As filed with the Securities and Exchange Commission on December 15, 2000
Registration No. 333-34537
File No. 811-08343
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 6 |X|
AND/OR
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 7 |X|
(CHECK APPROPRIATE BOX OR BOXES)
------------
PHOENIX INVESTMENT TRUST 97
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
------------
101 MUNSON STREET, GREENFIELD, MASSACHUSETTS 01301
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(800) 243-1574
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
------------
Pamela S. Sinofsky
Assistant Vice President and Assistant Counsel
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, Connecticut 06115-0479
(name and address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
|X| immediately upon filing pursuant to paragraph (b)
[ ] on (date) 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.
Phoenix Investment Trust 97, a Delaware business trust (the "Registrant")
is the successor issuer to Phoenix Investment Trust 97, a Massachusetts business
trust (the "Predecessor"). This Post-Effective Amendment has been filed for the
purpose of adopting under the Securities Act of 1933, the Securities Exchange
Act of 1934 and the Investment Company Act of 1940 the Registration Statement on
Form N-1A (nos 333-34537 and 811-08343) of the Predecessor pursuant to the
provisions of Rule 414 under the Securities Act of 1933. In accordance with the
provisions of paragraph (d) of Rule 414, this Registration Statement also
revises and sets forth additional information arising in connection with
Registrant's change of domicile.
================================================================================
<PAGE>
<TABLE>
<CAPTION>
PHOENIX INVESTMENT TRUST 97
CROSS REFERENCE SHEET PURSUANT TO RULE 404
PART A
<S> <C>
ITEM NUMBER PROSPECTUS CAPTION
----------- ------------------
FORM N-1A, PART A
-----------------
1. Front and Back Cover Pages............................... Cover Page, Back Cover Page
2. Risk/Return Summary: Investments, Risks, Performance..... Investment Risk and Return Summary
3. Risk/Return Summary: Fee Table........................... Fund Expenses
4. Investment Objectives, Principal Investment Strategies,
and Related Risks...................................... Investment Risk and Return Summary
5. Management's Discussion of Fund Performance.............. Performance Tables
6. Management, Organization, and Capital Structure.......... Management of the Fund
7. Shareholder Information.................................. Pricing of Fund Shares; Sales Charges; Your
Account; How to Buy Shares; How to Sell Shares;
Things to Know When Selling Shares; Account
Policies; Investor Services; Tax Status of
Distributions
8. Distribution Arrangements................................ Sales Charges
9. Financial Highlights Information......................... Financial Highlights
PART B
ITEM NUMBER STATEMENT OF ADDITIONAL
----------- -----------------------
FORM N-1A, PART B INFORMATION CAPTIONS
----------------- --------------------
10. Cover Page and Table of Contents......................... Cover Page, Table of Contents
11. Fund History............................................. The Fund
12. Description of the Fund and Its Investment Risks......... Investment Techniques and Risks; Investment
Restrictions
13. Management of the Fund................................... Management of the Trust
14. Control Persons and Principal Holders of Securities...... Management of the Trust
15. Investment Advisory and Other Services................... Services of the Adviser; The Distributor;
Distribution Plans; Other Information
16. Brokerage Allocation and Other Practices................. Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities...................... Other Information
18. Purchase, Redemption, and Pricing of Shares.............. Net Asset Value; How to Buy Shares; Investor
Account Services; How to Redeem Shares; Tax
Sheltered Retirement Plans
19. Taxation of the Fund..................................... Dividends, Distributions and Taxes
20. Underwriters............................................. The Distributor
21. Calculation of Performance Data.......................... Performance Information
22. Financial Statements..................................... Financial Statements
PART C
INFORMATION REQUIRED TO BE INCLUDED IN PART C IS SET FORTH UNDER THE APPROPRIATE ITEM,
SO NUMBERED, IN PART C OF THIS REGISTRATION STATEMENT.
</TABLE>
<PAGE>
Phoenix Investment Partners
Prospectus
December 15, 2000
-------- Holllister
Phoenix-Hollister
Small Cap Value Fund
Phoenix-Hollister
Value Equity Fund
Neither the Securities and Exchange
Commission nor any state securities
commission has approved or
disapproved of these securities or
determined if this prospectus is
truthful or complete. Any representation
to the contrary is a criminal offense.
This prospectus contains important
information that you should know before
investing in the Phoenix-Hollister Small
Cap Value Fund and Phoenix-Hollister
Value Equity Fund. Please read it
carefully and retain it for future
reference.
[logo] PHOENIX
INVESTMENT PARTNERS
<PAGE>
Table of Contents
--------------------------------------------------------------------------------
Phoenix-Hollister Small Cap Value Fund
Investment Risk and Return Summary............................. 1
Fund Expenses.................................................. 4
Phoenix-Hollister Value Equity Fund
Investment Risk and Return Summary............................. 6
Fund Expenses.................................................. 9
Additional Investment Techniques................................ 11
Management of the Funds......................................... 12
Pricing of Fund Shares.......................................... 14
Sales Charges................................................... 15
Your Account.................................................... 17
How to Buy Shares............................................... 18
How to Sell Shares.............................................. 19
Things You Should Know When Selling Shares...................... 19
Account Policies................................................ 21
Investor Services............................................... 22
Tax Status of Distributions..................................... 23
Financial Highlights............................................ 24
Additional Information.......................................... 30
[triangle] Phoenix-
Investment
Trust 97
<PAGE>
PHOENIX-HOLLISTER SMALL CAP VALUE FUND
INVESTMENT RISK AND RETURN SUMMARY
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Hollister Small Cap Value Fund has an investment objective to seek
long-term capital appreciation. There is no guarantee that the fund will achieve
its objective.
PRINCIPAL INVESTMENT STRATEGIES
> Under normal circumstances, the fund invests at least 65% of its total
assets in securities of issuers with capitalizations of less than $1
billion at the time of investment. The fund invests in a portfolio of
common stocks and securities convertible into common stocks of primarily
domestic (U.S.) companies. Generally, the fund will invest in securities
traded on the New York Stock Exchange, the American Stock Exchange and in
over-the-counter markets.
> The fund is designed to invest in common stocks that meet the adviser's
quantitative standards that indicate intrinsic value relative to price and
above-average financial soundness. The adviser applies a security
selection process that selects stocks meeting certain investment criteria
relating to price, dividend yield, going concern value and debt levels.
For the few hundred of the approximately 5,000 companies that survive this
screening process, the adviser projects growth in earnings and dividends,
earnings momentum and relative undervaluation based on dividend discount
models. From this analysis, the adviser develops target prices and value
ranges and selects the top-rated securities for purchase.
> Generally, the adviser sells when a stock's target price is reached, when
the issuer or industry suffers negative changes, or when there is a change
in the investment criteria that prompted the initial purchase.
Temporary Defensive Strategy: If the adviser believes that market conditions are
not favorable to the fund's principal strategies, the fund may invest without
limit in U.S. Government securities and in money market instruments. When this
happens, the fund may not achieve its investment objective.
Please see "Additional Investment Techniques" for other investment techniques of
the fund.
RISKS RELATED TO PRINCIPAL INVESTMENT STRATEGIES
If you invest in this fund, you risk that you may lose your investment.
Phoenix-Hollister Small Cap Value Fund 1
<PAGE>
GENERAL
The value of the fund's investments that supports your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decreases, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
CONVERTIBLE SECURITIES
Convertible securities may be subject to redemption at the option of the issuer.
If a security is called for redemption, the fund may have to redeem the
security, convert it into common stock or sell it to a third party at a price
and time that is not beneficial for the fund. In addition, securities
convertible into common stocks may have higher yields than common stocks but
lower yields than comparable non-convertible securities.
SMALL CAPITALIZATIONS
Companies with small capitalizations are often companies with a limited
operating history or companies in industries that have recently emerged due to
cultural, economic, regulatory or technological developments. Such developments
can have a significant impact or negative effect on small capitalization
companies and their stock performance, and can make investment returns highly
volatile. Product lines are often less diversified and subject to competitive
threats. Smaller capitalization stocks are subject to varying patterns of
trading volume and may, at times, be difficult to sell.
2 Phoenix-Hollister Small Cap Value Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Hollister Small Cap Value Fund. The bar chart shows changes in
the fund's Class A Shares performance.(1) The table shows how the fund's annual
returns compare to those of a broad-based securities market index. The fund's
past performance is not necessarily an indication of how the fund will perform
in the future.
[GRAPHIC OMITTED]
CALENDAR YEAR ANNUAL RETURN (%)
1998 2.58
1999 43.25
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 25.84% (quarter ending December 31,
1999) and the lowest return for a quarter was -22.24% (quarter ending September
30, 1998). Year-to-date performance (through September 30, 2000) was 22.71%.
--------------------------------------------------------------------------------
Average Annual Total Returns(1)
(for the periods ending 12/31/99) One Year Life of the Fund(2)
--------------------------------------------------------------------------------
Class A Shares 35.01% 18.49%
--------------------------------------------------------------------------------
Class B Shares 38.24% 19.85%
--------------------------------------------------------------------------------
Class C Shares 42.24% 20.99%
--------------------------------------------------------------------------------
Russell 2000 Value Index(3) -1.49% -2.39%
--------------------------------------------------------------------------------
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption of the fund's Class B and Class C Shares.
(2) Class A Shares, Class B Shares and Class C Shares since November 20, 1997.
(3) The Russell 2000 Value Index is a measure of small-capitalization,
value-oriented stock total return performance. The Index's performance does not
reflect sales charges.
Phoenix-Hollister Small Cap Value Fund 3
<PAGE>
FUND EXPENSES
--------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
<S> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases
(as a percentage of offering price) 5.75% None None
Maximum Deferred Sales Charge (load) (as a
percentage of the lesser of the value redeemed
or the amount invested) None 5%(b) 1%(c)
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT
ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.90% 0.90% 0.90%
Distribution and Service (12b-1) Fees(d) 0.25% 1.00% 1.00%
Other Expenses 0.52% 0.52% 0.52%
---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES(A) 1.67% 2.42% 2.42%
==== ==== ====
</TABLE>
(a) The fund's investment adviser has agreed to reimburse through December 31,
2001 the Phoenix-Hollister Small Cap Value Fund's expenses, other than
Management Fees and Distribution and Service Fees, to the extent that such
expenses exceed 0.25% for each class of shares.
Actual Total Annual Fund Operating Expenses, after expense reimbursement, were
1.40% for Class A Shares, 2.15% for Class B Shares, and 2.15% for Class C
Shares.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(c) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight
4 Phoenix-Hollister Small Cap Value Fund
<PAGE>
years. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $735 $1,071 $1,430 $2,438
--------------------------------------------------------------------------------
Class B $645 $955 $1,291 $2,571
--------------------------------------------------------------------------------
Class C $345 $755 $1,291 $2,756
--------------------------------------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class B $245 $755 $1,291 $2,571
--------------------------------------------------------------------------------
Class C $245 $755 $1,291 $2,756
--------------------------------------------------------------------------------
Note: Your actual expenses may be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
reimbursement of expenses over certain levels by the fund's investment adviser.
Refer to the section "Management of the Funds" for information about expense
reimbursement.
Phoenix-Hollister Small Cap Value Fund 5
<PAGE>
PHOENIX-HOLLISTER VALUE EQUITY FUND
INVESTMENT RISK AND RETURN SUMMARY
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
Phoenix-Hollister Value Equity Fund has a primary investment objective to seek
long-term capital appreciation. The fund has a secondary investment objective to
seek current income. There is no guarantee that the fund will achieve either
objective.
PRINCIPAL INVESTMENT STRATEGIES
> The fund invests in common stocks of primarily domestic (U.S.), large
capitalization companies. Under normal circumstances, the fund will invest
at least 65% of its total assets in common stocks.
> The fund is designed to invest in common stocks that meet the adviser's
quantitative standards that indicate intrinsic value relative to price and
above-average financial soundness. The adviser applies a security
selection process that selects stocks meeting certain investment criteria
relating to price, dividend yield, going concern value and debt levels.
For the few hundred of the approximately 2,500 companies that survive this
screening process, the adviser projects growth in earnings and dividends,
earnings momentum and relative undervaluation based on dividend discount
models. From this analysis, the adviser develops target prices and value
ranges and selects the top-rated securities for purchase.
> Generally, the adviser sells when a stock's target price is reached, when
the issuer or industry suffer negative changes, or when there is a change
in the investment criteria that prompted the initial purchase.
Temporary Defensive Strategy: If the adviser believes that market conditions are
not favorable to the fund's principal strategies, the fund may invest without
limit in U.S. Government securities and in money market instruments. When this
happens, the fund may not achieve its investment objective.
Please see "Additional Investment Techniques" for other investment techniques of
the fund.
RISKS RELATED TO PRINCIPAL INVESTMENT STRATEGIES
If you invest in this fund, you risk that you may lose your investment.
6 Phoenix-Hollister Value Equity Fund
<PAGE>
GENERAL
The value of the fund's investments that supports your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decreases, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
Phoenix-Hollister Value Equity Fund 7
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Hollister Value Equity Fund. The bar chart shows changes in the
fund's Class A Shares performance.(1) The table shows how the fund's annual
returns compare to those of a broad-based securities market index. The fund's
past performance is not necessarily an indication of how the fund will perform
in the future.
[GRAPHIC OMITTED]
CALENDAR YEAR ANNUAL RETURN (%)
1998 17.22
1999 16.80
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 26.00% (quarter ending December 31,
1998) and the lowest return for a quarter was -17.98% (quarter ending September
30, 1998). Year-to-date performance (through September 30, 2000) was 9.42%.
--------------------------------------------------------------------------------
Average Annual Total Returns(1) One Year Life of the Fund(2)
(for the periods ending 12/31/99)
--------------------------------------------------------------------------------
Class A Shares 10.08% 12.94%
--------------------------------------------------------------------------------
Class B Shares 11.84% 14.00%
--------------------------------------------------------------------------------
Class C Shares 15.93% 15.21%
--------------------------------------------------------------------------------
S&P 500 Composite Stock Price Index(3) 21.14% 24.84%
--------------------------------------------------------------------------------
(1) The fund's average annual return in the table above reflect the deduction of
the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption of the fund's Class B and Class C Shares.
(2) Class A Shares, Class B Shares and Class C Shares since November 4, 1997.
(3) The S&P 500 Composite Stock Price Index is a measure of stock market total
return performance. The Index's performance does not reflect sales charges.
8 Phoenix-Hollister Value Equity Fund
<PAGE>
FUND EXPENSES
--------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
<S> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM
YOUR INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases
(as a percentage of offering price) 5.75% None None
Maximum Deferred Sales Charge (load) (as a
percentage of the lesser of the value redeemed
or the amount invested) None 5%(b) 1%(c)
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT
ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees(d) 0.25% 1.00% 1.00%
Other Expenses 0.47% 0.47% 0.47%
---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES (A) 1.47% 2.22% 2.22%
==== ==== ====
</TABLE>
(a) The fund's investment adviser has agreed to reimburse through December 31,
2001 the Phoenix-Hollister Value Equity Fund's expenses, other than Management
Fees and Distribution and Service Fees, to the extent that such expenses exceed
0.25% for each class of shares. Actual Total Annual Fund Operating Expenses,
after expense reimbursement, were 1.25% for Class A Shares, 2.00% for Class B
Shares, and 2.00% for Class C Shares.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(c) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight
Phoenix-Hollister Value Equity Fund 9
<PAGE>
years. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------------------------------------------------
Class A $716 $1,013 $1,332 $2,231
------------------------------------------------------------------------------
Class B $625 $894 $1,190 $2,365
------------------------------------------------------------------------------
Class C $325 $694 $1,190 $2,554
------------------------------------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class B $225 $694 $1,190 $2,365
--------------------------------------------------------------------------------
Class C $225 $694 $1,190 $2,554
--------------------------------------------------------------------------------
Note: Your actual expenses may be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
reimbursement of expenses over certain levels by the fund's investment adviser.
Refer to the section "Management of the Funds" for information about expense
reimbursement.
10 Phoenix-Hollister Value Equity Fund
<PAGE>
ADDITIONAL INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------
In addition to the Principal Investment Strategies and Risks Related to
Principal Investment Strategies, Phoenix-Hollister Small Cap Value Fund and
Phoenix-Hollister Value Equity Fund each may engage in the following investment
techniques:
BORROWING
Each fund may obtain fixed interest rate loans and invest the loan proceeds in
other assets. If the securities purchased with such borrowed money decrease in
value or do not increase enough to cover interest and other borrowing costs, the
funds will suffer greater losses than if no borrowing took place.
DEPOSITORY RECEIPTS
The funds may invest in American Depository Receipts (ADRs) and New York Shares.
While investment in ADRs may eliminate some of the risk associated with foreign
investments, it does not eliminate all the risks inherent in investing in
securities of foreign issuers. ADRs which are not sponsored by U.S. banks are
subject to the same investment risks as foreign securities.
FINANCIAL FUTURES AND RELATED OPTIONS
The funds may use financial futures contracts and related options for hedging
purposes. Futures and options involve market risk in excess of their value and
may not be as liquid as other securities.
FOREIGN INVESTING
The funds may invest in securities of foreign (non-U.S.) issuers. Investments in
non-U.S. companies involve additional risks and conditions, including
differences in accounting standards, generally higher commission rates,
differences in transaction settlement systems, political instability, and the
possibility of confiscatory or expropriation taxes. Political and economic
uncertainty in foreign countries, as well as less public information about
foreign investments, may negatively impact the fund's portfolio. Dividends and
other income payable on foreign securities may also be subject to foreign taxes.
Some investments may be made in currencies other than U.S. dollars that will
fluctuate in value as a result of changes in the currency exchange rate. Foreign
markets and currencies may not perform as well as U.S. markets.
Phoenix Investment Trust 97 11
<PAGE>
ILLIQUID SECURITIES
The funds may invest in illiquid securities. Illiquid and restricted securities
may be difficult to sell or may be sold only pursuant to certain legal
restrictions. Difficulty in selling securities may result in a loss to the funds
or entail expenses not normally associated with the sale of a security.
MUTUAL FUND INVESTING
The funds may invest in shares of other mutual funds. Assets invested in other
mutual funds incur a layering of expenses, including operating costs, advisory
fees and administrative fees that you, as a shareholder in the funds, indirectly
bear.
SECURITIES LENDING
Each fund may loan portfolio securities. If the borrower is unwilling or unable
to return the borrowed securities when due, the fund can suffer losses.
REPURCHASE AGREEMENTS
The funds may invest in repurchase agreements. Default or insolvency of the
other party presents a risk to the funds.
The adviser may buy other types of securities or employ other portfolio
management techniques on behalf of each fund. Please refer to the Statement of
Additional Information for more detailed information about these and other
investment techniques of the funds.
MANAGEMENT OF THE FUNDS
--------------------------------------------------------------------------------
THE ADVISER
Phoenix Investment Counsel, Inc. ("Phoenix") is the investment adviser to the
funds and is located at 56 Prospect Street, Hartford, CT 06115. Phoenix acts as
the investment adviser for 14 fund companies totaling 37 mutual funds, as
subadviser to two fund companies totaling three mutual funds and as adviser to
institutional clients. As of September 30, 2000, Phoenix had $26.5 billion in
assets under management. Phoenix has acted as an investment adviser for over
sixty years.
