As filed with the Securities and Exchange Commission on December 29, 1997
Registration No. 2-14069
File No. 811-810
================================================================================
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. 85 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 33 [X]
(Check appropriate box or boxes.)
-------------
Phoenix Series Fund
(Exact Name of Registrant as Specified in Charter)
-------------
101 Munson Street, Greenfield, MA 01301
(Address of Principal Executive Offices) (Zip Code)
c/o Phoenix Equity Planning Corporation--Customer Service
(800) 243-1574
Registrant's Telephone Number
-------------
Thomas N. Steenburg, Esq.
Vice President, Counsel and Secretary
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115
(Name and Address of Agent for Service)
-------------
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on __________ pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(i)
[ ] on __________ pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on __________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
PHOENIX SERIES FUND
Cross Reference Sheet
Required by Rule 495
Under the Securities Act of 1933
PART A
Information Required in Prospectus
<TABLE>
<CAPTION>
Item Number Prospectus Caption
- ---------------------------------------------------- --------------------------------------------------
<S> <C> <C>
1. Cover Page ................................. Cover Page
2. Synopsis ................................. Introduction
3. Condensed Financial Information ............ Financial Highlights
4. General Description of Registrant ......... Introduction; Investment Objectives and Policies;
Additional Information
5. Management of the Fund ..................... Management of the Funds
6. Capital Stock and Other Securities ......... Management of the Funds; How to Buy Shares;
Investor Account Services; How to Redeem Shares;
Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered ...... How to Buy Shares; Investor Account Services;
How to Redeem Shares; Distribution Plans
8. Redemption or Repurchase .................. How to Buy Shares; How to Redeem Shares
9. Pending Legal Proceedings .................. Not Applicable
</TABLE>
PART B
Information Required in Statement of Additional Information
<TABLE>
<CAPTION>
Item Number Statement of Additional Information
- ------------------------------------------------------------------- --------------------------------------------------------
<S> <C> <C>
10. Cover Page ................................................ Cover Page
11. Table of Contents ....................................... Table of Contents
12. General Information and History ........................... Cover Page
13. Investment Objectives and Policies ........................ Investment Policies; Investment Restrictions; Portfolio
Turnover
14. Management of the Registrant .............................. Management of the Trust
15. Control Persons and Principal Holders of Securities ...... Not Applicable
16. Investment Advisory and Other Services .................. Management of the Trust; The Investment Adviser;
The National Distributor and Distribution Plans;
Financial Statements
17. Brokerage Allocation and Other Practices .................. Brokerage Allocation
18. Capital Stock and Other Securities ........................ Purchase of Shares; Alternative Purchase
Arrangements; Special Services; How to Redeem
Shares
19. Purchase, Redemption and Pricing
of Securities Being Offered .............................. Net Asset Value; Purchase of Shares;
Alternative Purchase Arrangements; Shareholder
Services; Special Services; How to Redeem Shares
20. Tax Status ................................................ Dividends, Distributions and Taxes
21. Underwriter ............................................. The Distributor and Distribution Plans
22. Calculation of Yield Quotations of Money Market Funds Performance Information
23. Financial Statements .................................... Financial Statements
</TABLE>
<PAGE>
[FRONT COVER]
P H O E N I X
FUNDS
Prospectus FEBRUARY 27, 1998
-- PHOENIX BALANCED FUND
-- PHOENIX CONVERTIBLE FUND
-- PHOENIX GROWTH FUND
-- PHOENIX AGGRESSIVE GROWTH FUND
-- PHOENIX HIGH YIELD FUND
-- PHOENIX MONEY MARKET FUND
-- PHOENIX U.S. GOVERNMENT SECURITIES FUND
[LOGOTYPE] PHOENIX
DUFF & PHELPS
<PAGE>
PHOENIX BALANCED FUND
PHOENIX CONVERTIBLE FUND
PHOENIX GROWTH FUND
PHOENIX AGGRESSIVE GROWTH FUND
PHOENIX HIGH YIELD FUND
PHOENIX MONEY MARKET FUND
PHOENIX U.S. GOVERNMENT SECURITIES FUND
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
February 27, 1998
Phoenix Balanced Fund Series ("Balanced Fund") seeks as its investment
objectives reasonable income, long-term capital growth and conservation of
capital. It is intended that this Fund will invest in common stocks and fixed
income securities, with emphasis on income-producing securities which appear to
have some potential for capital enhancement.
Phoenix Convertible Fund Series ("Convertible Fund") seeks as its
investment objectives income and the potential for capital appreciation, which
objectives are to be considered as relatively equal. It is intended that this
Fund will invest at least 65% of its total assets (exclusive of cash and
government securities) in debt securities and preferred stocks which are
convertible into, or carry the right to purchase, common stock or other equity
securities.
This Fund may employ "leverage" by borrowing money and using such funds to
increase its investments in securities above the amounts otherwise possible.
Leverage may involve greater costs and risks than would otherwise be the case.
See the Statement of Additional Information.
Phoenix Growth Fund Series ("Growth Fund") seeks as its investment
objective long-term appreciation of capital. Since income is not an objective,
any income generated by the investment of this Fund's assets will be incidental
to its objective. It is intended that this Fund will invest primarily in the
common stocks of companies believed by the Adviser to have appreciation
potential.
Phoenix Aggressive Growth Fund Series ("Aggressive Growth Fund") seeks as
its investment objective appreciation of capital through the use of aggressive
investment techniques. It is intended that this Fund will invest primarily in
domestic common stocks believed by management to have a substantial potential
for capital growth without being subject to unreasonable risks. This Fund may
employ "leverage" by borrowing money and using such funds to increase its
investments in securities above the amounts otherwise possible. Leverage may
involve greater costs and risks than would otherwise be the case. See the
Statement of Additional Information.
- --------------------------------------------------------------------------------
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
CUSTOMER SERVICE--(800) 243-1574
MARKETING--(800) 243-4361
TELEPHONE ORDERS--(800) 367-5877
TELECOMMUNICATION DEVICE (TTY)--(800) 243-1926
<PAGE>
Phoenix High Yield Fund Series ("High Yield Fund") seeks as its investment
objective high current income. Capital growth is a secondary objective which
will also be considered when consistent with the primary objective of high
current income. It is intended that this Fund will invest primarily in a
diversified portfolio of high yield fixed income securities, commonly known as
junk bonds. In addition to other risks, these high yield, high risk bonds are
often subject to greater market fluctuations and risk of loss of income and
principal due to issuer default than are lower-yielding, higher-rated bonds.
The risks of investing in high yield, high risk bonds should be carefully
considered and are outlined on page 18.
Phoenix Money Market Fund Series ("Money Market Fund") seeks as its
investment objective as high a level of current income as is consistent with
the preservation of capital and the maintenance of liquidity. It is intended
that this Fund will invest primarily in a portfolio of high-quality money
market instruments generally maturing in less than one year. An investment in
the Money Market Fund is neither insured nor guaranteed by the U.S. Government
and there can be no assurance that the Fund will be able to maintain a stable
net asset value of $1.00 per share.
Phoenix U.S. Government Securities Fund Series ("U.S. Government
Securities Fund") seeks as its investment objective a high level of current
income consistent with safety of principal. This Fund invests in securities
which are issued or guaranteed by the U.S. Government or its agencies and
backed by the full faith and credit of the U.S. Government and those supported
by the ability to borrow from the U.S. Treasury or by the credit of an agency
or otherwise supported by the U.S. Government.
All of the above Funds, except the Money Market Fund and the U.S.
Government Securities Fund, may engage in limited securities and index options
transactions and enter into financial futures contracts and related options for
hedging purposes. See "Investment Techniques and Related Risks."
The Convertible Fund and the High Yield Fund may invest up to 100% and 65%
respectively of their portfolios in non-investment grade securities (sometimes
referred to as "junk bonds") which entail default and other risks greater than
those associated with higher rated securities. Investors should carefully
assess the risks associated with an investment in these Funds. See "Investment
Objectives and Policies" and "Risk Factors."
Phoenix Series Fund (the "Trust") is a diversified, open-end management
investment company whose shares are presently offered in seven series. Each
series generally operates as a separate fund with its own investment objectives
and policies designed to meet its specific investment goals. There can be no
assurance that any series will achieve its objectives.
This Prospectus sets forth concisely the information about the Trust that
a prospective investor should know before investing. No dealer, salesperson or
any other person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Trust, Adviser or Distributor. This Prospectus
does not constitute an offer to sell or solicitation of an offer to buy any of
the securities offered hereby in any state in which, or to any person whom, it
is unlawful to make such offer. Neither the delivery of this Prospectus nor any
sale hereunder shall, under any circumstances, create any implication that
information herein is correct at any time subsequent to its date. Investors
should read and retain this Prospectus for future reference. Additional
information about the Trust is contained in the Statement of Additional
Information dated February 27, 1998 which has been filed with the Securities
and Exchange Commission (the "Commission") and is available upon request at no
charge by calling (800) 243-4361 or by writing to Phoenix Equity Planning
Corporation at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut
06083-2200. The Statement of Additional Information is incorporated herein by
reference.
The Commission maintains a Web site (http://www.sec.gov) that contains
this Prospectus, the Statement of Additional Information, material incorporated
by reference, and other information regarding registrants that file
electronically with the Commission.
Shares of the Trust are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union or affiliated entity and are not federally
insured or otherwise protected by the Federal Deposit Insurance Corporation
(FDIC), the Federal Reserve Board or any other agency and involve investment
risk, including possible loss of principal.
2
<PAGE>
TABLE OF CONTENTS
Page
-----
INTRODUCTION ......................................................... 4
FUND EXPENSES ......................................................... 5
FINANCIAL HIGHLIGHTS ................................................... 8
PERFORMANCE INFORMATION ................................................ 15
INVESTMENT OBJECTIVES AND POLICIES .................................... 16
Phoenix Balanced Fund ................................................ 16
Phoenix Convertible Fund ............................................. 16
Phoenix Growth Fund ................................................... 17
Phoenix Aggressive Growth Fund ....................................... 17
Phoenix High Yield Fund ............................................. 18
Phoenix Money Market Fund ............................................. 18
Phoenix U.S. Government Securities Fund .............................. 19
INVESTMENT TECHNIQUES AND RELATED RISKS .............................. 20
INVESTMENT RESTRICTIONS ................................................ 23
MANAGEMENT OF THE FUNDS ................................................ 24
DISTRIBUTION PLANS ................................................... 25
HOW TO BUY SHARES ...................................................... 26
NET ASSET VALUE ...................................................... 31
HOW TO REDEEM SHARES ................................................... 32
DIVIDENDS, DISTRIBUTIONS AND TAXES .................................... 33
ADDITIONAL INFORMATION ................................................ 33
APPENDIX ............................................................... 34
3
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of the
Phoenix Series Fund (the "Trust"). The Trust is a diversified, open-end
management investment company established as a business trust under the laws of
Massachusetts by an Agreement and Declaration of Trust dated April 7, 1958, as
amended (the "Declaration of Trust"). The Declaration of Trust authorizes the
assets and shares of the Trust to be divided into series (each a "Fund" and
collectively the "Funds"). Each Fund has a different investment objective and
invests primarily in certain types of securities, as described on the cover
page of this Prospectus, and is designed to meet different investment needs. In
many respects, each Fund operates as if it were a separate mutual fund. The
Trustees have authority to issue an unlimited number of shares of beneficial
interest of one dollar par value of each Fund.
