phoenix Series Fund, Phoenix Multi-Portfolio Fund (other than the Phoenix Real
Estate Securities Portfolio), Phoenix Strategic Allocation Fund, Inc., Phoenix
Strategic Equity Series Fund (except Phoenix Equity Opportunities Fund),
Phoenix Duff & Phelps Institutional Mutual Funds (except Real Estate Equity
Securities Portfolio, Core Equity Portfolio and Enhanced Reserves Portfolio),
Phoenix Growth and Income Fund of Phoenix Equity Series Fund and as subadviser
to SunAmerica Series Trust among others. PIC also serves as Subadviser to the
Phoenix-Aberdeen New Asia Fund of Phoenix-Aberdeen Series Fund and the Aberdeen
New Asia Series of the Phoenix Edge Series Fund.
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, William R. Moyer and William J. Newman, 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
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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
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. 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
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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.
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 or M 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
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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.
Class M Shares
Class M Shares are currently closed to new investors. Class M Shares incur
a sales charge at the time of purchase but are not subject to any sales charge
when redeemed. Certain purchases of Class M Shares may qualify for reduced
initial sales charges as described in the Funds' Prospectus. Class M Shares are
subject to an ongoing distribution services fee of up to 0.50% of the Funds'
aggregate average daily net assets attributable to Class M Shares.
INVESTOR ACCOUNT SERVICES
The Funds offer combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange privileges
as described in the Funds' current Prospectus. Certain privileges may not be
available in connection with all classes. In most cases, changes to account
services may be accomplished over the phone. Inquiries regarding policies and
procedures relating to shareholder account services should be directed to
Shareholder Services at (800) 243-1574.
Exchanges. 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.
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.
12
<PAGE>
Redemptions by Class B and C shareholders will be subject to the
applicable deferred sales charge, if any.
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the
giving of not less than 30 days written notice to the shareholder mailed to the
address of record. During the 30-day period the shareholder has the right to
add to the account to bring its value to $200 or more. See the Funds' current
Prospectus for more information.
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.
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.
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
13
<PAGE>
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 sales charges in accordance with the commission table set forth in the
Prospectus. The Distributor may from time to time pay, from its own resources
or pursuant to the Plans of Distribution described below, a bonus or other
incentive to dealers (other than the Distributor) which employ a registered
representative who sells a minimum dollar amount of the shares of the Funds
during a specific period of time. Such bonus or other incentive may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and members of their
families to places within or without the United States or other bonuses such as
gift certificates or the cash equivalent of such bonuses. The Distributor may,
from time to time, reallow the entire portion of the sales charge which it
normally retains to individual selling dealers. However, such additional
reallowance generally will be made only when the selling dealer commits to
substantial marketing support such as internal wholesaling through dedicated
personnel, internal communications and mass mailings.
Equity Planning also acts as administrative agent of the Trust and as such
performs administrative, bookkeeping and pricing functions for the Funds. As
compensation for such services, Equity Planning is entitled to a fee, payable
monthly and based upon the average of the aggregate daily net asset values of
each Fund, at the following incremental annual rates:
<TABLE>
<S> <C>
First $100 million .05% subject to a minimum fee
$100 million to $300 million .04%
$300 million through $500 million .03%
Greater than $500 million .015%
</TABLE>
A minimum charge of $50,000 is applicable for each Fund. In addition,
Equity Planning is paid $12,000 for each class of shares beyond one.
14
<PAGE>
PLANS OF DISTRIBUTION
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," the "Class M 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, and up to 0.25% of the
average daily net assets of the Funds' Class M 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.
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.
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 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.
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>
15
<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>
16
<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>
17
<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-
55 East Monroe Street present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Suite 3600 Duff & Phelps Institutional Mutual Funds (1996-present).
Chicago, IL 60603 President and Chief Executive Officer, Duff & Phelps Utilities
Tax-Free Income Inc. (1995-present), Duff & Phelps Utilities
Income 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>
18
<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>
19
<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 $1,000 and $1,000 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. 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.
20
<PAGE>
For the Funds' current fiscal year, the Trustees will receive approximately
the following compensation:
<TABLE>
<CAPTION>
Total
Compensation
Pension or From Fund and
Aggregate Retirement Benefits Estimated Fund Complex
Compensation Accrued as Part Annual Benefits (13 Funds)
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
- ------------------------ -------------- --------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Robert Chesek $2,415 None None $40,250
E. Virgil Conway+ $3,065 for any for any $50,750
Harry Dalzell-Payne+ $2,705 Trustee Trustee $44,750
Francis E. Jeffries $2,250* $37,500
Leroy Keith, Jr. $2,415 $40,250
Philip R. McLoughlin+ $ 0 $ 0
Everett L. Morris+ $2,540* $42,000
James M. Oates+ $2,540 $42,000
Calvin Pedersen $ 0 $ 0
Herbert Roth, Jr.+ $3,230* $53,500
Richard E. Segerson $2,610 $43,500
Lowell P. Weicker, Jr. $2,700 $45,000
</TABLE>
Since the registrant has not yet completed its first full year since its
organization, the table above covers an estimated future payment for the period
from November 1, 1997 through the Funds' first fiscal year end August 31, 1998.
*This compensation (and the earnings thereon) paid to Messrs. Jeffries and
Roth, will be deferred pursuant to the Directors' Deferred Compensation Plan.
At April 30, 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 $82,041, $137,256 and
$140,068, 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 April 30, 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 April 27, 1998 with
respect to each person who owns of record or is known by the Registrant to own
of record or beneficially own 5% or more of any class of the Registrant's
equity securities.
<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 471,139.394 38.20%
56 Prospect St.
Hartford, CT 06103-2818
Smith Barney Inc. Class A 87,210.679 7.07%
388 Greenwich St.
New York, NY 10013-2339
MLPF&S For The Sole Class B 60,293.612 13.60%
Benefit of its Customers
ATTN: Fund Administration
4800 Deer Lake Dr. E 3rd Fl
Jacksonville, FL 32246-6484
Phoenix Home Life Class C 10,016.162 6.30%
56 Prospect St.
Hartford, CT 06103-2818
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Name of Shareholder Class Number of Shares Percent of Class
- -------------------------------- --------- ------------------ -----------------
<S> <C> <C> <C>
Painewebber For The Benefit of Class C 10,720.271 6.74%
Catherine J Smith Revocable
Trust of 1997
Catherine J Smith Trustee
150 Beacon St.
Milton, MA 02186-1005
Donaldson Lufkin Jenrette Class C 11,727.842 7.37%
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-2052
MLPF&S For the Sole Class C 53,134.000 33.41%
Benefit of its Customers
ATTN: Fund Administration
4800 Deer Lake Dr. E 3rd Fl
Jacksonville, FL 32246-6484
Phoenix Home Life Class M 10,014.127 82.16%
56 Prospect St.
Hartford, CT 06103-2818
State Street Bank & Trust Co. Class M 1,421.654 11.66%
Cust For The IRA Rollover Of
Lawrence E Agle
24 Sherman Ct.
Fairfax, CA 94930-1322
Small Cap Value Fund
Phoenix Home Life Class A 471,505.506 32.16%
56 Prospect St.
Hartford, CT 06103-2818
Sales Marketing Services Inc. Class A 79,452.791 5.42%
PO Box 516
Metairie, LA 70004-0516
MLPF&S For The Sole Class B 68,052.981 15.06%
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 72,585.678 34.20%
Benefit of its Customers
ATTN: Fund Administration
4800 Deer Lake Dr. E 3rd Fl
Jacksonville, FL 32246-6484
Phoenix Home Life Class M 10,025.000 74.65%
56 Prospect St.
Hartford, CT 06103-2818
Donaldson Lufkin Jenrette Class M 1,748.424 13.02%
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-2052
</TABLE>
22
<PAGE>
OTHER INFORMATION
The Trust's Prospectus and this Statement of Additional Information omit
certain information contained in the registration statement filed with the
Securities and Exchange Commission which may be obtained from the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549, upon
payment of the fee prescribed by the rules and regulations promulgated by the
Commission.
Independent Accountants
Price Waterhouse LLP, 160 Federal Street, Boston, MA 02110, has been
selected as the independent accountants for the Funds. Price Waterhouse 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 $19.25 for each
designated daily dividend shareholder account and $14.95 for each designated
non-daily dividend 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, and is available without charge upon request.
Financial Statements
Financial information relating to the Trust is contained in the Semiannual
Reports to Shareholders for the period ended February 28, 1998 and is available
by calling Equity Planning at (800) 243-4361, or by writing to Equity Planning
at 100 Bright Meadow Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200. The
Semiannual Report is incorporated into this Statement of Additional Information
by reference. A copy of the Semiannual Report must precede or accompany this
Statement of Additional Information.
23
<PAGE>
Phoenix Value Equity Fund
- --------------------------------------------------------------------------------
INVESTMENTS AT FEBRUARY 28, 1998
(Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
-------------- --------------
<S> <C> <C>
COMMON STOCKS--94.2%
Aerospace/Defense--3.5%
Boeing Co. ................................... 10,000 $ 542,500
-----------
Air Freight--1.4%
FDX Corp. (b) ................................ 3,400 216,538
-----------
Banks (Major Regional)--7.4%
AmSouth Bancorporation ....................... 1,900 106,756
Fleet Financial Group, Inc. .................. 2,300 181,269
KeyCorp. ..................................... 2,200 154,137
NationsBank Corp. ............................ 2,200 150,700
PNC Bank Corp. ............................... 2,800 155,400
Wells Fargo & Co. ............................ 1,300 418,600
-----------
1,166,862
-----------
Banks (Money Center)--9.9%
BankAmerica Corp. ............................ 1,700 131,750
Bankers Trust New York Corp. ................. 2,400 283,800
Chase Manhattan Corp. ........................ 2,600 322,563
Citicorp ..................................... 4,300 569,750
Morgan (J.P.) & Co., Inc. .................... 2,000 239,000
-----------
1,546,863
-----------
Beverages (Alcoholic)--1.4%
Anheuser-Busch Companies, Inc. ............... 4,600 215,625
-----------
Chemicals--0.8%
Praxair, Inc. ................................ 2,500 119,531
-----------
Communications Equipment--1.8%
Motorola, Inc. ............................... 5,100 284,325
-----------
Computers (Hardware)--1.8%
Hewlett Packard Co. .......................... 1,600 107,200
Sun Microsystems, Inc. (b) ................... 3,600 171,450
-----------
278,650
-----------
Computers (Software & Services)--1.5%
Oracle Corp. (b) ............................. 9,300 229,012
-----------
Electrical Equipment--2.5%
Honeywell, Inc. .............................. 5,000 396,250
-----------
Electronics (Defense)--1.5%
Raytheon Co. Class B ......................... 4,100 241,131
-----------
Electronics (Semiconductors)--2.3%
Intel Corp. .................................. 4,000 358,750
-----------
Financial (Diversified)--10.8%
American Express Co. ......................... 1,700 153,107
FMAC ......................................... 10,100 477,225
FNMA ......................................... 8,500 542,406
SLM Holding Corp. ............................ 12,500 516,406
-----------
1,689,144
-----------
Footwear--2.3%
Nike, Inc. Class B ........................... 8,300 364,163
-----------
Health Care (Diversified)--8.2%
American Home Products Corp. ................. 2,500 234,375
Bristol-Myers Squibb Co. ..................... 3,700 370,694
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------- --------------
<S> <C> <C>
Foundation Health Systems, Inc.
Class A (b) ................................ 11,000 $ 304,562
Johnson & Johnson ............................ 5,100 385,050
-----------
1,294,681
-----------
Health Care (Drugs-Major Pharmaceuticals)--4.0%
Pfizer, Inc. ................................. 5,000 442,500
Pharmacia & Upjohn, Inc. ..................... 4,700 185,944
-----------
628,444
-----------
Health Care (Medical Products & Supplies)--0.5%
Baxter International, Inc. ................... 1,500 84,937
-----------
Insurance (Life/Health)--1.7%
Aetna, Inc. .................................. 3,100 270,863
-----------
Insurance (Multi-Line)--2.5%
American International Group, Inc. ........... 3,300 396,619
-----------
Insurance (Property-Casualty)--3.4%
Allstate Corp. ............................... 1,000 93,250
Chubb Corp. .................................. 1,800 143,662
Travelers Property Casualty Corp. Class A..... 7,200 295,200
-----------
532,112
-----------
Investment Banking/Brokerage--2.1%
Merrill Lynch & Co., Inc. .................... 4,500 322,031
-----------
Machinery (Diversified)--1.5%
Caterpillar, Inc. ............................ 4,400 240,350
-----------
Manufacturing (Diversified)--1.8%
Illinois Tool Works, Inc. .................... 4,800 287,700
-----------
Office Equipment & Supplies--1.5%
Pitney Bowes, Inc. ........................... 5,000 234,375
-----------
Photography/Imaging--1.1%
Xerox Corp. .................................. 1,900 168,506
-----------
Publishing--1.3%
Knight-Ridder, Inc. .......................... 3,600 202,500
-----------
Restaurants--3.2%
McDonald's Corp. ............................. 9,200 503,700
-----------
Retail (General Merchandise)--2.8%
Dayton Hudson Corp. .......................... 5,700 440,681
-----------
Services (Data Processing)--1.5%
First Data Corp. ............................. 7,000 238,000
-----------
Telephone--4.8%
BellSouth Corp. .............................. 4,200 256,200
GTE Corp. .................................... 6,300 340,988
SBC Communications, Inc. ..................... 2,000 151,250
-----------
748,438
-----------
Tobacco--3.4%
Fortune Brands, Inc. ......................... 4,800 190,500
Philip Morris Companies, Inc. ................ 8,000 347,500
-----------
538,000
-----------
TOTAL COMMON STOCKS
(Identified cost $13,675,644).................................. 14,781,281
-----------
</TABLE>
See Notes to Financial Statements
2
<PAGE>
Phoenix Value Equity Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<S> <C> <C>
FOREIGN COMMON STOCKS--4.4%
Foods--3.2%
Nestle SA ADR (Switzerland) ............... 3,400 $ 297,697
Unilever NV (Netherlands) ................. 3,100 199,369
-----------
497,066
-----------
Oil (International Integrated)--1.2%
Royal Dutch Petroleum Co. ADR NY
Registered Shares (Netherlands) ......... 3,600 195,525
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
-----------
<S> <C>
TOTAL FOREIGN COMMON STOCKS
(Identified cost $635,694) ......................... $ 692,591
-----------
TOTAL LONG-TERM INVESTMENTS--98.6%
(Identified cost $14,311,338) ...................... 15,473,872
-----------
TOTAL INVESTMENTS--98.6%
(Identified cost $14,311,338) ...................... 15,473,872(a)
Cash and receivables, less liabilities--1.4% ....... 219,912
-----------
NET ASSETS--100% ..................................... $15,693,784
===========
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $1,269,497 and gross
depreciation of $106,963 for federal income tax purposes. At February 28,
1998, the aggregate cost of securities for federal income tax purposes was
$14,311,338.
(b) Non-income producing.
See Notes to Financial Statements
3
<PAGE>
Phoenix Value Equity Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment securities at value
(Identified cost $14,311,338) $15,473,872
Cash 52,359
Receivables
Fund shares sold 235,874
Investment securities sold 138,651
Receivable from adviser 21,021
Dividends and interest 19,909
Prepaid expenses 52,182
-----------
Total assets 15,993,868
-----------
Liabilities
Payables
Investment securities purchased 232,460
Trustees' fee 6,854
Transfer agent fee 6,781
Financial agent fee 6,597
Distribution fee 5,577
Fund shares repurchased 1,856
Accrued expenses 39,959
-----------
Total liabilities 300,084
-----------
Net Assets $15,693,784
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $14,484,353
Undistributed net investment loss (12,889)
Accumulated net realized gain 59,786
Net unrealized appreciation 1,162,534
-----------
Net Assets $15,693,784
===========
Class A shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $10,085,721) 927,464
Net asset value per share $10.87
Offering price per share $10.87/(1-4.75%) $11.41
Class B shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $4,079,387) 375,903
Net asset value and offering price per share $10.85
Class C shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $1,396,086) 128,571
Net asset value and offering price per share $10.86
Class M shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $132,590) 12,189
Net asset value per share $10.88
Offering price per share $10.88/(1-3.50%) $11.27
</TABLE>
STATEMENT OF OPERATIONS
FROM INCEPTION NOVEMBER 5, 1997
TO FEBRUARY 28, 1998
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Dividends $ 56,613
Interest 6,773
----------
Total investment income 63,386
----------
Expenses
Financial agent fee 27,332
Investment advisory fee 26,053
Distribution fee--Class A 5,967
Distribution fee--Class B 7,227
Distribution fee--Class C 3,278
Distribution fee--Class M 183
Registration 39,431
Transfer agent 25,127
Custodian 11,464
Printing 7,314
Professional 7,226
Trustees 6,854
Miscellaneous 7,802
----------
Total expenses 175,258
Less expenses borne by investment adviser (123,866)
----------
Net expenses 51,392
----------
Net investment income 11,994
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 59,786
Net change in unrealized appreciation (depreciation)
on investments 1,162,534
----------
Net gain on investments 1,222,320
----------
Net increase in net assets resulting from
operations $1,234,314
==========
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Phoenix Value Equity Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
November 5, 1997 to
February 28, 1998
(Unaudited)
--------------------
<S> <C>
From Operations
Net investment income $ 11,994
Net realized gain 59,786
Net change in unrealized appreciation (depreciation) 1,162,534
-----------
Increase in net assets resulting from operations 1,234,314
-----------
From Distributions to Shareholders
Net investment income--Class A (18,161)
Net investment income--Class B (4,549)
Net investment income--Class C (2,012)
Net investment income--Class M (161)
-----------
Decrease in net assets from distributions to shareholders (24,883)
-----------
From Share Transactions
Class A
Proceeds from sales of shares (932,560 shares) 9,338,803
Net asset value of shares issued from reinvestment of distributions (1,823 shares) 18,045
Cost of shares repurchased (6,919 shares) (72,938)
-----------
Total 9,283,910
-----------
Class B
Proceeds from sales of shares (379,965 shares) 3,840,051
Net asset value of shares issued from reinvestment of distributions (370 shares) 3,662
Cost of shares repurchased (4,432 shares) (45,834)
-----------
Total 3,797,879
-----------
Class C
Proceeds from sales of shares (147,939 shares) 1,474,850
Net asset value of shares issued from reinvestment of distributions (108 shares) 1,073
Cost of shares repurchased (19,476 shares) (195,500)
-----------
Total 1,280,423
-----------
Class M
Proceeds from sales of shares (12,173 shares) 121,980
Net asset value of shares issued from reinvestment of distributions (16 shares) 161
Cost of shares repurchased (0 shares) --
-----------
Total 122,141
-----------
Increase in net assets from share transactions 14,484,353
-----------
Net increase in net assets 15,693,784
Net Assets
Beginning of period 0
-----------
End of period (including undistributed net investment loss of ($12,889)) $15,693,784
===========
</TABLE>
See Notes to Financial Statements
5
<PAGE>
Phoenix Value Equity Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
---------------
From Inception
11/5/97 to
2/28/98
(Unaudited)
---------------
<S> <C>
Net asset value, beginning of period $10.00
Income from investment operations
Net investment income (loss) 0.02(4)(5)
Net realized and unrealized gain 0.87
-------
Total from investment operations 0.89
-------
Less distributions
Dividends from net investment income (0.02)
-------
Total distributions (0.02)
-------
Change in net asset value 0.87
-------
Net asset value, end of period $10.87
=======
Total return(1) 8.96%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $10,086
Ratio to average net assets of:
Operating expenses 1.25%(2)
Net investment income (loss) 0.61%(2)
Portfolio turnover 31%(3)
Average commission rate paid(6) $0.0326
<CAPTION>
Class B Class C Class M
-------------- -------------- --------------
From Inception From Inception From Inception
11/5/97 to 11/5/97 to 11/5/97 to
2/28/98 2/28/98 2/28/98
(Unaudited) (Unaudited) (Unaudited)
-------------- -------------- --------------
<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) (0.01)(4)(5) 0.01(4)(5)
Net realized and unrealized gain 0.88 0.89 0.88
------- -------- -------
Total from investment operations 0.87 0.88 0.89
------- -------- -------
Less distributions
Dividends from net investment income ( 0.02) (0.02) (0.01)
------- -------- -------
Total distributions ( 0.02) (0.02) (0.01)
------- -------- -------
Change in net asset value 0.85 0.86 0.88
------- -------- -------
Net asset value, end of period $10.85 $10.86 $10.88
======= ======== =======
Total return(1) 8.72%(3) 8.78%(3) 8.95%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $4,079 $1,396 $133
Ratio to average net assets of:
Operating expenses 2.00%(2) 2.00%(2) 1.50%(2)
Net investment income (loss) (0.28%)(2) (0.28%)(2) 0.44%(2)
Portfolio turnover 31%(3) 31%(3) 31%(3)
Average commission rate paid(6) $0.0326 $0.0326 $0.0326
</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
$0.11, $0.11, $0.11 and $0.11, respectively.