Subject to the direction of the fund's Board of Trustees, Phoenix is responsible
for managing each fund's investment program and the day-to-day management of
each fund's portfolio. Phoenix manages each fund's assets to conform with the
investment policies as described in this prospectus. Each fund pays Phoenix a
monthly investment management fee that is accrued daily against the value of the
fund's net assets at the following rates:
12 Phoenix Investment Trust 97
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
$1+ billion
$1st billion through $2 billion $2+ billion
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Phoenix-Hollister Small Cap 0.90% 0.85% 0.80%
Value Fund
------------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity 0.75% 0.70% 0.65%
Fund
------------------------------------------------------------------------------------------------------------------
</TABLE>
Phoenix has voluntarily agreed to assume total fund operating expenses of each
fund, excluding interest, taxes, brokerage fees, commissions and extraordinary
expenses, until December 31, 2001, to the extent that such expenses exceed the
following percentages of the average annual net asset values for each fund:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Class A Class B Class C
Shares Shares Shares
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Phoenix-Hollister Small Cap 1.40% 2.15% 2.15%
Value Fund
-----------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity 1.25% 2.00% 2.00%
Fund
-----------------------------------------------------------------------------------------------------------------
</TABLE>
During the funds' last fiscal year, the funds paid total management fees of
$1,245,610. The ratio of management fees to average net assets for the fiscal
year ended August 31, 2000, for Phoenix-Hollister Small Cap Value Fund was 0.90%
and for Phoenix-Hollister Value Equity Fund was 0.75%.
PORTFOLIO MANAGEMENT
Christian C. Bertelsen serves as senior portfolio manager and John LaForge, II
serves as portfolio manager of both the Phoenix-Hollister Small Cap Value Fund
and the Phoenix-Hollister Value Equity Fund, and as such, are primarily
responsible for the day-to-day management of the funds' investments. Messrs.
Bertelsen and LaForge also manage the domestic portions of the Phoenix-Aberdeen
Global Small Cap Fund and Phoenix-Aberdeen Worldwide Opportunities Fund and
provide portfolio management to the Aberdeen Prolific American Opportunities
Trust. Mr. Bertelsen joined Phoenix 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. Mr. LaForge joined Phoenix in
September 1997. Mr. LaForge's previous investment experience includes portfolio
management, syndicate, and sales positions with Raymond James & Associates, Inc.
in St. Petersburg, Florida, from 1993 to 1997.
Phoenix Investment Trust 97 13
<PAGE>
PRICING OF FUND SHARES
--------------------------------------------------------------------------------
HOW IS THE SHARE PRICE DETERMINED?
Each fund calculates a share price for each class of its shares. The share price
is based on the net assets of the fund and the number of outstanding shares. In
general, each fund calculates net asset value by:
o adding the values of all securities and other assets of the fund,
o subtracting liabilities, and
o dividing the result by the total number of outstanding shares of the fund.
Asset Value: The funds' investments are valued at market value. If market
quotations are not available, a fund determines a "fair value" for an investment
according to rules and procedures approved by the Trustees. Foreign and domestic
debt securities (other than short-term investments) are valued on the basis of
broker quotations or valuations provided by a pricing service approved by the
Trustees when such prices are believed to reflect the fair value of such
securities. Foreign and domestic equity securities are valued at the last sale
price or, if there has been no sale that day, at the last bid price, generally.
Short-term investments having a remaining maturity of sixty days or less are
valued at amortized cost, which the Trustees have determined approximates market
value.
Liabilities: Class specific expenses, distribution fees, service fees and other
liabilities are deducted from the assets of each class. Expenses and liabilities
that are not class specific (such as management fees) are allocated to each
class in proportion to each class' net assets, except where an alternative
allocation can be more fairly made.
Net Asset Value: The liability allocated to a class plus any other expenses are
deducted from the proportionate interest of such class in the assets of the
fund. The resulting amount for each class is then divided by the number of
shares outstanding of that class to produce each class' net asset value per
share.
The net asset value per share of each class of each fund is determined on days
when the New York Stock Exchange (the "NYSE") is open for trading as of the
close of trading (normally 4:00 PM eastern time). A fund will not calculate its
net asset values per share on days when the NYSE is closed for trading. If the
funds hold securities that are traded on foreign exchanges that trade on
weekends or other holidays when the funds do not price their shares, the net
asset value of the funds' shares may change on days when the shareholders will
not be able to purchase or redeem the funds' shares.
AT WHAT PRICE ARE SHARES PURCHASED?
All investments received by the funds' authorized agents prior to the close of
regular trading on the NYSE (normally 4:00 PM eastern time) will be executed
based on that day's net asset
14 Phoenix Investment Trust 97
<PAGE>
value. Shares credited to your account from the reinvestment of fund
distributions will be in full and fractional shares that are purchased at the
closing net asset value on the next business day on which the fund's net asset
value is calculated following the dividend record date.
SALES CHARGES
--------------------------------------------------------------------------------
WHAT ARE THE CLASSES AND HOW DO THEY DIFFER?
Each fund presently offers three classes of shares that have different sales and
distribution charges (see "Fund Expenses" previously in this prospectus). The
funds have adopted distribution and service plans allowed under Rule 12b-1 of
the Investment Company Act of 1940 that authorize the funds to pay distribution
and service fees for the sale of their shares and for services provided to
shareholders.
WHAT ARRANGEMENT IS BEST FOR YOU?
The different classes permit you to choose the method of purchasing shares that
is most beneficial to you. In choosing a class, consider the amount of your
investment, the length of time you expect to hold the shares, whether you decide
to receive distributions in cash or to reinvest them in additional shares, and
any other personal circumstances. Depending upon these considerations, the
accumulated distribution and service fees and contingent deferred sales charges
of one class may be more or less than the initial sales charge and accumulated
distribution and service fees of another class of shares bought at the same
time. Because distribution and service fees are paid out of a fund's assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
CLASS A SHARES. If you purchase Class A Shares, you will pay a sales charge at
the time of purchase equal to 5.75% of the offering price (6.10% of the amount
invested). The sales charge may be reduced or waived under certain conditions.
See "Initial Sales Charge Alternative--Class A Shares" below. Class A Shares are
not subject to any charges by the fund when redeemed. Class A Shares have lower
distribution and service fees (0.25%) and pay higher dividends than any other
class.
CLASS B SHARES. If you purchase Class B Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class B Shares within the first five
years after they are purchased, you will pay a sales charge of up to 5% of your
shares' value. See "Deferred Sales Charge Alternative--Class B and Class C
Shares" below. This charge declines to 0% over a period of five years and may be
waived under certain conditions. Class B Shares have higher distribution and
service fees (1.00%) and pay lower dividends than Class A Shares. Class B Shares
automatically convert to Class A Shares eight years after purchase. Purchases of
Class B Shares may be inappropriate for any investor who may qualify for reduced
sales charges of Class A
Phoenix Investment Trust 97 15
<PAGE>
Shares and anyone who is over 85 years of age. The underwriter may decline
purchases in such situations.
CLASS C SHARES. If you purchase Class C Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class C Shares within the first year
after they are purchased, you will pay a sales charge of 1%. See "Deferred Sales
Charge Alternative--Class B and Class C Shares" below. Class C Shares have the
same distribution and service fees (1.00%) and pay comparable dividends as Class
B Shares. Class C Shares do not convert to any other class of shares of the
fund.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The public offering price of Class A Shares is the net asset value plus a sales
charge that varies depending on the size of your purchase (see "Class A
Shares--Reduced Initial Sales Charges: Combination Purchase Privilege" in the
Statement of Additional Information). Shares purchased based on the automatic
reinvestment of income dividends or capital gain distributions are not subject
to any sales charges. The sales charge is divided between your investment dealer
and the fund's underwriter (Phoenix Equity Planning Corporation or "PEPCO").
SALES CHARGE YOU MAY PAY TO PURCHASE CLASS A SHARES
SALES CHARGE AS
A PERCENTAGE OF
-------------------------
AMOUNT OF NET
TRANSACTION OFFERING AMOUNT
AT OFFERING PRICE PRICE INVESTED
-------------------------------------------------------------------------------
Under $50,000 5.75% 6.10%
$50,000 but under $100,000 4.75 4.99
$100,000 but under $250,000 3.75 3.90
$250,000 but under $500,000 2.75 2.83
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
DEFERRED SALES CHARGE ALTERNATIVE--CLASS B AND CLASS C SHARES
Class B and Class C Shares are purchased without an initial sales charge;
however, shares sold within a specified time period are subject to a declining
contingent deferred sales charge ("CDSC") at the rates listed below. The sales
charge will be multiplied by the then current market value or the initial cost
of the shares being redeemed, whichever is less. No sales charge will be imposed
on increases in net asset value or on shares purchased through the reinvestment
of income dividends or capital gain distributions. To minimize the sales charge,
shares not subject to any charge will be redeemed first, followed by shares held
the longest time. To calculate the amount of shares owned and time period held,
all Class B Shares purchased in any month are considered purchased on the last
day of the preceding month, and all Class C Shares are considered purchased on
the trade date.
16 Phoenix Investment Trust 97
<PAGE>
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS B SHARES
YEAR 1 2 3 4 5 6+
------------------------------------------------------------------------------
CDSC 5% 4% 3% 2% 2% 0%
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS C SHARES
YEAR 1 2+
--------------------------------------------------------------------------------
CDSC 1% 0%
YOUR ACCOUNT
--------------------------------------------------------------------------------
OPENING AN ACCOUNT
Your financial advisor can assist you with your initial purchase as well as all
phases of your investment program. If you are opening an account by yourself,
please follow the instructions outlined below.
STEP 1.
Your first choice will be the initial amount you intend to invest.
Minimum INITIAL investments:
o $25 for individual retirement accounts, or accounts that use the
systematic exchange privilege, or accounts that use the
Investo-Matic program (see below for more information on the
Investo-Matic program).
o There is no initial dollar requirement for defined contribution
plans, profit-sharing plans, or employee benefit plans. There is
also no minimum for reinvesting dividends and capital gains into
another account.
o $500 for all other accounts.
Minimum ADDITIONAL investments:
o $25 for any account.
o There is no minimum for defined contribution plans, profit-sharing
plans, or employee benefit plans. There is also no minimum for
reinvesting dividends and capital gains into an existing account.
The funds reserve the right to refuse any purchase order for any reason.
Phoenix Investment Trust 97 17
<PAGE>
STEP 2.
Your second choice will be what class of shares to buy. Each fund offers three
classes of shares for individual investors. Each has different sales and
distribution charges. Because all future investments in your account will be
made in the share class you choose when you open your account, you should make
your decision carefully. Your financial advisor can help you pick the share
class that makes the most sense for your situation.
STEP 3.
Your next choice will be how you want to receive any dividends and capital gain
distributions. Your options are:
o Receive both dividends and capital gain distributions in additional
shares;
o Receive dividends in additional shares and capital gain
distributions in cash;
o Receive dividends in cash and capital gain distributions in
additional shares; or
o Receive both dividends and capital gain distributions in cash.
No interest will be paid on uncashed distribution checks.
HOW TO BUY SHARES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------- ----------------------------------------------------------------------------
TO OPEN AN ACCOUNT
----------------------------------- ----------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee and may set
different minimum investments or limitations on buying shares.
----------------------------------- ----------------------------------------------------------------------------
Through the mail Complete a New Account Application and send it with a check payable to the
fund. Mail them to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301.
----------------------------------- ----------------------------------------------------------------------------
By Federal Funds wire Call us at (800) 243-1574 (press 1, then 0).
----------------------------------- ----------------------------------------------------------------------------
Through express delivery Complete a New Account Application and send it with a check payable to the
fund. Send them to: Boston Financial Data Services, Attn: Phoenix Funds,
66 Brooks Drive, Braintree, MA 02184.
----------------------------------- ----------------------------------------------------------------------------
By Investo-Matic Complete the appropriate section on the application and send it with your
initial investment payable to the fund. Mail them to: State Street Bank,
P.O. Box 8301, Boston, MA 02266-8301.
----------------------------------- ----------------------------------------------------------------------------
By telephone exchange Call us at (800) 243-1574 (press 1, then 0).
----------------------------------- ----------------------------------------------------------------------------
</TABLE>
18 Phoenix Investment Trust 97
<PAGE>
HOW TO SELL 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 by the funds' Transfer Agent or
an authorized agent. In the case of a Class B or Class C Share redemption, you
will be subject to the applicable deferred sales charge, if any, for such
shares. Subject to certain restrictions, shares may be redeemed by telephone or
in writing. In addition, shares may be sold through securities dealers, brokers
or 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; however, redemption proceeds will not be disbursed until each
check used for purchases of shares has been cleared for payment by your bank,
which may take up to 15 days after receipt of the check.
<TABLE>
<CAPTION>
------------------------------------ -----------------------------------------------------------------------------
TO SELL SHARES
------------------------------------ -----------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee and may set
different minimums on redemptions of accounts.
------------------------------------ -----------------------------------------------------------------------------
Through the mail Send a letter of instruction and any share certificates (if you hold
certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA 02266-8301.
Be sure to include the registered owner's name, fund and account number, and
number of shares or dollar value you wish to sell.
------------------------------------ -----------------------------------------------------------------------------
Through express delivery Send a letter of instruction and any share certificates (if you hold
certificate shares) to: Boston Financial Data Services, Attn: Phoenix
Funds, 66 Brooks Drive, Braintree, MA 02184. Be sure to include the registered
owner's name, fund and account number, and number of shares or dollar value you
wish to sell.
------------------------------------ -----------------------------------------------------------------------------
By telephone For sales up to $50,000, requests can be made by calling (800) 243-1574.
------------------------------------ -----------------------------------------------------------------------------
By telephone exchange Call us at (800) 243-1574 (press 1, then 0).
------------------------------------ -----------------------------------------------------------------------------
</TABLE>
THINGS YOU SHOULD KNOW WHEN SELLING SHARES
--------------------------------------------------------------------------------
You may realize a taxable gain or loss (for federal income tax purposes) if you
redeem shares of a fund. Each fund reserves the right to pay large redemptions
"in-kind" (in securities owned by a fund rather than in cash). Large redemptions
are those over $250,000 or 1% of a fund's net assets. Additional documentation
will be required for redemptions by organizations, fiduciaries, or retirement
plans, or if redemption is requested by anyone but the shareholder(s)
Phoenix Investment Trust 97 19
<PAGE>
of record. Transfers between broker-dealer "street" accounts are governed by the
accepting broker-dealer. Questions regarding this type of transfer should be
directed to your financial advisor. Redemption requests will not be honored
until all required documents in proper form have been received. To avoid delay
in redemption or transfer, shareholders having questions about specific
requirements should contact the funds' Transfer Agent at (800) 243-1574.
REDEMPTIONS BY MAIL
> If you are selling shares held individually, jointly, or as custodian
under the Uniform Gifts to Minors Act or Uniform Transfers to Minors
Act.
Send a clear letter of instructions if all of these apply:
o The proceeds do not exceed $50,000.
o The proceeds are payable to the registered owner at the address on
record.
Send a clear letter of instructions with a signature guarantee when any
of these apply:
o You are selling more than $50,000 worth of shares.
o The name or address on the account has changed within the last 60
days.
o You want the proceeds to go to a different name or address than on
the account.
> If you are selling shares held in a corporate or fiduciary account,
please contact the fund's Transfer Agent at (800) 243-1574.
If required, the signature guarantee must be made by an eligible guarantor
institution as defined by the funds' Transfer Agent in accordance with its
signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker-dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
SELLING SHARES BY TELEPHONE
The Transfer Agent will use reasonable procedures to confirm that telephone
instructions are genuine. Address and bank account information are verified,
redemption instructions are taped, and all redemptions are confirmed in writing.
The individual investor bears the risk from instructions given by an
unauthorized third party that the Transfer Agent reasonably believed to be
genuine.
The Transfer Agent may modify or terminate the telephone redemption privilege at
any time with 60 days notice to shareholders.
During times of drastic economic or market changes, telephone redemptions may be
difficult to make or temporarily suspended.
20 Phoenix Investment Trust 97
<PAGE>
ACCOUNT POLICIES
--------------------------------------------------------------------------------
ACCOUNT REINSTATEMENT PRIVILEGE
For 180 days after you sell your Class A, Class B, or Class C Shares, you can
purchase Class A Shares of any fund at net asset value, with no sales charge, by
reinvesting all or part of your proceeds, but not more. Send your written
request to State Street Bank, P.O. Box 8301, Boston, MA 02266-8301. You can call
us at (800) 243-1574 for more information.
Please remember, a redemption and reinvestment are considered to be a sale and
purchase for tax-reporting purposes. Class B and Class C shareholders who have
had the contingent deferred sales charge waived because they are in the
Systematic Withdrawal Program are not eligible for this reinstatement privilege.
REDEMPTION OF SMALL ACCOUNTS
Due to the high cost of maintaining small accounts, if your account balance is
less than $200, you may receive a notice requesting you to bring the balance up
to $200 within 60 days. If you do not, the shares in the account will be sold at
net asset value, and a check will be mailed to the address of record.
EXCHANGE PRIVILEGES
You should read the prospectus of the fund into which you want to exchange
before deciding to make an exchange. You can obtain a prospectus from your
financial advisor or by calling us at (800) 243-4361 or accessing our Web site
at www.phoenixinvestments.com.
o You may exchange shares for another fund in the same class of shares;
e.g., Class A for Class A. Exchange privileges may not be available
for all Phoenix Funds, and may be rejected or suspended.
o Exchanges may be made by telephone ((800) 243-1574) or by mail (State
Street Bank, P.O. Box 8301, Boston, MA 02266-8301).
o The amount of the exchange must be equal to or greater than the
minimum initial investment required.
o The exchange of shares is treated as a sale and purchase for federal
income tax purposes.
o Because excessive trading can hurt fund performance and harm other
shareholders, the funds reserve the right to temporarily or
permanently end exchange privileges or reject an order from anyone
who appears to be attempting to time the market, including investors
who request more than one exchange in any 30-day period. The funds'
underwriter has entered into agreements with certain market timing
firms
Phoenix Investment Trust 97 21
<PAGE>
permitting them to exchange by telephone. These privileges are
limited, and the funds' distributor has the right to reject or
suspend them.
RETIREMENT PLANS
Shares of the funds may be used as investments under the following qualified
prototype retirement plans: traditional IRA, rollover IRA, SIMPLE IRA, Roth IRA,
401(k) plans, profit-sharing, money purchase plans, and 403(b) plans. For more
information, call (800) 243-4361.
INVESTOR SERVICES
--------------------------------------------------------------------------------
INVESTO-MATIC is a systematic investment plan that allows you to have a
specified amount automatically deducted from your checking or savings account
and then deposited into your mutual fund account. Just complete the
Investo-Matic Section on the application and include a voided check.
SYSTEMATIC EXCHANGE allows you to automatically move money from one Phoenix Fund
to another on a monthly, quarterly, semiannual or annual basis. Shares of one
Phoenix Fund will be exchanged for shares of the same class of another fund at
the interval you select. To sign up, just complete the Systematic Exchange
Section on the application. Exchange privileges may not be available for all
Phoenix Funds, and may be rejected or suspended.
TELEPHONE EXCHANGE lets you exchange shares of one fund for the same class of
shares in another fund, using our customer service telephone service. See the
Telephone Exchange Section on the application. Exchange privileges may not be
available for all Phoenix Funds, and may be rejected or suspended.
SYSTEMATIC WITHDRAWAL PROGRAM allows you to periodically redeem a portion of
your account on a predetermined monthly, quarterly, semiannual, or annual basis.