The Investment Adviser
Phoenix Investment Counsel, Inc. (the "Adviser") is the investment adviser
to the Trust and its professional staff selects and supervises the investments
in each Fund's portfolio. The Adviser is a subsidiary of Phoenix Duff & Phelps
Corporation and an indirect subsidiary of Phoenix Home Life Mutual Insurance
Company. Under the terms of the Investment Advisory Agreement, for its services
to each Fund of the Trust, the Adviser is entitled to fees as set forth under
the "Adviser." The Adviser has agreed to reimburse the Trust for certain
expenses as described under "Management of the Fund."
Distributor and Distribution Plans
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
serves as Distributor of the Trust's shares. See "Distribution Plans" and the
Statement of Additional Information. Equity Planning also acts as financial
agent and as such receives a fee. See "The Financial Agent." Equity Planning
also serves as the Trust's transfer agent. See "The Custodian and Transfer
Agent."
The Trust has adopted, amended and restated distribution plans pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act") for all classes of all Funds other than Class A Shares of the Money
Market Fund. Pursuant to the distribution plan adopted for Class A Shares, the
Trust shall reimburse the Distributor at an annual rate of 0.25% of the Trust's
average daily Class A Share net assets of a Fund for distribution expenditures
incurred in connection with the sale and promotion of Class A Shares of a Fund
and for furnishing shareholder services (the "Service Fee"). Pursuant to the
distribution plan adopted for Class B Shares, the Trust shall reimburse the
Distributor up to a maximum annual rate of 0.75% of the Trust's average daily
Class B Share net assets of a Fund (0.50% of the Money Market Fund's average
daily Class B Share net assets) for distribution expenses incurred in
connection with the sale and promotion of Class B Shares of a Fund and 0.25% of
the Trust's average daily Class B Shares net assets of a Fund for furnishing
shareholder services. Pursuant to the distribution plans adopted for Class C
Shares and Class M Shares, the High Yield Fund shall reimburse the Distributor
up to a maximum annual rate of 0.75% and 0.25%, respectively, of the average
daily net assets of the High Yield Fund for distribution expenses incurred in
connection with the sale and promotion of each class of shares and 0.25% of the
High Yield Fund's average daily Class C and M shares net assets for furnishing
shareholder services. See "Distribution Plans."
Purchase of Shares
The Trust offers two classes of shares of each Fund and two additional
classes of shares of the High Yield Fund which may be purchased at a price
equal to their net asset value per share plus a sales charge (except for Class
A Shares of the Money Market Fund) which, at the election of the purchaser, may
be imposed (i) at the time of purchase (the "Class A Shares" and "Class M
Shares"), or (ii) on a contingent deferred basis (the "Class B Shares" and
"Class C Shares"). Completed applications for the purchase of shares should be
mailed to the Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box
8301, Boston, MA 02266-8301.
Class A and M Shares (except Class A Shares of the Money Market Fund) are
offered to the public at the next determined net asset value after receipt of
the order by State Street Bank and Trust Company plus a maximum sales charge of
4.75% and 3.50%, respectively, of the offering price on single purchases of
less than $50,000. The sales charges are reduced on a graduated scale on single
purchases of $50,000 or more.
Class B and C Shares are offered to the public at the next determined net
asset value after receipt of an order by State Street Bank and Trust Company
with no sales charge. Class B Shares are subject to a sales charge if they are
redeemed within five years of purchase. Class C Shares redeemed within one year
of purchase are subject to a 1% sales charge.
Shares of the Money Market Fund are offered to the public at their
constant net asset value of $1.00 per share with no sales charge on Class A
Shares. There can be no assurance that the Money Market Fund will be able to
maintain a stable net asset value of $1.00 per share.
Shares of each class represent an identical interest in the investment
portfolio of that Fund and have the same rights. For more information on fees
and charges applicable for each Fund and class, refer to "Fund Expenses" and
"How to Buy Shares."
Minimum Initial and Subsequent Investments
The minimum initial investment is $500 ($25 if using the bank draft
investing program designated "Investo-Matic") and the minimum subsequent
investment is $25. Exceptions to the minimum and subsequent investment amounts
are available under specific circumstances. See "How to Buy Shares."
Redemption of Shares
Class A and M Shares of a Fund may be redeemed at any time at the net
asset value per share next computed after receipt of a redemption request by
Equity Planning, the Trust's transfer agent. Class B and C shareholders
redeeming shares
4
<PAGE>
within certain time periods of the date of purchase will normally be assessed a
contingent deferred sales charge. See "How to Redeem Shares."
Risk Factors
There can be no assurance that any Fund will achieve its investment
objectives. In addition, special risks may be presented by the particular types
of securities in which a Fund may invest. For example, several Funds may invest
in below investment grade securities. To the extent that a Fund invests in
lower-rated securities (sometimes referred to as "junk bonds"), such an
investment is speculative and involves risks not typically associated with
investment in higher rated securities, including overall greater risk of
non-payment of interest and principal and potentially greater sensitivity to
general economic conditions and changes in interest rates. In addition,
investors should consider risks inherent in foreign debt securities, futures
and options. See "Investment Objectives and Policies."
FUND EXPENSES
The following tables illustrate all expenses and fees that a shareholder
will incur. The expenses and fees set forth in these tables are for the fiscal
year ended October 31, 1997.
<TABLE>
<CAPTION>
Class A Shares
- ----------------------------------------------------------------------------------------------------------------------
U.S.
Aggressive Money Government
Balanced Convertible Growth Growth High Yield Market Securities
Fund Fund Fund Fund Fund Fund Fund
----------- ------------- ---------- ------------ ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction
Expenses
Maximum Sales Load 4.75% 4.75% 4.75% 4.75% 4.75% None 4.75%
Imposed on Purchases
(as a percentage of
offering price)
Maximum Sales Load None None None None None None None
Imposed on Reinvested
Dividends
Deferred Sales Load (as None None None None None None None
a percentage of original
purchase price or
redemption proceeds,
as applicable)
Redemption Fee None None None None None None None
Exchange Fee None None None None None None None
Annual Fund Operating
Expenses (as a percentage
of average net assets)
Management Fees 0.53% 0.65% 0.66% 0.70% 0.65% 0.40% 0.45%
12b-1 Fees (a) 0.25% 0.25% 0.25% 0.25% 0.25% None 0.25%
Other Operating Expenses
(after reimbursement) 0.20% 0.22% 0.19% 0.25% 0.21% 0.39%(b) 0.28%
----- ----- ---- ---- ---- ----- -----
Total Fund Operating
Expenses 0.98% 1.12% 1.10% 1.20% 1.11% 0.79% 0.98%
===== ===== ==== ==== ==== ===== =====
</TABLE>
- -----------
(a) "12b-1 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"). 12b-1 Fees as
stated include a Service Fee. See "Distribution Plans."
(b) The Adviser has agreed to reimburse the Trust for the amount, if any, by
which the Money Market Fund's operating expenses for any fiscal year exceeded
0.85% of the average daily net assets of Class A Shares and 1.60% of the
average daily net assets of Class B Shares of the Fund. There were no expense
reimbursements for the fiscal year ended October 31, 1997.
5
<PAGE>
<TABLE>
<CAPTION>
Class B Shares
- ----------------------------------------------------------------------------------------------
Balanced Convertible Growth
Fund Fund Fund
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder Transaction
Expenses
Maximum Sales Load None None None
Imposed on Purchases
(as a percentage of
offering price)
Maximum Sales Load None None None
Imposed on Reinvested
Dividends
Deferred Sales Load (as 5% during 5% during 5% during
a percentage of original the first year, the first year, the first year,
purchase price or decreasing 1% decreasing 1% decreasing 1%
redemption proceeds, annually to 2% annually to 2% annually to 2%
as applicable) during the fourth during the fourth during the fourth
and fifth years, and fifth years, and fifth years,
dropping from dropping from dropping from
2% to 0% after 2% to 0% after 2% to 0% after
the fifth year the fifth year the fifth year
Redemption Fee None None None
Exchange Fee None None None
Annual Fund
Operating Expenses
(as a percentage of
average net assets)
Management Fees 0.53% 0.65% 0.66%
12b-1 Fees (a) 1.00% 1.00% 1.00%
Other Operating Expenses
(after reimbursement) 0.20% 0.22% 0.19%
---- ---- ----
Total Fund Operating
Expenses 1.73% 1.87% 1.85%
==== ==== ====
<CAPTION>
Class B Shares
- ------------------------------------------------------------------------------------------------------------------------
U.S.
Aggressive Money Government
Growth High Yield Market Securities
Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction
Expenses
Maximum Sales Load None None None None
Imposed on Purchases
(as a percentage of
offering price)
Maximum Sales Load None None None None
Imposed on Reinvested
Dividends
Deferred Sales Load (as 5% during 5% during 5% during 5% during
a percentage of original the first year, the first year, the first year, the first year,
purchase price or decreasing 1% decreasing 1% decreasing 1% decreasing 1%
redemption proceeds, annually to 2% annually to 2% annually to 2% annually to 2%
as applicable) during the fourth during the fourth during the fourth during the fourth
and fifth years, and fifth years, and fifth years, and fifth years,
dropping from dropping from dropping from dropping from
2% to 0% after 2% to 0% after 2% to 0% after 2% to 0% after
the fifth year the fifth year the fifth year the fifth year
Redemption Fee None None None None
Exchange Fee None None None None
Annual Fund
Operating Expenses
(as a percentage of
average net assets)
Management Fees 0.70% 0.65% 0.40% 0.45%
12b-1 Fees (a) 1.00% 1.00% 0.75% 1.00%
Other Operating Expenses
(after reimbursement) 0.25% 0.21% 0.39%(b) 0.28%
---- ---- ---- ----
Total Fund Operating
Expenses 1.95% 1.86% 1.54% 1.73%
==== ==== ==== ====
</TABLE>
- -----------
(a) "12b-1 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"). 12b-1 Fees as
stated include a Service Fee. See "Distribution Plans."
(b) The Adviser has agreed to reimburse the Trust for the amount, if any, by
which the Money Market Fund's operating expenses for any fiscal year exceeded
0.85% of the average daily net assets of Class A Shares and 1.60% of the
average daily net assets of Class B Shares of the Fund. There were no expense
reimbursements for the fiscal year ended October 31, 1997.
<TABLE>
<CAPTION>
Class C Shares Class M Shares
- -------------------------------------------------------------------------------------------------------
High Yield High Yield
Fund (b) Fund (b)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Share Transaction Expenses (Pro Forma) (Pro Forma)
Maximum Sales Load Imposed on Purchases None 3.50%
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Load (as a percentage of original purchase price 1% during None
or redemption proceeds, as applicable) the first year
Redemption Fee None None
Exchange Fee None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.65% 0.655%
12b-1 Fees (a) 1.00% 0.50%
Other Operating Expenses (after reimbursement) 0.21% 0.21%
---- ----
Total Fund Operating Expenses 1.86% 1.36%
==== ====
</TABLE>
- -----------
(a) "12b-1 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"). 12b-1 Fees as
stated include a Service Fee. See "Distribution Plans."
(b) Prior to February 27, 1998, Class C and M Shares of the High Yield Fund
were not offered.