(6) A fund is required to disclose its average commission rate per share for
securities trades on which commissions are charged. This rate generally does
not reflect mark-ups, mark-downs, or spreads on shares traded on a
principal bass.
See Notes to Financial Statements
6
<PAGE>
Phoenix Small Cap Value Fund
- --------------------------------------------------------------------------------
INVESTMENTS AT FEBRUARY 28, 1998
(Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCKS--89.5%
Aerospace/Defense--2.0%
Gulfstream Aerospace Corp. (b) ......................... 9,000 $ 364,500
----------
Airlines--2.5%
America West Holdings Corp. (b) ........................ 18,200 451,588
----------
Auto Parts & Equipment--1.7%
Breed Technologies, Inc. ............................... 6,000 130,500
Superior Industries International, Inc. ................ 6,000 186,375
----------
316,875
----------
Banks (Major Regional)--16.2%
Ambassador Bank of the Commonwealth (b)................. 4,000 137,000
Associated Banc-Corp ................................... 900 47,138
BancorpSouth, Inc. ..................................... 2,000 87,250
Bank Plus Corp. (b) .................................... 20,000 295,000
Charter One Financial, Inc. ............................ 3,000 181,781
Dime Bancorp, Inc. ..................................... 5,300 161,650
First American Corp. ................................... 1,900 90,962
First Midwest Bancorp, Inc. ............................ 4,800 211,800
FirstMerit Corp. ....................................... 4,400 129,525
Old National Bancorp ................................... 3,200 149,600
ONBANCorp, Inc. ........................................ 3,000 217,875
People's Bank .......................................... 5,000 187,812
St. Paul Bancorp, Inc. ................................. 5,500 145,750
Sterling Bancorp ....................................... 6,000 144,750
Trustmark Corp. ........................................ 7,500 329,063
United Bankshares, Inc. ................................ 2,900 147,356
Washington Federal, Inc. ............................... 4,400 121,550
Whitney Holding Corp. .................................. 2,700 170,438
----------
2,956,300
----------
Biotechnology--1.7%
ICOS Corp. (b) ......................................... 21,800 306,563
----------
Broadcasting (Television, Radio, & Cable)--1.8%
Jones Intercable, Inc. (b) ............................. 20,000 327,500
----------
Building Materials--8.1%
Lennar Corp. ........................................... 22,000 614,625
Toll Brothers, Inc. (b) ................................ 19,200 576,000
Webb (Del E.) Corp. .................................... 9,000 288,000
----------
1,478,625
----------
Chemicals (Specialty)--1.6%
Fuller (H.B.) Co. ...................................... 5,000 284,375
----------
Commercial Finance--4.4%
First Indiana Corp. .................................... 4,000 117,000
Fremont General Corp. .................................. 9,500 557,531
National Commerce Bancorporation ....................... 3,400 127,925
----------
802,456
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
Communications Equipment--0.7%
Scientific-Atlanta, Inc. ............................... 7,000 $ 122,500
----------
Computers (Peripherals)--0.7%
At Home Corp. Series A (b) ............................. 4,000 136,500
----------
Computers (Software &
Services)--1.0%
Walker Interactive Systems (b) ......................... 11,000 186,313
----------
Containers & Packaging (Paper)--1.1%
Shorewood Packaging Corp. (b) .......................... 8,200 200,900
----------
Electronics (Component
Distributors)--1.8%
CHS Electronics, Inc. (b) .............................. 16,000 330,000
----------
Electronics (Instrumentation)--0.7%
Iomega Corp. (b) ....................................... 6,000 54,750
VLSI Technology, Inc. (b) .............................. 3,500 67,594
----------
122,344
----------
Financial (Diversified)--1.8%
Advest Group, Inc. ..................................... 3,600 89,775
Astoria Financial Corp. ................................ 2,400 134,100
Finet Holdings Corp. (b) ............................... 25,000 93,750
----------
317,625
----------
Foods--0.1%
Cal-Maine Foods, Inc. .................................. 4,000 25,500
----------
Footwear--0.4%
Brown Group, Inc. ...................................... 5,200 77,350
----------
Hardware & Tools--0.5%
Starrett (L.S.) Co. Class A ............................ 2,200 88,275
----------
Health Care (Medical Products &
Supplies)--1.8%
Alaris Medical, Inc. (b) ............................... 45,000 244,687
Technical Chemicals & Products, Inc. (b) ............... 8,000 77,000
----------
321,687
----------
Insurance (Multi-Line)--6.9%
Horace Mann Educators Corp. ............................ 17,000 603,500
Lawyers Title Corp. .................................... 12,500 545,312
Penncorp Financial Group, Inc. ......................... 3,200 111,200
----------
1,260,012
----------
</TABLE>
See Notes to Financial Statements
8
<PAGE>
Phoenix Small Cap Value Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C>
Insurance (Property-Casualty)--3.9%
Commerce Group, Inc. ........................ 13,500 $ 472,500
Selective Insurance Group, Inc. ............. 8,500 233,219
-----------
705,719
-----------
Investment Banking/Brokerage--2.6%
EVEREN Capital Corp. ........................ 5,000 213,125
McDonald & Company Investments .............. 10,200 255,000
-----------
468,125
-----------
Iron & Steel--1.5%
Quanex Corp. ................................ 8,500 281,562
-----------
Machinery (Diversified)--2.5%
Blount International, Inc. Class A .......... 9,200 255,875
Stewart & Stevenson Services, Inc. .......... 8,000 195,500
-----------
451,375
-----------
Manufacturing (Diversified)--2.0%
Furon Co. ................................... 17,500 368,594
-----------
Manufacturing (Specialized)--0.9%
Sturm, Ruger & Co., Inc. .................... 8,000 161,500
-----------
Metals Mining--1.5%
AK Steel Holding Corp. ...................... 6,700 125,206
Titanium Metals Corp. (b) ................... 4,800 144,600
-----------
269,806
-----------
Professional Services--4.0%
Valassis Communications, Inc. (b) ........... 10,500 400,312
Wackenhut Corp. Class A ..................... 14,200 332,812
-----------
733,124
-----------
Publishing--2.7%
Houghton Mifflin Co. ........................ 5,000 158,750
Young Broadcasting Corp. Class A (b) ........ 7,600 336,300
-----------
495,050
-----------
Railroads--0.8%
Railtex, Inc. (b) ........................... 9,000 146,250
-----------
REITS--2.3%
First Union Real Estate Investments ......... 8,000 94,500
Hospitality Properties Trust ................ 5,000 175,000
Winston Hotels, Inc. ........................ 12,000 158,250
-----------
427,750
-----------
Retail (Building Supplies)--1.9%
Sherwin-Williams Co. ........................ 10,500 351,094
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C>
Retail (General Merchandise)--1.3%
Heilig-Meyers Co. ........................... 15,000 $ 232,500
-----------
Retail (Specialty)--2.2%
Claire's Stores, Inc. ....................... 22,000 396,000
-----------
Savings & Loan Companies--1.5%
Downey Financial Corp. ...................... 2,800 81,900
FirstFed Financial Corp. (b) ................ 3,000 121,125
Glacier Bancorp, Inc. ....................... 2,200 63,250
-----------
266,275
-----------
Services (Advertising/Marketing)--0.4%
ACNielsen Corp. (b) ......................... 3,000 75,000
-----------
TOTAL COMMON STOCKS
(Identified cost $14,992,954).............................. 16,307,512
-----------
FOREIGN COMMON STOCKS--0.2%
Financial (Diversified)--0.2%
London Pacific Group Ltd. Sponsored ADR
(United Kingdom) .......................... 2,000 25,000
-----------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $24,830).................................. 25,000
-----------
UNIT INVESTMENT TRUSTS--5.1%
DIAMONDS Trust Series I (b) ................. 3,000 257,015
S&P 500 Depositary Receipts ................. 5,000 525,313
S&P 400 Mid-Cap Depositary Receipts ......... 2,200 149,497
-----------
931,825
-----------
TOTAL UNIT INVESTMENT TRUSTS
(Identified cost $874,453)................................. 931,825
-----------
TOTAL LONG-TERM INVESTMENTS--94.8%
(Identified cost $15,892,237).............................. 17,264,337
-----------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000)
---------- ---------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--3.6%
Commercial Paper--3.6%
Koch Industries, Inc. 5.67%,
3/2/98 ................... A-1+ $660 659,896
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $659,896)............................. 659,896
-----------
TOTAL INVESTMENTS--98.4%
(Identified cost $16,552,133).......................... 17,924,233(a)
Cash and receivables, less liabilities--1.6% .......... 292,504
-----------
NET ASSETS--100.0% ...................................... $18,216,737
===========
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $1,713,785 and gross
depreciation of $341,685 for federal income tax purposes. At February 28,
1998, the aggregate cost of securities for federal income tax purposes was
$16,552,133.
(b) Non-income producing.
See Notes to Financial Statements
9
<PAGE>
Phoenix Small Cap Value Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
(Unaudited)
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $16,552,133) $17,924,233
Cash 23,563
Receivables
Fund shares sold 347,284
Investment securities sold 315.118
Receivable from adviser 17,669
Dividends and interest 10,679
Prepaid expenses 55,527
------------
Total assets 18,694,073
------------
Liabilities
Payables
Investment securities purchased 377,258
Fund shares repurchased 44,673
Financial agent fee 6,597
Transfer agent fee 6,371
Trustees' fee 5,884
Distribution fee 5,660
Accrued expenses 30,893
------------
Total liabilities 477,336
------------
Net Assets $18,216,737
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $16,987,672
Undistributed net investment loss (24,843)
Accumulated net realized loss (118,192)
Net unrealized appreciation 1,372,100
------------
Net Assets $18,216,737
============
Class A shares of beneficial interest outstanding, $1 par
value, unlimited authorization (Net Assets $12,868,535) 1,188,159
Net asset value per share $10.83
Offering price per share $10.83/(1-4.75%) $11.37
Class B shares of beneficial interest outstanding, $1 par
value, unlimited authorization (Net Assets $3,460,050) 319,978
Net asset value and offering price per share $10.81
Class C shares of beneficial interest outstanding, $1 par
value, unlimited authorization (Net Assets $1,740,310) 160,927
Net asset value and offering price per share $10.81
Class M shares of beneficial interest outstanding, $1 par
value, unlimited authorization (Net Assets $147,842) 13,647
Net asset value per share $10.83
Offering price per share $10.83/(1-3.50%) $11.22
</TABLE>
STATEMENT OF OPERATIONS
FROM INCEPTION NOVEMBER 20, 1997
TO FEBRUARY 28, 1998
(Unaudited)
<TABLE>
<S> <C>
Investment income
Dividends $ 42,496
Interest 16,478
----------
Total investment income 58,974
----------
Expenses
Investment advisory fee 29,544
Financial agent fee 23,562
Distribution fee--Class A 6,352
Distribution fee--Class B 4,544
Distribution fee--Class C 2,547
Distribution fee--Class M 165
Registration 30,797
Transfer agent 24,714
Custodian 9,843
Printing 6,279
Professional 6,204
Trustees 5,884
Miscellaneous 6,985
----------
Total expenses 157,420
Less expenses borne by investment adviser (106,061)
----------
Net expenses 51,359
----------
Net investment income 7,615
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized loss on securities (118,192)
Net change in unrealized appreciation (depreciation)
on investments 1,372,100
----------
Net gain on investments 1,253,908
----------
Net increase in net assets resulting from
operations $1,261,523
==========
</TABLE>
See Notes to Financial Statements
10
<PAGE>
Phoenix Small Cap Value Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
November 20, 1997 to
February 28, 1998
(Unaudited)
---------------------
<S> <C>
From Operations
Net investment income $ 7,615
Net realized loss (118,192)
Net change in unrealized appreciation (depreciation) 1,372,100
-----------
Increase in net assets resulting from operations 1,261,523
-----------
From Distributions to Shareholders
Net investment income--Class A (27,475)
Net investment income--Class B (2,932)
Net investment income--Class C (1,800)
Net investment income--Class M (251)
-----------
Decrease in net assets from distributions to shareholders (32,458)
-----------
From Share Transactions
Class A
Proceeds from sales of shares (1,208,555 shares) 12,191,923
Net asset value of shares issued from reinvestment of distributions (2,693 shares) 26,901
Cost of shares repurchased (23,089 shares) (241,166)
-----------
Total 11,977,658
-----------
Class B
Proceeds from sales of shares (322,600 shares) 3,272,177
Net asset value of shares issued from reinvestment of distributions (224 shares) 2,235
Cost of shares repurchased (2,846 shares) (29,504)
-----------
Total 3,244,908
-----------
Class C
Proceeds from sales of shares (160,825 shares) 1,627,092
Net asset value of shares issued from reinvestment of distributions (102 shares) 1,015
Cost of shares repurchased (0 shares) --
-----------
Total 1,628,107
-----------
Class M
Proceeds from sales of shares (13,622 shares) 136,750
Net asset value of shares issued from reinvestment of distributions (25 shares) 249
Cost of shares repurchased (0 shares) --
-----------
Total 136,999
-----------
Increase in net assets from share transactions 16,987,672
-----------
Net increase in net assets 18,216,737
Net Assets
Beginning of period 0
-----------
End of period (including undistributed net investment loss of ($24,843)) $18,216,737
===========
</TABLE>
See Notes to Financial Statements
11
<PAGE>
Phoenix Small Cap Value Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
--------------
From Inception
11/20/97 to
2/28/98
(Unaudited)
--------------
<S> <C>
Net asset value, beginning of period $10.00
Income from investment operations
Net investment income (loss) 0.01(4)(5)
Net realized and unrealized gain 0.85
-------
Total from investment operations 0.86
-------
Less distributions
Dividends from net investment income (0.03)
-------
Total distributions (0.03)
-------
Change in net asset value 0.83
-------
Net asset value, end of period $10.83
=======
Total return(1) 8.45%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $12,869
Ratio to average net assets of:
Operating expenses 1.40%(2)
Net investment income 0.44%(2)
Portfolio turnover 38%(3)
Average commission rate paid(6) $0.0377
<CAPTION>
Class B Class C Class M
-------------- -------------- --------------
From Inception From Inception From Inception
11/20/97 to 11/20/97 to 11/20/97 to
2/28/98 2/28/98 2/28/98
(Unaudited) (Unaudited) (Unaudited)
-------------- -------------- --------------
<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) (0.01)(4)(5) 0.01(4)(5)
Net realized and unrealized gain 0.85 0.85 0.85
------- ------- -------
Total from investment operations 0.84 0.84 0.86
------- ------- -------
Less distributions
Dividends from net investment income (0.03) (0.03) (0.03)
------- ------- -------
Total distributions (0.03) (0.03) (0.03)
------- ------- -------
Change in net asset value 0.81 0.81 0.83
------- ------- -------
Net asset value, end of period $10.81 $10.81 $10.83
======= ======= =======
Total return(1) 8.21%(3) 8.18%(3) 8.37%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $3,460 $1,740 $148
Ratio to average net assets of:
Operating expenses 2.15%(2) 2.15%(2) 1.65%(2)
Net investment income (0.53%)(2) (0.50%)(2) 0.25%(2)
Portfolio turnover 38%(3) 38%(3) 38%(3)
Average commission rate paid(6) $0.0377 $0.0377 $0.0377
</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
$0.09, $0.09, $0.09 and $0.09, respectively.
(6) A fund is required to disclose its average commission rate per share for
securities trades on which commissions are charged. This rate generally
does not reflect mark-ups, mark-downs, or spreads on shares traded on a
principal basis.
See Notes to Financial Statements
12
<PAGE>
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
February 28, 1998 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix Investment Trust 97 (the "Trust") is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as a diversified, open-end management investment company
whose shares are offered in two separate Series, each a "Fund". Each Fund has
distinct investment objectives.
Phoenix Value Equity Fund's primary investment objective is to seek
long-term capital appreciation and its secondary objective is to seek current
income by investing in a diversified portfolio of common stocks.
Phoenix Small Cap Value Fund seeks long-term capital appreciation.
Each Fund offers Class A, Class B, Class C and Class M shares. Class A
shares are sold with the front-end sales charge of up to 4.75%. Class B shares
are sold with a contingent deferred sales charge which declines from 5% to zero
depending on the period of time the shares are held. Class C shares are sold
with a 1% contingent deferred sales charge if redeemed within one year of
purchase. Class M shares are sold with a front-end sales charge of up to 3.50%.
All classes of shares have identical voting, dividend, liquidation and other
rights and the same terms and conditions, except that each class bears
different distribution expenses and has exclusive voting rights with respect to
its distribution plan. Income and expenses of each Fund are borne pro rata by
the holders of all classes of shares, except that each class bears distribution
expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. Security valuation:
Equity securities are valued at the last sale price, or if there had been
no sale that day, at the last bid price. Short-term investments having a
remaining maturity of 60 days or less are valued at amortized cost which
approximates market. All other securities and assets are valued at fair value
as determined in good faith by or under the direction of the Trustees.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date or, in the case of certain foreign securities, as soon as the Fund is
notified. Realized gains and losses are determined on the identified cost
basis.
C. Income taxes:
Each of the Funds is treated as a separate taxable entity. It is the
policy of each Fund in the Trust to comply with the requirements of the
Internal Revenue Code (the "Code"), applicable to regulated investment
companies, and to distribute all of its taxable and tax-exempt income to its
shareholders. In addition, each Fund intends to distribute an amount sufficient
to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision for federal income taxes or excise taxes has been made.
D. Distributions to shareholders:
Distributions are recorded by each Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, foreign
currency gain/loss, partnerships, operating losses and losses deferred due to
wash sales and excise tax regulations. Permanent book and tax basis differences
relating to shareholder distributions will result in reclassifications to paid
in capital.
E. Foreign currency translation:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at
the trade date. The gain or loss resulting from a change in currency exchange
rates between the trade and settlement dates of a portfolio transaction is
treated as a gain or loss on foreign currency. Likewise, the gain or loss
resulting from a change in currency exchange rates between the date income is
accrued and paid is treated as a gain or loss on foreign currency. The Trust
does not separate that portion of the results of operations arising from
changes in exchange rates and that portion arising from changes in the market
prices of securities.
F. Forward currency contracts:
Each Fund may enter into forward currency contracts in conjunction with
the planned purchase or sale of foreign denominated securities in order to
hedge the U.S. dollar cost or proceeds. Forward currency contracts involve, to
varying degrees, elements of market risk in excess of the amount recognized in
the statement of assets and liabilities. Risks arise from the possible
movements in foreign
13
<PAGE>
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
February 28, 1998 (Unaudited) (Continued)
exchange rates or if the counterparty does not perform under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded directly between currency traders and
their customers. The contract is marked-to-market daily and the change in
market value is recorded by each Fund as an unrealized gain (or loss). When the
contract is closed or offset with the same counterparty, the Fund records a
realized gain (or loss) equal to the change in the value of the contract when
it was opened and the value at the time it was closed or offset.
G. Expenses:
Expenses incurred by the Trust with respect to more than one Fund are
allocated in proportion to the net assets of each Fund, except where allocation
of direct expense to each Fund or an alternative allocation method can be more
fairly made.