Sufficient shares will be redeemed on the 15th of the month at the closing net
asset value so that the payment is made about the 20th of the month. The program
also provides for redemptions on or about the 10th, 15th, or 25th with proceeds
directed through Automated Clearing House (ACH) to your bank. The minimum
withdrawal is $25.00, and minimum account balance requirements continue.
Shareholders in the program must own fund shares worth at least $5,000.
22 Phoenix Investment Trust 97
<PAGE>
TAX STATUS OF DISTRIBUTIONS
--------------------------------------------------------------------------------
The funds plan to make distributions from net investment income semiannually,
and to distribute net realized capital gains, if any, at least annually.
Distributions of short-term capital gains and net investment income are taxable
to shareholders as ordinary income. Long-term capital gains, if any, distributed
to shareholders and which are designated by a fund as capital gain
distributions, are taxable to shareholders as long-term capital gain
distributions regardless of the length of time you have owned your shares.
Unless you elect to receive distributions in cash, dividends and capital gain
distributions are paid in additional shares. All distributions, cash or
additional shares, are subject to federal income tax and may be subject to
state, local and other taxes.
Phoenix Investment Trust 97 23
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
These tables are intended to help you understand the funds' financial
performance since inception. Certain information reflects financial results for
a single fund share. The total returns in the table represent the rate that an
investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, independent accountants. Their report,
together with the funds' financial statements, are included in the funds' most
recent Annual Report, which is available upon request.
PHOENIX-HOLLISTER SMALL CAP VALUE FUND
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------
FROM
INCEPTION
YEAR ENDED AUGUST 31, 11/20/97 TO
2000 1999 8/31/98
---- ---- -------
<S> <C> <C> <C>
Net asset value, beginning of period $11.41 $8.11 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.08) 0.01 (0.01)
Net realized and unrealized gain (loss) 7.38 3.31 (1.85)
---- ---- -----
TOTAL FROM INVESTMENT OPERATIONS 7.30 3.32 (1.86)
---- ---- -----
LESS DISTRIBUTIONS
Dividends from net investment income (0.81) (0.02) --
In excess of net investment income -- -- (0.03)
---- ---- -----
TOTAL DISTRIBUTIONS (0.81) (0.02) (0.03)
----- ----- -----
Change in net asset value 6.49 3.30 (1.89)
---- ---- -----
NET ASSET VALUE, END OF PERIOD $17.90 $11.41 $8.11
====== ====== =====
Total return(2) 66.15% 40.90% (18.64)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $79,254 $26,926 $14,519
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 1.40%(6) 1.40% 1.40%(5)
Net investment income (loss) (0.45)% 0.15% (0.14)%(5)
Portfolio turnover 191% 203% 105%(4)
</TABLE>
--------------------------------
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.67%, 1.87%
and 3.12% for the periods ended August 31, 2000, 1999 and 1998, respectively.
(4) Not annualized.
(5) Annualized.
(6) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian fees; if
expense offsets were included, the ratio would not significantly differ.
24 Phoenix-Investment Trust 97
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PHOENIX-HOLLISTER SMALL CAP VALUE FUND
CLASS B
-------------------------------------------
FROM
INCEPTION
YEAR ENDED AUGUST 31, 11/20/97 TO
2000 1999 8/31/98
---- ---- -------
<S> <C> <C> <C>
Net asset value, beginning of period $11.27 $8.07 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.19) (0.06) (0.08)
Net realized and unrealized gain (loss) 7.27 3.28 (1.82)
---- ---- -----
TOTAL FROM INVESTMENT OPERATIONS 7.08 3.22 (1.90)
---- ---- -----
LESS DISTRIBUTIONS
Dividends from net investment income (0.81) (0.02) --
In excess of net investment income -- -- (0.03)
---- ---- -----
TOTAL DISTRIBUTIONS (0.81) (0.02) (0.03)
----- ----- -----
Change in net asset value 6.27 3.20 (1.93)
---- ---- -----
NET ASSET VALUE, END OF PERIOD $17.54 $11.27 $8.07
====== ====== =====
Total return(2) 64.97% 39.86% (19.07)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $26,625 $9,494 $5,922
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 2.15%(6) 2.15% 2.15%(5)
Net investment income (loss) (1.20)% (0.60)% (1.01)%(5)
Portfolio turnover 191% 203% (105)%(4)
</TABLE>
--------------------------------
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.42%, 2.62%
and 3.87% for the periods ended August 31, 2000, 1999 and 1998, respectively.
(4) Not annualized.
(5) Annualized.
(6) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian fees; if
expense offsets were included, the ratio would not significantly differ.
Phoenix Investment Trust 97 25
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PHOENIX-HOLLISTER SMALL CAP VALUE FUND
CLASS C
-------------------------------------------
FROM
INCEPTION
YEAR ENDED AUGUST 31, 11/20/97 TO
2000 1999 8/31/98
---- ---- -------
<S> <C> <C> <C>
Net asset value, beginning of period $11.27 $8.07 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.19) (0.06) (0.08)
Net realized and unrealized gain (loss) 7.27 3.28 (1.82)
---- ---- -----
TOTAL FROM INVESTMENT OPERATIONS 7.08 3.22 (1.90)
---- ---- -----
LESS DISTRIBUTIONS
Dividends from net investment income (0.81) (0.02) --
In excess of net investment income -- -- (0.03)
---- ---- -----
TOTAL DISTRIBUTIONS (0.81) (0.02) (0.03)
----- ----- -----
Change in net asset value 6.27 3.20 (1.93)
---- ---- -----
NET ASSET VALUE, END OF PERIOD $17.54 $11.27 $8.07
====== ====== =====
Total return(2) 64.97% 39.86% (19.09)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $28,046 $6,465 $2,770
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 2.15%(6) 2.15% 2.15%(5)
Net investment income (loss) (1.20)% (0.60)% (0.98)%(5)
Portfolio turnover 191% 203% 105%(4)
</TABLE>
---------------------------------
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.42%, 2.62%
and 3.87% for the periods ended August 31, 2000, 1999 and 1998, respectively.
(4) Not annualized.
(5) Annualized.
(6) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian fees; if
expense offsets were included, the ratio would not significantly differ.
26 Phoenix Investment Trust 97
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PHOENIX-HOLLISTER VALUE EQUITY FUND
CLASS A
-----------------------------------------
FROM
INCEPTION
YEAR ENDED AUGUST 31, 11/5/97 TO
2000 1999 8/31/98
---- ---- -------
<S> <C> <C> <C>
Net asset value, beginning of period $12.11 $8.94 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) 0.03 0.02 0.03
Net realized and unrealized gain (loss) 2.89 3.20 (1.07)
---- ---- -----
TOTAL FROM INVESTMENT OPERATIONS 2.92 3.22 (1.04)
---- ---- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.03) (0.01)
In excess of net investment income -- (0.02) (0.01)
----- ----- -----
TOTAL DISTRIBUTIONS -- (0.05) (0.02)
----- ----- -----
Change in net asset value 2.92 3.17 (1.06)
---- ---- -----
NET ASSET VALUE, END OF PERIOD $15.03 $12.11 $8.94
====== ====== =====
Total return(2) 24.11% 35.89% (10.28)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $37,977 $26,974 $19,766
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 1.25%(6) 1.25% 1.25%(5)
Net investment income (loss) 0.20% 0.14% 0.31%(5)
Portfolio turnover 193% 192% 59%(4)
</TABLE>
---------------------------------
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.47%, 1.57%
and 2.96% for the periods ended August 31, 2000, 1999 and 1998, respectively.
(4) Not annualized.
(5) Annualized.
(6) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian fees; if
expense offsets were included, the ratio would not significantly differ.
Phoenix Investment Trust 97 27
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PHOENIX-HOLLISTER VALUE EQUITY FUND
CLASS B
----------------------------------------
FROM
INCEPTION
YEAR ENDED AUGUST 31, 11/5/97 TO
2000 1999 8/31/98
---- ---- -------
<S> <C> <C> <C>
Net asset value, beginning of period $12.00 $8.89 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.08) (0.07) (0.04)
Net realized and unrealized gain (loss) 2.85 3.19 (1.05)
---- ---- -----
TOTAL FROM INVESTMENT OPERATIONS 2.77 3.12 (1.09)
---- ---- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.01) (0.01)
In excess of net investment income -- -- (0.01)
---- ---- -----
TOTAL DISTRIBUTIONS -- (0.01) (0.02)
---- ---- -----
Change in net asset value 2.77 3.11 (1.11)
---- ---- -----
NET ASSET VALUE, END OF PERIOD $14.77 $12.00 $8.89
====== ====== =====
Total return(2) 23.08% 35.05% (10.92)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $26,471 $24,709 $5,291
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 2.00%(6) 2.00% 2.00%(5)
Net investment income (loss) (0.57)% (0.62)% (0.45)%(5)
Portfolio turnover 193% 192% 59%(4)
</TABLE>
---------------------------------
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.22%, 2.32%
and 3.71% for the periods ended August 31, 2000, 1999 and 1998, respectively.
(4) Not annualized.
(5) Annualized.
(6) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian fees; if
expense offsets were included, the ratio would not significantly differ.
28 Phoenix Investment Trust 97
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PHOENIX-HOLLISTER VALUE EQUITY FUND
CLASS C
----------------------------------------
FROM
INCEPTION
YEAR ENDED AUGUST 31, 11/5/97 TO
2000 1999 8/31/98
---- ---- -------
<S> <C> <C> <C>
Net asset value, beginning of period $12.00 $8.89 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.07) (0.07) (0.04)
Net realized and unrealized gain (loss) 2.85 3.19 (1.05)
---- ---- -----
TOTAL FROM INVESTMENT OPERATIONS 2.78 3.12 (1.09)
---- ---- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.01) (0.01)
In excess of net investment income -- -- (0.01)
---- ---- -----
TOTAL DISTRIBUTIONS -- (0.01) (0.02)
---- ---- -----
Change in net asset value 2.78 3.11 (1.11)
---- ---- -----
NET ASSET VALUE, END OF PERIOD $14.78 $12.00 $8.89
====== ====== =====
Total return(2) 23.17% 34.91% (10.86)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $12,590 $3,108 $2,005
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 2.00%(6) 2.00% 2.00%(5)
Net investment income (loss) (0.52)% (0.60)% (0.45)%(5)
Portfolio turnover 193% 192% 59%(4)
</TABLE>
---------------------------------
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.22%, 2.32%
and 3.71% for the periods ended August 31, 2000, 1999 and 1998, respectively.
(4) Not annualized.
(5) Annualized.
(6) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian fees; if
expense offsets were included, the ratio would not significantly differ.
Phoenix-Investment Trust 97 29
<PAGE>
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The Trust has filed a Statement of Additional Information, dated December 15,
2000 with the Securities and Exchange Commission. The Statement contains more
detailed information about the funds. It is incorporated into this prospectus by
reference and is legally part of the prospectus. You may obtain a free copy of
the Statement:
o by writing to Phoenix Equity Planning Corporation, 56 Prospect
Street, P.O. Box 150480, Hartford, Connecticut 06115-0480, or
o by calling (800) 243-4361.
You may also obtain information about the funds from the Securities and Exchange
Commission:
o through its internet site (http://www.sec.gov),
o by visiting its Public Reference Room in Washington, DC,
o by writing to its Public Reference Section, Washington, DC 20549-6009
(a fee may be charged), or
o by electronic request at [email protected] (a fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling 1-202-942-8090.
SHAREHOLDER REPORTS
The funds semiannually mail to shareholders detailed reports containing
information about the fund's investments. The funds' Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the funds' performance from September 1 through August
31. You may request a free copy of the funds' Annual and Semiannual Reports:
o by writing to Phoenix Equity Planning Corporation, 56 Prospect
Street, P.O. Box 150480, Hartford, Connecticut 06115-0480, or
o by calling (800) 243-4361.
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY): (800) 243-1926
<TABLE>
<CAPTION>
<S> <C>
SEC File Nos. 333-34537 and 811-08343 [Recycle Logo] Printed on recycled paper using soybean ink
</TABLE>
30 Phoenix Investment Trust 97
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
PO Box 150480
Hartford CT 06115-0480
[LOGO] PHOENIX
INVESTMENT PARTNERS
For more information about
Phoenix mutual funds, please call
your financial representative or
contact us at 1-800-243-4361 or
www.phoenixinvestments.com
PXP 2053 (12/00)
<PAGE>
PHOENIX-HOLLISTER SMALL CAP VALUE FUND
PHOENIX-HOLLISTER VALUE EQUITY FUND
101 Munson Street
Greenfield, MA 01301
STATEMENT OF ADDITIONAL INFORMATION
December 15, 2000
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current prospectus of the
Phoenix-Hollister Small Cap Value Fund and Phoenix-Hollister Value Equity Fund,
dated December 15, 2000 (the "Prospectus"), and should be read in conjunction
with it. The prospectus may be obtained by calling Phoenix Equity Planning
Corporation ("Equity Planning") at (800) 243-4361 or by writing to Equity
Planning at 56 Prospect Street, P.O. Box 150480, Hartford, CT 06115-0480.
TABLE OF CONTENTS
PAGE
The Trust ................................................................ 1
Investment Restrictions .................................................. 1
Investment Techniques and Risks .......................................... 2
Performance Information................................................... 10
Portfolio Transactions and Brokerage...................................... 11
Services of the Adviser .................................................. 12
Net Asset Value .......................................................... 13
How to Buy Shares ........................................................ 14
Alternative Purchase Arrangements ........................................ 14
Investor Account Services ................................................ 17
How to Redeem Shares ..................................................... 18
Tax Sheltered Retirement Plans............................................ 19
Dividends, Distributions and Taxes ....................................... 19
The Distributor .......................................................... 20
Distribution Plans........................................................ 22
Management of the Trust................................................... 23
Other Information ........................................................ 29
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY): (800) 243-1926
PXP 2053B (12/00)
<PAGE>
THE TRUST
Phoenix Investment Trust 97 (the "Trust") is a diversified open-end
management investment company which was organized under Massachusetts law in
1997 as a business trust and was reorganized as a Delaware business trust in
December, 2000. The Trust presently comprises two series: the Phoenix-Hollister
Small Cap Value Fund and Phoenix-Hollister Value Equity Fund, each a "Fund" and
collectively the "Funds."
The Trust's prospectus describes the investment objectives of the Funds and
the strategies that each of the Funds will employ in seeking to achieve its
investment objective. The Funds' investment objectives are fundamental policies
of the Funds and may not be changed without the vote of a majority of the
outstanding voting securities of the Funds. The following discussion describes
the Funds' investment policies and techniques and supplements the disclosure in
the prospectus.
INVESTMENT RESTRICTIONS
The following investment restrictions have been adopted by the Trust with
respect to each Fund. Except as otherwise stated, these investment restrictions
are "fundamental" policies. A "fundamental" policy is defined in the 1940 Act to
mean that the restriction cannot be changed without the vote of a "majority of
the outstanding voting securities" of the Fund. A majority of the outstanding
voting securities is defined in the 1940 Act as the lesser of (a) 67% or more of
the voting securities present at a meeting if the holders of more than 50% of
the outstanding voting securities are present or represented by proxy, or (b)
more than 50% of the outstanding voting securities.
The Fund may not:
(1) With respect to 75% of its total assets, purchase securities of an issuer
(other than the U.S. Government, its agencies, instrumentalities or authorities
or repurchase agreements collateralized by U.S. Government securities and other
investment companies), if: (a) such purchase would, at the time, cause more than
5% of the Fund's total assets taken at market value to be invested in the
securities of such issuer; or (b) such purchase would, at the time, result in
more than 10% of the outstanding voting securities of such issuer being held by
the Fund.
(2) Purchase securities if, after giving effect to the purchase, more than
25% of its total assets would be invested in the securities of one or more
issuers conducting their principal business activities in the same industry
(excluding the U.S. Government or its agencies or instrumentalities).
(3) Borrow money, except (i) in amounts not to exceed one third of the value
of the Fund's total assets (including the amount borrowed) from banks, and (ii)
up to an additional 5% of its total assets from banks or other lenders for
temporary purposes. For purposes of this restriction, (a) investment techniques
such as margin purchases, short sales, forward commitments, and roll
transactions, (b) investments in instruments such as futures contracts, swaps,
and options and (c) short-term credits extended in connection with trade
clearance and settlement, shall not constitute borrowing.
(4) Issue "senior securities" in contravention of the 1940 Act. Activities
permitted by a SEC exemptive orders or staff interpretations shall not be deemed
to be prohibited by this restriction.
(5) Underwrite the securities issued by other persons, except to the extent
that, in connection with the disposition of portfolio securities, the Fund may
be deemed to be an underwriter under applicable law.
(6) Purchase or sell real estate, except that the Fund may (i) acquire or
lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (iii) invest in mortgage-related
securities and other securities that are secured by real estate or interests
therein, (iv) hold and sell real estate acquired by the Fund as a result of the
ownership of securities.
(7) Purchase or sell commodities or commodity contracts, except the Fund may
purchase and sell derivatives (including, but not limited to, options, futures
contracts and options on futures contracts) whose value is tied to the value of
a financial index or a financial instrument or other asset (including, but not
limited to, securities indexes, interest rates, securities, currencies and
physical commodities).
(8) Make loans, except that the Fund may (i) lend portfolio securities, (ii)
enter into repurchase agreements, (iii) purchase all or a portion of an issue of
debt securities, bank loan participation interests, bank certificates of
deposit, bankers' acceptances, debentures or other securities, whether or not
the purchase is made upon the original issuance of the securities and (iv)
participate in an interfund lending program with other registered investment
companies.
If any percentage restriction described above for the Fund is adhered to at
the time of investment, a subsequent increase or decrease in the percentage
resulting from a change in the value of the Fund's assets will not constitute a
violation of the restriction.
1
<PAGE>
INVESTMENT TECHNIQUES AND RISKS
The Funds may utilize the following practices or techniques in pursuing their
investment objectives.
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.
FINANCIAL FUTURES CONTRACTS AND RELATED OPTIONS
Each Fund may use financial futures contracts and related options to hedge
against changes in the market value of 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 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.
2
<PAGE>
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 AND RELATED OPTIONS. Each Fund may enter
into futures contracts and options. 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.
3
<PAGE>
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.
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 SECURITIES
Each Fund may purchase foreign securities, including those issued by foreign
branches of U.S. banks. 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.
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 which 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.
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
4
<PAGE>
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.
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.
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.
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.
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.
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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.
ILLIQUID SECURITIES
Each Fund may invest in securities that are not liquid. The Funds consider
investments that the adviser is not likely to be able to sell within seven days
as not liquid. These securities can include repurchase agreements with
maturities of more than seven days and private placements. Repurchase agreements
are contracts under which the fund will buy securities and simultaneously agree
to resell them at a later date for an agreed, higher price. Private placements
are securities that are not sold to investors through a public offering but
instead are sold in direct, private transactions. Illiquid securities may have a
lower value than comparable securities that have active markets for resale, and
they can lose their value more quickly under unfavorable conditions.
INVESTMENT COMPANIES
Each Fund may invest in mutual funds. The Funds may invest in mutual funds
advised by the fund's adviser or other advisers controlled by the same persons
who control the fund's adviser. Assets invested in other investment companies
and mutual funds will incur fees similar to the investment management, custodial
and other fees that these funds charge. You will in effect incur a second set of
fees on these fund investments.