6
<PAGE>
<TABLE>
<CAPTION>
Cumulative Expenses
Paid for the Period
1 year 3 years 5 years 10 years
Example* -------- --------- --------- ---------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a hypothetical $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end of each time period:
- ------------------------------------------------------------------------------------------------------------------------
Balanced Fund (Class A Shares) $57 $77 $99 $162
- ------------------------------------------------------------------------------------------------------------------------
Balanced Fund (Class B Shares) 58 74 94 184
- ------------------------------------------------------------------------------------------------------------------------
Convertible Fund (Class A Shares) 58 81 106 177
- ------------------------------------------------------------------------------------------------------------------------
Convertible Fund (Class B Shares) 59 79 101 199
- ------------------------------------------------------------------------------------------------------------------------
Growth Fund (Class A Shares) 58 81 105 175
- ------------------------------------------------------------------------------------------------------------------------
Growth Fund (Class B Shares) 59 78 100 197
- ------------------------------------------------------------------------------------------------------------------------
Aggressive Growth Fund (Class A Shares) 59 84 110 186
- ------------------------------------------------------------------------------------------------------------------------
Aggressive Growth Fund (Class B Shares) 60 81 105 208
- ------------------------------------------------------------------------------------------------------------------------
High Yield Fund (Class A Shares) 58 81 106 176
- ------------------------------------------------------------------------------------------------------------------------
High Yield Fund (Class B Shares) 59 78 101 198
- ------------------------------------------------------------------------------------------------------------------------
High Yield Fund (Class C Shares) 29 58 101 218
- ------------------------------------------------------------------------------------------------------------------------
High Yield Fund (Class M Shares) 48 77 107 193
- ------------------------------------------------------------------------------------------------------------------------
Money Market Fund (Class A Shares) 8 25 44 98
- ------------------------------------------------------------------------------------------------------------------------
Money Market Fund (Class B Shares) 56 69 84 163
- ------------------------------------------------------------------------------------------------------------------------
U.S. Government Sec. Fund (Class A Shares) 57 77 99 162
- ------------------------------------------------------------------------------------------------------------------------
U.S. Government Sec. Fund (Class B Shares) 58 74 94 184
</TABLE>
<TABLE>
<CAPTION>
Cumulative Expenses
Paid for the Period
1 year 3 years 5 years 10 years
Example* -------- --------- --------- ---------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on the same $1,000 investment assuming
no redemption at the end of each time period:
- --------------------------------------------------------------------------------------------------------------------------
Balanced Fund (Class A Shares) $57 $77 $99 $162
- --------------------------------------------------------------------------------------------------------------------------
Balanced Fund (Class B Shares) 18 54 94 184
- --------------------------------------------------------------------------------------------------------------------------
Convertible Fund (Class A Shares) 58 81 106 177
- --------------------------------------------------------------------------------------------------------------------------
Convertible Fund (Class B Shares) 19 59 101 199
- --------------------------------------------------------------------------------------------------------------------------
Growth Fund (Class A Shares) 58 81 105 175
- --------------------------------------------------------------------------------------------------------------------------
Growth Fund (Class B Shares) 19 58 100 197
- --------------------------------------------------------------------------------------------------------------------------
Aggressive Growth Fund (Class A Shares) 59 84 110 186
- --------------------------------------------------------------------------------------------------------------------------
Aggressive Growth Fund (Class B Shares) 20 61 105 208
- --------------------------------------------------------------------------------------------------------------------------
High Yield Fund (Class A Shares) 58 81 106 176
- --------------------------------------------------------------------------------------------------------------------------
High Yield Fund (Class B Shares) 19 58 101 198
- --------------------------------------------------------------------------------------------------------------------------
High Yield Fund (Class C Shares) 19 58 101 218
- --------------------------------------------------------------------------------------------------------------------------
High Yield Fund (Class M Shares) 48 77 107 193
- --------------------------------------------------------------------------------------------------------------------------
Money Market Fund (Class A Shares) 8 25 44 98
- --------------------------------------------------------------------------------------------------------------------------
Money Market Fund (Class B Shares) 16 49 84 163
- --------------------------------------------------------------------------------------------------------------------------
U.S. Government Sec. Fund (Class A Shares) 57 77 99 162
- --------------------------------------------------------------------------------------------------------------------------
U.S. Government Sec. Fund (Class B Shares) 18 54 94 184
</TABLE>
- -----------
*The purpose of the tables above are to help the investor understand the
various costs and expenses that the investor will bear, directly or indirectly.
The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. Class B
Share figures assume conversion to Class A Shares after eight years. See
"Management of the Fund," "Distribution Plans" and "How to Buy Shares."
7
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables set forth certain financial information for the
respective fiscal years of the Trust. This financial information has been
audited by Price Waterhouse LLP, independent accountants. Their opinion and the
Trust's Financial Statements and notes thereto are incorporated by reference in
the Statement of Additional Information. The Statement of Additional
Information and the Trust's most recent Annual Report (containing the report of
Independent Accountants and additional information relating to each Series'
performance) are available at no charge upon request by calling (800) 243-4361.
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED FUND
Class A
-----------------------------------------------------
Year ended October 31,
-----------------------------------------------------
1997 1996 1995 1994
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $17.56 $17.04 $ 15.23 $ 16.64
Income from investment
operations
Net investment income 0.48 0.48 0.52 0.48
Net realized and unrealized
gain (loss) 2.38 1.46 1.80 (1.01)
------- ------- ------- -------
Total from investment operations 2.86 1.94 2.32 (0.53)
------- ------- ------- -------
Less distributions
Dividends from net
investment income (0.48) 0.49) (0.51) (0.49)
Dividends from net realized gains (1.87) 0.93) -- (0.39)
------- ------- ------- -------
Total distributions (2.35) 1.42) (0.51) (0.88)
------- ------- ------- -------
Change in net asset value 0.51 0.52 1.81 (1.41)
------- ------- ------- -------
Net asset value, end of period $18.07 $17.56 $ 17.04 $ 15.23
======= ======= ======= =======
Total return(1) 18.04% 12.03% 15.52% (3.28)%
Ratios/supplemental data:
Net assets, end of period
(thousands) $1,702,385 $1,897,306 $2,345,440 $2,601,808
Ratio to average net assets of:
Operating expenses 0.98% 1.01% 1.02% 0.96%
Net investment income 2.65% 2.74% 3.27% 3.03%
Portfolio turnover 206% 191% 197% 159%
Average commission rate paid(4) $ 0.0541 $ 0.0546 N/A N/A
<CAPTION>
BALANCED FUND
Class A
-----------------------------------------------------------------------------
Year ended October 31,
-----------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
--------- ------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $15.92 $16.05 $13.86 $13.91 $12.19 $13.53
Income from investment
operations
Net investment income 0.46 0.52 0.62 0.69 0.69 0.58
Net realized and unrealized
gain (loss) 1.08 0.92 2.84 (0.04) 1.74 (0.33)
------ ------ ------ ------ ------ ------
Total from investment operations 1.54 1.44 3.46 0.65 2.43 0.25
------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income (0.46) (0.54) (0.64) (0.67) (0.71) (0.61)
Dividends from net realized gains (0.36) (1.03) (0.63) (0.03) -- (0.98)
------ ------ ------ ------ ------ ------
Total distributions (0.82) (1.57) (1.27) (0.70) (0.71) (1.59)
------ ------ ------ ------ ------ ------
Change in net asset value 0.72 (0.13) 2.19 (0.05) 1.72 (1.34)
------ ------ ------ ------ ------ ------
Net asset value, end of period $16.64 $15.92 $16.05 $13.86 $13.91 $12.19
====== ====== ====== ====== ====== ======
Total return(1) 9.92% 9.77% 26.26% 4.71% 20.60% 2.14%
Ratios/supplemental data:
Net assets, end of period
(thousands) $3,126,014 $2,146,726 $941,754 $472,642 $446,970 $425,737
Ratio to average net assets of:
Operating expenses 0.95% 0.98% 0.98% 0.85% 0.93% 0.80%
Net investment income 2.88% 3.55% 4.22% 4.91% 5.28% 4.87%
Portfolio turnover 130% 136% 196% 181% 172% 226%
Average commission rate paid(4) N/A N/A N/A N/A N/A N/A
<CAPTION>
BALANCED FUND
Class B
---------------------------------
Year ended
October 31, From inception
--------------------------------- 7/15/94 to
1997 1996 1995 10/31/94
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $17.54 $17.01 $ 15.23 $15.27
Income from investment
operations
Net investment income 0.35 0.35 0.40 0.09
Net realized and unrealized
gain (loss) 2.37 1.47 1.80 (0.04)
------- ------- ------- ------
Total from investment operations 2.72 1.82 2.20 0.05
------- ------- ------- ------
Less distributions
Dividends from net
investment income (0.35) (0.36) (0.42) (0.09)
Dividends from net realized gains (1.87) (0.93) -- --
------- -------- ------- ------
Total distributions (2.22) (1.29) (0.42) (0.09)
------- -------- ------- ------
Change in net asset value 0.50 0.53 1.78 (0.04)
------- -------- ------- ------
Net asset value, end of period $18.04 $17.54 $ 17.01 $15.23
======= ======== ======= ======
Total return(1) 17.13% 11.24% 14.68% 0.34%(3)
Ratios/supplemental data:
Net assets, end of period
(thousands) $30,216 $26,209 $16,971 $4,629
Ratio to average net assets of:
Operating expenses 1.73% 1.76% 1.78% 1.65%(2)
Net investment income 1.90% 1.96% 2.46% 2.36%(2)
Portfolio turnover 191% 197% 159%
Average commission rate paid(4) $0.0541 $0.0546 N/A N/A
</TABLE>
- -----------
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not reflect
mark-ups, mark-downs or spreads on shares traded on a principal basis.