H. Repurchase agreements:
A repurchase agreement is a transaction where a Fund acquires a security
for cash and obtains a simultaneous commitment from the seller to repurchase
the security at an agreed upon price and date. Each Fund, through its
custodian, takes possession of securities collateralizing the repurchase
agreement. The collateral is marked-to-market daily to ensure that the market
value of the underlying assets remains sufficient to protect the Fund in the
event of default by the seller. If the seller defaults and the value of the
collateral declines, or, if the seller enters insolvency proceedings,
realization of collateral may be delayed or limited.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, the Adviser, Phoenix
Investment Counsel, Inc., an indirect majority-owned subsidiary of Phoenix Home
Life Mutual Insurance Company ("PHL"), is entitled to a fee based upon the
following annual rates as a percentage of the average daily net assets of each
separate Fund:
<TABLE>
<CAPTION>
1st $1 $1-2 $2+
Fund Billion Billion Billion
- ---------------------- --------- --------- ----------
<S> <C> <C> <C>
Value Equity Fund 0.75% 0.70% 0.65%
Small Cap Value Fund 0.90 0.85 0.80
</TABLE>
The Adviser has voluntarily agreed to assume total operating expenses of
each Fund excluding interest, taxes, brokerage fees, commissions and
extraordinary expenses, until August 31, 1998, 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 Class M
Shares Shares Shares Shares
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Value Equity Fund 1.25% 2.00% 2.00% 1.50%
Small Cap Value Fund 1.40 2.15 2.15 1.65
</TABLE>
As Distributor of the Trust's shares, Phoenix Equity Planning Corp.
("PEPCO"), an indirect majority-owned subsidiary of PHL, has advised the Trust
that it retained net selling commissions of $15,702 for Class A shares and $298
for Class M shares, and deferred sales charges of $447 for Class B shares and
$1,916 for Class C shares for the period ended February 28, 1998. In addition,
each Fund pays PEPCO a distribution fee at an annual rate of 0.25% for Class A
shares, 1.00% for Class B shares, 1.00% for Class C shares and 0.50% for Class
M shares applied to the average daily net assets of the Fund. The Distributor
has advised the Trust that of the total amount expensed for the period ended
February 28, 1998, $27,788 was earned by the Distributor, $2,459 was paid to
unaffiliated participants, and $16 was paid to W.S. Griffith, an indirect
subsidiary of PHL.
As Financial Agent of the Trust, PEPCO receives a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.05% of average
daily net assets up to $100 million, 0.04% of average daily net assets of $100
million to $300 million, 0.03% of average daily net assets of $300 million
through $500 million, and 0.015% of average daily net assets greater than $500
million; a minimum fee may apply. PEPCO serves as the Trust's Transfer Agent
with State Street Bank and Trust Company as sub-transfer agent. For the period
ended February 28, 1998, transfer agent fees were $49,841 of which PEPCO
retained $52 which is net of the fees paid to State Street.
14
<PAGE>
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
February 28, 1998 (Unaudited) (Continued)
At February 28, 1998, PHL and its affiliates held shares of the Trust
which aggregated the following:
<TABLE>
<CAPTION>
Aggregate
Shares Net Asset Value
--------- ----------------
<S> <C> <C>
Value Equity Fund--Class A ......... 471,139 $5,121,285
Value Equity Fund--Class B ......... 10,020 108,719
Value Equity Fund--Class C ......... 10,016 108,776
Value Equity Fund--Class M ......... 10,014 108,954
Small Cap Value Fund--
Class A ......................... 471,506 5,106,405
Small Cap Value Fund--
Class B ......................... 10,029 108,415
Small Cap Value Fund--
Class C ......................... 10,026 108,381
Small Cap Value Fund--
Class M ......................... 10,025 108,570
</TABLE>
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the period ended February 28,
1998 (excluding U.S. Government and agency securities, short-term securities,
and forward currency contracts) aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
-------------- -------------
<S> <C> <C>
Value Equity Fund ..... $18,017,417 $3,765,865
Small Cap Value Fund .. 20,529,525 4,519,096
</TABLE>
There were no purchases or sales of long-term U.S. Government and agency
securities during the period ended February 28, 1998.
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a Fund's ability to
repatriate such amounts.
5. SUBSEQUENT EVENT
Class M Shares are currently closed to new investors and subsequent
investments by existing shareholders. Existing shareholders in Class M Shares
may exchange their shares for Class M Shares of any other affiliated Phoenix
Fund without paying any fees or sales charges provided the fund into which the
exchange is made has existing Class M Share investors at the time of the
exchange.
This report is not authorized for distribution to prospective investors in
the Phoenix Investment Trust 97 unless preceded or accompanied by an effective
Prospectus which includes information concerning the sales charge, the Fund's
record and other pertinent information.
15
<PAGE>
PHOENIX INVESTMENT TRUST 97
PART C--OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A of the Registration Statement:
Financial Highlights
Included in Part B of the Registration Statement:
Financial Statement and Notes thereto
Report of Independent Accountants
(b) Exhibits:
<TABLE>
<S> <C>
1.1 Declaration of Trust of the Registrant previously filed via EDGAR with Pre-Effective Amendment No. 1 on
November 3, 1997 and incorporated by reference.
2. None.
3. None.
4.1 Reference is hereby made to Article IV of Registrant's Declaration of Trust.
5.1 Investment Advisory Agreement between Registrant and Phoenix Investment Counsel, Inc. previously filed
via EDGAR with Pre-Effective Amendment No. 1 on November 3, 1997 and incorporated by reference.
6.1 Underwriting Agreement between Registrant and Phoenix Equity Planning Corporation ("Equity Planning")
dated November 19, 1997 filed via EDGAR herewith.
6.2 Form of Sales Agreement between Phoenix Equity Planning Corporation and dealers filed via EDGAR
herewith.
6.3 Form of Supplement to Phoenix Family of Funds Sales Agreement filed via EDGAR herewith.
6.4 Form of Financial Institution Sales Contract for the Phoenix Family of Funds filed via EDGAR herewith.
7. None.
8.1 Master Custodian Contract between Registrant and State Street Bank and Trust Company previously filed
via EDGAR with Pre-Effective Amendment No. 1 on November 3, 1997 and incorporated by reference.
9.1 Transfer Agency and Service Agreement between Registrant and Equity Planning previously filed via
EDGAR with Pre-Effective Amendment No. 1 on November 3, 1997 and incorporated by reference.
9.2 Sub-Transfer Agency Agreement between Registrant and Phoenix Equity Planning Corporation dated June
1, 1994. Filed via EDGAR herewith.
9.3 Amended and Restated Financial Agent Agreement between Registrant and Phoenix Equity Planning
Corporation dated November 19, 1997 filed via EDGAR herewith.
9.4 First Amendment to the Amended and Restated Financial Agreement between Registrant and Phoenix
Equity Planning Corporation effective as of February 27, 1998 filed via EDGAR herewith.
10. Opinion of Counsel as to legality of the shares previously filed via EDGAR with Pre-Effective Amendment
No. 1 on November 3, 1997 and incorporated by reference.
11. Consent of Independent Accountant filed via EDGAR herewith.
12. Not applicable.
13. Initial Capital Agreement previously filed via EDGAR with Pre-Effective Amendment No. 1 on
November 3, 1997 and incorporated by reference.
14. None.
15.1 Distribution Plan for Class A Shares filed via EDGAR with Pre-Effective Amendment No. 1 on
November 3, 1997.
15.2 Distribution Plan for Class B Shares filed via EDGAR with Pre-Effective Amendment No. 1 on
November 3, 1997.
15.3 Distribution Plan for Class C Shares filed via EDGAR with Pre-Effective Amendment No. 1 on
November 3, 1997.
15.4 Distribution Plan for Class M Shares filed via EDGAR with Pre-Effective Amendment No. 1 on
November 3, 1997.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
16. Schedule for computation of performance information filed via EDGAR herewith.
17. Financial Data Schedules reflected on EDGAR as exhibit 27 filed herewith.
18. Amended and Restated Plan pursuant to Rule 18f-3 adopted November 19, 1997 filed via EDGAR
herewith.
19. Powers of Attorney filed via EDGAR herewith and Powers of Attorney filed via EDGAR with Pre-Effective
Amendment No. 1 on November 3, 1997 and incorporated by reference.
</TABLE>
Item 25. Persons Controlled by or Under Common Control With Registrant
No person is controlled by, or under common control, with the Registrant.
Item 26. Number of Holders of Securities
As of April 30, 1998, the number of record holders of each class of
securities of the Registrant was as follows:
<TABLE>
<CAPTION>
Number of Number of Number of Number of
Class A Class B Class C Class M
Title of Fund Record-holders Record-holders Record-holders Record-holders
- -------------------------------- ---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Phoenix Value Equity Fund 501 378 60 7
Phoenix Small Cap Value Fund 884 455 152 11
</TABLE>
Item 27. Indemnification
Please see Article V of the Registrant's Declaration of Trust
(incorporated herein by reference). Registrant's trustees and officers are
covered by an Errors and Omissions Policy. The Investment Advisory Agreement
between the Registrant and its Adviser 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 28. Business and Other Connections of Investment Adviser
See "Management of the Funds" in the Prospectus and "The Investment
Adviser" in the Statement of Additional Information which is included in this
Registration Statement. 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 29. Principal Distributor
(a) Equity Planning also serves as the principal underwriter for the following
other registrants:
Phoenix Strategic Allocation Fund, Inc., Phoenix Series Fund, Phoenix
Multi-Sector Fixed Income Fund, Inc., Phoenix Multi-Sector Short Term Bond
Fund, Phoenix Multi-Portfolio Fund, Phoenix California Tax Exempt Bonds,
Inc., Phoenix Income and Growth Fund, Phoenix Worldwide Opportunities
Fund, Phoenix Strategic Equity Series Fund, Phoenix Equity Series Fund,
Phoenix-Aberdeen Series Fund, Phoenix-Engemann Funds, Phoenix-Seneca
Funds, Phoenix Duff & Phelps Institutional Mutual Funds, 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.
C-2
<PAGE>
(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
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, None
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 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by the
Registrant by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder will be maintained at the offices of the Registrant located at 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 31. Management Services
Not applicable.
C-3
<PAGE>
Item 32. Undertakings
(a) Not applicable.
(b) Filed herewith.
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders
upon request and without charge.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Hartford, and
State of Connecticut on the 15th day of May, 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 15th day of May, 1998.
<TABLE>
<CAPTION>
Signature Title
- ------------------------------ -------------------------
<S> <C>
/s/ E. Virgil Conway Trustee
- ----------------------------
E. Virgil Conway*
/s/ Nancy G. Curtiss Treasurer (Principal
- ---------------------------- Financial and Accounting
Nancy G. Curtiss Officer
/s/ Harry Dalzell-Payne Trustee
- ----------------------------
Harry Dalzell-Payne*
/s/ Philip R. McLoughlin President and Trustee
- ---------------------------- (Principal Executive
Philip R. McLoughlin* Officer)
/s/ Everett L. Morris Trustee
- ----------------------------
Everett L. Morris*
/s/ James M. Oates Trustee
- ----------------------------
James M. Oates*
/s/ Herbert Roth, Jr. Trustee
- ----------------------------
Herbert Roth, Jr.*
/s/ Robert Chesek Trustee
--------------------------
Robert Chesek**
/s/ Francis E. Jeffries Trustee
--------------------------
Francis E. Jeffries**
/s/ Leroy Keith, Jr. Trustee
--------------------------
Leroy Keith, Jr.**
/s/ Calvin J. Pedersen Trustee
--------------------------
Calvin J. Pedersen**
/s/ Richard E. Segerson Trustee
--------------------------
Richard E. Segerson**
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
Signature Title
- ---------------------------------------------- --------
<S> <C>
/s/ Lowell P. Weicker, Jr. Trustee
--------------------------
Lowell P. Weicker, Jr.**
*Philip R. McLoughlin pursuant to powers of
attorney previously filed with Pre-Effective
Amendment No. 1.
By /s/ Philip R. McLoughlin
---------------------------
**Philip R. McLoughlin pursuant to
powers of attorney filed herewith.
</TABLE>
S-2
UNDERWRITING AGREEMENT
THIS AGREEMENT made as of this 19th day of November, 1997, by and
between Phoenix Investment Trust 97, a Massachusetts business trust having a
place of business located at 101 Munson Street, Greenfield, Massachusetts (the
"Fund") and Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Underwriter").
WITNESSETH THAT:
1. The Fund hereby grants to the Underwriter the right to purchase shares of
beneficial interest of each class of each series of the Fund established and
designated as of the date hereof and of any additional series and classes
thereof which the Board of Directors or Board of Trustees, as applicable
("Trustees") may establish and designate during the term of this Agreement
(called the "Series" and "Classes", respectively) and to resell shares of
various Classes, as applicable, of each Series (collectively called the
"Shares") as principal and not as agent. The Underwriter accepts such
appointment and agrees to render the services described in this Agreement for
the compensation herein provided.
2. The Underwriter's right to purchase Shares shall be exclusive except that the
terms of this Agreement shall not apply to Shares issued or transferred:
a) pursuant to an offer of exchange exempted under Section 22(d)
of the Investment Company Act of 1940, as amended (the "Act")
by reason of the fact that said offer is permitted by Section
11 of the Act, including any offer made pursuant to clause (1)
or (2) of Section 11(b);
b) upon the sale to a registered unit investment trust which is
the issuer of periodic payment plan certificates the net
proceeds of which are invested in redeemable securities;
c) pursuant to an offer made solely to all registered holders of
Shares, or all registered holders of Shares of any Series,
proportionate to their holdings or proportionate to any cash
distribution made to them by the Fund (subject to appropriate
qualifications designed solely to avoid issuance of fractional
securities);
d) in connection with any merger or consolidation of the Fund or
of any Series with any other investment company or the
acquisition by the Fund, by purchase or otherwise, of any
other investment company;
<PAGE>
e) pursuant to sales exempted from Section 22(d) of the Act, by
rule or regulation or order of the Securities and Exchange
Commission as provided in the then current registration
statement of the Fund; or
f) in connection with the reinvestment by Fund shareholders of
dividend and capital gains distributions.
3. The "Net Asset Value" and the "Public Offering Price" of the Shares as
referred to in this Agreement shall be computed in accordance with the
provisions of the then current registration statement of the Fund. The
Underwriter shall be notified promptly by the Fund of such computations.
4. The Underwriter has and shall enter into written sales agreements with
broker/dealers ("dealers") and with banks as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended, (Exchange Act) that are not
required to register as a broker/dealer under the Exchange Act or the
regulations thereunder ("Banks"). Such sales agreements shall provide that
dealers or Banks shall use their best efforts to promote the sale of Shares.
Such sales agreements shall include such terms and conditions as Underwriter may
determine not inconsistent with this Agreement; provided, however, that such
sales agreements shall specify a) that the dealer is registered as a
broker/dealer under the Exchange Act and a member of the National Association of
Securities Dealers, Inc. or, in the alternative, that the Bank is exempt from
broker/dealer registration under the Exchange Act; and b) that such dealers and
Banks agree that they will comply with all applicable state, and federal laws
and the rules and regulations of applicable regulatory agencies.
5. Each day the Underwriter shall have the right to purchase from the Fund, as
principal, the amount of Shares needed to fill unconditional orders for such
Shares received by the Underwriter from dealers, Banks, or investors, but no
more than the Shares needed, at a price equal to the Net Asset Value of the
Shares. Any purchase of Shares by the Underwriter under this Agreement shall be
subject to reasonable adjustment for clerical errors, delays and errors of
transmission and cancellation of orders.
6. With respect to transactions other than with dealers or Banks, the
Underwriter will sell Shares only at the Public Offering Price then in effect,
except to the extent that sales at less than the Public Offering Price may be
allowed by the Act, any rule or regulation promulgated thereunder or by order of
the Securities and Exchange Commission, provided, however, that any such sales
at less than the Public Offering Price shall be consistent with the terms of the
then current registration statement of the Fund. The Underwriter will sell at
Net Asset Value Shares of any Classes which are offered by the then current
registration statement or prospectus of the Fund for sale at such Net Asset
Value or at Net Asset Value with a contingent deferred sales charge ("CDSC
Shares"). The Underwriter shall receive from the Fund all contingent deferred
sales charges applied on redemptions of CDSC Shares.
2
<PAGE>
7. Sales at a discount from the Public Offering Price shall be made in
accordance with the terms and conditions of the terms of the current
registration statement of the Fund allowing such discounts. Such discounts shall
not exceed the difference between the Net Asset Value and the Public Offering
Price; however, the Underwriter may offer compensation in excess of the
difference between the Net Asset Value and the Public Offering Price, at its
discretion and from its own profits and resources, and only as described in the
current registration statement of the Fund. With respect to sales of CDSC
Shares, the Underwriter, in accordance with the terms of the current
registration statement of the Fund, shall pay dealers a commission on such sales
from its own profits and resources.
8. As reimbursement for expenditures made in connection with providing certain
distribution-related services, the Underwriter may receive from the Fund a
distribution service fee under the terms and conditions set forth in the Fund's
distribution plan adopted under Rule 12b-1 under the Investment Company Act of
1940, as amended, as the plan may be amended from time to time and subject to
any further limitations on such fees as the Trustees may impose. The Underwriter
may receive from the Fund a service fee to be retained by the Underwriter as
compensation for providing services to shareholders of the Fund or to be paid to
dealers and Banks for providing services to their clients who are also
shareholders of the Fund.
9. The Fund shall furnish the Underwriter with copies of its organizational
documents, as amended from time to time. The Fund shall also furnish the
Underwriter with any other documents of the Fund which will assist the
Underwriter in the performance of its duties hereunder.
10. The Underwriter agrees to use its best efforts (in states where it may
lawfully do so) to obtain from investors unconditional orders for Shares
authorized for issue by the Fund and registered under applicable Federal
securities laws, and, so long as it does so, nothing herein contained shall
prevent the Underwriter from entering into similar arrangements with other
registered investment companies. The Underwriter may, in the exercise of its
discretion, refuse to accept orders for Shares from any person.
11. Upon receipt by the Fund of a purchase order from the Underwriter,
accompanied by proper delivery instructions, the Fund shall, as promptly as
practicable thereafter, cause evidence of ownership of Shares to be delivered as
indicated in such purchase order. Payment for such Shares shall be made by the
Underwriter to the Fund in a manner acceptable to the Fund, provided that the
Underwriter shall pay for such Shares no later than the third business day after
the Underwriter shall have contracted to purchase such shares.
12. In connection with offering for sale and selling Shares, the Fund authorizes
the Underwriter to give only such information and to make only such statements
or representations as are contained in the then current registration statement
of the Fund. The Underwriter shall be responsible for the approval and filing of
sales material as required under SEC and NASD regulations.
3
<PAGE>
13. The Fund agrees to pay the following expenses:
a) the cost of mailing stock certificates representing Shares;
b) fees and expenses (including legal expenses) of registering
and maintaining registrations of the Fund and of each Series
and Class with the Securities and Exchange Commission
including the preparation and printing of registration
statements and prospectuses for filing with said Commission;
c) fees and expenses (including legal expenses) incurred in
registering and qualifying Shares for sale with any state
regulatory agency and fees and expenses of maintaining,
renewing, increasing or amending such registrations and
qualifications;
d) the expense of any issue or transfer taxes upon the sale of
Shares to the Underwriter by the Fund;
e) the cost of preparing and distributing reports and notices to
shareholders; and
f) fees and expenses of the transfer agent, including the cost of
preparing and mailing notices to shareholders pertaining to
transactions with respect to such shareholders accounts.
14. The Underwriter agrees to pay the following expenses:
a) all expenses of printing prospectuses and statements of
additional information used in connection with the sale of
Shares and printing and preparing all other sales literature;
b) all fees and expenses in connection with the qualification of
the Underwriter as a dealer in the various states and
countries;
c) the expense of any stock transfer tax required in connection
with the sale of Shares by the Underwriter as principal to
dealers or to investors; and
d) all other expenses in connection with offering for sale and
the sale of Shares which have not been herein specifically
allocated to the Fund.
15. The Fund hereby appoints the Underwriter its agent to receive requests to
accept the Fund's offer to repurchase Shares upon such terms and conditions as
may be described in the Fund's then current registration statement. The agency
granted in this paragraph 15 is terminable at the discretion of the Fund. As
compensation for acting as such agent and as part of the
4
<PAGE>
consideration for acting as underwriter, Underwriter shall receive from the Fund
all contingent deferred sales charges imposed upon the redemption of Shares.
Whether and to what extent a contingent deferred sales charge will be imposed
shall be determined in accordance with, and in the manner set forth in, the
Fund's prospectus.