LENDING PORTFOLIO SECURITIES
In order to increase its return on investments, each Fund may make loans of
its portfolio securities. 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.
LEVERAGE
Each Fund may borrow for temporary, extraordinary or emergency purposes.
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.
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.
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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 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.
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The risk of purchasing a call option or a put option is that the Fund may
lose the premium it paid plus transaction costs. If the Fund does not exercise
the option and is unable to close out the position prior to expiration of the
option, it will lose its entire investment.
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.
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.
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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.
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. 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.
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.
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. 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.
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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.
STANDARD & POOR'S DEPOSITARY RECEIPTS
Each Fund may invest in a special investment company issuing Standard &
Poor's Depositary Receipts ("SPDR"s). Each SPDR represents a proportionate
interest, in substantially the same weighting, as the stocks that make up the
Standard & Poor's 500 Index. The same types of events and circumstances
affecting stocks generally can affect the value of SPDRs.
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 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.
PERFORMANCE INFORMATION
The Funds may, from time to time, include total return in advertisements,
sales literature or reports to shareholders or prospective investors.
Performance information in advertisements and sales literature may be expressed
as yield of a class or Fund and as total return of any Class or Fund.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in either Class A, Class B or Class
C Shares of a Fund over periods of 1, 5 and 10 years or up to the life of the
class of shares of a Fund, calculated for each class separately pursuant to the
following formula: P(1 + T)n = ERV (where P = a hypothetical initial payment of
$1,000, T = the average annual total return, n = the number of years, and ERV =
the ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period). All total return figures reflect the deduction of a
proportional share of each class's expenses (on an annual basis), deduction of
the maximum initial sales load in the case of Class A Shares and the maximum
contingent deferred sales charge applicable to a complete redemption of the
investment in the case of Class B and Class C Shares, and assume that all
dividends and distributions are reinvested when paid.
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, each Fund may
separate its cumulative and average annual returns into income and capital gains
components.
Phoenix-Hollister Small Cap Value Fund's annual total return for the one year
period ended August 31, 2000 and since inception November 20, 1997 through
August 31, 2000 for Class A Shares was 56.59% and 23.42%, for Class B Shares was
60.97% and 24.46% and for Class C Shares was 64.97% and 25.17%.
Phoenix-Hollister Value Equity Fund's annual total return for the one year
period ended August 31, 2000 and since inception November 5, 1997 through August
31, 2000 for Class A Shares was 16.98% and 13.39%, for Class B Shares was 19.08%
and 14.08% and for Class C Shares was 23.17% and 14.92%. Performance information
reflects only the performance of a hypothetical investment in each class during
the particular time
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period on which the calculations are based. Performance information should be
considered in light of each Fund's investment objectives and policies,
characteristics and quality of the portfolio, and the market condition during
the given time period, and should not be considered as a representation of what
may be achieved in the future.
The Funds may also compute aggregate cumulative total return for specified
periods based on a hypothetical Class A, Class B or Class C account with an
assumed initial investment of $10,000. The aggregate total return is determined
by dividing the net asset value of this account at the end of the specified
period by the value of the initial investment and is expressed as a percentage.
Calculation of aggregate total return reflects payment of the Class A Shares'
maximum sales charge of 5.75%, and assumes reinvestment of all income dividends
and capital gain distributions during the period.
The Funds also may quote annual, average annual and annualized total return
and aggregate total return performance data, for each class of shares of the
Funds, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such data
will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate rate
of return calculations.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities, supervises
their execution and negotiates brokerage commissions on behalf of the Funds. It
is the practice of the Adviser to seek the best prices and execution of orders
and to negotiate brokerage commissions which in the Adviser's opinion are
reasonable in relation to the value of the brokerage services provided by the
executing broker. Brokers who have executed orders for the Funds are asked to
quote a fair commission for their services. If the execution is satisfactory and
if the requested rate approximates rates currently being quoted by the other
brokers selected by the Adviser, the rate is deemed by the Adviser to be
reasonable. Brokers may ask for higher rates of commission if all or a portion
of the securities involved in the transaction are positioned by the broker, if
the broker believes it has brought the Funds an unusually favorable trading
opportunity, or if the broker regards its research services as being of
exceptional value, and payment of such commissions is authorized by the Adviser
after the transaction has been consummated. If the Adviser more than
occasionally differs with the broker's appraisal of opportunity or value, the
broker would not be selected to execute trades in the future. The Adviser
believes that the Funds benefit with a securities industry comprised of many and
diverse firms and that the long-term interest of shareholders of the Funds is
best served by brokerage policies which include paying a fair commission rather
than seeking to exploit its leverage to force the lowest possible commission
rate. The primary factors considered in determining the firms to which brokerage
orders are given are the Adviser's appraisal of: the firm's ability to execute
the order in the desired manner; the value of research services provided by the
firm; and the firm's attitude toward and interest in mutual funds in general
including the sale of mutual funds managed and sponsored by the Adviser. The
Adviser does not offer or promise to any broker an amount or percentage of
brokerage commissions as an inducement or reward for the sale of shares of the
Funds. Over-the-counter purchases and sales are transacted directly with
principal market-makers except in those circumstances where in the opinion of
the Adviser better prices and execution are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor federal,
state, local and foreign political developments; many of the brokers also
provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff since the brokers as a group tend to
monitor a broader universe of securities and other matters than the Adviser's
staff can follow. In addition, it provides the Adviser with a diverse
perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to the Adviser and is available
for the benefit of other accounts advised by the Adviser and its affiliates and
not all of this information will be used in connection with the Funds. While
this information may be useful in varying degrees and may tend to reduce the
Adviser's expenses, it is not possible to estimate its value and in the opinion
of the Adviser it does not reduce the Adviser's expenses in a determinable
amount. The extent to which the Adviser makes use of statistical, research and
other services furnished by brokers is considered by the Adviser in the
allocation of brokerage business but there is no formula by which such business
is allocated. The Adviser does so in accordance with its judgment of the best
interest of the Funds and shareholders.
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
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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.
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 Adviser may use its broker/dealer affiliates, or other firms that sell
shares of the Funds, to buy and sell securities for the Funds, provided they
have the execution capability and that their commission rates are comparable to
those of other unaffiliated broker/dealers. Directors of PXP Securities Corp. or
its affiliates receive indirect benefits from the Funds as a result of its usual
and customary brokerage commissions that PXP Securities Corp. may receive for
acting as broker to the Funds in the purchase and sale of portfolio securities.
The investment advisory agreement does not provide for a reduction of the
advisory fee by any portion of the brokerage fees generated by portfolio
transactions of the Funds that PXP Securities Corp. may receive.
For the fiscal years ended August 31, 1998, 1999 and 2000, brokerage
commission paid by the Trust on portfolio transactions totaled $106,252,
$298,832 and $657,265, respectively. In the fiscal years ended August 31, 1998
and 1999, no brokerage commissions were paid to affiliates. In the fiscal year
ended August 31, 2000, the Trust paid brokerage commissions of $61,795 to PXP
Securities Corp., and affiliate of its Distributor. For the fiscal year ended
August 31, 2000, the amount paid to PXP Securities Corp. was 9.40% of the total
brokerage commission paid by the Trust and was paid on transactions amounting to
8.11% of the aggregate dollar amount of transactions involving the payment of
commissions. Brokerage commissions of $375,888 paid during the fiscal year ended
August 31, 2000, were paid on portfolio transactions aggregating $199,513,427
executed by brokers who provided research and other statistical information.
SERVICES OF THE ADVISER
The offices of Phoenix Investment Counsel, Inc. ("PIC" or the "Adviser") are
located at 56 Prospect Street, Hartford, Connecticut 06115-0480. PIC was
organized in 1932 as John P. Chase, Inc. All of the outstanding shares of PIC
are owned by Phoenix Equity Planning Corporation ("Equity Planning"), which acts
as Distributor and Financial Agent for the Trust. All of the outstanding shares
of Equity Planning are owned by Phoenix Investment Partners, Ltd. 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") of Hartford, Connecticut. Phoenix
Home Life is in the business of writing ordinary and group life and health
insurance and annuities. Equity Planning, a mutual fund distributor, acts as the
national distributor of the Trust's shares and as Financial Agent of the Trust.
The principal office of Phoenix Home Life is located at One American Row,
Hartford, Connecticut, 06115. The principal office of Equity Planning is located
at 56 Prospect Street, Hartford, Connecticut, 06115.
Phoenix Investment Partners, Ltd. ("PXP"), is a publicly-traded independent
registered investment advisory firm and has served investors for over 70 years.
(As of September 30, 2000) PXP had assets under management of approximately
$61.9 billion through its investment partners: Aberdeen Fund Managers, Inc.
(Aberdeen) in Aberdeen London, Singapore and Fort Lauderdale; Duff & Phelps
Investment Management Co. (Duff & Phelps) in Chicago; Roger Engemann &
Associates, Inc. (Engemann) in Pasadena; Seneca Capital Management LLC (Seneca)
in San Francisco; Phoenix/Zweig Advisers LLC (Zweig) in New York; and Phoenix
Investment Counsel, Inc. (Goodwin, Hollister, and Oakhurst divisions) in
Hartford, CT, Sarasota, FL, and Scotts Valley, CA, respectively.
Philip R. McLoughlin, a director and officer of the Trust, 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, Robert S.
Driessen and William R. Moyer, officers of the Fund, are officers of the
Adviser.
The Adviser provides certain services and facilities required to carry on the
day-to-day operations of the Funds (for which it receives management fees) other
than the costs of printing and mailing proxy materials, reports and notices to
shareholders; legal, auditing and accounting services; regulatory filing fees
and expenses of printing the Funds' registration statement (but the Distributor
purchases such copies of the Funds' prospectuses and reports and communications
to shareholders as it may require for sales purposes); insurance expense;
association membership dues; brokerage fees; and taxes.
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All costs and expenses (other than those specifically referred to as being
borne by the Adviser) incurred in the operation of the Funds are borne by the
Funds. Each Fund pays expenses incurred in its own operation and also pays a
portion of the Trust's general administration expenses allocated on the basis of
the asset size of the respective Fund, except where an allocation using an
alternative method can be more fairly made. Such expenses include, but shall not
be limited to, all expenses incurred in the operation of the Funds and any
public offering of its shares, including, among others, interest, taxes,
brokerage fees and commissions, fees of Trustees who are not employees of the
Adviser or any of its affiliates, expenses of Trustees' and shareholders'
meetings, including the cost of printing and mailing proxies, expenses of
insurance premiums for fidelity and other coverage, expenses of repurchase and
redemption of shares, expenses of issue and sale of shares (to the extent not
borne by Equity Planning under its agreement with the Funds), association
membership dues, charges of custodians, transfer agents, dividend disbursing
agents and financial agents, bookkeeping, auditing, and legal expenses. The
Funds will also pay the fees and bear the expense of registering and maintaining
the registration of the Trust and its shares with the Securities and Exchange
Commission and registering or qualifying its shares under state or other
securities laws and the expense of preparing and mailing prospectuses and
reports to shareholders.
The investment advisory agreement provides that the Adviser shall not be
liable to the Funds or to any shareholder of the Funds for any error of judgment
or mistake of law or for any loss suffered by the Funds or by any shareholder of
the Funds in connection with the matters to which the investment advisory
agreement relates, except a loss resulting from willful misfeasance, bad faith,
gross negligence or reckless disregard on the part of the Adviser in the
performance of its duties thereunder.
As full compensation for the services and facilities furnished to the Funds,
the Adviser is entitled to a fee, payable monthly, as described in the
prospectus. Total management fees for the fiscal years ended August 31, 1998,
1999 and 2000 amounted to $269,984, $627,271 and $1,245,610. These fees were
paid by each of the funds as follows:
--------------------------------------------------------------------------------
1998 1999 2000
--------------------------------------------------------------------------------
Small Cap Value Fund $145,860 $304,049 $740,022
--------------------------------------------------------------------------------
Value Equity Fund $124,124 $323,222 $505,588
--------------------------------------------------------------------------------
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.
The Fund, its Adviser and Distributor have each adopted a Code of Ethics
pursuant to Rule 17-j1 under the Investment Company Act of 1940. Personnel
subject to the Codes of Ethics may purchase and sell securities for their
personal accounts, including securities that may be purchased, sold or held by
the Fund, subject to certain restrictions and conditions. Generally, personal
securities transactions are subject to preclearance procedures, reporting
requirements and holding period rules. The Codes also restrict personal
securities transactions in private placements, initial public offerings and
securities in which the Fund has a pending order.
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,
Presidents' 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.
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A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world, the
calculation of net asset value may not take place for any Fund which invests in
foreign securities contemporaneously with the determination of the prices of the
majority of the portfolio securities of such Fund. All assets and liabilities
initially expressed in foreign currency values will be converted into United
States dollar values at the mean between the bid and ask quotations of such
currencies against United States dollars as last quoted by any recognized
dealer. If an event were to occur after the value of an investment was so
established but before the net asset value per share was determined, which was
likely to materially change the net asset value, then the instrument would be
valued using fair value considerations by the Trustees or their delegates. If at
any time a Fund has investments where market quotations are not readily
available, such investments are valued at the fair value thereof as determined
in good faith by the Trustees although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent investment
is $25. However, both the minimum initial and subsequent investment amounts are
$25 for investments pursuant to the "Investo-Matic" plan, a bank draft investing
program administered by Distributor, or pursuant to the Systematic Exchange
privilege or for an individual retirement account (IRA). In addition, there are
no subsequent investment minimum amounts in connection with the reinvestment of
dividend or capital gain distributions. Completed applications for the purchase
of shares should be mailed to: Phoenix Funds, c/o State Street Bank and Trust
Company, P.O. Box 8301, Boston, MA 02266-8301.
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 Class C Shares would be less than the initial sales charge and accumulated
distribution plan fees on Class A Shares purchased at the same time.
Dividends paid by the Funds, if any, with respect to each Class of Shares
will be calculated in the same manner at the same time on the same day, except
that fees such as higher distribution plan fees and any incremental transfer
agency costs relating to each Class of Shares will be borne exclusively by that
class. See "Dividends, Distributions and Taxes."
CLASS A SHARES
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed. Class A
Shares are subject to an ongoing distribution services fee at an annual rate of
0.25% of the Funds' aggregate average daily net assets attributable to the Class
A Shares. In addition, certain purchases of Class A Shares qualify for reduced
initial sales charges.
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 Class B and Class C Shares -- Waiver of Sales
Charges.
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
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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
subaccount. Each time any Class B Shares in the shareholder's Trust account
(other than those in the subaccount) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the subaccount will also convert to
Class A Shares.
CLASS C SHARES
Class C Shares are purchased without an initial sales charge but are subject
to a deferred sales charge if redeemed within one year of purchase. The deferred
sales charge may be waived in connection with certain qualifying redemptions.
Shares issued in conjunction with the automatic reinvestment of income
distributions and capital gain distributions are not subject to any sales
charges. Class C Shares are subject to an ongoing distribution services fee of
up to 1.00% of the Funds' aggregate average daily net assets attributable to
Class C Shares.
CLASS A SHARES -- REDUCED INITIAL SALES CHARGES
Investors choosing Class A Shares may be entitled to reduced sales charges.
The 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 Shares: (1)
trustee, director or officer of the Phoenix Funds, the 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
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 or any other Affiliated Phoenix Fund qualified plan; (11) any
Phoenix Home Life separate account which funds group annuity contracts offered
to qualified employee benefit plans; (12) any state, county, city, department,
authority or similar agency prohibited by law from paying a sales charge; (13)
any fully matriculated student in any U.S. service academy; (14) any unallocated
account held by a third party administrator, registered investment adviser, Fund
company, or bank Fund 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 or any other Affiliated Phoenix 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 or any other Affiliated Phoenix Fund trustee or director;
provided that sales to persons listed in (1) to (16) above are made upon the
written assurance of the purchaser that the purchase is made for investment
purposes and that the shares so acquired will not be resold except to the Fund;
(17) purchasers of Class A Shares bought through investment advisers and
financial planners who charge an advisory, consulting or other fee for their
services and buy shares for their own accounts or the accounts of their clients;
(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; (19) 401(k) participants
in the Merrill Lynch Daily K Plan (the "Plan") if the Plan has at least $3
million in assets or 500 or more eligible employees; (20) clients of investment
advisors or financial planners who buy shares for their own accounts but only if
their accounts are linked to a master
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account of their investment advisor of 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 (20) 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-Goodwin Money Market
Fund and Phoenix-Zweig Government Cash Fund 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 charge. A "person"
is defined in this and the following sections as (a) any individual, their
spouse and minor children purchase 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 or this or any other Affiliated Phoenix Fund (other than
Phoenix-Goodwin Money Market Fund and Phoenix-Zweig Government Cash Fund Class A
Shares), if made by the same person within a 13-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 Shares before Class C or Class 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.
CLASS B AND CLASS C SHARES -- WAIVER OF SALES CHARGES
The CDSC is waived on the redemption (sale) of Class B Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder of
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) 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)
from the Merrill Lynch Daily K Plan ("Plan") invested in Class B Shares, in
which such shares the Distributor has not paid the dealer the Class B sales
commission; (f) based on the exercise of exchange privileges among Class B
Shares of this or any other Affiliated Phoenix Fund; (g) 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 (h) based on the systematic withdrawal program. 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 Shares are not redeemed within one year of the death, they will
remain subject to the applicable CDSC.
CONVERSION FEATURES--CLASS B SHARES
Class B Shares will automatically convert to Class A Shares of the same
Portfolio eight years after they are purchased. Conversion will be on the basis
of the then-prevailing net asset value of Class A and Class B Shares. There is
no sales load, fee
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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 Fund was 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 Fund.
INVESTOR ACCOUNT SERVICES
The Funds offer accumulation plans, withdrawal plans and reinvestment and
exchange privileges. Certain privileges may not be available in connection with
all classes. In most cases, changes to account services may be accomplished over
the phone. Inquiries regarding policies and procedures relating to shareholder
account services should be directed to Shareholder Services at (800) 243-1574.
Broker/dealers may impose their own restrictions and limits on accounts held
through the broker/dealer. Please consult your broker/dealer for account
restriction and limit information. The Fund and the Distributor reserve the
right to modify or terminate these services upon reasonable notice.
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, 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"). Exchange privileges may not be available for all Phoenix Funds, and may
be rejected or suspended.
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. 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.
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.
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.
INVEST-BY-PHONE
This expedited investment service allows a shareholder to make an investment
in an account by requesting a transfer of funds from the balance of their bank
account. Once a request is phoned in, Equity Planning will initiate the
transaction by wiring a request for monies to the shareholder's commercial bank,
savings bank or credit union via Automated Clearing House (ACH). The
shareholder's bank, which must be an ACH member, will in turn forward the monies
to Equity Planning for credit to the shareholder's account. ACH is a computer
based clearing and settlement operation established for the exchange of
electronic transactions among participating depository institutions.
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<PAGE>
To establish this service, please complete an Invest-by-Phone Application and
attach a voided check if applicable. Upon Equity Planning's acceptance of the
authorization form (usually within two weeks) shareholders may call toll free
(800) 367-5877 prior to 3:00 p.m. (New York time) to place their purchase
request. Instructions as to the account number and amount to be invested must be
communicated to Equity Planning. Equity Planning will then contact the
shareholder's bank via ACH with appropriate instructions. The purchase is
normally credited to the shareholder's account the day following receipt of the
verbal instructions. The Fund may delay the mailing of a check for redemption
proceeds of Fund shares purchased with a check or via Invest-by-Phone service
until the Fund has assured itself that good payment has been collected for the
purchase of the shares, which may take up to 15 days. The Fund and Equity
Planning reserve the right to modify or terminate the Invest-by-Phone service
for any reason or to institute charges for maintaining an Invest-by-Phone
account.