8
<PAGE>
<TABLE>
<CAPTION>
CONVERTIBLE FUND
Class A
-----------------------------------------------------
Year ended October 31,
-----------------------------------------------------
1997 1996 1995 1994
--------- -------- ------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 19.26 $18.23 $17.56 $19.34
Income from investment
operations
Net investment income 0.61(4) 0.70(4) 0.87 0.78
Net realized and unrealized
gain (loss) 2.54 1.68 1.04 (1.06)
--------- ------- ------ ------
Total from investment operations 3.15 2.38 1.91 (0.28)
--------- ------- ------ ------
Less distributions
Dividends from net
investment income (0.64) (0.77) (1.05) (0.69)
Dividends from net realized gains (1.26) (0.58) (0.19) (0.81)
--------- ------- ------ ------
Total distributions (1.90) (1.35) (1.24) (1.50)
--------- ------- ------ ------
Change in net asset value 1.25 1.03 0.67 (1.78)
--------- ------- ------ ------
Net asset value, end of period $ 20.51 $19.26 $18.23 $17.56
========= ======= ======= =======
Total return(1) 17.40% 13.55% 11.45% (1.48)%
Ratios/supplemental data:
Net assets, end of period
(thousands) $201,170 $214,874 $219,384 $226,294
Ratio to average net assets of:
Operating expenses 1.12% 1.17% 1.18% 1.14%
Net investment income 3.11% 3.75% 4.78% 4.27%
Portfolio turnover 152% 141% 79% 91%
Average commission rate paid(5) $ 0.0661 $0.0619 N/A N/A
<CAPTION>
CONVERTIBLE FUND
Class A
-------------------------------------------------------------------------
Year ended October 31,
-------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
--------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $18.86 $18.36 $16.63 $17.13 $15.55 $17.84
Income from investment
operations
Net investment income 0.68 0.77 0.87 0.91 0.95 0.86
Net realized and unrealized
gain (loss) 1.53 1.54 1.75 (0.49) 1.58 (0.06)
------ ------ ------ ------ ------ ------
Total from investment operations 2.21 2.31 2.62 0.42 2.53 0.80
------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income (0.73) (0.72) (0.89) (0.92) (0.95) (0.84)
Dividends from net realized gains (1.00) (1.09) -- -- -- (2.25)
------ ------ ------ ------ ------ ------
Total distributions (1.73) (1.81) (0.89) (0.92) (0.95) (3.09)
------ ------ ------ ------ ------ ------
Change in net asset value 0.48 0.50 1.73 (0.50) 1.58 (2.29)
------ ------ ------ ------ ------ ------
Net asset value, end of period $19.34 $18.86 $18.36 $16.63 $17.13 $15.55
====== ====== ====== ====== ====== ======
Total return(1) 12.58% 13.77% 15.97% 2.35% 16.83% 4.90%
Ratios/supplemental data:
Net assets, end of period
(thousands) $252,072 $200,944 $169,288 $143,200 $156,279 $159,426
Ratio to average net assets of:
Operating expenses 1.15% 1.20% 1.14% 0.99% 1.03% 0.83%
Net investment income 3.70% 4.28% 4.84% 5.17% 5.71% 5.51%
Portfolio turnover 94% 200% 284% 194% 214% 213%
Average commission rate paid(5) N/A N/A N/A N/A N/A N/A
<CAPTION>
CONVERTIBLE FUND
Class B
-------------------------------------
Year ended
October 31, From inception
------------------------------------- 7/15/94 to
1997 1996 1995 10/31/94
--------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 19.20 $ 18.17 $17.55 $ 17.59
Income from investment
operations
Net investment income 0.55(4) 0.70(4) 0.15
Net realized and unrealized
gain (loss) 2.52 1.68 1.07 (0.06)
-------- -------- -------- -------
Total from investment operations 2.98 2.23 1.77 0.09
-------- -------- -------- -------
Less distributions
Dividends from net
investment income ( 0.49) ( 0.62) (0.96) (0.13)
Dividends from net realized gains ( 1.26) ( 0.58) (0.19) --
-------- -------- -------- -------
Total distributions ( 1.75) ( 1.20) (1.15) (0.13)
-------- -------- -------- -------
Change in net asset value 1.23 1.03 0.62 (0.04)
-------- -------- -------- -------
Net asset value, end of period $ 20.43 $ 19.20 $18.17 $ 17.55
======== ======== ======== =======
Total return(1) 16.49% 12.72% 10.59% 0.49%(3)
Ratios/supplemental data:
Net assets, end of period
(thousands) $ 8,063 $ 5,947 $3,715 $ 856
Ratio to average net assets of:
Operating expenses 1.87% 1.92% 1.95% 1.83%(2)
Net investment income 2.33% 2.95% 3.92% 3.29%(2)
Portfolio turnover 152% 141% 79% 91%
Average commission rate paid(5) $0.0661 $0.0619 N/A N/A
</TABLE>
- -----------
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not reflect
mark-ups, mark-downs or spreads on shares traded on a principal basis.
9
<PAGE>
<TABLE>
<CAPTION>
GROWTH FUND
Class A
----------------------------------------------------
Year ended October 31,
----------------------------------------------------
1997 1996 1995 1994
-------- -------- --------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $26.87 $24.92 $21.24 $ 21.53
Income from investment
operations(5)
Net investment income (loss) 0.14(4) 0.20(4) 0.26 0.26
Net realized and unrealized
gain (loss) 5.62 3.63 4.53 0.17
------- ------ ------ -------
Total from investment operations 5.76 3.83 4.79 0.43
------- ------ ------ -------
Less distributions
Dividends from net
investment income (0.21) (0.25) (0.30) (0.24)
Dividends from net realized gains (4.59) (1.63) (0.81) (0.48)
------- ------- ------ ------
Total distributions (4.80) (1.88) (1.11) (0.72)
------- ------- ------ ------
Change in net asset value 0.96 1.95 3.68 (0.29)
------- ------- ------ ------
Net asset value, end of period $27.83 $26.87 $24.92 $ 21.24
======= ====== ====== ====
Total return(1) 24.81% 16.34% 23.91% 2.06%
Ratios/supplemental data:
Net assets, end of period
(thousands) $2,518,289 $2,347,471 $2,300,251 $2,140,458
Ratio to average net assets of:
Operating expenses 1.10% 1.17% 1.20% 1.19%
Net investment income (loss) 0.53% 0.80% 0.92% 1.22%
Portfolio turnover 196% 116% 109% 118%
Average commission rate paid(6) $0.0518 $0.0534 N/A N/A
<CAPTION>
GROWTH FUND
1993 1992 1991 1990 1989 1988
-------------- -------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 20.76 $ 22.60 $ 18.45 $ 18.76 $ 16.01 $ 17.96
Income from investment
operations(5)
Net investment income (loss) 0.32 0.36 0.50 0.64 0.67 0.39
Net realized and unrealized
gain (loss) 1.15 0.97 4.97 (0.05) 2.68 0.72
---------- ---------- ---------- -------- -------- --------
Total from investment operations 1.47 1.33 5.47 0.59 3.35 1.11
---------- ---------- ---------- -------- -------- --------
Less distributions
Dividends from net
investment income (0.32) (0.45) (0.55) (0.62) (0.60) (0.51)
Dividends from net realized gains (0.38) (2.72) (0.77) (0.28) -- (2.55)
---------- ---------- ---------- -------- -------- --------
Total distributions (0.70) (3.17) (1.32) (0.90) (0.60) (3.06)
---------- ---------- ---------- -------- -------- --------
Change in net asset value 0.77 (1.84) 4.15 (0.31) 2.75 (1.95)
---------- ---------- ---------- -------- -------- --------
Net asset value, end of period $ 21.53 $ 20.76 $ 22.60 $ 18.45 $ 18.76 $ 16.01
========== ========== ========== ======== ======== ========
Total return(1) 7.20% 6.95% 30.97% 3.05% 21.44% 6.99%
Ratios/supplemental data:
Net assets, end of period
(thousands) $2,563,442 $2,186,868 $1,251,565 $678,151 $680,498 $603,600
Ratio to average net assets of:
Operating expenses 1.18% 1.17% 1.15% 1.01% 1.06% 0.85%
Net investment income (loss) 1.55% 1.86% 2.49% 3.37% 3.79% 2.48%
Portfolio turnover 176% 192% 227% 203% 180% 221%
Average commission rate paid(6) N/A N/A N/A N/A N/A N/A
<CAPTION>
GROWTH FUND
Class B
----------------------------------------
Year ended
October 31, From inception
--------------------------------------- 7/15/94 to
1997 1996 1995 10/31/94
-------- -------- -------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 26.63 $24.74 $ 21.19 $ 20.48
Income from investment
operations(5)
Net investment income (loss) (0.06)(4) --(4) --(4) 0.01
Net realized and unrealized
gain (loss) 5.57 3.61 4.60 0.70
-------- ------- ------- -------
Total from investment operations 5.51 3.61 4.60 0.71
-------- ------- ------- -------
Less distributions
Dividends from net
investment income (0.04) (0.09) (0.24) --
Dividends from net realized gains (4.59) (1.63) (0.81) --
-------- ------- ------- -------
Total distributions (4.63) (1.72) (1.05) --
-------- ------- ------- -------
Change in net asset value 0.88 1.89 3.55 0.71
-------- ------- ------- -------
Net asset value, end of period $ 27.51 $26.63 $ 24.74 $ 21.19
======== ======= ======= =======
Total return(1) 23.89% 15.48% 23.02% 3.47%(3)
Ratios/supplemental data:
Net assets, end of period
(thousands) $68,022 $45,326 $20,111 $2,966
Ratio to average net assets of:
Operating expenses 1.85% 1.93% 1.97% 1.87%(2)
Net investment income (loss) (0.25)% 0.01% 0.01% 0.32%(2)
Portfolio turnover 196% 116% 109% 118%
Average commission rate paid(6) $0.0518 $0.0534 N/A N/A
</TABLE>
- -----------
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions. (6) For
fiscal years beginning on or after September 1, 1995, a fund is required to
disclose its average commission rate per share for securities trades on which
commissions are charged. This rate generally does not reflect mark-ups,
mark-downs or spreads on shares traded on a principal basis.
10
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND
Class A
----------------------------------------------------------------
Year ended October 31,
----------------------------------------------------------------
1997 1996 1995 1994
----------------- ----------------- --------------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 16.84 $ 16.51 $ 13.33 $ 14.56
Income from investment
operations(5)
Net investment income (loss) ( 0.08)(4) ( 0.13)(4) 0.06(4) 0.27
Net realized and unrealized
gain (loss) 2.95 2.64 4.21 (0.21)
---------- ---------- ------------ --------
Total from investment operations 2.87 2.51 4.27 0.06
---------- ---------- ------------ --------
Less distributions
Dividends from net
investment income -- ( 0.02) (0.19) (0.22)
Dividends from net realized gains ( 2.51) ( 2.16) (0.90) (1.07)
Distributions in excess of
accumulated realized gains -- -- -- --
---------- ---------- ------------ --------
Total distributions ( 2.51) ( 2.18) (1.09) (1.29)
---------- ---------- ------------ --------
Change in net asset value 0.36 0.33 3.18 (1.23)
---------- ---------- ------------ --------
Net asset value, end of period $ 17.20 $ 16.84 $ 16.51 $ 13.33
========== ========== ============ ========
Total return(1) 19.67 % 17.43 % 35.14% 0.37%
Ratios/supplemental data:
Net assets, end of period
(thousands) $ 246,002 $ 233,488 $ 180,288 $140,137
Ratio to average net assets of:
Operating expenses 1.20 % 1.20 % 1.29% 1.26%
Net investment income (loss) ( 0.53)% ( 0.81)% 0.43% 1.97%
Portfolio turnover 518% 401% 331% 306%
Average commission rate paid(6) $ 0.0586 $ 0.0655 N/A N/A
<CAPTION>
AGGRESSIVE GROWTH FUND
1993 1992 1991 1990 1989 1988
------------ ------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 13.56 $ 14.88 $ 10.77 $ 12.68 $ 11.09 $ 13.89
Income from investment
operations(5)
Net investment income (loss) 0.22 0.23 0.23 0.17 0.43 0.27
Net realized and unrealized
gain (loss) 1.62 0.59 4.05 (1.82) 1.58 0.26
-------- -------- -------- --------- -------- --------
Total from investment operations 1.84 0.82 4.28 (1.65) 2.01 0.53
-------- -------- -------- --------- -------- --------
Less distributions
Dividends from net
investment income (0.23) (0.25) (0.17) (0.26) (0.42) (0.33)
Dividends from net realized gains (0.61) (1.50) -- -- -- (3.00)
Distributions in excess of
accumulated realized gains -- (0.39) -- -- -- --
-------- -------- -------- --------- -------- --------
Total distributions (0.84) (2.14) (0.17) (0.26) (0.42) (3.33)
-------- -------- -------- --------- -------- --------
Change in net asset value 1.00 (1.32) 4.11 (1.91) 1.59 (2.80)
-------- -------- -------- --------- -------- --------
Net asset value, end of period $ 14.56 $ 13.56 $ 14.88 $ 10.77 $ 12.68 $ 11.09
======== ======== ======== ========= ======== ========
Total return(1) 14.15% 7.11% 39.99% (13.27)% 18.59% 4.52%
Ratios/supplemental data:
Net assets, end of period
(thousands) $143,035 $128,530 $125,942 $ 99,428 $130,290 $124,650
Ratio to average net assets of:
Operating expenses 1.17% 1.25% 1.20% 1.07% 1.09% 0.84%
Net investment income (loss) 1.58% 1.70% 1.68% 1.37% 3.60% 2.39%
Portfolio turnover 192% 251% 332% 407% 248% 278%
Average commission rate paid(6) N/A N/A N/A N/A N/A N/A
<CAPTION>
AGGRESSIVE GROWTH FUND
Class B
-----------------------------------------------------------------------
Year ended
October 31, From inception
----------------------------------------------------- 7/21/94 to
1997 1996 1995 10/31/94
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 16.57 $ 16.38 $ 13.31 $ 13.09
Income from investment
operations(5)
Net investment income (loss) ( 0.20)(4) ( 0.25)(4) (0.12)(4) 0.02
Net realized and unrealized
gain (loss) 2.90 2.60 4.26 0.20
---------- ---------- ---------- ----------
Total from investment operations 2.70 2.35 4.14 0.22
---------- ---------- ---------- ----------
Less distributions
Dividends from net
investment income -- -- (0.17) --
Dividends from net realized gains ( 2.51) ( 2.16) (0.90) --
Distributions in excess of
accumulated realized gains -- -- -- --
---------- ---------- ---------- ----------
Total distributions ( 2.51) ( 2.16) (1.07) --
---------- ---------- ---------- ----------
Change in net asset value 0.19 0.19 3.07 0.22
---------- ---------- ---------- ----------
Net asset value, end of period $ 16.76 $ 16.57 $ 16.38 $ 13.31
========== ========== ========== ==========
Total return(1) 18.70 % 16.52 % 34.15% 1.68%(3)
Ratios/supplemental data:
Net assets, end of period
(thousands) $ 13,611 $ 10,466 $ 2,393 $ 330
Ratio to average net assets of:
Operating expenses 1.96 % 1.95 % 2.04% 1.81%(2)
Net investment income (loss) ( 1.28)% ( 1.57)% (0.83)% 1.45%(2)
Portfolio turnover 518% 401% 331% 306%
Average commission rate paid(6) $ 0.0586 $ 0.0655 N/A N/A
</TABLE>
- -----------
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions. (6) For
fiscal years beginning on or after September 1, 1995, a fund is required to
disclose its average commission rate per share for securities trades on which
commissions are charged. This rate generally does not reflect mark-ups,
mark-downs or spreads on shares traded on a principal basis.