16. The Fund agrees to indemnify and hold harmless the Underwriter, its officers
and directors and each person, if any, who controls the Underwriter within the
meaning of section 15 of the Securities Act of 1933, as amended, against any
losses, claims, damages, liabilities and expenses (including the cost of any
legal fees incurred in connection therewith) which the Underwriter, its
officers, directors or any such controlling person may incur under said Act,
under any other statute, at common law or otherwise, arising out of or based
upon
a) any untrue statement or alleged untrue statement of a material
fact contained in the Fund's registration statement or
prospectus (including amendments and supplements thereto), or
b) any omission or alleged omission to state a material fact
required to be stated in the Fund's registration statement or
prospectus or necessary to make the statements in either not
misleading, provided, however, that insofar as losses, claims,
damages, liabilities or expenses arise out of or are based
upon any such untrue statement or omission or alleged untrue
statement or omission made in reliance and in conformity with
information furnished to the Fund by the Underwriter for use
in the Fund's registration statement or prospectus, such
indemnification is not applicable. In no case shall the Fund
indemnify the Underwriter or its controlling persons as to any
amounts incurred for any liability arising out of or based
upon any action for which the Underwriter, its officers and
directors or any controlling person would otherwise be subject
to liability by reason of willful misfeasance, bad faith, or
gross negligence in the performance of its duties or by reason
of the reckless disregard of its obligations and duties under
this Agreement.
17. The Underwriter agrees to indemnify and hold harmless the Fund, its officers
and trustees and each person, if any, who controls the Fund within the meaning
of Section 15 of the Securities Act of 1933, as amended, against any losses,
claims, damages, liabilities and expenses (including the cost of any legal fees
incurred in connection therewith) which the Fund, its officers, trustees or any
such controlling person may incur under said Act, under any other statute, at
common law or otherwise arising out of the acquisition of any shares by any
person which
a) may be based upon any wrongful act by the Underwriter or any
of its employees or representatives, or
b) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Fund's
registration statement, prospectus (including
5
<PAGE>
amendments and supplements thereto) or sales material, or any
omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made
in reliance upon information furnished or confirmed in writing
to the Fund by the Underwriter.
18. It is understood that:
a) trustees, officers, employees, agents and shareholders of the
Fund are or may be interested persons, as that term is defined
in the Act ("Interested Persons"), of the Underwriter as
directors, officers, stockholders or otherwise;
b) directors, officers, employees, agents and stockholders of the
Underwriter are or may be Interested Persons of the Fund as
trustees, officers, shareholders or otherwise;
c) the Underwriter may be an Interested Person of the Fund as
shareholder or otherwise; and
d) the existence of any such dual interest shall not offset the
validity hereof or of any transactions hereunder.
19. The Fund may terminate this Agreement by 60 days written notice to the
Underwriter at any time, without the payment of any penalty, by vote of the
Trustees or by a vote of a majority of the outstanding voting securities, as
that term is defined in the Act, of the Fund. The Underwriter may terminate this
Agreement by 60 days written notice to the Fund, without the payment of any
penalty. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in the Act.
20. Subject to prior termination as provided in paragraph 19, this Agreement
shall continue in force for one year from the date of execution and from year to
year thereafter so long as the continuance after such one year period shall be
specifically approved at least annually by vote of the Trustees, or by a vote of
a majority of the appropriate class of outstanding voting securities, as that
term is defined in the Act, of the Fund. Additionally, each annual renewal of
this Agreement must be approved by the vote of a majority of the Trustees who
are not parties to the Agreement or Interested Persons of any such party, cast
in person at a meeting of the Trustees called for the purpose of voting on such
approval.
21. It is expressly agreed that the obligations of the Fund hereunder shall not
be binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Fund personally, but bind only the trust property of the Fund,
as provided in the Declaration of Trust. The execution and delivery of this
Agreement by the President of the Fund has been authorized by the Trustees
acting as such, and neither such execution and delivery by such officer nor such
6
<PAGE>
authorization by such Trustees shall be deemed to have been made by any of them
individually or be binding upon or impose any liability on any of them
personally, but shall bind only the trust property of the Fund as provided in
the Declaration of Trust. The Declaration of Trust is on file with the Secretary
of the Commonwealth of Massachusetts.
22. This Agreement shall become effective upon the date first set forth above.
This Agreement shall be governed by the laws of the State of Connecticut and
shall be binding on the successors and assigns of the parties to the extend
permitted by law.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
PHOENIX INVESTMENT TRUST 97
By: /s/ Philip R. McLoughlin
----------------------------
Philip R. McLoughlin
President
PHOENIX EQUITY PLANNING
CORPORATION
By: /s/ David R. Pepin
----------------------------
David R. Pepin
Executive Vice President
Exhibit 6.2
Sales Agreement
<PAGE>
[logo]PHOENIX Phoenix Funds
DUFF&PHELPS Sales Agreement
- - ------------------------------------------------------------------------------
PHOENIX EQUITY PLANNING CORPORATION
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, Connecticut 06083-2200
Dealer Name:
Address:
Phoenix Equity Planning Corporation ("PEPCO", "we", "us", or "our") invites you
to participate in the sale and distribution of shares of registered investment
companies (which shall collectively be referred to hereinafter as the "Funds")
for which we are national distributor or principal underwriter, and which may be
listed in Annex A hereto which such Annex may be amended by us from time to
time. Upon acceptance of this agreement by PEPCO, you may offer and sell shares
of each of the Funds (hereafter "Shares") subject, however, to the terms and
conditions hereof including our right to suspend or cease the sale of such
shares. For the purposes hereof, the above referenced dealer shall be referred
to as "you".
1. You understand and agree that in all sales of Shares to the public, you
shall act as dealer for your own account. All purchase orders and
applications are subject to acceptance or rejection by us in our sole
discretion and are effective only upon confirmation by us. Each purchase
will be deemed to have been consummated in our principal office subject to
our acceptance and effective only upon confirmation to you by us.
2. You agree that all purchases of Shares by you shall be made only for the
purpose of covering purchase orders already received from your customers
(who may be any person other than a securities dealer or broker) or for
your own bona-fide investment.
3. You shall offer and sell Shares pursuant to this agreement for the purpose
of covering purchase orders of your customers, to the extent applicable,
(a) at the current public offering price ("Offering Price") for Class A
Shares or (b) at the Net Asset Value for Class B shares as set forth in the
current prospectus of each of the funds. The offer and sale of Class B
Shares by you is subject to Annex B hereto, "Compliance Standards for the
Sale of the Phoenix Funds Under Their Alternative Purchase Arrangements".
4. You shall pay us for Shares purchased within three (3) business days of the
date of our confirmation to you of such purchase or within such time as
required by applicable rule or law. The purchase price shall be (a) the
Offering Price, less only the applicable dealer discount (Dealer Discount)
for Class A Shares, if applicable, or (b) the Net Asset Value, less only
the applicable sales commission (Sales Commission) for Class B Shares, if
applicable, as set forth in the current prospectus at the time the purchase
is received by us. We have the right, without notice, to cancel any order
for which payment of good and sufficient funds has not been received by us
as provided in this paragraph, in which case you may be held responsible
for any loss suffered resulting from your failure to make payment as
aforesaid.
5. You understand and agree that any Dealer Discount, Sales Commission or fee
is subject to change from time to time without prior notice. Any orders
placed after the effective date of any such change shall be subject to the
Dealer Discount or Sales Commission in effect at the time such order is
received by us.
6. You understand and agree that Shares purchased by you under this Agreement
will not be delivered until payment of good and sufficient funds has been
received by us. Delivery of Shares will be made by credit to a shareholder
open account unless delivery of certificates is specified in the purchase
order. In order to avoid unnecessary delay, it is understood that, at your
request, any Shares resold by you to one of your customers will be
delivered (whether by credit to a shareholder open account or by delivery
of certificates) in the name of your customer.
<PAGE>
7. You understand that on all purchases of Shares to which the terms of this
Agreement are applicable by a shareholder for whom you are dealer of
record, we will pay you an amount equal to the Dealer Discount, Sales
Commission or fees which would have been paid to you with respect to such
Shares if such Shares had been purchased through you. You understand and
agree that the dealer of record for this purpose shall be the dealer
through whom such shareholder most recently purchased Shares of such fund,
unless the shareholder or you have instructed us otherwise. You understand
that all amounts payable to you under this paragraph and currently payable
under this agreement will be paid as of the end of the month unless
specified otherwise for the total amount of Shares to which this paragraph
is applicable but may be paid more frequently as we may determine in our
discretion. Your request for Dealer Discount or Sales Commission reclaims
will be considered if adequate verification and documentation of the
purchase in question is supplied to us, and the reclaim is requested within
three years of such purchase.
8. We appoint the transfer agent (or identified sub-transfer agent) for each
of the Funds as our agent to execute the purchase transaction of Shares and
to confirm such purchases to your customers on your behalf, and you
guarantee the legal capacity of your customers so purchasing such Shares.
You further understand that if a customer's account is established without
the customer signing the application form, you hereby represent that the
instructions relating to the registration and shareholder options selected
(whether on the application form, in some other document or orally) are in
accordance with the customer's instructions and you agree to indemnify the
Funds, the transfer agent (or identified sub-transfer agent) and us for any
loss or liability resulting from acting upon such instructions.
9. Upon the purchase of Class A Shares pursuant to a Letter of Intent, you
will promptly return to us any excess of the Dealer Discount previously
allowed or paid to you over that allowable in respect to such larger
purchases.
10. Unless at the time of transmitting a purchase order you advise us to the
contrary, we may consider that the investor owns no other Shares and may
further assume that the investor is not entitled to any lower sales charge
than that accorded to a single transaction in the amount of the purchase
order, as set forth in the current prospectus.
11. You understand and agree that if any Shares purchased by you under the
terms of this Agreement are, within seven (7) business days after the date
of our confirmation to you of the original purchase order for such Shares,
repurchased by us as agent for such fund or are tendered to such fund for
redemption, you shall forfeit the right to, and shall promptly pay over to
us the amount of any Dealer Discount or Sales Commission allowed to you
with respect to such Shares. We will notify you of such repurchase or
redemption within ten (10) days of the date upon which certificates are
delivered to us or to such fund or the date upon which the holder of Shares
held in a shareholder open account places or causes to be placed with us or
with such fund an order to have such shares repurchased or redeemed.
12. You agree that, in the case of any repurchase of any Shares made more than
seven (7) business days after confirmation by us of any purchase of such
Shares, except in the case of Shares purchased from you by us for your own
bona fide investment, you will act only as agent for the holders of such
Shares and will place the orders for repurchase only with us. It is
understood that you may charge the holder of such Shares a fair commission
for handling the transaction.
13. Our obligations to you under this Agreement are subject to all the
provisions of the respective distribution agreements entered into between
us and each of the Funds. You understand and agree that in performing your
services under this agreement you are acting in the capacity of an
independent contractor, and we are in no way responsible for the manner of
your performance or for any of your acts or omissions in connection
therewith. Nothing in the Agreement shall be construed to constitute you or
any of your agents, employees, or representatives as our agent, partner or
employee, or the agent, partner of employee of any of the Funds.
In connection with the sale and distribution of shares of Phoenix Funds,
you agree to indemnify and hold us and our affiliates, employees, and/or
officers harmless from any damage or expense as a result of (a) the
negligence, misconduct or wrongful act by you or any employee,
representative, or agent of yours and/or (b) any actual or alleged
violation of any securities laws, regulations or orders. Any indebtedness
or obligation of yours to us whether arising hereunder or otherwise, and
any liabilities incurred or moneys paid by us to any person as a result of
any misrepresentation, wrongful or unauthorized act or omission, negligence
of, or failure of you or your employees, representatives or agents to
comply with the Sales Agreement, shall be set off against any compensation
payable under this agreement. Any differential between such expenses and
compensation payable hereunder shall be payable to us upon demand. The
terms of this provision shall not be impaired by the termination of this
agreement.
In connection with the sale and distribution of shares of Phoenix Funds, we
agree to indemnify and hold you, harmless from any damage or expense on
account of the gross and willful negligence, misconduct or wrongful act of
us or any employee, representative, or agent of ours which arises out of or
is based upon any untrue statement or alleged untrue statement of material
fact, or the omission or alleged omission of a material fact in: (i) any
registration statement, including any prospectus or any post-effective
amendment thereto; or (ii) any material prepared and/or supplied by us for
use in conjunction with the offer or sale of Phoenix Funds; or (iii) any
state registration or other document filed in any state or jurisdiction in
order to qualify any Fund under the securities laws of such state or
jurisdiction. The terms of this provision shall not be impaired by the
termination of this agreement.
<PAGE>
14. We will supply you with reasonable quantities of the current prospectus,
periodic reports to shareholders, and sales materials for each of the
Funds. You agree not to use any other advertising or sales material
relating to the sale of shares of any of the Funds unless such other
advertising or sales material is pre-approved in writing by us.
15. You agree to offer and sell Shares only in accordance with the terms and
conditions of the then current prospectus of each of the Funds and subject
to the provisions of this Agreement, and you will make no representations
not contained in any such prospectus or any authorized supplemental sales
material supplied by us. You agree to use your best efforts in the
development and promotion of sales of the Shares covered by this Agreement,
and agree to be responsible for the proper instruction, training and
supervision of all sales representatives employed by you in order that such
Shares will be offered in accordance with the terms and conditions of this
Agreement and all applicable laws, rules and regulations. All expenses
incurred by you in connection with your activities under this Agreement
shall be borne by you. In consideration for the extension of the right to
exercise telephone exchange and redemption privileges to you and your
registered representatives, you agree to bear the risk of any loss
resulting from any unauthorized telephone exchange or redemption
instructions from you or your registered representatives. In the event we
determine to refund any amounts paid by any investor by reason of such
violation on your part, you shall forfeit the right to, and pay over to us,
the amount of any Dealer Discount or Sales Commission allowed to you with
respect to the transaction for which the refund is made.
16. You represent that you are properly registered as a broker or dealer under
the Securities and Exchange Act of 1934 and are member of the National
Association of Securities Dealers, Inc. (NASD) and agree to maintain
membership in the NASD or in the alternative, that you are a foreign dealer
not eligible for membership in the NASD. You agree to notify us promptly of
any change, termination or suspension of the foregoing status. You agree to
abide by all the rules and regulations of the NASD including Section 26 of
Article III of the Rules of Fair Practice, which is incorporated herein by
reference as if set forth in full. You further agree to comply with all
applicable state and Federal laws and the rules and regulations of
applicable regulatory agencies. You further agree that you will not sell,
or offer for sale, Shares in any jurisdiction in which such Shares have not
been duly registered or qualified for sale. You agree to promptly notify us
with respect to (a) the initiation and disposition of any formal
disciplinary action by the NASD or any other agency or instrumentality
having jurisdiction with respect to the subject matter hereof against you
or any of your employees or agents; (b) the issuance of any form of
deficiency notice by the NASD or any such agency regarding your training,
supervision or sales practices; and (c) the effectuation of any consensual
order with respect thereto.
17. Either party may terminate this agreement for any reason by written or
electronic notice to the other party which termination shall become
effective fifteen (15) days after the date of mailing or electronically
transmitting such notice to the other party. We may also terminate this
agreement for cause or as a result of a violation by you, as determined by
us in our discretion, of any of the provisions of this Agreement, said
termination to be effective on the date of mailing written or transmitting
electronic notice to you of the same. Without limiting the generality of
the foregoing, your own expulsion from the NASD will automatically
terminate this Agreement without notice. Your suspension from the NASD or
violation of applicable state or Federal laws or rules and regulations of
applicable regulatory agencies will terminate this Agreement effective upon
the date of our mailing written notice or transmitting electronic notice to
you of such termination. Our failure to terminate this Agreement for any
cause shall not constitute a waiver of our right to so terminate at a later
date.
18. All communications and notices to you or us shall be sent to the addresses
set forth at the beginning of this Agreement or to such other address as
may be specified in writing from time to time.
19. This agreement shall become effective upon the date of its acceptance by us
as set forth herein. This agreement may be amended by PEPCO from time to
time. This Agreement and all rights and obligations of the parties
hereunder shall be governed by and construed under the laws of the State of
Connecticut. This agreement is not assignable or transferable, except that
we may assign or transfer this agreement to any successor distributor of
the Shares described herein.
ACCEPTED ON BEHALF OF ACCEPTED ON BEHALF OF
PHOENIX EQUITY PLANNING DEALER FIRM:
CORPORATION:
Date ______________________________ Date __________________________________
By /s/ John F. Sharry By
________________________________ ____________________________________
Print Name John F. Sharry Print Name
_________________________ ____________________________
Managing Director, Retail Sales
Print Title _______________________ Print Title ___________________________
NASD CRD Number _______________________
<PAGE>
[LOGO]PHOENIX AMENDED ANNEX A, DEALER AGREEMENT WITH
DUFF&PHELPS PHOENIX EQUITY PLANNING CORPORATION, FEBRUARY 27, 1998
================================================================================
I. PHOENIX FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PHOENIX SERIES FUND
Balanced Fund Series
Convertible Fund Series
Growth Fund Series
Aggressive Growth Fund Series
High Yield Fund Series
Money Market Fund Series
U.S. Government Securities Fund Series
PHOENIX-ABERDEEN SERIES FUND
Aberdeen New Asia Fund
Aberdeen Global Small Cap Fund
PHOENIX MULTI-PORTFOLIO FUND
Tax-Exempt Bond Portfolio
Mid Cap Portfolio
International Portfolio
Real Estate Securities Portfolio
Emerging Markets Bond Portfolio
Strategic Income Fund
PHOENIX STRATEGIC EQUITY SERIES FUND
Equity Opportunities Fund
Strategic Theme Fund
Small Cap Fund
PHOENIX EQUITY SERIES FUND
Core Equity Fund
Growth and Income Fund
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX VALUE EQUITY FUND
PHOENIX SMALL CAP VALUE FUND
PHOENIX-ENGEMANN FUNDS
Balanced Return Fund
Global Growth Fund
Growth Fund
Nifty Fifty Fund
Small & Mid-Cap Growth Fund
Value 25 Fund
- --------------------------------------------------------------------------------
Equity Planning may sponsor, to all qualifying dealers, on a non-discriminatory
basis, sales contests, training and educational meetings and provide to all
qualifying broker/dealers, from its own profits and resources, additional
compensation in the form of trips, merchandise or expense reimbursement. Brokers
or dealers other than Equity Planning may also make customary additional charges
for their services in effecting purchases, if they notify the Fund of their
intention to do so. Applicable waivers of Class A sales loads and Class B
contingent deferred sales charges are described in the prospectus.
================================================================================
CLASS A SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A SHARES (EXCEPT MULTI-SECTOR SHORT TERM MULTI-SECTOR SHORT TERM
BOND FUND & MONEY MARKET) BOND FUND CLASS A SHARES
DEALER DISCOUNT DEALER DISCOUNT
SALES CHARGE OR AGENCY FEE SALES CHARGE OR AGENCY FEE
AMOUNT OF AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
TRANSACTION OFFERING PRICE OFFERING PRICE OFFERING PRICE OFFERING PRICE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.25% 2.25% 2.00%
- ---------------------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 4.50 4.00 1.25 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 3.50 3.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 3.00 2.75 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 2.00 1.75 0.75 0.75
- ---------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Shares of the Money Market Series are offered to the public at their constant
net asset value of $1.00 per share with no sales charge on Class A shares.
$1 MILLION NAV SALES FINDERS FEE: In connection with Class A Share purchases of
$1,000,000 or more (or subsequent purchases in any amount), Equity Planning may
pay broker/dealers, from its own profits and resources, a percentage of the net
asset value of shares sold (excluding Money Market shares) as set forth in the
table below. If part or all of such investment, is subsequently redeemed within
one year of the investment date, the broker/dealer will refund to Equity
Planning any such amounts paid with respect to the investment.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASE AMOUNT $1,000,000 to $3,000,000 $3,000,001 to $6,000,000 $6,000,001 or more
- ---------------------------------------------------------------------------------------------------------------------------------
PAYMENT TO BROKER/DEALERS 1% 0.50 of 1% 0.25 of 1%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
CLASS A SHARES
- --------------------------------------------------------------------------------
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of Class A shares sold by such broker/dealers (except
Money Market Series) and remaining outstanding on the Funds' books during the
period in which the fee is calculated. Dealers must have an aggregate value of
$50,000 or more in one Fund to qualify for payment in that Fund.