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. The purchase
of shares while participating in the withdrawal program will ordinarily be
disadvantageous to the Class A Shares investor since a sales charge will be paid
by the investor on the purchase of Class A Shares at the same time as other
shares are being redeemed. For this reason, investors in Class A Shares may not
participate in an automatic investment program while participating in the
Systematic Withdrawal Program.
Through the Program, Class B and Class C 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 and Class C 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 or Class C Shares will generally not be suitable for an
investor who anticipates withdrawing sums in excess of the above limits shortly
after purchase.
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 after the
receipt of the check.
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.
Redemptions by Class B and Class C shareholders will be subject to the
applicable deferred sales charge, if any.
A shareholder should contact his/her broker/dealer if he/she wishes to
transfer shares from an existing broker/dealer street name account to a street
name account with another broker/dealer. The Fund has no specific procedures
governing such account transfers.
REDEMPTION OF SMALL ACCOUNTS
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the giving
of not less than 30 days written notice to the shareholder mailed to the address
of record. During the 30-day period the shareholder has the right to add to the
account to bring its value to $200 or more.
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<PAGE>
BY MAIL
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds, c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written request
to Equity Planning that the Trust redeem the shares. See the Funds' current
Prospectus for more information.
TELEPHONE REDEMPTIONS
Shareholders may redeem up to $50,000 worth of their shares by telephone. See
the Funds' current Prospectus for additional information.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the Funds may make
payment of the redemption price either in cash or in kind. However, the Funds
have elected to pay in cash all requests for redemption by any shareholder of
record, limited in respect to each shareholder during any 90-day period to the
lesser of $250,000 or 1% of the net asset value of the Fund at the beginning of
such period. This election has been made pursuant to Rule 18f-1 under the
Investment Company Act of 1940 and is irrevocable while the Rule is in effect
unless the Securities and Exchange Commission, by order, permits the withdrawal
thereof. In case of a redemption in kind, securities delivered in payment for
shares would be readily marketable and valued at the same value assigned to them
in computing the net asset value per share of the Fund. A shareholder receiving
such securities would incur brokerage costs when selling the securities.
ACCOUNT REINSTATEMENT 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.
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.
MERRILL LYNCH DAILY K PLAN
Class A Shares of a Fund are made available to Merrill Lynch Daily K Plan
(the "Plan") participants at NAV without an initial sales charge if:
(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping
Service Agreement, the Plan has $3 million or more in assets invested in
broker/dealer funds not advised or managed by Merrill Lynch Asset
Management L.P. ("MLAM") that are made available pursuant to a Service
Agreement between Merrill Lynch and the fund's principal underwriter or
distributor and in funds advised or managed by MLAM (collectively, the
"Applicable Investments");
(ii) The Plan is recordkept on a daily valuation basis by an independent
recordkeeper whose services are provided through a contract or alliance
arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs
the Merrill Lynch Recordkeeping Service Agreement, the Plan has $3
million or more in assets, excluding money market funds, invested in
Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by a Merrill
Lynch plan conversion manager, on the date the Plan Sponsor signs the
Merrill Lynch Recordkeeping Service Agreement.
Alternatively, Class B Shares of a Fund are made available to Plan
participants at NAV without a CDSC if the Plan conforms with the requirements
for eligibility set for in (i) through (iii) above but either does not meet the
$3 million asset threshold or does not have 500 or more eligible employees.
Plans recordkept on a daily basis by Merrill Lynch or an independent
recordkeeper under a contract with Merrill Lynch that are currently investing in
Class B Shares of a Fund convert to Class A Shares once the Plan has reached $5
million invested in Applicable Investments, or after the normal holding period
of seven years from the initial date of purchase.
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
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<PAGE>
"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 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.
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
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<PAGE>
only such securities as may be sold to the public. The address of the
Distributor is 56 Prospect Street, P.O. Box 150480, Hartford, Connecticut
06115-0480.
For the fiscal year ended August 31, 1998, 1999 and 2000, purchasers of
shares of the Funds paid aggregate sales charges of $282,725, 203,174 and
$395,981, of which the Distributor received net commissions of $39,280, $75,635
and $75,197 for its services, the balance being paid to dealers. For the fiscal
year ended August 31, 2000, the distributor received net commissions of $35,803
for Class A Shares and deferred sales charges of $39,394 for Class B and Class C
Shares.
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.
DEALER CONCESSIONS
Dealers with whom the Distributor has entered into sales agreements receive a
discount or commission as set forth below.
<TABLE>
<CAPTION>
AMOUNT OF
TRANSACTION SALES CHARGE AS PERCENTAGE OF SALES CHARGE AS PERCENTAGE OF DEALER DISCOUNT OR AGENCY FEE
AT OFFERING PRICE OFFERING PRICE AMOUNT INVESTED AS PERCENTAGE OF OFFERING PRICE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.25%
$50,000 but under $100,000 4.75% 4.99% 4.25%
$100,000 but under $250,000 3.75% 3.90% 3.25%
$250,000 but under $500,000 2.75% 2.83% 2.25%
$500,000 but under $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. This sales commission will not be paid to
dealers for sales of Class B or Class C Shares purchased by 401(k) participants
of the Merrill Lynch Daily K Plan due to a waiver of the CDSC for these Plan
participants' purchases. 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. Such fees are in addition
to the sales commissions referenced above and may be based upon the amount of
sales of fund shares by a dealer; the provision of assistance in marketing of
fund shares; access to sales personnel and information dissemination services;
provision of recordkeeping and administrative services to qualified employee
benefit plans; and other criteria as established by the Distributor. Depending
on the nature of the services, these fees may be paid either from the Funds
through distribution fees, service fees or transfer agent fees or in some cases,
the Distributor may pay certain fees from its own profits and resources. From
its own profits and resources, the Distributor does intend to: (a) sponsor sales
contests, training and educational meetings and provide additional compensation
to qualifying dealers in the form of trips, merchandise or expense
reimbursements; (b) from time to time pay special incentive and retention fees
to qualified wholesalers, registered financial institutions and third party
marketers; (c) pay broker/dealers an amount equal to 1% of the first $3 million
of Class A Share purchases by an account held in the name of a qualified
employee benefit plan with at least 100 eligible employees, 0.50% on the next $3
million, plus 0.25% on the amount in excess of $6 million; and (d) excluding
purchases as described in (c) above, pay broker/dealers an amount equal to 1% of
the amount of Class A Shares sold above $1 million but under $3 million, 0.50%
on the next $3 million, plus 0.25% on the amount in excess of $6 million. If
part or all of such investment, including investments by qualified employee
benefit plans, is subsequently redeemed within one year of the investment date,
the broker-dealer will refund to the Distributor such amounts paid with respect
to the investment. In addition, the Distributor may pay the entire applicable
sales charge on purchases of Class A Shares to selected dealers and agents. From
its own resources, the Distributor intends to pay the following additional
compensation to Merrill Lynch, Pierce, Fenner & Smith, Incorporated: 0.25% on
sales of Class A and Class B Shares, 0.10% on sales of Class C Shares, 0.10% on
sales of Class A shares sold at net asset value, and 0.10% annually on the
average daily net asset value of fund shares on which Merrill Lynch is broker of
record and which such shares exceed the amount of assets on which Merrill Lynch
is broker of record as of July 1, 1999. Any dealer who receives more than 90% of
a sales charge may be deemed to be an "underwriter" under the Securities Act of
1933. Equity Planning reserves the right to discontinue or alter such fee
payment plans at any time.
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From its own resources or pursuant to the Plan, and subject to the dealers'
prior approval, the Distributor may provide additional compensation to
registered representatives of dealers in the form of travel expenses, meals, and
lodging associated with training and educational meetings sponsored by the
Distributor. The Distributor may also provide gifts amounting in value to less
than $100, and occasional meals or entertainment, to registered representatives
of dealers. Any such travel expenses, meals, lodging, gifts or entertainment
paid will not be preconditioned upon the registered representatives' or dealers'
achievement of a sales target. The Distributor may, from time to time, reallow
the entire portion of the sales charge on Class A shares 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.
ADMINISTRATIVE SERVICES
Equity Planning also acts as administrative agent of the Funds and as such
performs administrative, bookkeeping and pricing functions for the Funds. For
its services, Equity Planning will be paid a fee equal to the sum of (1) the
documented cost of fund accounting and related services provided by PFPC, Inc.,
as subagent, plus (2) the documented cost to Equity Planning to provide
financial reporting and tax services and to oversee the subagent's performance.
The current fee schedule of PFPC, Inc. is based upon the average of the
aggregate daily net asset values of the Funds, at the following incremental
annual rates.
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .015%
Greater than $1 billion .0125%
Percentage rates are applied to the aggregate daily net asset values of the
Funds. PFPC, Inc. also charges minimum fees and additional fees for each
additional class of fund shares. Equity Planning retains PFPC, Inc. as subagent
for each of the funds for which Equity Planning serves as administrative agent.
PFPC, Inc. agreed to a modified fee structure and waived certain charges.
Because PFPC, Inc.'s arrangement would have favored smaller funds over larger
funds, Equity Planning reallocates PFPC, Inc.'s overall asset-based charges
among all funds for which it serves as administrative agent on the basis of the
relative net assets of each fund. As a result, the PFPC, Inc. charges to the
Fund are expected to be slightly less than the amount that would be found
through direct application of the table illustrated above. For its services
during the Fund's fiscal year ended August 31, 2000, Equity Planning received
$82,360.
DISTRIBUTION PLANS
The Trust has adopted a distribution plan for each class of shares (i.e.,
plan for the Class A Shares, a plan for the Class B Shares, and a plan for the
Class C Shares, collectively, the "Plans") in accordance with Rule 12b-1 under
the Act, to compensate the Distributor for the services it provides and for the
expenses it bears under the Underwriting Agreement. Each class of shares pays a
service fee at a rate of 0.25% per annum of the average daily net assets of such
class of the Fund and a distribution fee based on average daily net assets at
the rate of 0.75% per annum for Class B Shares and 0.75% per annum for Class C
Shares.
Pursuant to the Plans, the Funds will pay the Distributor 0.25% of the
average daily net assets of the Funds for providing services to shareholders,
including assistance with inquiries related to shareholder accounts (the
"Service Fee"). Pursuant to the Plans, the Funds may reimburse the Distributor
monthly for actual expenses of the Distributor up to 0.75% of the average daily
net assets of the Funds' Class B and of Class C Shares. Expenditures under the
Plans shall consist of: (i) commissions to sales personnel for selling shares of
the Funds (including underwriting fees and financing expenses incurred in
connection with the payment of commissions); (ii) compensation, sales incentives
and payments to sales, marketing and service personnel; (iii) payments to
broker-dealers and other financial institutions which have entered into
agreements with the Distributor in the form of the Dealer Agreement for Phoenix
Funds for services rendered in connection with the sale and distribution of
shares of the Funds; (iv) payment of expenses incurred in sales and promotional
activities, including advertising expenditures related to the Funds; (v) the
costs of preparing and distributing promotional materials; (vi) the cost of
printing the Funds' Prospectuses and Statements of Additional Information for
distribution to potential investors; and (vii) such other similar services that
the Trustees of the Funds determine are reasonably calculated to result in the
sale of shares of the Funds.
From the Service Fee the Distributor expects to pay a quarterly fee to
qualifying broker/dealer firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such firms. This fee will not exceed on an annual basis 0.25% of the average
annual net asset value of such shares, and will be in addition to sales charges
on Fund shares which are re-allowed to such firms. To the extent that the entire
amount of the Service Fee is not paid to such firms, the balance will serve as
compensation for personal and account maintenance services furnished by the
Distributor.
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<PAGE>
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor, such
as services to the Funds' shareholders; or services providing the Funds with
more efficient methods of offering shares to coherent groups of clients, members
or prospects of a participant; or services permitting bulking of purchases or
sales, or transmission of such purchases or sales by computerized tape or other
electronic equipment; or other processing.
For the fiscal year ended August 31, 2000 the Funds paid Rule 12b-1 Fees in
the amount of $885,343, of which the Distributor received $607,618, W.S.
Griffith & Co., an affiliate, received $11,727 and unaffiliated broker-dealers
received $265,998. The Rule 12b-1 payments were used for (1) compensation to
dealers, $937,262; (2) compensation to sales personnel, $1,126,866;
(3) advertising, $585,635; (4) service costs, $66,277; (5) printing and mailing
of prospectuses to other than current shareholders, $8,052; and (6) other,
$169,596.
On a quarterly basis, the Funds' Trustees review a report on expenditures
under the Plans and the purposes for which expenditures were made. The Trustees
conduct an additional, more extensive review annually in determining whether the
Plans will be continued. By its terms, continuation of the Plans from year to
year is contingent on annual approval by a majority of the Funds' Trustees and
by a majority of the Trustees who are not "interested persons" (as defined in
the 1940 Act) and who have no direct or indirect financial interest in the
operation of the Plans or any related agreements (the "Plan Trustees"). The
Plans provide that they may not be amended to increase materially the costs
which the Funds may bear pursuant to the Plans without approval of the
shareholders of the Funds and that other material amendments to the Plans must
be approved by a majority of the Plan Trustees by vote cast in person at a
meeting called for the purpose of considering such amendments. The Plans further
provide that while they are in effect, the selection and nomination of Trustees
who are not "interested persons" shall be committed to the discretion of the
Trustees who are not "interested persons." The Plans may be terminated at any
time by vote of a majority of the Plan Trustees or a majority of the outstanding
shares of the Funds. The Trustees have concluded that there is a reasonable
likelihood that the Plans will benefit the Fund and all classes of shareholders.
The Board of Trustees has also adopted a Rule 18f-3 Multi-Class Share Plan
permitting the issuance of shares in multiple classes.
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
amend the Plans.
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for the overall supervision of the
operations of the Trust and perform the various duties imposed on Trustees by
the 1940 Act and Delaware business trust law.
TRUSTEES AND OFFICERS
The Trustees and Officers of the Trust and their business affiliations for
the past five years are set forth below and, unless otherwise noted, the address
of each executive officer and Trustee is 56 Prospect Street, Hartford,
Connecticut, 06115-0480.
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
--------------------- -------------- -----------------------
<S> <C> <C>
Robert Chesek (66) Trustee Trustee/Director (1981-present) and Chairman (1989-1994),
49 Old Post Road Phoenix Funds. Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Wethersfield, CT 06109 Duff & Phelps Institutional Mutual Funds (1996-present). Vice
President, Common Stock, Phoenix Home Life Mutual Insurance
Company (1980-1994).
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
--------------------- -------------- -----------------------
<S> <C> <C>
E. Virgil Conway (71) Trustee Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (1978-present), Atlantic Mutual
Insurance Company (1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Freddie Mac
Mortgage Securities Fund (Advisory Director) (1990-present),
Centennial Insurance Company (1974-present), Josiah Macy, Jr.,
Foundation (1975-present), The Harlem Youth Development
Foundation (1987-present), Accuhealth (1994-present), Trism,
Inc. (1994-present), Realty Foundation of New York
(1972-present), New York Housing Partnership Development Corp.
(Chairman) (1981-present) and Academy of Political Science (Vice
Chairman) (1985 to present). Director/Trustee, Phoenix Funds
(1993-present). Trustee, Phoenix-Aberdeen Series Fund, Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present) and
Phoenix-Seneca Funds (2000-present). Director, Duff & Phelps
Utilities Tax-Free Income Inc. and Duff & Phelps Utility and
Corporate Bond Trust Inc. (1995-present). Chairman/Member,
Audit Committee of the City of New York (1981-1996). Advisory
Director, Blackrock Fannie Mae Mortgage Securities Fund
(1989-1996) and Fund Directions (1993-1998).
Harry Dalzell-Payne (71) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
The Flat Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps
Elmore Court Institutional Mutual Funds (1996-present) and Phoenix-Seneca
Elmore, Funds (2000-present). Director, Duff & Phelps Utilities Tax-Free
GLOS 9L2 3NT UK Income Inc. and Duff & Phelps Utility and Corporate Bond Trust
Inc. (1995-present). Formerly a Major General of the British
Army.
*Francis E. Jeffries (70) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
6585 Nicholas Blvd. Phoenix-Aberdeen Series Inc., Phoenix Duff & Phelps
Apt. 1601 Institutional Mutual Funds (1996-present) and Phoenix-Seneca
Naples, FL 33963 Funds (2000-present). Director, Duff & 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. (61) Trustee Chairman and Chief Executive Officer, Carson Products Company
Chairman and Chief (1995-present). Director/Trustee, Phoenix Funds (1980-present).
Executive Officer Trustee, Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps
Carson Products Company Institutional Mutual Funds (1996-present) and Phoenix-Seneca
64 Ross Road Funds (2000-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.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
--------------------- -------------- -----------------------
<S> <C> <C>
*Philip R. McLoughlin (53) Trustee and Chairman (1997-present), Director (1995-present), Vice Chairman
President (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, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Director, Duff & Phelps Utilities Tax-Free Income Inc.
(1995-present) and Duff & Phelps Utility and Corporate Bond Trust
Inc. (1995-present). Trustee Phoenix-Seneca Funds (1999-present).
Director (1983-present) and Chairman (1995-present), Phoenix
Investment Counsel, Inc. Director (1984-present) and President
(1990-present), Phoenix Equity Planning Corporation. Chairman and
Chief Executive Officer, Phoenix/Zweig Advisers LLC (1999-present).
Director, 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, PHL Associates, Inc. (1995-present).
Director (1992-present) and President (1992-1994), W.S. Griffith &
Co., Inc.
Everett L. Morris (72) 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, Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present) and Phoenix-Seneca
Funds (2000-present). Director, Duff & Phelps Utilities Tax-Free
Income Inc. (1991-present) and Duff & Phelps Utility and Corporate
Bond Trust Inc. (1993-present).
*James M. Oates (54) Trustee Chairman, IBEX Capital Markets Inc. (formerly IBEX Capital
Managing Director Markets, LLC) (1997-present). Managing Director, Wydown Group
The Wydown Group (1994-present). Director, Phoenix Investment Partners, Ltd.
IBEX Capital Markets, Inc. (1995-present). Director/Trustee, Phoenix Funds (1987-present).
60 State Street Trustee, Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps
Suite 950 Institutional Mutual Funds (1996-present) and Phoenix-Seneca
Boston, MA 02109 Funds (2000-present). Director, AIB Govett Funds (1991-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) Connecticut River Bancorp
(1998-present) and Endowment for Health, Inc. (1999-present).
Member, Chief Executives Organization (1996-present). Vice
Chairman, Massachusetts Housing Partnership (1998-1999).
Director, Blue Cross and Blue Shield of New Hampshire
(1994-1999).
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
--------------------- -------------- -----------------------
<S> <C> <C>
Herbert Roth, Jr. (72) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present) and Phoenix-Seneca
Sherborn, MA 01770 Funds (2000-present). Director, Boston Edison Company
(1978-present), 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, Phoenix Home Life Mutual
Insurance Company (1972-1998).
Richard E. Segerson (54) Trustee Managing Director, Northway Management Company (1998-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 07840 Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present) and Phoenix-Seneca
Funds (2000-present). Managing Director, Mullin Associates
(1993-1998).