11
<PAGE>
<TABLE>
<CAPTION>
HIGH YIELD FUND
Class A
-----------------------------------------------------------------------------------------
Year ended October 31,
-----------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 8.63 $ 8.17 $ 8.11 $ 9.11 $ 8.14 $ 7.70 $ 6.72
Income from investment
operations
Net investment income 0.80 0.78 0.80 0.76 0.74 0.77 0.74
Net realized and unrealized
gain (loss) 0.46 0.46 0.04 (0.97) 0.97 0.44 0.98
-------- -------- -------- ------- -------- -------- -------
Total from investment operations 1.26 1.24 0.84 (0.21) 1.71 1.21 1.72
-------- -------- -------- ------- -------- -------- -------
Less distributions
Dividends from net investment
income (0.80) (0.78) (0.78) (0.76) (0.74) (0.77) (0.74)
Tax return of capital -- -- -- (0.03) -- -- --
-------- -------- -------- ------- -------- -------- -------
Total distributions (0.80) (0.78) (0.78) (0.79) (0.74) (0.77) (0.74)
-------- -------- -------- ------- -------- -------- -------
Change in net asset value 0.46 0.46 0.06 (1.00) 0.97 0.44 0.98
-------- -------- -------- ------- -------- -------- -------
Net asset value, end of period $ 9.09 $ 8.63 $ 8.17 $ 8.11 $ 9.11 $ 8.14 $ 7.70
======== ======== ======== ======= ======== ======== =======
Total return(1) 15.03% 15.95% 11.19% (2.57)% 21.87% 16.28% 26.77%
Ratios/supplemental data:
Net assets, end of period
(thousands) $532,906 $501,265 $507,855 $531,773 $182,333 $113,197 $91,664
Ratio to average net assets of:
Operating expenses 1.11% 1.17% 1.21% 1.19% 1.04% 1.08% 1.08%
Net investment income 8.76% 9.21% 10.01% 9.01% 8.46% 9.51% 10.12%
Portfolio turnover 167% 162% 147% 222% 157% 205% 326%
<CAPTION>
HIGH YIELD FUND
Class B
------------------------------------------------------
Year ended
October 31, From inception
----------------------------------- 2/16/94 to
1990 1989 1988 1997 1996 1995 10/31/94
------------ ------------ ------------ ----------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 7.90 $ 8.84 $ 8.42 $ 8.63 $ 8.19 $ 8.13 $ 9.38
Income from investment
operations
Net investment income 0.81 1.03 1.01 0.73 0.71 0.72 0.54
Net realized and unrealized
gain (loss) (1.18) (0.95) 0.42 0.46 0.45 0.07 (1.25)
------- -------- -------- ------- ------- ------- ----------
Total from investment operations (0.37) 0.08 1.43 1.19 1.16 0.79 (0.71)
------- -------- -------- ------- ------- ------- ----------
Less distributions
Dividends from net investment
income (0.81) (1.02) (1.01) (0.75) (0.72) (0.73) (0.52)
Tax return of capital -- -- -- -- -- -- (0.02)
------- -------- -------- ------- ------- ------- ----------
Total distributions (0.81) (1.02) (1.01) (0.75) (0.72) (0.73) (0.54)
------- -------- -------- ------- ------- ------- ----------
Change in net asset value (1.18) (0.94) 0.42 0.44 0.44 0.06 (1.25)
------- -------- -------- ------- ------- ------- ----------
Net asset value, end of period $ 6.72 $ 7.90 $ 8.84 $ 9.07 $ 8.63 $ 8.19 $ 8.13
======= ======== ======== ======= ======= ======= ==========
Total return(1) (4.99)% 0.64% 17.71% 14.18% 14.88% 10.44%
Ratios/supplemental data:
Net assets, end of period
(thousands) $80,391 $133,887 $161,208 $52,184 $25,595 $12,331 $ 6,056
Ratio to average net assets of:
Operating expenses 0.89% 0.85% 0.76% 1.86% 1.92% 1.97%
Net investment income 11.02% 11.81% 11.45% 8.00% 8.47% 9.18%
Portfolio turnover 321% 285% 217% 167% 162% 147% 222%
</TABLE>
- -----------
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
12
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
Class A
---------------------------------------------------
Year ended October 31,
---------------------------------------------------
1997 1996 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations
Net investment income 0.048 0.047 0.053 0.032
-------- -------- -------- --------
Total from investment operations 0.048 0.047 0.053 0.032
-------- -------- -------- --------
Less distributions
Dividends from net investment
income (0.048) (0.047) (0.053) (0.032)
-------- -------- -------- --------
Total distributions (0.048) (0.047) (0.053) (0.032)
-------- -------- -------- --------
Change in net asset value -- -- -- --
-------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total return 4.76 % 4.67 % 5.32 % 3.20 %
Ratios/supplemental data:
Net assets, end of period
(thousands) $188,695 $192,859 $193,534 $196,566
Ratio to average net assets of:
Operating expenses 0.79 % 0.84 % 0.71 % 0.85 %
Net investment income 4.76 % 4.68 % 5.31 % 3.19 %
<CAPTION>
MONEY MARKET FUND
1993 1992 1991 1990 1989 1988
--------------- --------------- ------------ ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations
Net investment income 0.025(1) 0.035(1) 0.060 0.076 0.085(1) 0.067(1)
------------ ------------ -------- -------- ------------ ------------
Total from investment operations 0.025 0.035 0.060 0.076 0.085 0.067
------------ ------------ -------- -------- ------------ ------------
Less distributions
Dividends from net investment
income (0.025) (0.035) (0.060) (0.076) (0.085) (0.067)
------------ ------------ -------- -------- ------------ ------------
Total distributions (0.025) (0.035) (0.060) (0.076) (0.085) (0.067)
------------ ------------ -------- -------- ------------ ------------
Change in net asset value -- -- -- -- -- --
------------ ------------ -------- -------- ------------ ------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ============ ======== ======== ============ ============
Total return 2.50 % 3.50 % 6.00 % 7.60 % 8.50 % 6.70 %
Ratios/supplemental data:
Net assets, end of period
(thousands) $ 170,334 $ 180,786 $168,573 $163,645 $ 149,968 $ 107,262
Ratio to average net assets of:
Operating expenses 0.85 % 0.85 % 0.82 % 0.85 % 0.85 % 0.85 %
Net investment income 2.53 % 3.50 % 6.01 % 7.59 % 8.53 % 6.71 %
<CAPTION>
MONEY MARKET FUND
Class B
---------------------------------------------------
Year ended
October 31, From inception
----------------------------------- 7/15/94 to
1997 1996 1995 10/31/94
----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations
Net investment income 0.040 0.039 0.046 0.007
-------- -------- -------- --------
Total from investment operations 0.040 0.039 0.046 0.007
-------- -------- -------- --------
Less distributions
Dividends from net investment
income (0.040) (0.039) (0.046) (0.007)
-------- -------- -------- ---------
Total distributions (0.040) (0.039) (0.046) (0.007)
-------- -------- -------- ---------
Change in net asset value -- -- -- --
-------- -------- -------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== =========
Total return 4.02 % 3.93 % 4.63 % 0.70%(3)
Ratios/supplemental data:
Net assets, end of period
(thousands) $ 15,013 $ 10,223 $ 8,506 $ 2,086
Ratio to average net assets of:
Operating expenses 1.55 % 1.59 % 1.44 % 1.60%(2)
Net investment income 4.02 % 3.92 % 4.62 % 3.46%(2)
</TABLE>
- -----------
(1) Includes reimbursement of operating expenses by Adviser of $0.0001, $0.001,
$0.001 and $0.001, respectively.
(2) Annualized.
(3) Not annualized.