<PAGE>
================================================================================
CLASS B SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B SHARES
(EXCEPT MULTI-SECTOR SHORT TERM BOND FUND) MULTI-SECTOR SHORT TERM BOND FUND CLASS B
<S> <C>
Sales Commission 4.00% Sales Commission 2.00%
</TABLE>
Broker/Dealer firms maintaining house/omnibus accounts, upon redemption of a
customer account within the time frames specified below, shall forward to Equity
Planning the indicated contingent deferred sales charge.
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE CONTINGENT DEFERRED CONTINGENT DEFERRED
SALES CHARGES SALES CHARGES
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
First 5.00% 2.00%
- -----------------------------------------------------------------------------------------------------------------------------
Second 4.00 1.50
- -----------------------------------------------------------------------------------------------------------------------------
Third 3.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------
Fourth and Fifth 2.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------
Sixth 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of shares sold by such broker/dealers (except Money Market
Series) and remaining outstanding on the Funds' books during the period in which
the fee is calculated, commencing one year after the investment date. Dealers
must have an aggregate value of $50,000 or more in one Fund to qualify for
payment in that Fund.
================================================================================
CLASS C SHARES - MULTI-SECTOR SHORT TERM BOND FUND ONLY
- --------------------------------------------------------------------------------
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
FINDERS FEE:
In connection with Class C Share purchases of $250,000 or more (or subsequent
purchases in any amount), Equity Planning may pay broker-dealers,
from its own resources, on amount equal to 0.50% of purchases above $250,000
but under $3 million plus 0.25% on purchases in excess of $3 million.
If all or part of the investment is subsequently redeemed, except for exchanges
or purchases of other Phoenix funds, within one year of the investment date, the
broker-dealer will refund to the Distributor such amount paid with respect to
the investment.
================================================================================
CLASS C SHARES - AVAILABLE ONLY FOR THE FUNDS LISTED BELOW:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CORE EQUITY FUND PHOENIX-ENGEMANN GLOBAL GROWTH FUND PHOENIX-ENGEMANN SMALL & MID-CAP
EMERGING MARKETS BOND PORTFOLIO MULTI-SECTOR FIXED INCOME FUND GROWTH FUND
(EFFECTIVE 3-27-98) STRATEGIC INCOME FUND VALUE EQUITY FUND
GROWTH AND INCOME FUND (EFFECTIVE 3-27-98) SMALL CAP VALUE FUND
HIGH YIELD FUND SERIES STRATEGIC THEME FUND PHOENIX-ENGEMANN BALANCED RETURN FUND
(EFFECTIVE 2-27-98) PHOENIX-ENGEMANN NIFTY FIFTY FUND PHOENIX-ENGEMANN VALUE 25 FUND
PHOENIX-ENGEMANN GROWTH FUND
</TABLE>
Sales Commission: 1%. Contingent deferred sales charge: 1% for one year from the
date of each purchase. Broker/Dealer firms maintaining house/omnibus accounts,
upon redemption of a customer account within one year of purchase date, shall
forward to Equity Planning the indicated contingent deferred sales charge.
TRAIL AND SERVICE FEE: Equity Planning intends to pay a fee after the first year
to qualifying broker/dealer firms at the equivalent of 0.75% annually, and a
Service Fee at the equivalent of 0.25% annually, based on the average daily net
asset value of shares sold by such broker/dealers and remaining outstanding on
the Funds' books during the period in which the fee is calculated. Dealers must
have an aggregate value of $50,000 or more in the Fund to qualify for payment.
<PAGE>
================================================================================
CLASS M SHARES - AVAILABLE ONLY FOR THE FUNDS LISTED BELOW:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CORE EQUITY FUND MULTI-SECTOR FIXED INCOME FUND VALUE EQUITY FUND
GROWTH AND INCOME FUND STRATEGIC THEME FUND SMALL CAP VALUE FUND
PHOENIX-ENGEMANN GROWTH FUND PHOENIX-ENGEMANN NIFTY FIFTY FUND PHOENIX-ENGEMANN BALANCED RETURN FUND
PHOENIX-ENGEMANN GLOBAL GROWTH FUND PHOENIX-ENGEMANN SMALL & MID-CAP PHOENIX-ENGEMANN VALUE 25 FUND
GROWTH FUND
</TABLE>
<TABLE>
<CAPTION>
DEALER DISCOUNT
SALES CHARGE OR AGENCY FEE
AMOUNT OF AS PERCENTAGE OF AS PERCENTAGE OF
OFFERING PRICE OFFERING PRICE OFFERING PRICE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 3.50% 3.00%
- ------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 2.50 2.00
- ------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 1.50 1.00
- ------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 1.00 1.00
- ------------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 None None
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
================================================================================
II. A. PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
- --------------------------------------------------------------------------------
Balanced Portfolio Growth Stock Portfolio
Enhanced Reserves Portfolio Money Market Portfolio
Managed Bond Portfolio U.S. Government Securities Portfolio
FINDER'S FEE: Equity Planning may pay broker/dealers, from its own profits and
resources, a percentage of the net asset value of Class X and Class Y shares
sold as set forth in the table below. If part of any investment is subsequently
redeemed within one year of the investment date, the broker/dealer will refund
to Equity Planning any such amounts paid with respect to the investment.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASE AMOUNT 0 to $5,000,000 $5,000,001 to $10,000,000 $10,000,001 or more
- ------------------------------------------------------------------------------------------------------------------------------------
PAYMENT TO BROKER/DEALERS 0.50% 0.25% 0.10%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TRAIL: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold by such broker/dealers and
remaining outstanding on the Funds' books during the period in which the fee is
calculated, subject to future amendment or termination.
================================================================================
II. B. PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
- --------------------------------------------------------------------------------
Phoenix Real Estate Equity Securities Portfolio
TRAIL: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold by such broker/dealers and
remaining outstanding on the Funds' books during the period in which the fee is
calculated, subject to future amendment or termination.
<PAGE>
PDP80A (2-98) Distributed by Phoenix Equity Planning Corporation,
Enfield, CT, 06083
<PAGE>
[logo]PHOENIX Annex B To Dealer Agreement With
DUFF&PHELPS Phoenix Equity Planning Corporation
- --------------------------------------------------------------------------------
Compliance Standards for
the Sale of the Phoenix Funds
Under Their Alternative Purchase Arrangements
As national distributor or principal underwriter of the Phoenix Funds, which
offer their shares on both a front-end and deferred sales charge basis, Phoenix
Equity Planning Corporation ("PEPCO") has established the following compliance
standards which set forth the basis upon which shares of the Phoenix Funds may
be sold. These standards are designed for those broker/dealers ("dealers") that
distribute shares of the Phoenix Funds and for each dealer's financial
advisors/registered representatives.
As shares of the Phoenix Funds are offered with two different sales arrangements
for sales and distribution fees, it is important for an investor not only to
choose a mutual fund that best suits his investment objectives, but also to
choose the sales financing method which best suits his particular situation. To
assist investors in these decisions and to ensure proper supervision of mutual
fund purchase recommendations, we are instituting the following compliance
standards to which dealers must adhere when selling shares of the Phoenix Funds:
1. Any purchase of a Phoenix Fund for less than $250,000 may be either of
shares subject to a front-end load (Class A shares) or subject to deferred
sales charge (Class B shares).
2. Any purchase of a Phoenix Fund by an unallocated qualified employer
sponsored plan for less than $1,000,000 may be either of shares subject to
a front-end load (Class A shares) or subject to deferred sales charge
(Class B shares). Class B shares sold to allocated qualified employer
sponsored plans will be limited to a maximum total value of $250,000 per
participant.
3. Any purchase of a Phoenix Fund for $250,000 or more (except as noted above)
or which qualifies under the terms of the prospectus for net asset value
purchase of Class A shares should be for Class A shares.
General Guidelines
These are instances where one financing method may be more advantageous to an
investor than the other. Class A shares are subject to a lower distribution fee
and, accordingly, pay correspondingly higher dividends per share. However,
because initial sales charges are deducted at the time of purchase, such
investors would not have all of their funds invested initially and, therefore,
would initially own fewer shares. Investors not qualifying for reduced initial
sales charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A Shares because the accumulated continuing
distribution charges on Class B Shares may exceed the initial sales charge on
Class A Shares during the life of the investment.
Again, however, such investors must weigh this consideration against the fact
that, because of such initial sales charge, not all of their funds will be
invested initially. However, other investors might determine that it would be
more advantageous to purchase Class B Shares to have all of their funds invested
initially, although remaining subject to higher continuing distribution charges
and, for a five-year period, being subject to a contingent deferred sales charge
(three years for Asset Reserve).
A National Association of Securities Dealers rule specifically prohibits
"breakpoint sales" of front-end load shares. A "breakpoint sale" is a sale to
the client of an amount of front-end load (Class A) shares just below the amount
which would be subject to the next breakpoint on the fund's sales charge
schedule. Because the deferred sales charge on Class B shares is reduced by 1%
for each year the shares are held, a redemption of Class B shares just before an
"anniversary date" is in some ways analogous to a breakpoint sale. A client
might wish to redeem just before an anniversary date for tax or other reasons,
and a client who chose to wait would continue to be at market risk.
Nevertheless, investment executives should inform clients intending to redeem
Class B shares near an anniversary date that, if the redemption were delayed,
the deferred sales charge would be reduced.
Responsibilities of Branch Office Manager (or other appropriate reviewing
officer).
A dealer's branch manger or other appropriate reviewing officer ("the Reviewing
Officer") must ensure that the financial advisor/registered representative has
advised the client of the available financing methods offered by the Phoenix
Funds, and the impact of choosing one method over another. In certain instances,
it may be appropriate for the Reviewing Officer to discuss the purchase directly
with the client. The reviewing officer should review purchases for Class A or
Class B shares given the relevant facts and circumstances, including but not
limited to: (a) the specific purchase order dollar amount; (b) the length of
time the investor expects to hold his shares; and (c) any other relevant
circumstances, such as the availability of purchases under letters of intent or
pursuant to rights of accumulation and distribution requirements. The foregoing
guidelines, as well as the examples cited above, should assist the Reviewing
Officer in reviewing and supervising purchase recommendations and orders.
Effectiveness
These compliance guidelines are effective immediately with respect to any order
for shares of those Phoenix Funds which offer their shares pursuant to the
alternative purchase arrangement.
Questions relating to these compliance guidelines should be directed by the
dealer to its national mutual fund sales and market group or its legal
department or compliance director. PEPCO will advise dealers in writing of any
future changes in these guidelines.
PEP80B 11/95
PHOENIX EQUITY PLANNING CORPORATION
SUPPLEMENT TO PHOENIX FAMILY OF FUNDS
SALES AGREEMENT
It is hereby agreed that this AGREEMENT, dated this __________ day
of __________, 19__, between ________________________________________ ("Dealer")
and Phoenix Equity Planning Corporation ("Distributor"), supplements and amends
the Sales Agreement between Dealer and Distributor dated by Distributor
_______________________ 19__ ("Sales Agreement').
WHEREAS, Dealer wishes to use shares of the Funds in a fee-based
program made available by Dealer to clients of Dealer (the "Fee-Based Program");
WHEREAS, Dealer wishes to afford its fee-based clients the
opportunity to qualify for the ability to purchase shares of the Funds at net
asset value; and
WHEREAS, Distributor is willing to allow Dealer to purchase shares
of the Funds for clients in the Fee-Based Program subject to the provisions of
this agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by both parties, Dealer
and Distributor hereby agree as follows:
1. Dealer may sell shares of any Funds made available by
Distributor, from time to time, at net asset value to bona fide clients of
Dealer for use solely in their Fee-Based Program. Dealer will earn no concession
or commission on any such sale.
2. Distributor, after consulting Dealer, will determine, from time
to time, which Funds it will make available to Dealer for use in the Fee-Based
Program. Dealer will comply with all provisions of the Prospectus and Statement
of Additional Information of each Fund.
1
<PAGE>
3. All shares made available to Dealer under the Fee-Based Program
must be purchased by Dealer for the benefit of Dealer's clients participating in
its Fee-Based Program under which Dealer provides portfolio management and other
services to such clients for a fee. Such fee to be paid in connection with
investment in the Funds shall at all times be at a level acceptable to
Distributor. Dealer acknowledges that it has sent the Distributor the current
fee schedule for the Fee-Based Program and Dealer agrees to notify Distributor
at least thirty (30) days in advance in writing of any amendment to such fee
schedule. The current fee schedule is attached. Dealer shall not prepare, use or
distribute brochures, written materials or advertising in any form that refers
to sales of the Funds as no-load or at net asset value except, in the case of
brochures, it may refer to the Funds as available at net asset value under the
Fee-Based Program if the fees and expenses of the Fee-Based Program are given at
least equal prominence. Notwithstanding the foregoing, in connection with
explaining the fees and expenses of the Fee-Based Program, representatives of
Dealer may describe to customers the option of purchasing Fund shares through
the Fee-Based Program at net asset value.
4. Distributor warrants that all necessary disclosures regarding
the sale of shares at net asset value will be set forth in the Prospectus and
Statement of Additional Information of the Funds available under this Agreement.
5. Dealer may maintain either an omnibus account(s) solely for the
clients of its Fee-Based program or may maintain separate accounts for each
client of its Fee-Based Program with the Fund's transfer agent. If an omnibus
account(s) is maintained, Dealer shall be solely responsible for meeting all
legal obligations with respect to each beneficial owner including, but not
limited to, the delivery of proxies, annual and semi-annual reports and other
materials.
6. This Agreement shall be governed and interpreted in accordance
with the laws of the State of Connecticut. This Agreement shall not relieve
Dealer or Distributor from any obligations either may have under any other
agreements between them (except with respect to the payment of service fees),
including but not limited to the Sales Agreement, which is incorporated by
reference herein and shall control in case of any conflict with this Agreement.
7. Distributor is not endorsing, recommending or otherwise involved
in providing any investment product or advisory service of Dealer (including but
not limited to the Fee-Based Program). Distributor is merely affording Dealer
the opportunity to use shares of the Funds distributed by Distributor as an
investment medium for the Fee-Based Program.
8. This Agreement is not exclusive and may be terminated by either
party upon sixty (60) days prior written notice to the other party. It shall
terminate automatically upon termination of the Sales Agreement between the
parties. This Agreement may be amended only by a written instrument, signed by
both parties.
IN WITNESS WHEREOF, this Agreement has been executed as of the date set
forth above by a duly authorized officer of each party.
2
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
By: _______________________________________
John F. Sharry
Managing Director, Retail Sales
Dealer: _____________________________
By: _________________________________
Name: _______________________________
Title: ______________________________
Address: ____________________________
____________________________
____________________________
Phone: ______________________________
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P O Box 2200
Enfield, CT 06083-2200
(230) 253-1000
3
FINANCIAL INSTITUTION SALES CONTRACT
FOR THE PHOENIX FAMILY OF FUNDS
Between: and
PHOENIX EQUITY PLANNING CORPORATION
Distributor of: The Phoenix Family of Funds
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
As distributor of The Phoenix Family of Funds (the "Funds"), we agree that you
may make available to your customers, under an agency relationship with your
customers, shares of beneficial interest issued by the Funds (the "Shares"),
subject to any limitation imposed by the Funds and to confirmation by us of each
transaction. By your acceptance hereof, you agree to all of the following terms
and conditions:
I. Offering Prices and Fees
The public offering price at which you may make Shares available to your
customers is the net asset value thereof, as computed from time to time, plus
any applicable sales charge described in the then current prospectus of the
applicable Fund. In the case of purchases by you, as agent for your customers,
of shares sold with a sales charge, you will receive an agency fee consisting of
a portion of the public offering price, determined on the same basis as the
"dealer discount" described in the then current Prospectus of the Funds, and
such other compensation to dealers as may be described therein, which shall be
payable to you at the same time and on the same basis as the same is paid to
such dealers, consistent with applicable law, rules and regulations. In
determining the amount of any agency fee payable to you hereunder, we reserve
the right to revise the agency fee referred to herein upon written notice to
you. We will furnish you upon request with the public offering prices for the
Shares and you agree to quote such prices in connection with any Shares made
available by you as agent for your customers. Each purchase of Shares by your
customers is made subject to confirmation by us at the public offering price
next computed after receipt of the order. There is no sales charge or agency fee
to you on the reinvestment of dividends and distributions.
II. Manner of Making Shares Available for Purchase
We will, upon request, deliver to you a copy of each Fund's then current
Prospectus and will provide you with such number of copies of each Fund's
current Prospectus, Statement of Additional Information and shareholder reports
and of supplementary sales materials prepared by us, as you may reasonably
request. It shall be your obligation to ensure that all such information and
materials are distributed to your customers who own Shares in accordance with
securities and/or banking law and regulations and any other applicable
regulations. Neither you nor any other person is authorized to give any
information or make any representations other than those contained in such
prospectuses, Statements of Additional Information and shareholder reports or in
such supplemental sales materials. You shall not furnish or cause to be
furnished to any person, display or publish any information or materials
relating to any Fund (including, without limitation, promotional materials and
sales literature, advertisements, press releases, announcements, statements,
posters, signs or similar material), except such information and materials as
may be furnished to you by us or the Fund, and such other information and
materials as may be approved in writing by us. We reserve the right to reject
any purchases for any accounts which we reasonably determine are not made in
accordance with the terms of the applicable Fund Prospectus and the provisions
of this Agreement.
You hereby agree:
(i) to not purchase any Shares as agent for any customer, unless you
deliver or cause to be delivered to such customer, at or prior to the
time of such purchase, a copy of the then-current Prospectus of the
applicable Fund unless such customer has acknowledged receipt of the
Prospectus of such Fund. You hereby represent that you understand your
obligation to deliver a prospectus to customers who purchase Shares
pursuant to federal securities laws and you have taken all necessary
steps to comply with such prospectus delivery requirements;
PEP 613 12-92
<PAGE>
(ii) to transmit to us promptly upon receipt any and all orders received by
you, it being understood that no conditional orders will be accepted;
(iii) to obtain from each customer for whom you act as agent for the
purchase of Shares any taxpayer identification number certification
and backup withholding information required under the Internal Revenue
Code, as amended from time to time (the "Code"), and the regulations
set forth thereunder, or other sections of the Code which may become
applicable and to provide us or our designee with timely written
notice of any failure to obtain such taxpayer identification number
certification or information in order to enable the implementation of
any required backup withholding in accordance with the Code and the
regulations thereunder;
(iv) to pay to us the offering price, less any agency fee to which you are
entitled, within five (5) business days of our confirmation of your
customer's order, or such shorter time as may be required by law. You
may, subject to our approval, remit the total public offering price to
us, and we will return to you your agency fee. If such payment is not
received within said time period, we reserve the right, without prior
notice, to cancel the sale, or at our option to return the Shares to
the issuer for redemption or repurchase. In the latter case, we shall
have the right to hold you responsible for any loss resulting to us.
Should payment be made by local bank check, liquidation of Shares may
be delayed pending clearance of your check; and
(v) to offer and sell Shares, and execute telephone transactions only in
accordance with the terms and conditions of the then current
prospectuses of the relevant Funds and to make no representations not
contained in any such prospectus or in any authorized supplemental
material supplied to you. In addition, in consideration for the
extension of the right to exercise telephone transaction privileges,
you acknowledge that neither the Funds nor the Transfer Agent nor
Equity Planning will be liable for any loss, injury or damage incurred
as a result of acting upon, nor will they be responsible for the
authenticity of, any telephone instructions, and you agree to
indemnify and hold harmless the Funds, Equity Planning and the
Transfer Agent against any loss, injury or damage resulting from any
unauthorized telephone transaction instruction from you or your
representatives. (Telephone instructions will be recorded on tape).
Unless otherwise mutually agreed in writing or except as provided below, each
transaction placed by you shall be promptly confirmed by us in writing to you,
and shall be confirmed to the customer promptly upon receipt by us of
instructions from you as to such customer. In the case of a purchase order by
customer's application, each transaction shall be promptly confirmed in writing
directly to the customer and a copy of each confirmation shall be sent
simultaneously to you. You understand that in the case of an Omnibus Account we
shall send a confirmation to you as the shareholder of record only. We reserve
the right, at our discretion and without notice, to suspend the sale of Shares
or withdraw entirely the sale of Shares of any or all of the Funds. All orders
are subject to acceptance or rejection by us in our sole discretion, and by the
Funds in their sole discretion. The procedure stated herein relating to the
pricing and handling of orders shall be subject to instructions which we may
forward to you from time to time.