Lowell P. Weicker, Jr. (69) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps
Greenwich, CT 06830 Institutional Mutual Funds (1996-present) and Phoenix-Seneca
Funds (2000-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).
Michael E. Haylon (42) Executive Director and Executive Vice President; Investments, Phoenix
Vice Investment Partners, Ltd. (1995-present). Director
President (1994-present), President (1995-present), Executive Vice
President (1994-1995), Vice President (1991-1994), Phoenix
Investment Counsel, Inc. Director, Phoenix Equity Planning
Corporation (1995-present). Executive Vice President, Phoenix
Funds (1993-present), Phoenix-Aberdeen Series Fund
(1996-present) and Phoenix-Seneca Funds (1999-present).
Executive Vice President (1997-present), Vice President
(1996-1997), Phoenix Duff & Phelps Institutional Mutual Funds.
Senior Vice President, Securities Investments, Phoenix Home Life
Mutual Insurance Company (1993-1995).
John F. Sharry (48) Executive Vice President, Retail Division (1999-present), Executive Vice
President President, Retail Division (1997-present), Phoenix Investment
Partners, Ltd. Managing Director, Retail Distribution, Phoenix
Equity Planning Corporation (1995-1997). Executive Vice
President, Phoenix Funds (1998-present), Phoenix-Aberdeen Series
Fund (1998-present) and Phoenix-Seneca Funds (2000-present).
Managing Director, Director and National Sales Manager, Putnam
Mutual Funds (1993-1995).
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
--------------------- -------------- -----------------------
<S> <C> <C>
Christian C. Bertelsen (57) Vice Managing Director, Value Equities, Phoenix Investment Counsel,
President 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).
Robert S. Driessen (53) Vice President and Vice President and Compliance Officer, Phoenix Investment
Assistant Secretary Partners, Ltd. (1999-present) and Phoenix Investment Counsel,
Inc. (1999-present). Vice President, Phoenix Funds,
Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps
Institutional Mutual Funds (1999-present) and Phoenix-Seneca
Funds (2000-present). Compliance Officer (2000-present) and
Associate Compliance Officer (1999), PXP Securities Corporation.
Vice President, Risk Management Liaison, Bank of America
(1996-1999). Vice President, Securities Compliance, The
Prudential Insurance Company of America (1993-1996). Branch
Chief/Financial Analyst, Securities and Exchange Commission,
Division of Investment Management (1972-1993).
William R. Moyer (56) Vice Executive Vice President and Chief Financial Officer
President (1999-present), Senior Vice President and Chief Financial
Officer, Phoenix Investment Partners, Ltd. (1995-1999). Director
(1998-present), Senior Vice President, Finance (1990-present),
Chief 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. 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). Executive Vice
President, Phoenix-Seneca Funds (2000 present). Vice President,
Investment Products Finance, Phoenix Home Life Mutual Insurance
Company (1990-1995). Senior Vice President and Chief Financial
Officer, W. S. Griffith & Co., Inc. (1992-1995) and Townsend
Financial Advisers, Inc. (1993-1995).
Nancy G. Curtiss (48) 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), Phoenix-Aberdeen
Series Fund (1996-present) and Phoenix-Seneca Funds (2000
present). Second Vice President and Treasurer, Fund Accounting,
Phoenix Home Life Mutual Insurance Company (1994-1995).
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
--------------------- -------------- -----------------------
<S> <C> <C>
G. Jeffrey Bohne (53) Secretary Vice President and General Manager, Phoenix Home Life Mutual
101 Munson Street Insurance Co. (1993-present). Vice President, Mutual Fund
Greenfield, MA 01301 Customer Service (1996-1999), Vice President, Transfer Agent
Operations (1993-1996), Senior Vice President, Mutual Fund Customer
Service (1999-present), Phoenix Equity Planning Corporation.
Secretary/Clerk, Phoenix Funds (1993-present). Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present), Phoenix-Aberdeen Series
Fund (1996-present) and Phoenix-Seneca Funds (2000-present).
</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.
For services rendered to the Fund for the fiscal year ended August 31, 2000,
the Trustees received aggregate remuneration of $33,343. For services on the
Boards of Directors/Trustees of the Phoenix Funds, each Trustee who is not a
full-time employee of the Adviser or any of its affiliates currently receives a
retainer at the annual rate of $40,000 and a fee of $2,500 per joint meeting of
the Boards. Each Trustee who serves on the Audit Committee receives a retainer
at the annual rate of $2,000 and a fee of $2,000 per joint Audit Committee
meeting attended. Each Trustee who serves on the Nominating Committee receives a
retainer at the annual rate of $1,000 and a fee of $1,000 per joint Nominating
Committee meeting attended. Each Trustee who serves on the Executive Committee
and who is not an interested person of the Fund receives a retainer at the
annual rate of $2,000 and $2,000 per joint Executive Committee meeting attended.
The function of the Executive Committee is to serve as a contract review,
compliance review and performance review delegate of the full Board of Trustees.
Trustee costs are allocated equally to each of the Series and Funds within the
Fund complex. The foregoing fees do not include the reimbursement of expenses
incurred in connection with meeting attendance. Officers and employees of the
Adviser who are interested persons are compensated by the Adviser and receive no
compensation from the Fund.
For the Funds' last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FROM FUND AND
AGGREGATE RETIREMENT BENEFITS ESTIMATED FUND COMPLEX
COMPENSATION ACCRUED AS PART ANNUAL BENEFITS (14 FUNDS)
NAME FROM FUND OF FUND EXPENSES UPON RETIREMENT PAID TO TRUSTEES
--------------------- ----------- ------------------ ----------------- ------------------
<S> <C> <C> <C> <C>
Robert Chesek $3,313 $56,250
E. Virgil Conway+ $3,255 $58,000
Harry Dalzell-Payne+ $3,788 $74,250
Francis E. Jeffries $3,250* $55,000
Leroy Keith, Jr. $3,313 Not for Not for $56,250
Philip R. McLoughlin+ $ 0 any Trustee any Trustee $ 0
Everett L. Morris+ $3,325* $53,000
James M. Oates+ $3,550 $60,500
Herbert Roth, Jr.+ $1,750 $28,750
Richard E. Segerson $3,900* $66,000
Lowell P. Weicker, Jr. $3,900 $65,250
</TABLE>
-----------------------
*This compensation (and the earnings thereon) paid to Messrs. Jeffries and
Roth, will be deferred pursuant to the Directors' Deferred Compensation Plan.
At September 30, 2000, the total amount of deferred compensation (including
interest and other accumulation earned on the original amounts deferred)
accrued for Messrs. Jeffries, Morris, Roth and Segerson was $241,931.17,
$153,651.87, $152,500.93 and $55,754.32, 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.
[dagger] Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth
are members of the Executive Committee.
At November 24, 2000, the trustees and officers as a group owned less than 1%
of the outstanding shares of the Trust.
28
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of November 26, 2000 with
respect to each person who owns of record or is known by the Funds to own of
record or beneficially own 5% or more of any class of each Fund's equity
securities.
<TABLE>
<CAPTION>
Name of Shareholder Fund and Class Percent of Class Number of Shares
------------------- -------------- ---------------- ----------------
<S> <C> <C> <C>
MLPF&S Small Cap Value Fund Class A 6.28% 334,395.163
For the Sole Benefit Small Cap Value Fund Class B 23.25% 362,954.926
of its Customers Small Cap Value Fund Class C 18.30% 344,266.213
Attn: Fund Administration Value Equity Fund Class C 6.17% 57,562.909
4800 Deer Lake Drive East, 3rd Fl.
Jacksonville, FL 32246-6484
Phoenix Home Life Value Equity Fund Class A 42.71% 1,161,424.879
Attn. Pam Levesque Value Equity Fund Class B 52.76% 988,497.030
1 American Row
Hartford, CT 06103
</TABLE>
OTHER INFORMATION
CAPITAL STOCK
The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest. The Trust currently offers shares in different
Funds and different classes of those Funds. Holders of shares of a Fund have
equal rights with regard to voting, redemptions, dividends, distributions, and
liquidations with respect to that Fund. 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. The Trust does not hold regular
meetings of shareholders. The Trustees will call a meeting when shareholders
representing 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 1940 Act.
Shares are fully paid, nonassessable, redeemable and fully transferable
when they are issued. Shares do not have cumulative voting rights, preemptive
rights or subscription rights. The assets received by the Trust for the issue or
sale 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. The Declaration of Trust provides for indemnification
out of the Trust property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability, which
is considered remote, is limited to circumstances in which the Trust itself
would be unable to meet its obligations.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, has been
selected as the independent accountants for the Funds. PricewaterhouseCoopers
LLP audits the Funds' annual financial statements and expresses an opinion
thereon.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company ("State Street"), P.O. Box 351, Boston,
MA 02101, serves as custodian of the Funds' assets (the "Custodian"). Equity
Planning, 56 Prospect Street, P.O. Box 150480, Hartford, CT 06115-0480, acts as
Transfer Agent for the Funds (the "Transfer Agent"). As compensation, Equity
Planning receives a fee equivalent to $17.95 for each designated shareholder
account, plus out-of-pocket expenses. Transfer Agent fees are also utilized to
offset costs and fees paid to subtransfer agents employed by Equity Planning.
State Street Bank and Trust Company serves as a subtransfer agent pursuant to a
Subtransfer Agency Agreement.
29
<PAGE>
REPORT TO SHAREHOLDERS
The fiscal year of the Funds ends on August 31. The Funds will send financial
statements to shareholders at least semi-annually. An annual report, containing
financial statements, audited by independent accountants, will be sent to
shareholders each year.
FINANCIAL STATEMENTS
The Financial Statements for the Fund's fiscal year ended August 31, 2000,
appearing in the Fund's 2000 Annual Report to Shareholders, are incorporated
herein by reference.
30
<PAGE>
INVESTMENTS AT AUGUST 31, 2000
SHARES VALUE
-------- -----------
COMMON STOCKS -- 81.0%
Aerospace/Defense -- 2.1%
Alliant Techsystems, Inc.(b) ......................... 36,000 $ 2,774,250
Auto Parts & Equipment -- 0.4%
Tower Automotive, Inc.(b) ............................ 50,000 568,750
Banks (Regional) -- 1.9%
Cullen/Frost Bankers, Inc. ........................... 84,000 2,604,000
Biotechnology -- 2.3%
Charles River Laboratories International, Inc.(b) .... 113,400 3,111,412
Chemicals (Specialty) -- 0.6%
Fuller (H.B.) Co. .................................... 25,000 857,812
Communications Equipment -- 7.3%
Brooktrout, Inc.(b) .................................. 100,000 3,400,000
L-3 Communications Holdings, Inc.(b) ................. 65,000 3,843,125
Spectrasite Holdings, Inc.(b) ........................ 110,000 2,578,125
-----------
9,821,250
-----------
Computers (Peripherals) -- 3.5%
Dot Hill Systems Corp.(b) ............................ 240,000 2,130,000
Quantum Corp. - DLT & Storage Systems.(b) ............ 185,000 2,509,062
-----------
4,639,062
-----------
Computers (Software & Services) -- 1.5%
Titan Corp. (The)(b) ................................. 80,000 1,970,000
Construction (Cement & Aggregates) -- 1.3%
Texas Industries, Inc. ............................... 50,000 1,706,250
Electric Companies -- 0.6%
El Paso Electric Co.(b) .............................. 60,000 806,250
Electrical Equipment -- 8.4%
Advanced Lighting Technologies, Inc.(b) .............. 145,300 2,324,800
Artesyn Technologies, Inc.(b) ........................ 56,000 2,327,500
Black Box Corp.(b) ................................... 40,000 2,380,000
C&D Technologies, Inc. ............................... 35,000 1,933,750
Littelfuse, Inc.(b) .................................. 63,000 2,287,687
-----------
11,253,737
-----------
Electronics (Instrumentation) -- 1.7%
Methode Electronics, Inc. Class A .................... 38,000 2,284,750
Engineering & Construction -- 1.6%
MasTec, Inc.(b) ...................................... 58,400 2,102,400
Financial (Diversified) -- 1.4%
CompuCredit Corp.(b) ................................. 47,000 1,862,375
Gaming, Lottery & Pari-mutuel Companies -- 0.5%
Sun International Hotels Ltd.(b) ..................... 28,000 609,000
Health Care (Hospital Management) -- 2.0%
Triad Hospitals, Inc.(b) ............................. 92,000 2,656,500
See Notes to Financial Statements
5
<PAGE>
Phoenix-Hollister Small Cap Value Fund
SHARES VALUE
-------- ------------
Health Care (Managed Care) -- 4.6%
Humana, Inc.(b) ..................................... 350,000 $ 2,996,875
Trigon Healthcare, Inc.(b) .......................... 62,000 3,200,750
----------
6,197,625
----------
Health Care (Medical Products & Supplies) -- 3.3%
Cooper Companies, Inc. (The) ........................ 60,000 1,972,500
Laser Vision Centers, Inc.(b) ....................... 400,000 2,462,500
----------
4,435,000
----------
Homebuilding -- 3.2%
Horton (D.R.), Inc. ................................ 110,000 2,158,750
Lennar Corp. ........................................ 77,000 2,127,125
----------
4,285,875
----------
Household Furnishings & Appliances -- 1.3%
U.S. Industries, Inc. ............................... 140,000 1,785,000
Insurance (Property-Casualty) -- 3.4%
Commerce Group, Inc. (The) .......................... 40,000 1,040,000
Horace Mann Educators Corp. ......................... 50,000 762,500
Radian Group, Inc. .................................. 38,000 2,360,750
Selective Insurance Group, Inc. ..................... 20,000 358,750
----------
4,522,000
----------
Iron & Steel -- 2.1%
Lone Star Technologies, Inc (b) ..................... 30,000 1,507,500
Maverick Tube Corp.(b) .............................. 45,000 1,262,812
----------
2,770,312
----------
Machinery (Diversified) -- 2.3%
Terex Corp.(b) ...................................... 170,000 3,113,125
Metal Fabricators -- 2.8%
Shaw Group, Inc. (The) (b) .......................... 67,000 3,731,063
Oil & Gas (Drilling & Equipment) -- 7.3%
Cal Dive International, Inc.(b) ..................... 55,000 3,162,500
Gulf Island Fabrication, Inc.(b) .................... 160,000 2,960,000
Parker Drilling Co.(b) .............................. 250,000 1,796,875
Santa Fe International Corp. ........................ 47,000 1,847,688
----------
9,767,063
----------
Oil & Gas (Exploration & Production) -- 3.4%
Bellwether Exploration Co.(b) ....................... 130,000 1,035,938
Pogo Producing Co. .................................. 50,000 1,343,750
Vintage Petroleum, Inc. ............................. 105,000 2,205,000
----------
4,584,688
----------
REITS -- 0.5%
Health Care REIT, Inc. .............................. 40,000 722,500
Restaurants -- 1.2%
CBRL Group, Inc. (b) ................................ 130,000 1,568,125
Retail (Home Shopping) -- 1.8%
ValueVision International, Inc.(b) .................. 83,200 2,438,800
Retail (Specialty-Apparel) -- 0.8%
Men's Wearhouse, Inc. (The)(b) ...................... 26,000 793,000
Pacific Sunwear of California, Inc.(b) .............. 25,000 332,813
----------
1,125,813
----------
Services (Commercial & Consumer) -- 0.6%
Wackenhut Corp. (The) Class A(b) .................... 55,000 780,313
Specialty Printing -- 2.7%
Valassis Communications, Inc.(b) .................... 125,000 3,609,375
Telecommunications (Cellular/Wireless) -- 2.6%
Boston Communications Group, Inc.(b) ................ 240,000 3,450,000
- ------------------------------------------------------------------------------
Total Common Stocks
(Identified cost $94,414,242) 108,514,475
- ------------------------------------------------------------------------------
FOREIGN COMMON STOCKS -- 6.9%
Insurance (Life/Health) -- 3.9%
Annuity and Life Re (Holdings) Ltd. (Bermuda) ....... 100,000 2,625,000
London Pacific Group Ltd. ADR (United Kingdom) ..... 130,000 2,624,375
----------
5,249,375
----------
Insurance (Property-Casualty) -- 1.5%
RenaissanceRe Holdings Ltd. (Bermuda) ............... 40,000 1,915,000
Oil & Gas (Drilling & Equipment) -- 1.5%
Precision Drilling Corp. (Canada)(b) ................ 60,000 2,040,000
- ------------------------------------------------------------------------------
Total Foreign Common Stocks
(Identified cost $8,231,972) 9,204,375
- ------------------------------------------------------------------------------
See Notes to Financial Statements
6
<PAGE>
Phoenix-Hollister Small Cap Value Fund
SHARES VALUE
-------- ----------
UNIT INVESTMENT TRUSTS -- 8.8%
AMEX Financial Select Sector Depository Receipts .... 110,000 $ 3,131,563
Diamonds Trust, Series I(b) ......................... 27,500 3,093,750
Nasdaq - 100 Shares ................................. 15,000 1,526,484
S&P 400 Mid-Cap Depository Receipts ................. 20,000 1,997,500
S&P 500 Depository Receipts ......................... 8,000 1,219,000
Utilities Select Sector Index ....................... 30,000 865,781
- ------------------------------------------------------------------------------
Total Unit Investments Trusts
(Identified cost $11,179,656) 11,834,078
- ------------------------------------------------------------------------------
Total Long-Term Investments -- 96.7%
(Identified cost $113,825,870) 129,552,928
- ------------------------------------------------------------------------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
----------- -----
SHORT-TERM OBLIGATIONS -- 3.3%
Commercial Paper -- 3.3%
Lexington Parker Capital Co. 6.65%, 9/5/00 ...... A-1 $4,070 4,066,993
Ciesco, L.P. 6.50%, 9/6/00 ...................... A-1+ 335 334,697
- ------------------------------------------------------------------------------
Total Short-Term Obligations
(Identified cost $4,401,690) 4,401,690
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.0%
(Identified cost $118,227,560) 133,954,618(a)
Cash and receivables, less liabilities--(0.0%) (30,639)
-------------
NET ASSETS-100% $ 133,923,979
=============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $20,551,909 and gross
depreciation of $5,608,811 for federal income tax purposes. At August 31,
2000, the aggregate cost of securities for federal income tax purposes was
$119,011,520.