13
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES FUND
Class A
---------------------------------------------------
Year ended October 31,
---------------------------------------------------
1997 1996 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 9.47 $ 9.60 $ 8.88 $ 9.87
Income from investment
operations
Net investment income 0.55 0.52 0.55 0.64
Net realized and unrealized
gain (loss) 0.17 (0.15) 0.72 (1.02)
-------- -------- -------- -------
Total from investment operations 0.72 0.37 1.27 (0.38)
-------- -------- -------- -------
Less distributions
Dividends from net investment
income (0.53) (0.50) (0.55) (0.45)
Dividends from net realized gains -- -- -- (0.02)
Tax return of capital -- -- -- (0.14)
-------- -------- -------- -------
Total distributions (0.53) (0.50) (0.55) (0.61)
-------- -------- -------- -------
Change in net asset value 0.19 (0.13) 0.72 (0.99)
-------- -------- -------- -------
Net asset value, end of period $ 9.66 $ 9.47 $ 9.60 $ 8.88
======== ======== ======== =======
Total return(2) 7.85% 4.05% 14.81% (3.98)%
Ratios/supplemental data:
Net assets, end of period
(thousands) $182,250 $208,552 $235,879 $262,157
Ratio to average net assets of:
Operating expenses 0.98% 1.03% 0.99% 0.98%
Net investment income 5.63% 5.55% 6.01% 5.92%
Portfolio turnover 377% 379% 178% 101%
<CAPTION>
U.S. GOVERNMENT SECURITIES FUND
1993 1992 1991 1990 1989 1988
-------------- -------------- -------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 9.91 $ 9.65 $ 9.08 $ 9.28 $ 9.25 $ 9.14
Income from investment
operations
Net investment income 0.62(1) 0.65(1) 0.68(1) 0.71(1) 0.72 0.73(1)
Net realized and unrealized
gain (loss) 0.34 0.26 0.57 (0.20) 0.03 0.22
----------- ----------- ----------- ----------- ------- -----------
Total from investment operations 0.96 0.91 1.25 0.51 0.75 0.95
----------- ----------- ----------- ----------- ------- -----------
Less distributions
Dividends from net investment
income (0.62) (0.65) (0.68) (0.71) (0.72) (0.84)
Dividends from net realized gains (0.38) -- -- -- -- --
Tax return of capital -- -- -- -- -- --
----------- ----------- ----------- ----------- ------- -----------
Total distributions (1.00) (0.65) (0.68) (0.71) (0.72) (0.84)
----------- ----------- ----------- ----------- ------- -----------
Change in net asset value (0.04) 0.26 0.57 (0.20) 0.03 0.11
----------- ----------- ----------- ----------- ------- -----------
Net asset value, end of period $ 9.87 $ 9.91 $ 9.65 $ 9.08 $ 9.28 $ 9.25
=========== =========== =========== =========== ======= ===========
Total return(2) 10.18% 9.74% 14.24% 5.82% 8.56% 10.92%
Ratios/supplemental data:
Net assets, end of period
(thousands) $ 57,072 $ 40,365 $ 22,123 $ 11,957 $10,747 $ 8,980
Ratio to average net assets of:
Operating expenses 0.75% 0.77% 0.97% 1.00% 1.00% 1.00%
Net investment income 6.19% 6.64% 7.20% 7.77% 7.93% 7.93%
Portfolio turnover 264% 285% 130% 265% 297% 160%
<CAPTION>
U.S. GOVERNMENT SECURITIES FUND
Class B
---------------------------------------------------
Year ended From
October 31, inception
-------------------------------- 2/24/94 to
1997 1996 1995 10/31/94
---------- ---------- ---------- ------------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 9.45 $ 9.58 $ 8.86 $ 9.61
Income from investment
operations
Net investment income 0.47 0.44 0.48 0.39
Net realized and unrealized
gain (loss) 0.17 (0.14) 0.72 (0.75)
------- ------- ------- ----------
Total from investment operations 0.64 0.30 1.20 (0.36)
------- ------- ------- ----------
Less distributions
Dividends from net investment
income (0.49) (0.43) (0.48) (0.30)
Dividends from net realized gains -- -- -- --
Tax return of capital -- -- -- (0.09)
------- ------- ------- ----------
Total distributions (0.49) (0.43) (0.48) (0.39)
------- ------- ------- ----------
Change in net asset value 0.15 (0.13) 0.72 (0.75)
------- ------- ------- ----------
Net asset value, end of period $ 9.60 $ 9.45 $ 9.58 $ 8.86
======= ======= ======= ==========
Total return(2) 6.94% 3.39% 13.82% (3.83)%(4)
Ratios/supplemental data:
Net assets, end of period
(thousands) $ 5,321 $ 4,875 $ 3,655 $ 1,238
Ratio to average net assets of:
Operating expenses 1.71% 1.78% 1.73% 2.00%(3)
Net investment income 4.91% 4.79% 5.23% 4.49%(3)
Portfolio turnover 377% 379% 178% 101%
</TABLE>
- -----------
(1) Includes reimbursement of operating expenses by Adviser of $0.03, $0.04,
$0.01, $0.01 and $0.08, respectively.
(2) Maximum sales load is not reflected in the total return calculation.
(3) Annualized.
(4) Not annualized.
14
<PAGE>
PERFORMANCE INFORMATION
The Trust may, from time to time, include the yield and total return
history of any or all of the Funds in advertisements, sales literature or
reports to current or prospective shareholders. Both yield and total return
figures are computed separately for each class of shares in accordance with
formulas specified by the Securities and Exchange Commission. Yield and total
return are based on historical earnings of each Fund and are not an indication
of future performance. Performance information may be expressed as yield and
effective yield of the Money Market Fund, as yield of any other Fund or class
thereof, and as total return of any Fund or class thereof. Current yield for
the Money Market Fund will be based on the income earned by the Fund over a
given 7-day period (less a hypothetical charge reflecting deductions for
expenses taken during the period) and then annualized, i.e., the income earned
in the period is assumed to be earned every seven days over a 52-week period
and is stated in terms of an annual percentage return on the investment.
Effective yield is calculated similarly but reflects the compounding effect of
earnings on reinvested dividends.
The yield of each Fund will be computed by dividing the Fund's net
investment income over a 30-day period by an average value of invested assets
(using the average number of shares entitled to receive dividends and the
maximum offering price per share at the end of the period), all in accordance
with applicable regulatory requirements. Such amount will be compounded for six
months and then annualized for a twelve-month period to derive the Fund's yield
for each class.
Standardized quotations of average annual total return for each class of
shares of each Fund will be expressed in terms of the average annual compounded
rate of return of a hypothetical investment in such class of shares of each
Fund over a period of 1, 5, and 10 years (or up to the life of the class of
shares). Standardized total return quotations reflect the deduction of a
proportional share of each class's expenses of each Fund (on an annual basis),
deduction of the maximum initial sales load in the case of Class A and M Shares
and the maximum contingent deferred sales charge applicable to a complete
redemption of the investment in the case of Class B and C Shares, and assume
that all dividends and distributions are reinvested when paid. Performance data
quoted for Class B, C and M Shares covering periods prior to the inception of
such classes of shares will reflect historical performance of Class A Shares of
a Fund as adjusted for the higher operating expenses applicable to such class
of shares. The Trust may also quote supplementally a rate of total return over
different periods of time by means of aggregate, average, and year-by-year or
other types of total return figures. In addition, the Trust may from time to
time, publish material citing historical volatility for Shares of the Trust.
The Trust may also advertise performance relative to certain performance
rankings and indices compiled by independent organizations. The Trust may
include the ranking of these performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc., and Morningstar, Inc.
Additionally, the Trust may compare a Fund's performance results to other
investment or savings vehicles (such as certificates of deposit) and may refer
to results published in various publications such as Changing Times, Forbes,
Fortune, Money, Barrons, Business Week and 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 and Poors The Outlook and Personal Investor. The Trust
may from time to time illustrate the benefits of tax deferral by comparing
taxable investments to investments made through tax-deferred retirement plans.
The total return may also be used to compare the performance of a Fund with
certain widely acknowledged outside standards or indices for stock and bond
market performance, such as the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500"), Dow Jones Industrial Average, Europe Australia Far East
Index (EAFE), Russell 2000 Growth Index, Salomon Brothers 90-Day Treasury Bill
Index, Consumer Price Index, Lehman Brothers Corporate Index and Lehman Brothers
T-Bond Index. The S&P 500 is a commonly quoted measure of stock market
performance and represents common stocks of companies of varying sizes segmented
across 90 different industries which are listed on the New York Stock Exchange,
the American Stock Exchange and traded over the NASDAQ National Market System.
Advertisements, sales literature and other communications may contain
information about the Trust or Adviser's current investment strategies and
management style. Current strategies and style may change to respond to a
changing market and economic conditions. From time to time, the Trust may
discuss specific portfolio holdings or industries in such communications. To
illustrate components of overall performance, the Trust may separate its
cumulative and average annual returns into income results and capital gains or
losses; or cite separately as a return figure the equity or bond portion of a
Fund's portfolio; or compare a Fund's equity or bond return figure to
well-known indices of market performance including but not limited to: the S&P
500 Index, Dow Jones Industrial Average, CS First Boston High Yield Index and
Solomon Brothers Corporate and Government Bond Indices.
Performance information for a Fund reflects only the performance of a
hypothetical investment in Class A, Class B, Class C and Class M Shares of that
Fund during the particular time period on which the calculations are based.
Performance information should be considered in light of a particular Fund's
investment objectives and policies, characteristics and qualities of the Fund,
and the market conditions during the given time period, and should not be
considered as a representation of what may be achieved in the future. For a
description of the methods used to determine total return for each Fund, see
the Statement of Additional Information.
15
<PAGE>
The Trust's Annual Report, available upon request and without charge,
contains a discussion of the performance of each Fund and a comparison of that
performance to a securities market index.
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has a different investment objective and is designed to meet
different investment needs. The differences in objectives and policies among
the seven Funds can be expected to affect the investment return of each Fund
and the degree of market and financial risk to which each Fund is subject. The
investment objective of each Fund is a fundamental policy which may not be
changed without the approval of a vote of a majority of the outstanding shares
of that Fund. Since certain risks are inherent in the ownership of any
security, there can be no assurance that any Fund will achieve its investment
objective. The investment policies of each Fund will also affect the rate of
portfolio turnover. A high rate of portfolio turnover generally involves
correspondingly greater brokerage commissions, which are paid directly by the
Fund. The rate for each Fund, except the Money Market Fund (which does not
normally pay brokerage commissions), is included under "Financial Highlights."
Phoenix Balanced Fund
The Balanced Fund seeks as its investment objectives reasonable income,
long-term capital growth and conservation of capital. The Balanced Fund intends
to invest based on combined considerations of risk, income, capital enhancement
and protection of capital value.
The Balanced Fund may invest in any type or class of security. The
Balanced Fund will invest at least 65% of the value of its total assets in
common stocks and fixed income senior securities; however, it may also invest
in securities convertible into common stocks. At least 25% of the value of its
assets will be invested in fixed income senior securities which are rated
within the four highest rating categories by recognized rating agencies (i.e.,
AAA to BBB by Standard & Poor's Corporation, Aaa to Baa by Moody's Investors
Services, Inc. (Moody's)). Fixed-income securities which are rated in these
categories are sometimes referred to as "investment grade" securities. See
"Appendix" for a discussion of ratings.
The Fund may also engage in certain options transactions and enter into
financial futures contracts and related options for hedging purposes and may
invest in deferred or zero coupon debt obligations. See "Investment Techniques
and Related Risks."
In implementing the investment objectives of this Fund, management will
select securities believed to have potential for the production of current
income, with emphasis on securities that also have potential for capital
enhancement. For temporary defensive purposes when the Adviser believes that
adverse market conditions warrant, the Balanced Fund may actively pursue a
policy of retaining cash or investing part or all of its assets in cash
equivalents, such as government securities and high grade commercial paper.
Risk Factors. The Fund may invest up to 35% of its net assets, determined
at the time of investment, in high yield, high risk, non-investment grade fixed
income securities (commonly referred to as "junk bonds"). Securities rated Baa
by Moody's or BBB by S&P may have some speculative characteristics and changes
in economic conditions or other circumstances may affect the ability to make
principal and interest payments on these types of bonds. A fixed income
securities issue may have its ratings reduced below the minimum permitted for
purchase by the Fund. In that event, the Adviser will determine whether the
Fund should continue to hold such issue in its portfolio. If, in the Adviser's
opinion, market conditions warrant, the Fund may increase its position in lower
or non-rated securities from time to time. The lower rated and non-rated
convertible securities are predominantly speculative with respect to the
issuer's capacity to repay principal and pay interest. Investment in lower
rated and non-rated convertible fixed-income securities normally involves a
greater degree of market and credit risk than does investment in securities
having higher ratings. The price of these fixed income securities will
generally move in inverse proportion to interest rates. In addition, non-rated
securities are often less marketable than rated securities. To the extent that
the Fund holds any lower rated or non-rated securities, it may be negatively
affected by adverse economic developments, increased volatility and lack of
liquidity.