III. Compliance With Law
You hereby represent that you are either (1) a "bank" as defined in Section
3(a)(6) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and at the time of each transaction in shares of the Funds, are not required to
register as a broker-dealer under the Exchange Act or regulations thereunder; or
(2) registered as a broker-dealer under the Exchange Act, a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD") and
affiliated with a bank.
(i) If you are a bank, not required to register as a broker-dealer under
the Exchange Act, you further represent and warrant to us that with
respect to any sales in the United States, you will use your best
efforts to ensure that any purchase of Shares by your customers
constitutes a suitable investment for such customers. You shall not
effect any transaction in, or induce any purchase or sale of, any
Shares by means of any manipulative deceptive or other fraudulent
device or contrivance and shall otherwise deal equitable and fairly
with your customers with respect to transactions in Shares of a Fund.
-2-
<PAGE>
(ii) If you are a NASD member broker-dealer affiliated with a bank and
registered under the Exchange Act, you further represent and warrant
to us that with respect to any sales in the United States, you agree
to abide by all of the applicable laws, rules and regulations
including applicable provisions of the Securities Act of 1933 as
amended, and the applicable rules and regulations of the NASD,
including, without limitation, its Rules of Fair Practice, and the
applicable rules and regulations of any jurisdiction in which you make
Shares available for sale to your customers. You agree not to make
available for sale to your customers the Shares in any jurisdiction in
which the Shares are not qualified for sale or in which you are not
qualified as a broker-dealer. We shall have no obligation or
responsibility as to your right to make Shares of any Fund available
to your customers in any jurisdiction. You agree to notify us
immediately in the event of (a) your expulsion or suspension from the
NASD or your becoming subject to any enforcement action by the
Securities and Exchange Commission, NASD, or any other self-regulatory
organization, or (b) your violation of any applicable federal or state
law, rule or regulation including, but not limited to, those of the
SEC, NASD, or other self-regulatory organization, arising out of or in
connection with this Agreement, or which may otherwise affect in any
material way your ability to act in accordance with the terms of this
Agreement.
You shall not make Shares of any Fund available to your customers, including
your fiduciary customers, except in compliance with all federal and state laws
and rules and regulations of regulatory agencies or authorities applicable to
you, or any of your affiliates engaging in such activity, which may affect your
business practices. You confirm that you are not in violation of any banking law
or regulations to which you are subject. You agree to hold us and the Funds
harmless and indemnify us in the event that you or any of your representatives
should violate any law, rule or regulation or any provisions of this Agreement.
In the event that we determine to refund any amounts paid by a customer in
connection with any such violation on your part, you shall forfeit the right to
the amount of any agency fee allowed by us with respect to the transaction for
which the refund is made. All expenses which you incur in connection with your
activities under this Agreement shall be borne by you.
IV. Relationship With Customer
With respect to any and all transactions in the Shares of any Fund pursuant to
this Agreement, it is understood and agreed in each case that: (i) you shall be
acting solely as agent for the account of your customer; (ii) each transaction
shall be initiated solely upon the order of your customer; (iii) we shall
execute transactions only upon receiving instructions from you acting as agent
for your customer or upon receiving instructions directly from your customer;
(iv) as between you and your customer, your customer will have full beneficial
ownership of all Shares; and (v) each transaction shall be for the account of
your customer and not for your account.
Subject to the foregoing, however, you may maintain record ownership of such
customers' Shares in an "Omnibus Account" or an account registered in your name
or the name of your nominee, for the benefit of such customers. You understand
that such Shares must be held in a separate account for each shareholder of such
Funds. You represent and warrant to us that you will have full right, power and
authority to effect transactions (including, without limitation, any purchases
and redemptions) in Shares on behalf of all customer accounts provided by you.
V. Relationship With Financial Institutions
Your obligations to us under this Agreement are subject to all the provisions of
the respective distribution agreements entered into between us and each of the
Funds. You understand and agree that in performing your services under this
Agreement you are acting in the capacity of an independent contractor, and we
are in no way responsible for the manner of your performance or for any of your
acts or omissions in connection therewith. It is further understood that neither
this Agreement nor the performance of the services of the respective parties
hereunder shall be considered to constitute an exclusive arrangement, or to
create a partnership, association or joint venture between you and us. In making
available Shares of the Funds under this Agreement, nothing herein shall be
construed to constitute you or any of your agents, employees or representatives
as our agent or employee, or as an agent or employee of the Funds, and you shall
not make any representations to the contrary. As distributor of the Funds, we
shall have full authority to take such action as we may deem advisable in
respect of all matters pertaining to the distribution of the Shares. We shall
not be under any obligation to you, except for obligations expressly assumed by
us in this Agreement.
-3-
<PAGE>
VI. Termination
Either party hereto may terminate this Agreement, without cause, upon ten days'
written notice to the other party. We may terminate this Agreement for cause
upon the violation by you of any of the provisions hereof, such termination to
become effective on the date such notice of termination is mailed to you. If you
are registered as a broker-dealer and affiliated with a bank, this Agreement
shall terminate automatically if either Party ceases to be a member of the NASD.
VII. Assignability
This Agreement is not assignable or transferable, except that we may assign or
transfer this Agreement to any successor distributor of the Funds.
VIII. Miscellaneous
(i) All communications mailed to us should be sent to the above address.
Any notice to you shall be duly given if mailed or delivered to you at
the address specified by you below.
(ii) This Agreement constitutes the entire agreement and understanding
between the parties and supersedes any and all prior agreements
between the parties.
(iii) This Agreement and the rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of
Connecticut.
Very truly yours,
PHOENIX EQUITY PLANNING CORPORATION
By _________________________________________
Authorized Signature
____________________________________________
Name and Title
We accept and agree to the foregoing Agreement as of the date set forth below
Financial Institution: __________________________________
By _________________________________________
Authorized Signature, Title
____________________________________________
____________________________________________
Address
(NASD CRD # if applicable _________________ )
Date: ______________________________________
Please return the signed copy of this Sales Contract to Phoenix Equity Planning
Corporation at the above address.
Exhibit 9.2
Sub-Transfer Agent Agreement
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
PHOENIX EQUITY PLANNING CORPORATION
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
1. Terms of Appointment; Duties of the Bank and 1-4
Transfer Agent
2. Fees and Expenses 4
3. Bank as Trustee or Custodian of Retirement Plans 4-5
4. Wire Transfer Operating Guidelines 5-7
5. Data Access and Proprietary Information 7-8
6. Indemnification 8-9
7. Standard of Care 10
8. Covenants of the Transfer Agent and the Bank 10
9. Representations and Warranties of the Bank 11
10. Representations and Warranties of the Transfer Agent 11
11. Termination of Agreement 12
12. Assignment 12
13. Amendment 12
14. Massachusetts Law to Apply 13
15. Force Majeure 13
16. Consequential Damages 13
17. Limitation of Shareholder Liability 13
18. Merger of Agreement 13
19. Counterparts 13
<PAGE>
AGREEMENT effective as of the 1st day of June, 1994, by and between
PHOENIX EQUITY PLANNING CORPORATION, a Connecticut corporation, having its
principal office and place of business at 100 Bright Meadow Boulevard, Enfield,
Connecticut, 06083, (the "Transfer Agent"), and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company having its principal office and place of
business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank");
WHEREAS, the Transfer Agent has been appointed by each of the investment
companies (including each series thereof) listed on Schedule A (the "Fund(s)"),
each an open-end diversified management investment company registered under the
Investment Company Act of 1940 as amended, as transfer agent, dividend
disbursing agent and shareholder servicing agent in connection with certain
activities, and the Transfer Agent has accepted each such appointment;
WHEREAS, the Transfer Agent has entered into a Transfer Agency and Service
Agreement with each of the Funds (including each series thereof) listed on
Schedule A pursuant to which the Transfer Agent is responsible for certain
transfer agency and dividend disbursing functions for each Fund's shares
("Shares") and each Fund's shareholders ("Shareholders") and the Transfer Agent
is authorized to subcontract for the performance of its obligations and duties
thereunder in whole or in part with the Bank;
WHEREAS, the Transfer Agent desires to appoint the Bank as sub-transfer
agent, and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenant herein contained,
the parties hereto agree as follows:
1. Duties of the Bank and the Transfer Agent
1.1 Subject to the terms and conditions set forth in this Agreement, the
Bank shall act as the Transfer Agent's non-exclusive sub-transfer agent for
Shares in connection with any accumulation plan, open-account, dividend
reinvestment plan, retirement plan or similar plan provided to Shareholders and
set out in each Fund's currently effective prospectus and statement of
additional information ("Prospectus"), including without limitation any
periodic investment plan or periodic withdrawal program. As used herein the
term "Shares" means the authorized and issued shares of common stock, or shares
of beneficial interest, as the case may be, for each Fund listed in Schedule A.
In accordance with procedures established from time to time by agreement
between the Transfer Agent and the Bank, the Bank and Transfer Agent shall
provide the services listed in this Section 1.
(a) According to the service responsibility schedule attached hereto
for Shareholder accounts and record-keeping the Bank or the
Transfer Agent shall:
(i) receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the custodian of each Fund authorized pursuant
to the articles of incorporation or organization of each
Fund (the "Custodian");
(ii) pursuant to purchase orders, issue the appropriate number
of Shares and hold such Shares in the appropriate
Shareholder account;
(iii) receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation
thereof to the Custodian;
(iv) in respect to the transactions in items (i), (ii), and
(iii) above, the Bank shall execute transactions directly
with broker-dealers authorized by each Fund;
(v) at the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any
redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the
redeeming Shareholders;
(vi) effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vii) prepare and transmit payments for dividends and
distributions declared by each Fund;
<PAGE>
(viii) issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon
receipt by the Bank of indemnification satisfactory to the
Bank and protecting the Bank and each Fund, and the Bank
at its option, may issue replacement certificates in place
of mutilated stock certificates upon presentation thereof
and without such indemnity;
(ix) maintain records of account for and advise the Transfer
Agent and its Shareholders as to the foregoing;
(x) record the issuance of Shares of each Fund and maintain
pursuant to Rule 17Ad-10 (e) of the Securities Exchange
Act of 1934 as amended (the "Exchange Act") a record of
the total number of Shares of each Fund that are
authorized, based upon data provided to it by each Fund or
the Transfer Agent and issued and outstanding, the Bank
shall also provide each Fund on a regular basis with the
total number of Shares which are authorized and issued and
outstanding and shall have no obligation, when recording
the issuance of Shares, to monitor the issuance of such
Shares or to take cognizance of any laws relating to the
issues or sale of such Shares, which functions shall be
the sole responsibility of each Fund or the Transfer
Agent.
1.2 (a) For reports, the Bank shall:
(i) maintain all Shareholder accounts, prepare meeting, proxy,
and mailing lists, withhold taxes on U.S. resident and
non-resident alien accounts, prepare and file U.S.
Treasury reports required with respect to dividends and
distributions by federal authorities for all Shareholders,
prepare confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder account
information.
(b) For blue sky reporting the Bank shall provide a system that will
enable each Fund or the Transfer Agent to monitor the total
number of Shares sold in each State, and each Fund or the
Transfer Agency shall:
(i) identify to the Bank in writing those transactions and
assets to be treated as exempt from blue sky reporting for
each State; and
(ii) verify the establishment of transactions for each State on
the system prior to activity for each State, the
responsibility of the Bank for each Fund's blue sky State
registration status is solely limited to the initial
establishment of transactions subject to blue sky
compliance by the Fund or the Transfer Agent and the
reporting of such transactions to the Fund as provided
above.
1.3 Per the attached service responsibility schedule procedures as to who
shall provide certain of the services in Section 1 may be established from time
to time by agreement between the Transfer Agent and the Bank. The Bank may at
times perform only a portion of these services and the Transfer Agent may
perform these services on each Fund's behalf.
1.4 The Bank shall provide additional services on behalf of the Transfer
Agent (i.e., escheat services) as may be agreed upon in writing between the Bank
and the Transfer Agent.
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement, the
Transfer Agent agrees to pay the Bank an annual maintenance fee for each
Shareholder account as set out in the initial fee schedule attached hereto. Such
fees and out-of-pocket expenses and advances identified under Section 2.2 below
may be changed from time to time subject to mutual written agreement between the
Transfer Agent and the Bank. For purposes hereof the term account should refer
to any Shareholder account designated as such on the DST mutual fund system (or
any replacement system) provided further that so called omnibus accounts shall
be considered to be a single account.
2.2 In addition to the fees paid under Section 2.1 above, the Transfer
Agent agrees to reimburse the Bank for out-of-pocket expenses, including but not
limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by the Bank at the request or with the consent of the
Transfer Agent, will be reimbursed by the Transfer Agent.
<PAGE>
2.3 The Transfer Agent agrees to pay all fees and reimbursable expenses
within five days following the receipt of the respective billing notice. Postage
for mailing of dividends, proxies, Fund reports and other mailings to all
accounts shall be advanced to the Bank by the Transfer Agent at least seven (7)
days prior to the mailing date of such materials.
3. Bank as Trustee or Custodian of Retirement Plans
As agreed upon in writing between the parties, the Bank and Transfer Agent
agree that the Bank may serve as the named custodian or trustee of individual
retirement accounts established under section 408 of the Internal Revenue Code
(the "Code"), tax-sheltered plans established under section 403 (b) of the Code,
qualified plans under section 401(a) of the Code, or money purchase plans,
pension plans or profit sharing plans with a cash deferred arrangement under
section 401(k) of the Code (collectively "Retirement Plans").
3.1 The Bank shall provide certain recordkeeping services as more fully
described in the TRAC-2000 Procedures manual provided to the Fund for
Shareholders who become plan participants of Retirement Plans using TRAC-2000
System.
3.2 The Bank shall:
(a) have no investment responsibility for the selection of
investments, no liability for any investments made for Retirement
Plans other than to maintain custody and provide recordkeeping of
the investments subject to the terms of the Agreement; and
(b) not serve as "Plan Administrator" (as defined in the Employee
Retirement Income Securities Act of 1974, as amended) of any
Retirement Plan, or in any other administrative capacity or other
capacity except as trustee or custodian thereof, the Bank shall
not keep records of Retirement Plan accounts except as provided
herein.
3.3 The Transfer Agent agrees that in any communications from the Transfer
Agent or the Funds to any prospective or actual Shareholder, neither the Funds
nor the Transfer Agent shall state or represent that the Bank has any investment
discretion or other power concerning investments of any Retirement Plan or the
Bank shall serve as plan administrator or have any administrative or other
responsibility for the administration or operation of any Retirement Plan. The
Funds, the Funds' designee, or the Transfer Agent as may be required to comply
with the Code and all other applicable federal and state laws shall:
(a) serve as third party administrators of all Retirement Plans; and
(b) provide all Retirement Plan prototype document design, tax form
preparation (excluding services performed by the Bank under
section 1.2 of this Agreement), discrimination testing and
consulting about Retirement Plan qualification and maintenance.
4. Wire Transfer Operating Guidelines/Articles 4A of the Uniform Commercial Code
4.1 The Bank is authorized to promptly debit the appropriate Transfer Agent
account(s) upon the receipt of a payment order in compliance with the selected
security procedure (the "Security Procedure") chosen for funds transfer and in
the amount of money that the Bank has been instructed to transfer. The Bank
shall execute payment orders in compliance with the Security Procedure and with
the Transfer Agent instructions on the execution date provided that such payment
order is received by the customary deadline for processing such a request,
unless the payment order specifies a later time. All payment orders and
communications received after this time-frame will be deemed to have been
received the next business day.
4.2 The Transfer Agent acknowledges that the Security Procedure it has
designated on the Transfer Agent Selection Form was selected by the Transfer
Agent from Security Procedures offered by the Bank. The Transfer Agent shall
restrict access to confidential information relating to the Security Procedure
to authorized persons as communicated to the Bank in writing. The Transfer Agent
must notify the Bank immediately if it has reason to believe unauthorized
persons may have obtained access to such information or of any change in the
Transfer Agent's authorized personnel. The Bank shall verify the authenticity of
all such instructions according to the Security Procedure.
<PAGE>
4.3 The Bank shall process all payment orders on the basis of the account
number contained in the payment order. In the event of a discrepancy between any
name indicated on the payment order and the account number, the account number
shall take precedence and govern.
4.4 When the Transfer Agent initiates or receives Automated Clearing House
("ACH") credit and debit entries pursuant to these guidelines and the rules of
the National Automated Clearing House Association and the New England Clearing
House Association, the Bank will act as an Originating Depository Financial
Institution and/or receiving depository Financial Institution, as the case may
be, with respect to such entries. Credits given by the Bank with respect to an
ACH credit entry are provisional until the Bank receives final settlement for
such entry from the Federal Reserve Bank. If the Bank does not receive such
final settlement, the Transfer Agent agrees that the Bank shall receive a refund
of the amount credited to the Transfer Agent in connection with such entry, and
the party making payment to the Transfer Agent via such entry shall not be
deemed to have paid the amount of the entry.
4.5 The Bank reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of the Bank's receipt of such payment
order; (b) if initiating such payment order would cause the Bank, in the Bank's
sole judgement, to exceed any volume, aggregate dollar, network, time, credit or
similar limits upon wire transfers which are applicable to the Bank; or (c) if
the Bank, in good faith, is unable to satisfy itself that the transaction has
been properly authorized.
4.6 The Bank shall use reasonable efforts to act on all authorized requests
to cancel or amend payment orders received in compliance with the Security
Procedure provided that such requests are received in a timely manner affording
the Bank reasonable opportunity to act. However, the Bank assumes liability if
the request for amendment or cancellation cannot be satisfied.
4.7 The Bank shall assume no responsibility for failure to detect any
erroneous payment order provided that the Bank complies with the payment order
instructions as received and the Bank complies with the Security Procedure. The
Security Procedure is established for the purpose of authenticating payment
orders only and not for the detection of errors in payment orders.
4.8 The Bank shall assume no responsibility for lost interest with respect
to the refundable amount of any unauthorized payment order unless the Bank is
notified of the unauthorized payment order within (30) days or notification by
the Bank of the acceptance of such payment order. In no event (including failure
to execute a payment order) shall the Bank be liable for special, indirect or
consequential damages, even if advised of the possibility of such damages.
4.9 Confirmation of Bank's execution of payment orders shall ordinarily be
provided within 24 hours notice of which may be delivered through the Bank's
proprietary information systems, or by facsimile or call-back. Client must
report any objections to the execution of an order within 30 days.
5. Data Access and Proprietary Information
5.1 The Transfer Agent acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and other
information furnished to the Transfer Agent by the Bank are provided solely in
connection with the services rendered under this Agreement and constitute
copyrighted trade secrets or proprietary information of substantial value to the
Bank. Such databases, programs, formats, designs, techniques and other
information are collectively referred to below as "Proprietary Information". The
Transfer Agent agrees that it shall treat all Proprietary Information as
proprietary to the Bank and further agrees that it shall not divulge any
Proprietary Information to any person or organization except as expressly
permitted hereunder. The Transfer Agent agrees for itself and its employees and
agents:
(a) to use such programs and databases (i) solely on the Transfer
Agent's computers, or (ii) solely from equipment at the locations
agreed to between the Transfer Agent and the Bank and (iii) in
accordance with the Bank's applicable user documentation;
<PAGE>
(b) to refrain from copying or duplicating in any way (other than in
the normal course of performing processing on the Transfer Agents
computers) any part of any Proprietary Information;
(c) to refrain from obtaining unauthorized access to any programs,
data or other information not owned by the Transfer Agent, and if
such access if accidently obtained, to respect and safeguard the
same Proprietary Information;
(d) to refrain from causing or allowing information transmitted from
the Bank's computer to the Transfer Agent's terminal to be
retransmitted to any other computer terminal or other device
except as expressly permitted by the Bank, such permission not to
be unreasonably withheld;
(e) that the Transfer Agent shall have access only to those
authorized transactions as agreed to between the Transfer Agent
and the Bank; and
(f) to honor reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law and under applicable statutes.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section 5 shall
survive any earlier termination of this Agreement.
6. Indemnification
6.1 The Bank shall not be responsible for, and the Transfer Agent shall
indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payment, expenses and liability arising
out of or attributable to:
(a) all actions of the Bank or its agent or subcontractors required
to be taken pursuant to this Agreement, provided that such
actions are taken in good faith and without negligence or willful
misconduct;
(b) the Transfer Agents' lack of good faith, negligence or willful
misconduct;
(c) the reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services
which (i) are received by the Bank or its agents or
subcontractors from the Transfer Agent or its duly authorized
representative, and (ii) have been prepared, maintained or
performed by the Transfer Agent including but not limited to any
previous transfer agent or registrar excluding the Bank;
(d) the reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Transfer
Agent;
(e) the offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws
or regulations of any state that such Shares be registered in
such state or in violation of any stop order or other
determination or ruling by any federal agency or any state with
respect to the offer or sale of such Shares in such state.