(b) Non-income producing
See Notes to Financial Statements
7
<PAGE>
Phoenix-Hollister Small Cap Value Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2000
Assets
Investment securities at value
(Identified cost $118,227,560) $133,954,618
Cash 4,182
Receivables
Investment securities sold 2,056,870
Fund shares sold 1,542,606
Dividends and interest 37,743
Prepaid expenses 280
------------
Total assets 137,596,299
------------
Liabilities
Payables
Investment securities purchased 3,398,151
Fund shares repurchased 42,089
Distribution fee 57,626
Investment advisory fee 41,372
Transfer agent fee 24,864
Financial agent fee 10,442
Trustees' fee 8,342
Accrued expenses 89,434
------------
Total liabilities 3,672,320
------------
Net Assets $133,923,979
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $ 97,587,799
Accumulated net realized gain 20,609,122
Net unrealized appreciation 15,727,058
------------
Net Assets $133,923,979
============
Class A
Shares of beneficial interest outstanding, $1 par value
unlimited authorization (Net Assets $79,253,552) 4,427,230
Net asset value per share $ 17.90
Offering price per share $17.90/(1-5.75%) $ 18.99
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $26,624,877) 1,518,039
Net asset value and offering price per share $ 17.54
Class C
Shares of beneficial interest outstanding, $1 par value
unlimited authorization (Net Assets $28,045,550) 1,599,308
Net asset value and offering price per share $ 17.54
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31,2000
Investment Income
Dividends $ 520,500
Interest 216,216
------------
Total investment income 736,716
------------
Expenses
Investment advisory fee 740,022
Distribution fee, Class A 124,117
Distribution fee, Class B 167,693
Distribution fee, Class C 158,084
Financial agent fee 107,489
Transfer agent 148,335
Printing 43,932
Registration 42,910
Professional 28,755
Trustees 24,644
Custodian 23,390
Miscellaneous 12,747
------------
Total expenses 1,622,118
Less expenses borne by investment adviser (222,171)
Custodian fees paid indirectly (4,468)
------------
Net expenses 1,395,479
------------
Net investment loss (658,763)
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 24,693,450
Net change in unrealized appreciation (depreciation) on
investments 12,266,168
------------
Net gain on investments 36,959,618
------------
Net increase in net assets resulting from operations $ 36,300,855
============
See Notes to Financial Statements
8
<PAGE>
Phoenix-Hollister Small Cap Value Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
8/31/00 8/31/99
------------- ------------
<S> <C> <C>
From Operations
Net investment income (loss) $ (658,763) $ (52,755)
Net realized gain (loss) 24,693,450 192,893
Net change in unrealized appreciation (depreciation) 12,266,168 10,201,578
------------- ------------
Increase (decrease) in net assets resulting from operations 36,300,855 10,341,716
------------- ------------
From Distributions to Shareholders
Net realized gains, Class A (2,234,451) (29,557)
Net realized gains, Class B (731,921) (11,989)
Net realized gains, Class C (554,210) (5,756)
------------- ------------
Decrease in net assets from distributions to shareholders (3,520,582) (47,302)
------------- ------------
From Share Transactions
Class A
Proceeds from sales of shares (2,837,654 and 1,080,990 shares, respectively) 44,871,985 11,142,835
Net asset value of shares issued from reinvestment of distributions
(146,701 and 2,728 shares, respectively) 2,021,532 27,226
Cost of shares repurchased (917,508 and 513,966 shares, respectively) (14,822,045) (5,211,308)
------------- ------------
Total 32,071,472 5,958,753
------------- ------------
Class B
Proceeds from sales of shares (807,290 and 328,886 shares, respectively) 12,658,205 3,326,336
Net asset value of shares issued from reinvestment of distributions
(51,822 and 1,052 shares, respectively) 703,223 10,468
Cost of shares repurchased (183,720 and 221,287 shares, respectively) (2,842,406) (2,235,715)
------------- ------------
Total 10,519,022 1,101,089
------------- ------------
Class C
Proceeds from sales of shares (1,055,119 and 338,260 shares, respectively) 16,211,920 3,417,996
Net asset value of shares issued from reinvestment of distributions
(38,106 and 397shares, respectively) 517,092 3,935
Cost of shares repurchased (67,758 and 108,144 shares, respectively) (1,061,504) (1,092,574)
------------- ------------
Total 15,667,508 2,329,357
------------- ------------
Class M
Cost of shares repurchased (0 and 10,849 shares, respectively) -- (95,668)
------------- ------------
Total -- (95,668)
------------- ------------
Increase (decrease) in net assets from share transactions 58,258,002 9,293,531
------------- ------------
Net increase (decrease) in net assets 91,038,275 19,587,945
Net Assets
Beginning of period 42,885,704 23,297,759
------------- ------------
End of period [including undistributed net investment income
of $0 and $0, respectively] $ 133,923,979 $ 42,885,704
============= ============
</TABLE>
See Notes to Financial Statements
9
<PAGE>
Phoenix-Hollister Small Cap Value Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------
From
Year Ended August 31 Inception
---------------------------- 11/20/97 to
2000 1999 8/31/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.41 $ 8.11 $ 10.00
Income from investment operations
Net investment income (loss)(1) (0.08) 0.01 (0.01)
Net realized and unrealized gain (loss) 7.38 3.31 (1.85)
---------- ---------- ----------
Total from investment operations 7.30 3.32 (1.86)
---------- ---------- ----------
Less distributions
Dividends from net realized gains (0.81) (0.02) --
In excess of net investment income -- -- (0.03)
---------- ---------- ----------
Total distributions (0.81) (0.02) (0.03)
---------- ---------- ----------
Change in net asset value 6.49 3.30 (1.89)
---------- ---------- ----------
Net asset value, end of period $ 17.90 $ 11.41 $ 8.11
========== ========== ==========
Total return(2) 66.15% 40.90% (18.64)%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 79,254 $ 26,926 $ 14,519
Ratio to average net assets of:
Operating expenses(3) 1.40%(7) 1.40% 1.40%(6)
Net investment income (loss) (0.45)% 0.15% (0.14)%(6)
Portfolio turnover 191% 203% 105%(5)
<CAPTION>
CLASS B
-------------------------------------------
From
Year Ended August 31 Inception
---------------------------- 11/20/97 to
2000 1999 8/31/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.27 $ 8.07 $ 10.00
Income from investment operations
Net investment income (loss)(1) (0.19) (0.06) (0.08)
Net realized and unrealized gain (loss) 7.27 3.28 (1.82)
---------- ---------- ----------
Total from investment operations 7.08 3.22 (1.90)
---------- ---------- ----------
Less distributions
Dividends from net realized gains (0.81) (0.02) --
In excess of net investment income -- -- (0.03)
---------- ---------- ----------
Total distributions (0.81) (0.02) (0.03)
---------- ---------- ----------
Change in net asset value 6.27 3.20 (1.93)
---------- ---------- ----------
Net asset value, end of period $ 17.54 $ 11.27 $ 8.07
========== ========== ==========
Total return(2) 64.97% 39.86% (19.07)%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 26,625 $ 9,494 $ 5,922
Ratio to average net assets of:
Operating expenses(4) 2.15%(7) 2.15% 2.15%(6)
Net investment income (loss) (1.20)% (0.60)% (1.01)%(6)
Portfolio turnover 191% 203% 105%(5)
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.67%,
1.87% and 3.12% for the periods ended August 31, 2000, 1999 and 1998,
respectively.
(4) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.42%,
2.62% and 3.87% for the periods ended August 31, 2000, 1999 and 1998,
respectively.
(5) Not annualized.
(6) Annualized.
(7) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
See Notes to Financial Statements
10
<PAGE>
Phoenix-Hollister Small Cap Value Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS C
----------------------------------------
From
Year Ended August 31 Inception
-------------------------- 11/20/97 to
2000 1999 8/31/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.27 $ 8.07 $ 10.00
Income from investment operations
Net investment income (loss)(1) (0.19) (0.06) (0.08)
Net realized and unrealized gain (loss) 7.27 3.28 (1.82)
---------- ---------- ----------
Total from investment operations 7.08 3.22 (1.90)
---------- ---------- ----------
Less distributions
Dividends from net realized gains (0.81) (0.02) --
In excess of net investment income -- -- (0.03)
---------- ---------- ----------
Total distributions (0.81) (0.02) (0.03)
---------- ---------- ----------
Change in net asset value 6.27 3.20 (1.93)
---------- ---------- ----------
Net asset value, end of period $ 17.54 $ 11.27 $ 8.07
========== ========== ==========
Total return(2) 64.97% 39.86% (19.09)%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 28,046 $ 6,465 $ 2,770
Ratio to average net assets of:
Operating expenses(3) 2.15%(6) 2.15% 2.15 %(5)
Net investment income (loss) (1.20)% (0.60)% (0.98)%(5)
Portfolio turnover 191% 203% 105%(4)
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.42%,
2.62% and 3.87% for the periods ended August 31, 2000, 1999 and 1998,
respectively.
(4) Not annualized.
(5) Annualized.
(6) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
See Notes to Financial Statements
11
<PAGE>
Phoenix-Hollister Value Equity Fund
--------------------------------------------------------------------------------
INVESTMENTS AT AUGUST 31, 2000
SHARES VALUE
------ ----------
COMMON STOCKS -- 88.9%
Aerospace/Defense -- 5.7%
General Dynamics Corp. .......................... 40,000 $2,517,500
Lockheed Martin Corp. ........................... 44,000 1,248,500
Northrop Grumman Corp. .......................... 8,000 622,500
----------
4,388,500
----------
Aluminum -- 1.5%
Alcoa, Inc. ..................................... 36,000 1,197,000
Auto Parts & Equipment -- 2.1%
Delphi Automotive Systems Corp. ................. 100,000 1,643,750
Banks (Major Regional) -- 3.5%
Bank of New York Co., Inc. (The) ................ 51,000 2,674,312
Banks (Money Center) -- 5.5%
Chase Manhattan Corp. (The) ..................... 45,500 2,542,312
Morgan (J.P.) & Co., Inc. ....................... 10,000 1,671,875
----------
4,214,187
----------
Beverages (Alcoholic) -- 2.5%
Anheuser-Busch Cos., Inc. ....................... 24,000 1,891,500
Computers (Networking) -- 3.2%
Cabletron Systems, Inc.(b) ...................... 65,000 2,433,437
Computers (Software & Services) -- 0.4%
Computer Associates International, Inc. ......... 11,000 349,250
Electric Companies -- 6.1%
Duke Energy Corp. ............................... 20,500 1,533,656
Entergy Corp. ................................... 41,500 1,263,156
Reliant Energy, Inc. ............................ 44,000 1,633,500
Southern Co. (The) .............................. 9,000 269,437
----------
4,699,749
----------
Electrical Equipment -- 2.0%
Solectron Corp.(b) .............................. 34,000 1,540,625
Electronics (Defense) -- 1.6%
Litton Industries, Inc.(b) ...................... 22,000 1,216,875
Electronics (Instrumentation) -- 1.9%
Agilent Technologies, Inc.(b) ................... 24,000 1,447,500
Engineering & Construction -- 1.6%
MasTec, Inc.(b) ................................. 34,200 1,231,200
Financial (Diversified) -- 6.5%
American Express Co. ............................ 9,000 532,125
Citigroup, Inc. ................................. 52,000 3,035,500
USA Education, Inc. ............................. 37,000 1,449,938
----------
5,017,563
----------
Health Care (Diversified) -- 0.3%
Abbott Laboratories ............................. 5,000 218,750
Health Care (Generic and Other) -- 3.0%
Watson Pharmaceuticals, Inc.(b) ................. 37,900 2,337,956
See Notes to Financial Statements
14
<PAGE>
Phoenix-Hollister Value Equity Fund
SHARES VALUE
------ -----------
Health Care (Hospital Management) -- 2.4%
Tenet Healthcare Corp.(b) .......................... 60,000 $ 1,860,000
Insurance (Life/Health) -- 4.7%
American General Corp. ............................. 28,000 2,038,750
MetLife, Inc.(b) ................................... 65,000 1,580,313
----------
3,619,063
----------
Insurance (Multi-Line) -- 5.7%
American International Group, Inc. ................. 30,750 2,740,594
CIGNA Corp. ........................................ 17,000 1,653,250
----------
4,393,844
----------
Insurance (Property-Casualty) -- 1.0%
Allstate Corp. (The) ............................... 26,000 755,625
Manufacturing (Diversified) -- 7.2%
Honeywell International, Inc. ...................... 28,000 1,079,750
Minnesota Mining and Manufacturing Co. ............. 23,000 2,139,000
United Technologies Corp. .......................... 37,000 2,310,188
----------
5,528,938
----------
Natural Gas -- 2.7%
Coastal Corp. (The) ................................ 30,000 2,066,250
Oil & Gas (Drilling & Equipment) -- 4.0%
Baker Hughes, Inc. ................................. 66,000 2,413,125
Diamond Offshore Drilling, Inc. .................... 15,000 672,188
----------
3,085,313
----------
Oil & Gas (Exploration & Production) -- 1.5%
Unocal Corp. ....................................... 35,000 1,168,125
Oil (International Integrated) -- 2.3%
Texaco, Inc. ....................................... 35,000 1,802,500
Publishing (Newspapers) -- 2.3%
Knight-Ridder, Inc. ................................ 33,000 1,802,625
Retail (General Merchandise) -- 1.0%
Wal-Mart Stores, Inc. .............................. 16,000 759,000
Services (Data Processing) -- 2.2%
First Data Corp. ................................... 36,000 1,716,750
Telecommunications (Long Distance) -- 1.6%
WorldCom, Inc.(b) .................................. 33,000 1,204,500
Tobacco -- 2.9%
Philip Morris Cos., Inc. ........................... 75,000 2,221,875
- ------------------------------------------------------------------------------
Total Common Stocks
(Identified cost $58,489,442) 68,486,562
- ------------------------------------------------------------------------------
FOREIGN COMMON STOCKS -- 9.9%
Communications Equipment -- 3.1%
Alcatel ADR (France) .............................. 29,200 2,419,950
Foods -- 2.2%
Unilever NV NY Registered Shares (Netherlands) ..... 35,000 1,653,750
Manufacturing (Diversified) -- 3.6%
Tyco International Ltd. (Bermuda) .................. 48,000 2,736,000
Oil (Domestic Integrated) -- 1.0%
Royal Dutch Petroleum Co. NY Registered
Shares (Netherlands) ............................... 13,000 795,438
- ------------------------------------------------------------------------------
Total Foreign Common Stocks
(Identified cost $4,915,343) 7,605,138
- ------------------------------------------------------------------------------
Total Long-Term Investments -- 98.8%
(Identified cost $63,404,785) 76,091,700
- ------------------------------------------------------------------------------
See Notes to Financial Statements
15
<PAGE>
Phoenix-Hollister Value Equity Fund
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ----- -----------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS -- 1.2%
Commercial Paper -- 1.2%
Asset Securitization Corp. 6.65%, 9/1/00 A-1+ $910 $ 910,000
- ---------------------------------------------------------------------------------
Total Short-Term Obligations
(Identified cost $910,000) 910,000
- ---------------------------------------------------------------------------------
TOTAL INVESTMENTS--100.0%
(Identified cost $64,314,785) 77,001,700(a)
Cash and receivables, less liabilities--0.0% 35,297
-----------
NET ASSETS--100.0% $77,036,997
===========
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $13,694,775 and gross
depreciation of $1,484,848 for federal income tax purposes. At August 31,
2000, the aggregate cost of securites for federal income tax purposes was
$64,791,773.
(b) Non-income producing.
See Notes to Financial Statements
16
<PAGE>
Phoenix-Hollister Value Equity Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2000
Assets
Investment securities at value
(Identified cost $64,314,785) $77,001,700
Cash 1,327
Receivables
Investment securities sold 1,823,168
Fund shares sold 210,602
Dividends and interest 128,112
Prepaid expenses 311
-----------
Total assets 79,165,220
-----------
Liabilities
Payables
Investment securities purchased 1,935,608
Fund shares repurchased 31,381
Distribution fee 39,877
Investment advisory fee 34,409
Transfer agent fee 13,368
Trustees' fee 8,342
Financial agent fee 7,959
Accrued expenses 57,279
-----------
Total liabilities 2,128,223
-----------
Net Assets $77,036,997
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $59,143,058
Accumulated net realized gain 5,207,024
Net unrealized appreciation 12,686,915
-----------
Net Assets $77,036,997
===========
Class A
Shares of beneficial interest outstanding, $1 par value
unlimited authorization (Net Assets $37,976,548) 2,526,958
Net asset value per share $ 15.03
Offering price per share $15.03/(1-5.75%) $ 15.95
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $26,470,632) 1,792,056
Net asset value and offering price per share $ 14.77
Class C
Shares of beneficial interest outstanding, $1 par value
unlimited authorization (Net Assets $12,589,817) 851,795
Net asset value and offering price per share $ 14.78
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31,2000
Investment Income
Dividends $ 879,601
Interest 102,621
Foreign taxes withheld (8,398)
------------
Total investment income 973,824
------------
Expenses
Investment advisory fee 505,588
Distribution fee, Class A 79,556
Distribution fee, Class B 263,876
Distribution fee, Class C 92,017
Financial agent fee 96,074
Transfer agent 75,680
Registration 37,274
Professional 30,580
Trustees 24,643
Printing 21,771
Custodian 17,157
Miscellaneous 12,166
------------
Total expenses 1,256,382
Less expenses borne by investment adviser (145,011)
Custodian fees paid indirectly (1,805)
------------
Net expenses 1,109,566
------------
Net investment loss (135,742)
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 5,835,561
Net change in unrealized appreciation (depreciation) on
investments 8,592,230
------------
Net gain on investments 14,427,791
------------
Net increase in net assets resulting from operations $ 14,292,049
============
See Notes to Financial Statements
17
<PAGE>
Phoenix-Hollister Value Equity Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
8/31/00 8/31/99
------------ ------------
<S> <C> <C>
From Operations
Net investment income (loss) $ (135,742) $ (68,591)
Net realized gain (loss) 5,835,561 87,678
Net change in unrealized appreciation (depreciation) 8,592,230 8,940,662
------------ ------------
Increase (decrease) in net assets resulting from operations 14,292,049 8,959,749
------------ ------------
From Distributions to Shareholders
Net investment income, Class A -- (61,486)
Net investment income, Class B -- (2,136)
Net investment income, Class C -- (982)
In excess of net investment income, Class A -- (49,116)
In excess of net investment income, Class B -- (1,706)
In excess of net investment income, Class C -- (784)
------------ ------------
Decrease in net assets from distributions to shareholders -- (116,210)
------------ ------------
From Share Transactions
Class A
Proceeds from sales of shares (606,640 and 511,993 shares, respectively) 8,320,634 6,168,646
Net asset value of shares issued from reinvestment of distributions
(0 and 9,487 shares, respectively) -- 110,073
Cost of shares repurchased (306,420 and 504,840 shares, respectively) (4,139,619) (6,064,609)
------------ ------------
Total 4,181,015 214,110
------------ ------------
Class B
Proceeds from sales of shares (206,446 and 1,603,387 shares, respectively) 2,814,451 20,006,209
Net asset value of shares issued from reinvestment of distributions
(0 and 298 shares, respectively) -- 3,446
Cost of shares repurchased (474,334 and 138,841 shares, respectively) (6,583,909) (1,652,638)
------------ ------------
Total (3,769,458) 18,357,017
------------ ------------
Class C
Proceeds from sales of shares (688,069 and 87,709 shares, respectively) 8,849,914 985,203
Net asset value of shares issued from reinvestment of distributions
(0 and 122 shares, respectively) -- 1,405
Cost of shares repurchased (95,182 and 54,302 shares, respectively) (1,307,763) (656,192)
------------ ------------
Total 7,542,151 330,416
------------ ------------
Class M
Cost of shares repurchased (0 and 10,024 shares, respectively) -- (105,146)
------------ ------------
Total -- (105,146)
------------ ------------
Increase (decrease) in net assets from share transactions 7,953,708 18,796,397
------------ ------------
Net increase (decrease) in net assets 22,245,757 27,639,936
Net Assets
Beginning of period 54,791,240 27,151,304
------------ ------------
End of period [including undistributed net investment income of
$0 and $0, respectively] $ 77,036,997 $ 54,791,240
============ ============
</TABLE>
See Notes to Financial Statements
18
<PAGE>
Phoenix-Hollister Value Equity Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------
From
Year Ended August 31 Inception
---------------------------- 11/5/97 to
2000 1999 8/31/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 12.11 $ 8.94 $ 10.00
Income from investment operations
Net investment income (loss)(1) 0.03 0.02 0.03
Net realized and unrealized gain (loss) 2.89 3.20 (1.07)
---------- ---------- ----------
Total from investment operations 2.92 3.22 (1.04)
---------- ---------- ----------
Less distributions
Dividends from net investment income -- (0.03) (0.01)
In excess of net investment income -- (0.02) (0.01)
---------- ---------- ----------
Total distributions -- (0.05) (0.02)
---------- ---------- ----------
Change in net asset value 2.92 3.17 (1.06)
---------- ---------- ----------
Net asset value, end of period $ 15.03 $ 12.11 $ 8.94
========== ========== ==========
Total return(2) 24.11% 35.89% (10.28)%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 37,977 $ 26,974 $ 19,766
Ratio to average net assets of:
Operating expenses(3) 1.25%(7) 1.25% 1.25%(6)
Net investment income (loss) 0.20% 0.14% 0.31%(6)
Portfolio turnover 193% 192% 59%(5)
<CAPTION>
CLASS B
-------------------------------------------
From
Year Ended August 31 Inception
---------------------------- 11/5/97 to
2000 1999 8/31/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 12.00 $ 8.89 $ 10.00
Income from investment operations
Net investment income (loss)(1) (0.08) (0.07) (0.04)
Net realized and unrealized gain (loss) 2.85 3.19 (1.05)
---------- ---------- ----------
Total from investment operations 2.77 3.12 (1.09)
---------- ---------- ----------
Less distributions
Dividends from net investment income -- (0.01) (0.01)
In excess of net investment income -- -- (0.01)
---------- ---------- ----------
Total distributions -- (0.01) (0.02)
---------- ---------- ----------
Change in net asset value 2.77 3.11 (1.11)
---------- ---------- ----------
Net asset value, end of period $ 14.77 $ 12.00 $ 8.89
========== ========== ==========
Total return(2) 23.08% 35.05% (10.92)%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 26,471 $ 24,709 $ 5,291
Ratio to average net assets of:
Operating expenses(4) 2.00%(7) 2.00% 2.00 %(6)
Net investment income (loss) (0.57)% (0.62)% (0.45)%(6)
Portfolio turnover 193% 192% 59%(5)
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.47%,
1.57% and 2.96% for the periods ended August 31, 2000, 1999 and 1998,
respectively.