Phoenix Convertible Fund
The Convertible Fund seeks as its investment objectives income and the
potential for capital appreciation, which objectives are to be considered as
relatively equal.
Under normal circumstances, this Fund intends to invest at least 65% of
the value of its total assets in debt securities and preferred stocks which are
convertible into, or carry the right to purchase, common stock or other equity
securities ("Convertible Securities"). Convertible securities have several
unique investment characteristics such as (1) higher yields than common stocks,
but lower yields than comparable nonconvertible fixed income securities, (2) a
lesser degree of fluctuation in value than the underlying stocks since they
have fixed income characteristics, and (3) the potential for capital
appreciation if the market price of the underlying common stock increases. A
convertible security might be subject to redemption at the option of the issuer
at a price established in the convertible security's governing instrument. If a
convertible security held by the Trust is called for redemption, the Trust
might be required to permit the issuer to redeem the security, convert it into
the underlying common stock or sell it to a third party.
If at any time the market value of the Convertible Fund's investments in
common stocks, warrants and non-convertible securities exceeds 35% of the
market value of its total assets (exclusive of cash and government securities),
it will (except when a temporary defensive position is deemed advisable)
thereafter invest only in Convertible Securities until the 65% standard is
equaled or exceeded. The 65% standard may not be maintained at all times
because securities received upon
16
<PAGE>
conversion or exercise of warrants and securities remaining upon the break-up
of units or detachment of warrants may be retained to permit orderly
disposition or to establish long-term holding periods for tax purposes. The
Convertible Fund may also invest up to 100% of the Fund's total net assets in
non-rated and non-investment grade convertible securities.
The Convertible Fund will invest its assets, without limit, in high-grade
senior securities or government securities or retain cash or cash equivalents
when a temporary defensive position is deemed advisable by the Adviser. In
seeking to achieve its objectives, the Adviser may utilize the Convertible
Fund's ability to expand its investments through the permitted use of bank
borrowings (see "Leverage"). The Convertible Fund may also engage in certain
options transactions and enter into financial futures contracts and related
options for hedging purposes and may invest in deferred or zero coupon debt
obligations. See "Investment Techniques and Related Risks."
Diversification is an important consideration in selecting the Convertible
Fund's portfolio. However, more emphasis will be placed upon careful selection
of securities believed to have good potential for income and appreciation than
upon wide diversification.
Risk Factors. The Convertible Securities acquired by this Fund are not
subject to any limitations as to ratings and may include high, medium, lower
and non-rated securities. Historically, the Convertible Fund has emphasized
investments in investment grade convertible securities which are rated within
the four highest categories by recognized rating agencies, i.e., S&P and
Moody's. (See the Appendix for a discussion of the S&P and Moody's ratings.)
The Convertible Fund may invest up to 100% of the Fund's total net assets in
non-rated and non-investment grade convertible securities. Lower rated and some
non-rated convertible securities are predominantly speculative with respect to
the issuer's capacity to repay principal and pay interest. Investment in lower
rated and non-rated convertible fixed-income securities normally involves a
greater degree of investment and credit risk than does investment in
convertible securities having higher ratings. In addition, the market for
non-rated convertible securities is usually less broad than the market for
rated securities, which could affect their marketability. To the extent that
the Convertible Fund holds any lower rated or non-rated securities, it may be
negatively affected by adverse economic developments, increased volatility or
lack of liquidity.
Phoenix Growth Fund
The Growth Fund's investment objective is to seek long-term appreciation of
capital. Since income is not an objective, any income generated by the
investment of the Growth Fund's assets will be incidental to its objective.
Under normal circumstances, the Growth Fund will invest at least 65% of
the value of its total assets in the common stock of companies believed by the
Adviser to have appreciation potential. However, since no one class or type of
security at all times necessarily affords the greatest promise for capital
appreciation, the Growth Fund may invest any amount or proportion of its assets
in any class or type of security believed by the Adviser to offer potential for
capital appreciation over both the intermediate and long term. Normally, of
course, its investment will consist largely of common stocks selected for the
promise they offer of appreciation of capital. However, the Growth Fund may
also invest in preferred stocks, investment grade bonds (Moody's rating Baa or
higher), convertible preferred stocks and convertible debentures if, in the
judgment of the Adviser, the investment would further its investment objective.
The Growth Fund may also engage in certain options transactions and enter into
financial futures contracts and related options for hedging purposes. See
"Investment Techniques and Related Risks." Each security held will be monitored
to determine whether it is contributing to the basic objective of long-term
appreciation of capital.
The Adviser believes that a portfolio of such securities provides the most
effective way to obtain capital appreciation, but when, for temporary defensive
purposes (as when market conditions for growth stocks are adverse), other types
of investments appear advantageous on the basis of combined considerations of
risk and the protection of capital values, investments may be made in fixed
income securities with or without warrants or conversion features. In addition,
for such temporary defensive purposes, the Growth Fund may pursue a policy of
retaining cash or investing part or all of its assets in cash equivalents.
Diversification is an important consideration in selecting the Growth
Fund's portfolio. However, greater emphasis will be placed upon careful
selection of securities believed to have good potential for appreciation than
upon wide diversification.
To the extent that the Fund holds bonds, it may be negatively affected by
adverse interest rate movements and credit quality. Generally, when interest
rates rise it may be expected that the value of bonds may decrease.
Phoenix Aggressive Growth Fund
Appreciation of capital through the use of aggressive investment
techniques is this Fund's investment objective, and income will not generally
be considered in the selection of investments. In seeking to achieve this
objective, management may utilize the Fund's ability to expand its investments
through the permitted use of bank borrowings (see "Leverage").
Under normal circumstances, the Aggressive Growth Fund will invest at
least 65% of the value of its total assets in common and preferred stocks and
securities convertible into common stocks or other equity securities. Up to 10%
of the Fund's total net assets may be invested in foreign securities.
The Aggressive Growth Fund may also invest in debt securities which, in
the judgment of the Adviser, offer opportunities for capital growth. However,
when a temporary defensive position is deemed advisable, the Fund may, without
limit, invest in high-grade senior securities or U.S. Government securities or
retain cash or cash equivalents. The Fund may also engage in certain options
transactions and enter
17
<PAGE>
into financial futures contracts and related options for hedging purposes. See
"Investment Techniques and Related Risks."
Since investments normally will consist primarily of securities believed
by the Adviser to have a substantial potential for capital growth, the assets
of the Aggressive Growth Fund may be considered to be subject to greater risks
than those involved if the Fund invested in securities that did not have these
growth characteristics. The Fund is intended for investors who have the
financial ability and the investment experience to regard their shares as a
long-term investment involving risks commensurate with the possibility of
achieving substantial capital gains.
Phoenix High Yield Fund
The High Yield Fund's primary objective is to seek high current income.
This Fund intends to invest at least 65% of the value of its total assets in a
diversified portfolio of high yield, high risk fixed income securities
(commonly referred to as "junk" bonds). Under normal conditions, at least 80%
of the value of the total assets of the High Yield Fund will be invested,
consistent with its primary investment objective, in fixed income securities
including preferred stocks, convertible securities, debt obligations,
certificates of deposit, commercial paper, bankers' acceptances, government
obligations issued or guaranteed by federal, state or municipal governments or
their agencies or instrumentalities and loan participations in secured and
unsecured corporate loans. Capital growth is a secondary objective which will
also be considered when consistent with the objective of high current income.
The risks of investing in high yield (high risk) fixed income securities are
outlined below.
Higher yields are available ordinarily from securities in the lower rating
categories of recognized rating agencies (Baa or lower by Moody's or BBB or
lower by S&P, D&P, or Fitch) and from unrated securities of comparable quality.
The High Yield Fund will not invest in securities in the lowest rating
categories (C for Moody's and D for S&P, D&P, or Fitch) unless management
believes that the financial condition of the issuer, or the protections
afforded to the particular securities, is stronger than would otherwise be
indicated by such low ratings. However, when the investment objective of this
Fund can be met by investing in securities in higher rating categories, such
investments may be made. This Fund may retain securities when their ratings
have changed.
The High Yield Fund may also invest in non-publicly offered or
"restricted" debt securities, which the Adviser deems to be "liquid" pursuant
to standards approved by the Trust's Board of Trustees. The High Yield Fund's
remaining assets may be invested in equity securities when such investments are
consistent with its primary investment objective or are acquired as part of a
unit consisting of a combination of fixed income securities and equity
securities. The High Yield Fund may also engage in certain options transactions
and enter into financial futures contracts and related options for hedging
purposes and may invest in deferred or zero coupon debt obligations. See
"Investment Techniques and Related Risks."
When a more conservative investment strategy is necessary for temporary
defensive purposes, the High Yield Fund may retain cash or invest part or all
of its assets in cash equivalents or in other fixed income securities deemed by
management to be consistent with a temporary defensive posture.
Risk Factors. While the High Yield Fund's management will seek to minimize
risk through diversification and continual evaluation of current developments
in interest rates and economic conditions, the market prices of lower rated
securities generally fluctuate in response to changes in interest rates and
economic conditions more than those of higher rated securities. Using credit
ratings helps to evaluate the safety of principal and interest payments but
does not assess market risk. Fluctuations in the market value of portfolio
securities subsequent to acquisition by the High Yield Fund will not normally
affect cash income from such securities but will be reflected in the Fund's net
asset value. Additionally, with lower rated securities, there is a greater
possibility that an adverse change in the financial condition of the issuer,
particularly a highly leveraged issuer, may affect its ability to make payments
of income and principal and increase the expenses of the Fund seeking recovery
from the issuer. Also, because the High Yield Fund intends to invest primarily
in securities in the lower rating categories, the achievement of its goals will
be more dependent on the Adviser's ability than would be the case if the High
Yield Fund were investing in securities in the higher rating categories.
Lower-rated securities may be thinly traded and less liquid than higher rated
securities and therefore harder to value and more susceptible to adverse
publicity concerning the issuer. Liquid restricted securities are typically
less marketable than publicly offered debt securities.
The table below shows the dollar weighted average of total investments, as
of October 31, 1997, listed by Moody's rating categories, or comparable rating
by another Nationally Recognized Statistical Rating Organization ("NRSRO"). The
column titled "Not Rated" reflects the percentage of portfolio holdings which
were not rated by any NRSRO but which the Adviser has judged to be comparable
in quality to the corresponding rating categories.
Moody's Rating Rated Not Rated
---------------- --------- ----------
Aaa 1.1% 0.0%
Aa 0.0 0.0
A 0.0 0.0
Baa 2.1 0.0
Ba 24.4 3.8
B 56.2 4.9
Caa 1.8 0.5
Ca 0.0 0.0
C 0.0 0.0
D 0.0 0.0
---- ---
Total 85.6 9.2
Phoenix Money Market Fund
The investment objective of the Money Market Fund is to seek as high a
level of current income as is consistent with the preservation of capital and
maintenance of liquidity by investing in a diversified portfolio of high
quality money market instruments maturing in 397 days or less.