6.2 At any time the Bank may apply to any officer of the Transfer Agent for
instructions, and may consult with legal counsel acceptable to the Transfer
Agent with respect to any matter arising in connection with the services to be
performed by the Bank under this Agreement, and the Bank and its agents or
subcontractors shall not be liable and shall be indemnified by the Transfer
Agent for any action taken or omitted by it in reliance upon such instructions
or upon the opinion of such counsel.
The Bank, its agents and subcontractors shall be protected and indemnified
in acting upon any paper or document furnished by or on behalf of the Transfer
Agent, reasonably believed to be genuine and to have been signed by the proper
person or persons, or upon any instruction, information, data, records or
documents provided the Bank or its agents or subcontractors by machine readable
input, telex, tape, CRT data entry or other similar means authorized by the
Transfer Agent, and shall not be held to have notice of any change of authority
of any person, until receipt of written notice thereof from the Transfer Agent.
The Bank, its agents and subcontractors shall also be protected and indemnified
in recognizing stock certificates which are reasonably believed to bear the
proper manual or facsimile signatures of the officers of the Fund, and the
proper countersignature of any former transfer agent or former registrar, or of
a co-transfer agent or co-registrar.
<PAGE>
6.3 In order that the indemnification provisions contained in this Section
6 shall apply, upon the assertion of a claim for which the Transfer Agent may be
required to indemnify the Bank, the Bank shall promptly notify the Transfer
Agent of such assertion, and shall keep the Transfer Agent advised with respect
to all developments concerning such claim. The Transfer Agent shall have the
option to participate with the Bank in the defense of such claim or to defend
against said claim in its own name or in the name of the Bank.
The Bank shall in no case confess any claim or make any compromise in any
case in which the Transfer Agent may be required to indemnify the Bank except
with the Transfer Agent's prior written consent.
6.4 The indemnity provisions of Section 6 shall survive any earlier
termination of this Agreement.
7. Standard of Care
The Bank shall at all times act in good faith and agrees to use its best
efforts to insure the accuracy of all services performed under this Agreement,
but assumes no responsibility and shall not be liable for loss or damage due to
errors unless said errors are caused by its negligence, bad faith, or willful
misconduct or that of its employees.
8. Covenants of the Transfer Agent and the Bank
8.1 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Transfer Agent for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
8.2 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of each Fund or the Transfer Agent and will be
preserved, maintained and made available in accordance with such section and
rules, for monitoring by the Transfer Agent, and will be surrendered promptly to
the Transfer Agent on and in accordance with its request. The Bank shall furnish
adequate resources and office space in order to allow the Transfer Agent or any
governmental authority to inspect all books, procedures, information and records
required hereby.
8.3 The Bank and the Transfer Agent agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.4 In case of any requests or demands for the inspection of the
Shareholder records of the Transfer Agent, the Bank will endeavor to notify the
Transfer Agent and to secure instructions from an authorized officer of the
Transfer Agent as to such inspection. The Bank reserves the right, however, to
exhibit the Shareholder records to any person, whenever it is advised by counsel
that it may be held liable for the failure to exhibit the Shareholder records to
such person.
9. Representations and Warranties of the Bank
The Bank represents and warrants to the Transfer Agent that:
(a) it is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts;
(b) it is duly qualified to carry on its business in the Commonwealth of
Massachusetts;
(c) it is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement;
(d) all requisite corporation proceedings have been taken to authorize it
to enter into and perform this Agreement;
(e) it has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement;
<PAGE>
(f) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act.
10. Representations and Warranties of the Transfer Agent
The Transfer Agent represents and warrants to the Bank that:
(a) it is a Connecticut corporation duly organized and existing and in
good standing under the laws of Connecticut;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(c) all corporate proceedings required by said articles of incorporation
and by-law have been taken to authorize it to enter into and perform
this Agreement;
(d) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act.
11. Termination of Agreement
11.1 This Agreement shall continue for a period of three years (the
"Initial Term") and be renewed or terminated as stated below.
11.2 This Agreement shall terminate upon the termination of the Transfer
Agency Agreement between the Funds and the Transfer Agent.
11.3 This Agreement may be terminated or renewed after the Initial Term by
either party upon ninety (90) days written notice to the other.
11.4 Should either party exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the party exercising its right to terminate. Additionally, the party receiving
the notice to terminate reserves the right to charge the terminating party for
any other reasonable expenses associated with such termination.
12. Assignment
12.1 Except as provided in Section 12.3 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
12.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
12.3 The Bank may, without further consent on the part of the Transfer
Agent, subcontract for the performance hereof with (a) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as
a transfer agent pursuant to Section 17A (c)(2) of the Exchange Act ("Section
17A (c)(2); (b) National Financial Data Services, Inc., a subsidiary of BFDS
duly registered as a transfer agent pursuant to Section 17A (c)(2) or (c) a BFDS
affiliate; provided, however, that the Bank shall be as fully responsible to the
Transfer Agent for the acts and omissions of any subcontractor as it is for its
own acts and omissions.
13. Amendment
This Agreement may be amended or modified by a written agreement executed
by both parties.
14. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
15. Force Majeure
In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
<PAGE>
16. Consequential Damages
Neither party to this agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
17. Limitations of Shareholder Liability
The Bank hereby expressly acknowledges that recourse against the Funds
shall be subject to those limitations provided by governing law and the
Declaration of Trust of the Funds, as applicable, and agrees that obligations
assumed by the Funds pursuant to the Transfer Agency Agreement shall be limited
in all cases to the Funds and their respective assets. The Bank shall not seek
satisfaction from the Shareholders or any Shareholders of the Funds, nor shall
the Bank seek satisfaction of any obligations from the Trustees/Directors or any
individual Trustee/Director of the Funds.
18. Merger of Agreement
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter hereof
whether oral or written.
19. Counterparts
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the 21st day of July 1994.
PHOENIX EQUITY PLANNING CORPORATION
BY: /s/ William R. Moyer
---------------------------------------
William R. Moyer
Senior Vice President, Finance
ATTEST:
/s/Patricia O. McGlaughlin
- -----------------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/Donald E. Logue
---------------------------
Executive Vice President
ATTEST:
/s/S. Cesso
- -------------------------------
<PAGE>
STATE STREET BANK & TRUST COMPANY
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS PLAN
TRANSFER AND DIVIDEND DISBURSEMENT AGENT
THE PHOENIX FUNDS
PHOENIX SERIES FUNDS
PHOENIX HIGH YIELD FUND SERIES--A & B SHARES
*NATIONAL BOND FUND MERGED WITH A SHARES
PHOENIX U.S. GOVERNMENT SECURITIES FUND SERIES--A & B SHARES
*NATIONAL FEDERAL SECURITIES TRUST MERGED WITH A SHARES
PHOENIX BALANCED FUND SERIES--A & B SHARES
PHOENIX CONVERTIBLE FUND SERIES--A & B SHARES
PHOENIX GROWTH FUND SERIES--A & B SHARES
PHOENIX MONEY MARKET FUND SERIES--A & B SHARES
PHOENIX MULTI PORTFOLIO FUNDS
PHOENIX TAX EXEMPT BOND PORTFOLIO--A & B SHARES
*NATIONAL SECURITIES TAX EXEMPT BONDS MERGED WITH A SHARES
PHOENIX CAPITAL APPRECIATION PORTFOLIO--A & B SHARES
PHOENIX INTERNATIONAL PORTFOLIO--A & B SHARES
PHOENIX ENDOWMENT EQUITY PORTFOLIO
PHOENIX ENDOWMENT FIXED-INCOME PORTFOLIO
OTHER PHOENIX FUNDS
PHOENIX TOTAL RETURN FUND, INC.--A & B SHARES
*NATIONAL TOTAL RETURN MERGED WITH A SHARES
PHOENIX MULTI-SECTOR FIXED INCOME FD, INC.--A & B SHARES
*PHOENIX HIGH QUALITY MERGED WITH A SHARES
PHOENIX EQUITY OPPORTUNITIES FUND--A & B SHARES
*A SHARES FORMERLY NATIONAL STOCK FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND--A & B SHARES
PHOENIX INCOME AND GROWTH FUND--A & B SHARES
PHOENIX CALIFORNIA TAX EXEMPT BOND FUND--A & B SHARES
PHOENIX ASSET RESERVE--A & B SHARES
<PAGE>
STATE STREET BANK & TRUST COMPANY
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS PLAN
TRANSFER AND DIVIDEND DISBURSEMENT AGENT
THE PHOENIX FUNDS
State Street shall charge PEPCO an annual fee based on a per shareholder
account per fund class for the next three (3) years equal to the following:
PHOENIX FEE SCHEDULE
Annual Per Account Fee
1994 $6.75
1995-1996* 1-600,000 ACCTS $7.00
600,000-1,000,000 ACCTS $6.75
OVER 1,000,000 ACCTS $6.60
Monthly Minimum/Fund Applied to Acct. Fee $1,500.00
Annual Closed Account Fee $1.20
Checkwriting Fees:
Per Check Cleared $1.00
Privilege Set-Up $5.00
Annual 12(B)1 Fee (Billed Quarterly) $1.00
Annual Investor Processing Fee
(Per Investor) $1.80
Other Fees: (1994-1996)
Management $27.00-$37.00 Per Hr. Per FTE
Fund Administrator $29.00 Per Hr. Per FTE
All Transfer Agent Functions $22.50 Per Hr. Per FTE
Liaisons Over 4,000/mth $26.00 Per Item
[bullet] This schedule is based on 700K accounts, 26 funds, and 4,000 liaison
items.
[bullet] If the account base decreases significantly, the per account fee will
be reviewed by both parties.
[bullet] If 12(B)1 product is discontinued the annual per account fee will be
increased by $1.00 [bullet]
[bullet] Additional Fund Administrators will be added as new funds are opened
(ratio 1:8) and charged as detailed above.
[bullet] This schedule does not include fees for Image terminals, conversions,
acquisitions, customer service, audio response, 401 recordkeeping, new product
lines, and out-of-pockets.
In witness whereof, Phoenix Equity Planning Corporation and State Street
Bank and Trust Company have agreed upon this fee schedule and have caused this
fee schedule to be executed in their names and on their behalf through their
duly authorized officers for the next three years.
PHOENIX EQUITY PLANNING CORPORATION STATE STREET BANK & TRUST CO.
By /s/Edward P. Hourihan By /s/ Mark Toomey
------------------------ --------------------------
Title Vice President Title Vice President
Date 7/15/94 Date 7/12/74
*The fee for this period shall be adjusted by the parties to reflect then
prevailing levels of service furnished by State Street.
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
SERVICE RESPONSIBILITY SCHEDULE
<TABLE>
<CAPTION>
FUNCTIONAL PEPCO BFDS
RESPONSIBILITIES (Transfer Agent) (Sub Transfer Agent)
<S> <C> <C>
A. Transmission Processing:
Remittance Cash Processing X
New Account Setup
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Quality Assurance X
Transfers
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Dealer X
[bullet] Quality Assurance X
Redemptions
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Quality Assurance X
Wire Order
[bullet] Set-Up X
[bullet] Settlement X
[bullet] Quality Assurance X
[bullet] Monitoring of Outstanding Trades X
Maintenance
[bullet] Registration X
[bullet] Rep/Dealer File X *X
[bullet] Sub Files X
[bullet] Quality Assurance X
[bullet] ACH Prenote Reject X
[bullet] All Account Options X
Adjustments (through 12/94)
[bullet] Account Corrections *X
[bullet] LOI Processing *X
[bullet] Year-End Accounts Adjustments *X
[bullet] Sharelot Adjustments *X
[bullet] Bounced Checks *X
[bullet] ACH Cancellations *X
[bullet] Quality Assurance *X
B. Customer Service:
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Telephones X
[bullet] Customer Inquiry X
[bullet] Transaction Line
[bullet] Timer Exchanges *X
[bullet] Liaison Support (Through 12/4) *X
Correspondence X
[bullet] Shareholder/Dealer Letters X
[bullet] Transfer of Assets Letters/Followup X
[bullet] Notice of Levy X
Dealer Services
[bullet] FundsServ/Networking Implementation X
[bullet] Dealer Security Access X
[bullet] Enhancements-Communications/Testing X
???ent Services
[bullet] Product Development/Implementation X
[bullet] Mailings X
[bullet] Year End Reporting X
C. Support:
Image/AWD
[bullet] Scanning X X
[bullet] Work Distribution X
[bullet] Retrieval X
[bullet] Technical Support X
Microfilm/Research Prior Agent X *X
[bullet] Media Production
[bullet] Design/Printing X
[bullet] Marketing Materials X
[bullet] Forms Development X
Corporate Actions
[bullet] Report Generation X
[bullet] Proxy Solicitation X
[bullet] Periodic Financial Activities (DIVs, PACs,
SWPs, etc.) X
Compliance/Regulatory
[bullet] Escheatment X
[bullet] Tax Filings X
[bullet] Lost Shareholder Recovery X
[bullet] BNotice/CNotice Reporting *X
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[bullet] Lost Certificate Processing/SIC *X
[bullet] Reporting
Recon/Control
[bullet] Cash Settlement X
[bullet] Account Reconcilement X
[bullet] Commission Payment X
[bullet] Automated Trade Settlement X
[bullet] Balance Credit Review X
[bullet] Reclaims *X
[bullet] Dividend Processing X
Financial Reporting
[bullet] Billing to the Fund X
Will be internalized to PEPCO
</TABLE>
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
THIS AGREEMENT made and concluded as of this 19th day of November, 1997
by and between Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Financial Agent") and each of the undersigned mutual funds
(hereinafter collectively and singularly referred to as the "Trust").
WITNESSETH THAT:
1. Financial Agent shall keep the books of the Trust and compute the
daily net asset value of shares of the Trust in accordance with instructions
received from time to time from the Board of Trustees of the Trust; which
instructions shall be certified to Financial Agent by the Trust's Secretary.
Financial Agent shall report such net asset value so determined to the Trust and
shall perform such other services as may be requested from time to time by the
Trust as are reasonably incidental to Financial Agent's duties hereunder.
2. Financial Agent shall be obligated to maintain, for the periods and
in the places required by Rule 31a-2 under the Investment Company Act of 1940,
as amended, those books and records maintained by Financial Agent. Such books
and records are the property of the Trust and shall be surrendered promptly to
the Trust upon its request. Furthermore, such books and records shall be open to
inspection and audit at reasonable times by officers and auditors of the Trust.
3. As compensation for its services hereunder during any fiscal year of
the Trust, Financial Agent shall receive, within eight days after the end of
each month, a fee as specified in Schedule A.
4. Financial Agent shall not be liable for anything done or omitted by
it in the exercise of due care in discharging its duties specifically described
hereunder and shall be answerable and accountable only for its own acts and
omissions and not for those of any agent employed by it nor for those of any
bank, trust company, broker, depository, correspondent or other person.
Financial Agent shall be protected in acting upon any instruction, notice,
request, consent, certificate, resolution, or other instrument or paper believed
by Financial Agent to be genuine, and to have been properly executed, and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained by Financial
Agent hereunder a certificate signed by the Secretary of the Trust. Financial
Agent shall be entitled, with respect to questions of law relating to its duties
hereunder, to advice of counsel (which may be counsel for the Trust) and, with
respect to anything done or omitted by it in good
<PAGE>
faith hereunder in conformity with the advice of or based upon an opinion of
counsel, to be held harmless by the Trust from all claims of loss or damage.
Nothing herein shall protect Financial Agent against any liability to the Trust
or to its respective shareholders to which Financial Agent would otherwise be
subject by reason of its willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties hereunder. Except as provided in this
paragraph, Financial Agent shall not be entitled to any indemnification by the
Trust.
5. Subject to prior approval of the Board of Trustees of the Trust,
Financial Agent may appoint one or more sub-financial agents to perform any of
the functions and services which are to be provided under the terms of this
Agreement upon such terms and conditions as may be mutually agreed upon by the
Trust, Financial Agent and such sub-financial agent.
6. This Agreement shall continue in effect only so long as (a) such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or by a vote of a majority of the outstanding voting securities of
the Trust, and (b) the terms and any renewal of such Agreement have been
approved by the vote of a majority of the trustees of the Trust who are not
parties to this Agreement or interested persons, as that term is defined in the
Investment Company Act of 1940, as amended, of any such party, cast in person at
a meeting called for the purpose of voting on such approval. A "majority of the
outstanding voting securities of the Trust" shall have, for all purposes of this
Agreement, the meaning provided therefor in said Investment Company Act.
7. Either party may terminate the within Agreement by tendering written
notice to the other, whereupon Financial Agent will be relieved of the duties
described herein. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in said Investment Company Act.
8. Additional funds may become party to this Agreement by notifying the
Financial Agent in writing, and if the Financial agent agrees in writing to
provide its services, such fund shall become a Trust subject to the terms of the
Agreement. Such notification shall include a revised Schedule A reflecting the
new fund(s) as added to the appropriate fund classification(s).
<PAGE>
9. This Agreement shall be construed and the rights and obligations of
the parties hereunder enforced in accordance with the laws of the Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
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
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS FINANCIAL AGENT
Annual Financial Agent Fees shall be based on the following formula:
(1) An incremental schedule applies as follows:
<TABLE>
<S> <C>
Up to $100 million: 5 basis points on average daily net assets
$100 million to $300 million: 4 basis points on average daily net assets
$300 million through $500 million: 3 basis points on average daily net assets
Greater than $500 million: 1.5 basis points on average daily net assets
</TABLE>
A minimum fee will apply as follows:
Money Market $35,000
Equity $50,000
Balanced $60,000
Fixed Income $70,000
International $70,000
REIT $70,000
(2) An additional charge of $12,000 applies for each additional class
of shares above one, over and above the minimum asset-based fee previously
noted.
The following tables indicates the classification and effective date
for each of the applicable fund/series/portfolio:
Classification Series Name
-------------- -----------
Money Market Phoenix Money Market Fund Series
Equity Phoenix Aggressive Growth Fund Series
Phoenix Core Equity Fund
Phoenix Equity Opportunities Fund
Phoenix Growth and Income Fund
Phoenix Growth Fund Series
Phoenix Micro Cap Fund
Phoenix Mid Cap Portfolio
Phoenix Small Cap Fund
Phoenix Small Cap Value Fund
Phoenix Strategic Theme Fund
Phoenix Value Equity Fund
<PAGE>
Classification Series Name
-------------- -----------
Balanced Phoenix Balanced Fund Series
Phoenix Convertible Fund Series
Phoenix Income and Growth Fund
Phoenix Strategic Allocation Fund, Inc.
Fixed Income Phoenix California Tax Exempt Bonds, Inc.
Phoenix Strategic Income Fund
Phoenix Emerging Markets Bond Portfolio
Phoenix High Yield Fund Series
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Tax-Exempt Bond Portfolio
Phoenix U.S. Government Securities Fund Series
International Phoenix International Portfolio
Phoenix Worldwide Opportunities Fund
REIT Phoenix Real Estate Securities Portfolio
Exhibit 9.4
FIRST AMENDMENT TO
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
<PAGE>
FIRST AMENDMENT TO
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
THIS AMENDMENT made effective as of the 27th day of February, 1998 amends that
certain Amended and Restated Financial Agent Agreement dated November 19, 1997
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 the Agreement to eliminate the
provision that states that Financial Agent is not responsible for the acts or
omissions of any agent appointed by it:
NOW, THEREFORE, in consideration of the foregoing premise, the first
sentence of Paragraph 4 of the Agreement is amended to read as follows:
"Financial Agent shall not be liable for anything done or omitted to be
done by it in the exercise of due care in discharging its duties
specifically described hereunder."
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized officers on this 23rd day of March, 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
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the reference to us under the heading "Other
Information--Independent Accountants" in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 1 to the registration
statement on Form N-1A for the Phoenix Investment Trust 97.