(4) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.22%,
2.32% and 3.71% for the periods ended August 31, 2000, 1999 and 1998,
respectively.
(5) Not annualized.
(6) Annualized.
(7) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
See Notes to Financial Statements
19
<PAGE>
Phoenix-Hollister Value Equity Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS C
-------------------------------------------
From
Year Ended August 31 Inception
---------------------------- 11/20/97 to
2000 1999 8/31/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 12.00 $ 8.89 $ 10.00
Income from investment operations
Net investment income (loss)(1) (0.07) (0.07) (0.04)
Net realized and unrealized gain (loss) 2.85 3.19 (1.05)
---------- ---------- ----------
Total from investment operations 2.78 3.12 (1.09)
---------- ---------- ----------
Less distributions
Dividends from net realized gains -- (0.01) (0.01)
In excess of net investment income -- -- (0.01)
---------- ---------- ----------
Total distributions -- (0.01) (0.02)
---------- ---------- ----------
Change in net asset value 2.78 3.11 (1.11)
---------- ---------- ----------
Net asset value, end of period $ 14.78 $ 12.00 $ 8.89
========== ========== ==========
Total return(2) 23.17% 34.91% (10.86)%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 12,590 $ 3,108 $ 2,005
Ratio to average net assets of:
Operating expenses(3) 2.00%(6) 2.00% 2.00%(5)
Net investment income (loss) (0.52)% (0.60)% (0.45)%(5)
Portfolio turnover 193% 192% 59%(4)
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.22%,
2.32% and 3.71% for the periods ended August 31, 2000, 1999 and 1998,
respectively.
(4) Not annualized.
(5) Annualized.
(6) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
See Notes to Financial Statements
20
<PAGE>
Phoenix Investment Trust 97
Notes to Financial Statements
August 31, 2000
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-Hollister Small Cap Value Fund seeks long-term capital
appreciation. Phoenix-Hollister 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.
Each Fund offers Class A, Class B, and Class C shares. Class M shares have
been closed. Effective April 3, 2000 Class A shares are sold with the front-end
sales charge of up to 5.75%. Prior to that date, the maximum sales charge was
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. 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 accounting principles
generally accepted in the United States 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 Fund 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 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 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
21
<PAGE>
Phoenix Investment Trust 97
Notes to Financial Statements
August 31, 2000 (Continued)
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. Options:
Each Fund may write covered options or purchase options contracts for the
purpose of hedging against changes in the market value of the underlying
securities or foreign currencies.
Each Fund will realize a gain or loss upon the expiration or closing of
the option transaction. Gains and losses on written options are reported
separately in the Statement of Operations. When a written option is exercised,
the proceeds on sales or amounts paid are adjusted by the amount of premium
recieved. Options written are reported as a liability in the Statement of Assets
and Liabilities and subsequently marked-to-market to reflect the current value
of the option. The risk associated with written options is that the change in
value of options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the value of
the underlying instruments, or if a liquid secondary, market does not exist for
the contracts.
Each Fund may purchase options which are included in the Funds' Schedule
of Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
H. 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.
I. 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:
1st $1 $1-2 $2+
Fund Billion Billion Billion
---- ------- ------- -------
Small Cap Value Fund .............. 0.90% 0.85% 0.80%
Value Equity Fund ................. 0.75% 0.70% 0.65%
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, 2001, to the extent that such expenses
exceed the following percentages of the average annual net asset values for each
Fund:
Class A Class B Class C
Shares Shares Shares
------- ------- -------
Small Cap Value Fund .............. 1.40% 2.15% 2.15%
Value Equity Fund ................. 1.25% 2.00% 2.00%
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 $35,803 for Class A shares, and
deferred sales charges of $34,344 for Class B shares and $5,050 for Class C
shares for the year ended August 31, 2000. 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 and 1.00% for Class C 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 year ended August 31, 2000, $607,618 was retained by the
Distributor, $265,998 was paid to unaffiliated participants, and $11,727 was
paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent of each Fund, PEPCO receives a financial agent fee
equal to the sum of (1) the documented cost of fund accounting and related
services provided by PFPC Inc. (subagent to PEPCO), plus (2) the documented cost
to PEPCO to provide financial reporting, tax services and oversight of
subagent's performance. For the year ended August 31, 2000, financial agent fees
were $203,563, of which PEPCO received $82,360. The current fee schedule of PFPC
Inc. ranges from 0.085% to 0.0125% of the average daily net asset values of each
Fund. Certain minimum fees and fee waivers may apply.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and
Trust Company as sub-transfer agent. For the year ended August 31, 2000,
transfer agent fees were $224,015 of which PEPCO retained $36,206 which is net
of the fees paid to State Street.
22
<PAGE>
Phoenix Investment Trust 97
Notes to Financial Statements
August 31, 2000 (Continued)
At August 31, 2000, PHL and its affiliates held shares of the Trust which
aggregated the following:
Aggregate Net
Shares Asset Value
--------- -------------
Value Equity Fund, Class A ............. 1,161,425 $17,456,218
Value Equity Fund, Class B ............. 988,497 14,600,101
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended August 31, 2000
(excluding U.S. Government and agency securities, and short-term securities)
aggregated the following:
Purchases Shares
------------ ------------
Small Cap Value Fund ............... $202,588,994 $151,628,027
Value Equity Fund .................. 137,559,475 126,431,405
There were no purchases or sales of long-term U.S. Government and agency
securities during the year ended August 31, 2000.
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. CAPITAL LOSS CARRYOVERS
For the year ended August 31, 2000, the Value Equity Fund utilized a
capital loss carryover of $403,905.
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the following fiscal year.
For the year ended August 31, 2000, the Small Cap Value Fund utilized prior year
capital losses deferred of $1,016,451.
6. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Trust has recorded
several reclassifications in the capital accounts. These reclassifications have
no impact on the net asset value of the Fund and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of August 31, 2000,
each Fund recorded the following reclassifications to increase (decrease) the
accounts listed below:
Capital paid
Undistributed Accumulated in on shares
net investment net realized of beneficial
income gain(loss) interest
-------------- ------------ -------------
Small Cap Value Fund $658,763 $(658,763) --
Value Equity Fund 135,742 (135,742) --
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.
23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS [LOGO]
To the Trustees and Shareholders of
Phoenix Investment Trust 97:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for bond ratings), and the
related statements of operations and of changes in net assets, and the financial
highlights present fairly, in all material respects, the financial position of
the Phoenix-Hollister Small Cap Value Fund and the Phoenix-Hollister Value
Equity Fund (constituting the Phoenix Investment Trust 97, hereinafter referred
to as the "Trust") at August 31, 2000, the results of each of their operations,
the changes in each of their net assets and the financial highlights for the
periods indicated, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at August
31, 2000 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
October 12, 2000
24
<PAGE>
PHOENIX INVESTMENT TRUST 97
PART C--OTHER INFORMATION
ITEM 23. EXHIBITS
a.* Agreement and Declaration of Trust of the Registrant, dated August
17, 2000, filed via EDGAR herewith.
b.* Bylaws of the Registrant filed via EDGAR herewith.
c. Reference is made to Registrant's Agreement and Declaration of
Trust. See Exhibit a.
d.1 Investment Advisory Agreement between Registrant and Phoenix
Investment Counsel, Inc. filed as Exhibit 5.1 via EDGAR with
Pre-Effective Amendment No. 1 on November 3, 1997 and incorporated
by reference.
e.1 Underwriting Agreement between Registrant and Phoenix Equity
Planning Corporation ("Equity Planning") dated November 19, 1997
filed as Exhibit 6.1 via EDGAR with Post-Effective Amendment No. 1
on May 15, 1998 and incorporated by reference.
e.2 Form of Sales Agreement between Phoenix Equity Planning
Corporation and dealers filed as Exhibit 6.2 via EDGAR with
Post-Effective Amendment No. 1 on May 15, 1998 and incorporated by
reference.
e.3 Form of Supplement to Phoenix Family of Funds Sales Agreement
filed as Exhibit 6.3 via EDGAR with Post-Effective Amendment No. 1
on May 15, 1998 and incorporated by reference.
e.4 Form of Financial Institution Sales Contract for the Phoenix
Family of Funds filed as Exhibit 6.4 via EDGAR with Post-Effective
Amendment No. 1 on May 15, 1998 and incorporated by reference.
f. None.
g.1 Master Custodian Contract between Registrant and State Street Bank
and Trust Company dated May 1, 1997 filed as Exhibit 8.1 via EDGAR
with Pre-Effective Amendment No. 1 on November 3, 1997 and
incorporated by reference.
h.1 Transfer Agency and Service Agreement between Registrant and
Equity Planning filed as Exhibit 9.1 via EDGAR with Pre-Effective
Amendment No. 1 on November 3, 1997 and incorporated by reference.
h.2 Sub-Transfer Agency Agreement between Registrant and Phoenix
Equity Planning Corporation dated June 1, 1994 filed as Exhibit
9.2 via EDGAR with Post-Effective Amendment No. 1 on May 15, 1998
and incorporated by reference.
h.3 Amended and Restated Financial Agent Agreement between Registrant
and Phoenix Equity Planning Corporation dated November 19, 1997
filed as Exhibit 9.3 via EDGAR with Post-Effective Amendment No. 1
on May 15, 1998 and incorporated by reference.
h.4 First Amendment to the Amended and Restated Financial Agreement
between Registrant and Phoenix Equity Planning Corporation
effective as of February 27, 1998 filed as Exhibit 9.4 via EDGAR
with Post-Effective Amendment No. 1 on May 15, 1998 and
incorporated by reference.
h.5 Second Amendment to Amended and Restated Financial Agent Agreement
between Registrant and Phoenix Equity Planning Corporation dated
July 31, 1998 filed via EDGAR with Post-Effective Amendment No. 2
on October 30, 1998 and incorporated herein by reference.
C-1
<PAGE>
i.* Opinion and consent of Counsel as to legality of the shares filed
via EDGAR herewith.
j.* Consent of Independent Accountant filed via EDGAR herewith.
k. Not applicable.
l. Initial Capital Agreement filed as Exhibit 13 via EDGAR with
Pre-Effective Amendment No. 1 on November 3, 1997 and incorporated
by reference.
m.1 Distribution Plan for Class A Shares filed as Exhibit 15.1 via
EDGAR with Pre-Effective Amendment No. 1 on November 3, 1997 and
incorporated by reference.
m.2 Distribution Plan for Class B Shares filed via EDGAR with Post-
Effective Amendment No. 5 on September 26, 2000 and incorporated
by reference.
m.3 Distribution Plan for Class C Shares filed via EDGAR with Post-
Effective Amendment No. 5 on September 26, 2000 and incorporated
by reference.
n. Financial Data Schedules.
o.1 Amended and Restated Plan pursuant to Rule 18f-3 effective
September 1, 1999 filed via EDGAR with Post-Effective Amendment
No. 5 on September 26, 2000 and incorporated by reference.
o.2 First Amendment to Amended and Restated Plan Pursuant to Rule
18f-3 dated February 24, 2000 filed via EDGAR with Post-Effective
Amendment No. 5 on September 26, 2000 and incorporated by
reference.
p. Codes of Ethics of the Trust, Adviser and Distributor filed via
EDGAR with Post-Effective Amendment No. 5 on September 26, 2000
and incorporated by reference.
q.1 Power of Attorney for Mr. Roth filed via EDGAR with Post-Effective
Amendment No. 3 on November 30, 1998 and incorporated herein by
reference.
q.2 Powers of Attorney for all other Trustees filed via EDGAR with
Post-Effective Amendment No. 5 on September 26, 2000 and
incorporated by reference.
----------
*Filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
None.
ITEM 25. INDEMNIFICATION
The Agreement and Declaration of Trust dated August 17, 2000 and the
By-Laws of the Registrant provide that no trustee or officer will be indemnified
against any liability to which the Registrant would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties. The Management Agreement, Underwriting
Agreement, Custody Agreement and Transfer Agency Agreement each provides that
the Trust will indemnify the other party (or parties, as the case may be) to the
agreement for certain losses.
Insofar as indemnification for liability arising under the Securities Act
of 1933, as amended (the "Act"), may be available to trustees, officers and
controlling persons of the Registrant 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, officer or controlling
person of the Registrant in the successful defense of any action, suit or
C-2
<PAGE>
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management of the Funds" in the Prospectus and "The Investment
Adviser" and "Management of the Trust" in the Statement of Additional
Information which is included in this Post-Effective Amendment. For information
as to the business, profession, vocation or employment of a substantial nature
of directors and officers of the Adviser, reference is made to the Adviser's
current Form ADV (SEC File No. 801-5995) filed under the Investment Advisers Act
of 1940, incorporated herein by reference.
ITEM 27. PRINCIPAL DISTRIBUTOR
(a) Equity Planning also serves as the principal underwriter for the following
other registrants:
Phoenix-Aberdeen Series Fund, Phoenix-Aberdeen Worldwide Opportunities
Fund, Phoenix Duff & Phelps Institutional Mutual Funds, Phoenix-Engemann Funds,
Phoenix Equity Series Fund, Phoenix-Euclid Funds, Phoenix-Goodwin California Tax
Exempt Bond Fund, Phoenix Multi-Series Trust, Phoenix Multi-Portfolio Fund,
Phoenix-Oakhurst Income & Growth Fund, Phoenix-Oakhurst Strategic Allocation
Fund, Phoenix-Seneca Funds, Phoenix Series Fund, Phoenix Strategic Equity Series
Fund, Phoenix-Zweig Trust, Phoenix Home Life Variable Universal Life Account,
Phoenix Home Life Variable Accumulation Account, PHL Variable Accumulation
Account, Phoenix Life and Annuity Variable Universal Life Account and PHL
Variable Separate Account MVA1.
(b) 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
56 Prospect Street Vice President
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and Chairman Trustee and
56 Prospect Street President
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Executive Vice Vice President
56 Prospect Street President, Chief Financial
P.O. Box 150480 Officer and Treasurer
Hartford, CT 06115-0480
John F. Sharry President, Executive Vice President
56 Prospect Street Retail Distribution
P.O. Box 150480
Hartford, CT 06115-0480
Barry Mandinach Executive Vice President None
900 Third Avenue Chief Marketing Officer,
New York, NY 10022 Retail Division
Robert Tousingnant Executive Vice President None
56 Prospect Street Chief Sales Officer
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
---------------- ---------------- ---------------
<S> <C> <C>
G. Jeffrey Bohne Senior Vice President, Clerk and
101 Munson Street Mutual Fund Secretary
P.O. Box 810 Customer Service and Clerk
Greenfield, MA 01302-0810
Robert S. Driessen Vice President, Compliance Vice President and
56 Prospect Street Assistant Secretary
P.O. Box 150480
Hartford, CT 06115-0480
Jacqueline M. Porter Assistant Vice President, Assistant Treasurer
56 Prospect Street Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an affiliated
person of the Registrant or an affiliated person of such affiliated person,
directly or indirectly, from the Registrant during the Registrant's last fiscal
year.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by the
Registrant by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder will be maintained at the offices of the Registrant located at 101
Munson Street, P.O. Box 810, Greenfield, Massachusetts 01302, or its investment
adviser, Phoenix Investment Counsel, Inc., 56 Prospect Street, Hartford,
Connecticut 06115, or the custodian, State Street Bank and Trust Company, 1
Heritage Drive, P2N, North Quincy, MA 02171. All such accounts, books and other
documents required to be maintained by the principal underwriter will be
maintained at Phoenix Equity Planning Corporation, 56 Prospect Street, Hartford,
Connecticut 06115.
ITEM 29. MANAGEMENT SERVICES
None.
ITEM 30. UNDERTAKINGS
None.
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 the effectiveness of this registration statement under rule
485(b) of the Securities Act and has duly caused this amendment to its
registration statement to be signed on its behalf by the undersigned, duly
authorized, in the City of Hartford, and State of Connecticut on the 15th day of
December, 2000.
PHOENIX INVESTMENT TRUST 97
ATTEST: /s/ Pamela S. Sinofsky By: /s/ Philip R. McLoughlin
-------------------------- --------------------------
Pamela S. Sinofsky Philip R. McLoughlin
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities indicated, on this 15th day of December, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Trustee
--------------------------------------------
Robert Chesek*
Trustee
--------------------------------------------
E. Virgil Conway*
/s/ Nancy G. Curtiss Treasurer
-------------------------------------------- (Principal Financial and Accounting Officer)
Nancy G. Curtiss
Trustee
--------------------------------------------
Harry Dalzell-Payne*
Trustee
--------------------------------------------
Francis E. Jeffries*
Trustee
--------------------------------------------
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin President and Trustee
-------------------------------------------- (Principal Executive Officer)
Philip R. McLoughlin
Trustee
--------------------------------------------
Everett L. Morris*
Trustee
--------------------------------------------
James M. Oates*
Trustee
--------------------------------------------
Herbert Roth, Jr.*
Trustee
--------------------------------------------
Richard E. Segerson*
Trustee
--------------------------------------------
Lowell P. Weicker, Jr.*
</TABLE>
*By /s/ Philip R. McLoughlin
------------------------------------------------------
*Philip R. McLoughlin, pursuant to powers of attorney.
S-1