/s/ PRICE WATERHOUSE LLP
Boston, Massachusetts
May 13, 1998
BELOW VERSION "PRETTY" HAS FORMULAS, COPIED TO NEXT SHEET FOR
EDGARIZING, STRIPPED OUT FORMULAS & FORMATS
EXPLANATION OF TOTAL RETURN CALCULATION EXHIBIT 16
TOTAL RETURN FORMULA:
P( 1 + T )n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value
<TABLE>
<CAPTION>
(a) (b) (c)=a-b (d) (e) (f) (g) (h)=f-g
Front end Initial Net Number of Dividend Share Backend Ending
Initial Sales Asset shares per Reinvest Value end Sales Redeemable
Payment Charge Value Initial Payment Shares of Period Charge Value
------- ------ ----- --------------- ------ --------- ------ -----
($) ($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Since inception November 4, 1997 to February 28, 1998
PDP Value Equity Class A
1,000.00 47.50 952.50 95.25 0.23 1,037.87 0 1,037.87
Since inception November 4, 1997 to February 28, 1998
PDP Value Equity Class B
1,000.00 - 1,000.00 100.00 0.20 1,087.17 50.00 1,037.17
Since inception November 4, 1997 to February 28, 1998
PDP Value Equity Class C
1,000.00 - 1,000.00 100.00 0.16 1,087.76 10.00 1,077.76
Since inception November 4, 1997 to February 28, 1998
PDP Value Equity Class M
1,000.00 35.00 965.00 96.50 0.136 1,051.40 0 1,051.40
Since inception November 20, 1997 to February 28, 1998
PDP Small Cap Value Class A
1,000.00 47.50 952.50 95.25 0.305 1,034.86 0 1,034.86
Since inception November 20, 1997 to February 28, 1998
PDP Small Cap Value Class B
1,000.00 - 1,000.00 100.00 0.29 1,084.13 50.00 1,034.13
Since inception November 20, 1997 to February 28, 1998
PDP Small Cap Value Class C
1,000.00 - 1,000.00 100.00 0.26 1,083.81 10.00 1,073.81
Since inception November 20, 1997 to February 28, 1998
PDP Small Cap Value Class M
1,000.00 35.00 965.00 96.50 0.241 1,047.71 0 1,047.71
</TABLE>
<TABLE>
<CAPTION>
(i)=(h-a)/a
Cumulative Average
Total Annual
Return Return
------ ------
(%) (%)
<S> <C> <C>
3.79% 3.79%
3.72% 3.72%
7.78% 7.78%
5.14% 5.14%
3.49% 3.49%
3.41% 3.41%
7.38% 7.38%
4.77% 4.77%
</TABLE>
Exhibit 18
Amended and Restated Plan
Pursuant to Rule 18f-3
<PAGE>
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended ("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
-------------------------
The portfolios of the Funds listed on Schedule A hereto shall offer up
to four classes of shares as indicated on Schedule A: Class A, Class B, Class C
and Class M ("Multi-Class Portfolios"). Shares of the Multi-Class Portfolios
shall represent an equal pro rata interest in the respective Multi-Class
Portfolio and, generally, shall have identical voting, dividend, liquidation,
and other rights, preferences, powers, restrictions, limitations, qualifications
and terms and conditions, except that: (a) each class shall have a different
designation; (b) each class shall bear any Class Expenses, as defined by Section
2(b), below; (c) each class shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its distribution arrangement;
and (d) each class shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the interests of
any other class. In addition, Class A, Class B, Class C and Class M shares shall
have the features described in Sections a, b, c and d, below.
a. Distribution Plans
------------------
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio, containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall reimburse
Phoenix Equity Planning Corporation (the "Distributor") for costs and expenses
incurred in connection with distribution and marketing of shares thereof, as
provided in the Class A Distribution Plan and any supplements thereto, subject
to an annual limit of 0.25%, or in some cases 0.30%, of the average daily net
assets of a Multi-Class Portfolio's Class A shares.
<PAGE>
-2-
ii. Class B shares of each Multi-Class Portfolio shall reimburse the
Distributor for costs and expenses incurred in connection with distribution and
marketing of shares thereof, as provided in the Class B Distribution Plan and
any supplements thereto, subject to an annual limit of 1.00% of the average
daily net assets of a Multi-Class Portfolio's Class B shares.
iii. Class C shares of each Multi-Class Portfolio shall reimburse the
Distributor for costs and expenses incurred in connection with distribution and
marketing of shares thereof, as provided in the Class C Distribution Plan and
any supplements thereto, subject to an annual limit of 1.00%, or in some cases
0.50%, of the average daily net assets of a Multi-Class Portfolio's Class C
shares.
iv. Class M shares of each Multi-Class Portfolio shall reimburse the
Distributor for costs and expenses incurred in connection with distribution and
marketing of shares thereof, as provided in the Class M Distribution Plan and
any supplements thereto, subject to an annual limit of 0.50% of the average
daily net assets of a Multi-Class Portfolio's Class M shares.
b. Allocation of Income and Expenses
---------------------------------
i. General.
The gross income, realized and unrealized capital gains and losses and
expenses (other than Class Expenses, as defined below) of each Multi-Class
Portfolio shall be allocated to each class on the basis of its net asset value
relative to the net asset value of the Multi-Class Portfolio. Expenses to be so
allocated include expenses of the Funds that are not attributable to a
particular Multi-Class Portfolio or class of a Multi-Class Portfolio but are
allocated to a Multi- Class Portfolio ("Fund Expenses") and expenses of a
particular Multi-Class Portfolio that are not attributable to a particular class
of that Multi-Class Portfolio ("Portfolio Expenses"). Fund Expenses include, but
are not limited to, trustees' fees, insurance costs and certain legal fees.
Portfolio Expenses include, but are not limited to, certain state registration
fees, custodial fees, advisory fees and other expenses relating to the
management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
Expenses attributable to a particular class ("Class Expenses") shall
be limited to: (1) transfer agency fees; (2) stationery, printing, postage, and
delivery expenses relating to preparing and distributing shareholder reports,
prospectuses, and proxy statements; (3) state Blue Sky registration fees; (4)
SEC registration fees; (5) expenses of administrative personnel and services to
the extent related to another category of class-specific expenses; (6) trustees'
fees and expenses; (7) accounting expenses, auditors' fees, litigation expenses,
and legal fees and expenses; and (8) expenses incurred in connection with
shareholder meetings. Expenses described in subsection (a) (i) and (ii) above of
this paragraph must be allocated to the class for which they are incurred. All
other expenses described in this paragraph will be allocated as Class
<PAGE>
-3-
Expenses, if a Fund's President and Treasurer have determined, subject to Board
approval or ratification, which of such categories of expenses will be treated
as Class Expenses, consistent with applicable legal principles under the 1940
Act and the Internal Revenue Code of 1986, as amended ("Code"). The difference
between the Class Expenses allocated to each share of a class during a year and
the Class Expenses allocated to each share of any other class during such year
shall at all times be less than .50% of the average daily net asset value of the
class of shares with the smallest average net asset value. The afore-described
description of Class Expenses and any amendment thereto shall be subject to the
continuing availability of an opinion of counsel or a ruling from the Internal
Revenue Service to the effect that any such allocation of expenses or the
assessment of higher distribution fees and transfer agency costs on any class of
shares does not result in any dividends or distributions constituting
"preferential dividends" under the Code.
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 1 8f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated as Class
Expenses and any subsequent changes thereto as set forth in this Plan shall be
reviewed by the Board of Trustees and approved by such Board and by a majority
of the Trustees who are not "interested persons" of the Fund, as defined in the
1940 Act ("Independent Trustees").
iii. Waivers or Reimbursements of Expenses.
Investment Advisor may waive or reimburse its management fee in whole
or in part provided that the fee is waived or reimbursed to all shares of the
Fund in proportion to the relative average daily net asset values.
Investment Advisor or a related entity who charges a fee for a Class
Expense may waive or reimburse that fee in whole or in part only if the revised
fee more accurately reflects the relative cost of providing to each Multi-Class
Portfolio the service for which the Class Expense is charged.
Distributor may waive or reimburse a Rule 12b- 1 Plan fee payment in
whole or in part.
c. Exchange Privileges
Shareholders of a Multi-Class Portfolio may exchange shares of a
particular class for shares of the same class in another Multi-Class Portfolio,
at the relative net asset values of the respective shares to be exchanged and
with no sales charge, provided the shares to be acquired in the exchange are, as
may be necessary, qualified for sale in the shareholder's state of residence and
subject to the applicable requirements, if any, as to minimum amount. Each
Multi-Class
<PAGE>
-4-
Portfolio reserves the right to temporarily or permanently terminate exchange
privileges, impose conditions upon the exercision of exchange privileges, or
reject any specific order for any dealer, shareholder or person whose
transactions seem to follow a timing pattern, including those who request more
than one exchange out of a Multi-Class Portfolio within any thirty (30) day
period. Each Multi-Class Portfolio reserves the right to terminate or modify
these exchange privileges at any time upon giving prominent notice to
shareholders at least 60 days in advance.
d. Conversion Feature
Class B Shares of a Multi-Class Portfolio will automatically convert
to Class A Shares of that portfolio, without sales charge, at the relative net
asset values of each such classes, not later than eight years from the
acquisition of the Class B Shares. The conversion of Class B Shares to Class A
Shares is subject to the continuing availability of an opinion of counsel or a
ruling from the Internal Revenue Service to the effect that the conversion of
shares does not constitute a taxable event under federal income tax law.
3. Board Review
------------
a. Approval of Amended and Restated Plan
The Board of Trustees, including a majority of the Independent
Trustees, at a meeting held on November 19, l997, approved the Amended and
Restated Plan based on a determination that the Plan, including the expense
allocation, is in the best interests of each class and Multi-Class Portfolio
individually and of the Funds. Their determination was based on their review of
information furnished to them which they deemed reasonably necessary and
sufficient to evaluate the Plan.
b. Approval of Amendments
The Plan may not be amended materially unless the Board of Trustees,
including a majority of the Independent Trustees, have found that the proposed
amendment, including any proposed related expense allocation, is in the best
interests of each class and Multi-Class Portfolio individually and of the Funds.
Such funding shall be based on information required by the Board and furnished
to them that the Board deems reasonably necessary to evaluate the proposed
amendment.
c. Periodic Review
The Board shall review reports of expense allocations and such other
information as they request at such times, or pursuant to such schedule, as they
may determine consistent with applicable legal requirements.
<PAGE>
-5-
4. Contracts
---------
Any agreement related to the Multi-Class System shall require the
parties thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
--------------
The Amended and Restated Plan, having been reviewed and approved by
the Board of Trustees and the Independent Trustees, shall take effect as of the
first day of each Fund's current fiscal year.
6. Amendments
----------
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3(b) of this
Plan.
<PAGE>
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 -- --
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 -- --
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 -- --
</TABLE>
Exhibit 19
Powers of Attorney
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Investment Trust 97, hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated below, any or
all Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Investment Trust 97, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
November 19, 1997 /s/ Robert Chesek
--------------------------
Robert Chesek, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Investment Trust 97, hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated below, any or
all Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Investment Trust 97, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
November 19, 1997 /s/ Francis E. Jeffries
--------------------------
Francis E. Jeffries, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Investment Trust 97, hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated below, any or
all Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Investment Trust 97, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
November 19, 1997 /s/ Leroy Keith, Jr.
--------------------------
Leroy Keith, Jr., Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Investment Trust 97, hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated below, any or
all Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Investment Trust 97, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
November 19, 1997 /s/ Calvin J. Pedersen
--------------------------
Calvin J. Pedersen, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Investment Trust 97, hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated below, any or
all Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Investment Trust 97, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
November 19, 1997 /s/ Richard E. Segerson
--------------------------
Richard E. Segerson, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix
Investment Trust 97, hereby constitute and appoint Philip R. McLoughlin and
Thomas N. Steenburg, or either of them as my true and lawful attorneys and
agents with full power to sign for me in the capacity indicated below, any or
all Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Investment Trust 97, and hereby ratify
and confirm my signature as it may be signed by said attorneys and agents.
WITNESS my hand and seal on the date set forth below.
November 19, 1997 /s/ Lowell P. Weicker, Jr.
--------------------------
Lowell P. Weicker, Jr., Trustee
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> PHOENIX SMALL CAP VALUE FUND Cl A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> NOV-20-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 16552
<INVESTMENTS-AT-VALUE> 17924
<RECEIVABLES> 691
<ASSETS-OTHER> 79
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18694
<PAYABLE-FOR-SECURITIES> 377
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100
<TOTAL-LIABILITIES> 477
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16988
<SHARES-COMMON-STOCK> 1188
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (25)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (118)
<ACCUM-APPREC-OR-DEPREC> 1372
<NET-ASSETS> 18217
<DIVIDEND-INCOME> 43
<INTEREST-INCOME> 16
<OTHER-INCOME> 0
<EXPENSES-NET> (51)
<NET-INVESTMENT-INCOME> 8
<REALIZED-GAINS-CURRENT> (118)
<APPREC-INCREASE-CURRENT> 1372
<NET-CHANGE-FROM-OPS> 1262
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (28)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1209
<NUMBER-OF-SHARES-REDEEMED> (23)
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 12869
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 23
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 157
<AVERAGE-NET-ASSETS> 16239
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 0.85
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.83
<EXPENSE-RATIO> 1.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> PHOENIX SMALL CAP VALUE FUND CL B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> NOV-20-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 16552
<INVESTMENTS-AT-VALUE> 17924
<RECEIVABLES> 691
<ASSETS-OTHER> 79
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18694
<PAYABLE-FOR-SECURITIES> 377
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100
<TOTAL-LIABILITIES> 477
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16988
<SHARES-COMMON-STOCK> 320
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (25)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (118)
<ACCUM-APPREC-OR-DEPREC> 1372
<NET-ASSETS> 18217
<DIVIDEND-INCOME> 43
<INTEREST-INCOME> 16
<OTHER-INCOME> 0
<EXPENSES-NET> (51)
<NET-INVESTMENT-INCOME> 8
<REALIZED-GAINS-CURRENT> (118)
<APPREC-INCREASE-CURRENT> 1372
<NET-CHANGE-FROM-OPS> 1262
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 323
<NUMBER-OF-SHARES-REDEEMED> (3)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3460
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 23
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 157
<AVERAGE-NET-ASSETS> 16239
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 0.85
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.81
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 003
<NAME> PHOENIX SMALL CAP VALUE FUND CL C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> NOV-20-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 16552
<INVESTMENTS-AT-VALUE> 17924
<RECEIVABLES> 691
<ASSETS-OTHER> 79
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18694
<PAYABLE-FOR-SECURITIES> 377
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100
<TOTAL-LIABILITIES> 477
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16988
<SHARES-COMMON-STOCK> 161
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (25)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (118)
<ACCUM-APPREC-OR-DEPREC> 1372
<NET-ASSETS> 18217
<DIVIDEND-INCOME> 43
<INTEREST-INCOME> 16
<OTHER-INCOME> 0
<EXPENSES-NET> (51)
<NET-INVESTMENT-INCOME> 8
<REALIZED-GAINS-CURRENT> (118)
<APPREC-INCREASE-CURRENT> 1372
<NET-CHANGE-FROM-OPS> 1262
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 161
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1740
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 23
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 157
<AVERAGE-NET-ASSETS> 16239
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 0.85
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.81
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 004
<NAME> PHOENIX SMALL CAP VALUE FUND CL M
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> NOV-20-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 16552
<INVESTMENTS-AT-VALUE> 17924
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<TOTAL-ASSETS> 18694
<PAYABLE-FOR-SECURITIES> 377
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100
<TOTAL-LIABILITIES> 477
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16988
<SHARES-COMMON-STOCK> 14
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (118)
<ACCUM-APPREC-OR-DEPREC> 1372
<NET-ASSETS> 18217
<DIVIDEND-INCOME> 43
<INTEREST-INCOME> 16
<OTHER-INCOME> 0
<EXPENSES-NET> (51)
<NET-INVESTMENT-INCOME> 8
<REALIZED-GAINS-CURRENT> (118)
<APPREC-INCREASE-CURRENT> 1372
<NET-CHANGE-FROM-OPS> 1262
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 14
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 148
<ACCUMULATED-NII-PRIOR> 0
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<PER-SHARE-NAV-BEGIN> 10.00
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> PHOENIX VALUE EQUITY FUND CL A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> NOV-05-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 14312
<INVESTMENTS-AT-VALUE> 15474
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<TOTAL-ASSETS> 15994
<PAYABLE-FOR-SECURITIES> 232
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 68
<TOTAL-LIABILITIES> 300
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14484
<SHARES-COMMON-STOCK> 927
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (12)
<ACCUMULATED-NET-GAINS> 60
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1162
<NET-ASSETS> 15694
<DIVIDEND-INCOME> 56
<INTEREST-INCOME> 7
<OTHER-INCOME> 0
<EXPENSES-NET> (51)
<NET-INVESTMENT-INCOME> 12
<REALIZED-GAINS-CURRENT> 60
<APPREC-INCREASE-CURRENT> 1162
<NET-CHANGE-FROM-OPS> 1234
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (18)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 933
<NUMBER-OF-SHARES-REDEEMED> (7)
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 10086
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 26
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 175
<AVERAGE-NET-ASSETS> 14305
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.87
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<PER-SHARE-NAV-END> 10.87
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> PHOENIX SMALL CAP VALUE CL B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> NOV-20-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 16552
<INVESTMENTS-AT-VALUE> 17924
<RECEIVABLES> 691
<ASSETS-OTHER> 79
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18694
<PAYABLE-FOR-SECURITIES> 377
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100
<TOTAL-LIABILITIES> 477
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16988
<SHARES-COMMON-STOCK> 320
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (25)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (118)
<ACCUM-APPREC-OR-DEPREC> 1372
<NET-ASSETS> 18217
<DIVIDEND-INCOME> 43
<INTEREST-INCOME> 16
<OTHER-INCOME> 0
<EXPENSES-NET> (51)
<NET-INVESTMENT-INCOME> 8
<REALIZED-GAINS-CURRENT> (118)
<APPREC-INCREASE-CURRENT> 1372
<NET-CHANGE-FROM-OPS> 1262
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 323
<NUMBER-OF-SHARES-REDEEMED> (3)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3460
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 157
<AVERAGE-NET-ASSETS> 16239
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 0.85
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.81
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 003
<NAME> PHOENIX VALUE EQUITY FUND CL C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> NOV-20-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 16552
<INVESTMENTS-AT-VALUE> 17924
<RECEIVABLES> 691
<ASSETS-OTHER> 79
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18694
<PAYABLE-FOR-SECURITIES> 377
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100
<TOTAL-LIABILITIES> 477
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16988
<SHARES-COMMON-STOCK> 161
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (25)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (118)
<ACCUM-APPREC-OR-DEPREC> 1372
<NET-ASSETS> 18217
<DIVIDEND-INCOME> 43
<INTEREST-INCOME> 16
<OTHER-INCOME> 0
<EXPENSES-NET> (51)
<NET-INVESTMENT-INCOME> 8
<REALIZED-GAINS-CURRENT> (118)
<APPREC-INCREASE-CURRENT> 1372
<NET-CHANGE-FROM-OPS> 1262
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 161
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1740
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 23
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 157
<AVERAGE-NET-ASSETS> 16239
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 0.85
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<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.81
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 004
<NAME> PHOENIX VALUE EQUITY FUND CL M
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> NOV-20-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 16552
<INVESTMENTS-AT-VALUE> 17924
<RECEIVABLES> 691
<ASSETS-OTHER> 79
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18694
<PAYABLE-FOR-SECURITIES> 377
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100
<TOTAL-LIABILITIES> 477
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16988
<SHARES-COMMON-STOCK> 14
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (25)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (118)
<ACCUM-APPREC-OR-DEPREC> 1372
<NET-ASSETS> 18217
<DIVIDEND-INCOME> 43
<INTEREST-INCOME> 16
<OTHER-INCOME> 0
<EXPENSES-NET> (51)
<NET-INVESTMENT-INCOME> 8
<REALIZED-GAINS-CURRENT> (118)
<APPREC-INCREASE-CURRENT> 1372
<NET-CHANGE-FROM-OPS> 1262
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 148
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 157
<AVERAGE-NET-ASSETS> 16239
<PER-SHARE-NAV-BEGIN> 10.00
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<PER-SHARE-DIVIDEND> (0.03)
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<PER-SHARE-NAV-END> 10.83
<EXPENSE-RATIO> 1.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