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The Money Market Fund seeks to achieve this objective by investing
exclusively in the following instruments:
(a) obligations issued or guaranteed by the United States Government or
its agencies, authorities or instrumentalities;
(b) obligations issued by banks and savings and loan associations (such as
bankers' acceptances, certificates of deposit and time deposits, including
dollar-denominated obligations of foreign branches of U.S. banks and U.S.
branches of foreign banks) and dollar-denominated obligations unconditionally
guaranteed as to payment by banks or savings and loan associations, which at
the date of investment have capital surplus, and undivided profits in excess of
$100,000,000 as of the date of their most recently published financial
statements which obligations have been determined by the Board, or the Adviser
acting at its direction, to present minimal credit risk; and obligations of
other banks or savings and loan associations if such obligations are insured by
the Federal Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation;
(c) commercial paper which at the date of investment is rated A-1 by S&P
and/or P-1 by Moody's Investors Service, Inc., or, if not rated, is issued or
guaranteed by companies which at the date of investment have an outstanding
debt issue rated AA or higher by S&P or Aa or higher by Moody's;
(d) other corporate obligations maturing in one year or less which at the
date of investment are rated AA or higher by S&P or Aa or higher by Moody's;
and
(e) repurchase agreements with recognized securities dealers and banks
with respect to any of the foregoing obligations.
Generally, investments will be limited to securities rated in the two
highest short-term rating categories by at least two nationally recognized
statistical rating organizations, or by one such organization if only one has
rated the security, and comparable unrated securities. In addition, no more
than 5% of the Money Market Fund's total assets will be invested in securities
of any one issuer or in securities not rated in the highest short-term rating
category. Moreover, no more than the greater of 1% of the Money Market Fund's
total assets or $1 million will be invested in the securities of any one issuer
that are not in the highest short-term rating category. Finally, in no event
will investments in illiquid securities, time deposits and/ or repurchase
agreements maturing in more than seven days exceed 10% of the Money Market
Fund's net assets taken at market value.
Obligations of foreign branches of U.S. banks are subject to somewhat
different risks than those of domestic banks. These risks include foreign
economic and political developments, foreign governmental restrictions which
may adversely affect payment of principal and interest on the obligations,
foreign withholding and other taxes on interest income, and difficulties in
obtaining and enforcing a judgment against a foreign branch of a domestic bank.
In addition, different risks may result from the fact that foreign branches of
U.S. banks and U.S. branches of foreign banks are not necessarily subject to
the regulatory requirements that apply to domestic banks. Obligations of such
branches will be purchased only when the Adviser believes the risks are
minimal.
The Money Market Fund may not necessarily invest in money market
instruments paying the highest available yield at a particular time as a result
of considerations of liquidity and preservation of capital. Rather, consistent
with its investment objective, it will attempt to maximize yields by engaging
in portfolio trading and buying and selling portfolio investments in
anticipation of or in response to changing economic and money market conditions
and trends. These policies, as well as the relatively short maturities of
obligations to be purchased by the Money Market Fund, may result in frequent
changes in its portfolio.
The value of the securities in the Money Market Fund's portfolio can be
expected to vary inversely to the changes in prevailing interest rates. Thus,
if interest rates increase after a security was purchased, that security, if
sold, might be sold at less than cost. Conversely, if interest rates decline
after purchase, the security, if sold, might be sold at a profit. In either
instance, if the security were held to maturity, no gain or loss would normally
be realized as a result of these fluctuations. Substantial redemptions of Money
Market Fund shares could require the sale of portfolio investments at a time
when a sale might not be desirable.
The average maturity of the Money Market Fund's portfolio securities based
on their dollar value will not exceed 90 days.
Phoenix U.S. Government Securities Fund
The U.S. Government Securities Fund seeks as its investment objective a
high level of current income consistent with safety of principal. This Fund
intends to invest at least 65% of the value of its total assets in securities
which are issued or guaranteed by the U.S. Government or its agencies and
instrumentalities and backed by the full faith and credit of the United States
("U.S. Government Securities"), those which are supported by the ability to
borrow from the U.S. Treasury or by the credit of an agency or instrumentality
and those otherwise supported by the U.S. Government. This Fund may invest up
to 35% of its net assets in short-term instruments including bank certificates
of deposit and time deposits, bankers' acceptances and repurchase agreements.
In addition, this Fund may invest up to 35% of its net assets in investment
grade securities including taxable municipal bonds, non-agency mortgage-backed
securities and corporate bonds.
U.S. Government Securities include (i) U.S. Treasury obligations which
differ only in their interest rates, maturities and times of issuance as
follows: U.S. Treasury bills (maturities of one year or less), U.S. Treasury
notes (maturities of one to ten years) and U.S. Treasury bonds (generally
maturities of greater than ten years); and (ii) obligations issued or
guaranteed by U.S. Government agencies and instrumentalities that are backed by
the full faith and credit of the United States; such as securities issued by
the Federal Housing Administration, the Government National Mortgage
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Association ("GNMA"), the Department of Housing and Urban Development, the
Export-Import Bank, the General Services Administration and the Maritime
Administration and certain securities issued by the Farmers Home Administration
and the Small Business Administration.
Securities issued by the GNMA ("GNMA Certificates") differ in certain
respects from other U.S. Government securities, which normally provide for
periodic payment of interest in fixed amounts with principal payments at
maturity or specified call dates. GNMA Certificates are mortgage-backed
securities representing part ownership of a pool of mortgage loans. These
loans, issued by lenders such as mortgage bankers, commercial banks and savings
and loan associations, are either insured by the Federal Housing Administration
or guaranteed by the Veterans Administration. A "pool" or group of such
mortgages is assembled and, after being approved by GNMA, is offered to
investors through securities dealers. Once approved by GNMA, the timely payment
of interest and principal on each mortgage is guaranteed by the full faith and
credit of the United States. GNMA Certificates also differ from other U.S.
Government securities in that principal is paid back monthly by the borrower
over the term of the loan rather than returned in a lump sum at maturity. GNMA
Certificates are called "pass-through" securities because both interest and
principal payments (including prepayments) are passed through to the holder of
the GNMA Certificate.
The U.S. Government Securities Fund may invest in debt or mortgage-backed
securities issued by the Federal National Mortgage Association ("FNMA") and by
the Federal Home Loan Mortgage Corporation ("FHLMC"). FNMA is a federally
chartered, privately-owned corporation that issues mortgage pass-through
securities which are guaranteed as to payment of principal and interest by
FNMA. FHLMC is a corporate instrumentality of the United States and issues
participation certificates which represent an interest in mortgages from
FHLMC's portfolio. FHLMC guarantees the timely payment of interest and the
collection of principal. Securities guaranteed by FNMA and FHLMC are not backed
by the full faith and credit of the U.S. Government.
The U.S. Government Securities Fund may also invest in collateralized
mortgage obligations ("CMOs") issued by U.S. Government agencies. These are
debt obligations collateralized by whole mortgage loans or by portfolios of
mortgage pass-through securities guaranteed by GNMA, FHLMC or FNMA. The U.S.
Government Securities Fund may also invest in ownership interests in pools of
mortgage assets such as FNMA Guaranteed REMIC (real estate mortgage investment
conduits) Pass-through Certificates and FHLMC Multi-Class Mortgage
Participation Certificates. Mortgage pass-through and other mortgage-related
securities are subject to prepayment risk which may adversely affect yields.
Generally, prepayments will increase during a period of falling interest rates.
Although the payment of interest and principal on a portfolio security may
be guaranteed by the U.S. Government or one of its agencies or
instrumentalities, the net asset value of shares of the U.S. Government
Securities Fund will fluctuate in response to interest rate levels. In general,
when interest rates rise, prices of fixed income securities decline. When
interest rates decline, prices of fixed income securities rise.
Descriptions of the short-term money market instruments the U.S.
Government Securities Fund may invest in are contained in the section "Phoenix
Money Market Fund." The quality ratings and maturity restrictions described in
that section also apply to the short-term investments of the U.S. Government
Securities Fund.
INVESTMENT TECHNIQUES AND RELATED RISKS
In addition to the investment policies described above, the Trust may
utilize the following investment practices or techniques.
Repurchase Agreements
Each Fund may invest in repurchase agreements. A repurchase agreement is a
transaction where a Fund buys a security and the seller simultaneously agrees
to buy that same security back at a fixed price and agreed-upon date. The
Adviser reviews the creditworthiness of the other party to the agreement and
must find it satisfactory before engaging in a repurchase agreement.
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. For more information about
repurchase agreements, see the Statement of Additional Information.
Zero Coupon Bonds
The Balanced, Convertible and High Yield Funds may invest in debt
obligations that do not make any interest payments for a specified period of
time prior to maturity or until maturity ("deferred coupon" or "zero coupon"
obligations). Even though interest is not actually paid on these instruments,
for tax purposes the Fund that owns them is imputed with ordinary income. This
imputed income is paid out to shareholders as dividends. These distributions
must be made from a Fund's cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Funds will not be able to purchase
additional income producing securities with the cash used to make such
distributions and its current income ultimately may be reduced as a result. The
value of zero coupon obligations fluctuates more in response to interest rate
changes than does the value of debt obligations that make current interest
payments. See the Statement of Additional Information.
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Securities and Index Options
All Funds, except the Money Market Fund and the U.S. Government Securities
Fund, may write covered call options and purchase call and put options. These
instruments are referred to as "derivatives" as their value is derived from the
value of any underlying security or securities index. Securities and index
options and the related risks are summarized below and are described in more
detail in the Statement of Additional Information.
Writing (Selling) Call Options. The Balanced Fund, Convertible Fund,
Growth Fund, High Yield Fund and the Aggressive Growth Fund may write
exchange-traded covered call options. A call option on a security gives the
purchaser of the option, in return for the premium paid to the writer (seller),
the right to buy the underlying security at the exercise price at any time
during the option period. Upon exercise by the purchaser, the writer of a call
option has the obligation to sell the underlying security at the exercise
price. A call option on a securities index is similar to a call option on an
individual security, except that the value of the option depends on the
weighted value of the group of securities comprising the index and all
settlements are made in cash. A call option may be terminated by the writer
(seller) by entering into a closing purchase transaction in which it purchases
an option of the same series as the option previously written. A call option is
"covered" if a Fund owns the underlying security or has an absolute and
immediate right to acquire that security without additional cash consideration
(or for additional cash consideration held in a pledged account by its
custodian) upon conversion or exchange of other securities held in its
portfolio. A call option written by a Fund is also covered if the Fund holds on
a share-for-share basis a covering call on the same security as the call
written where (i) the exercise price of the covering call held is equal to or
less than the exercise price of the call written or greater than the exercise
price of the call written if the difference is maintained by any asset,
including equity securities and non-investment grade debt so long as the asset
is liquid, unencumbered and marked to market daily in a pledged account with
its custodian, and (ii) the covering call expires at the same time or after the
call written.
The Trustees have limited the value of the total assets of a Fund which
may be subject to call options to 50% of a Fund's total assets. Management
presently intends to cease writing options if, and as long as, 25% of such
total assets are subject to outstanding options contracts, or if required under
regulations of state securities administrators. Call options on securities
indices will be written only to hedge in an economically appropriate way
portfolio securities which are not otherwise hedged with options or financial
futures contracts and will be "covered" by identifying the specific portfolio
securities being hedged.
A Fund will write call options in order to obtain a return on its
investments from the premiums received and will retain the premiums whether or
not the options are exercised. Any decline in the market value of portfolio
securities will be offset to the extent of the premiums received (net of
transaction costs). If an option is exercised, the premium received on the
option will effectively increase the exercise price.
During the option period the writer of a call option has 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. Writing call options also
involves risks relating to a Fund's ability to close out options it has
written.
Purchasing Call and Put Options. A call option is described above. A put
option on a security gives the purchaser of the option, in return for the
premium paid to the writer (seller), the right to sell the underlying security
at the exercise price at any time during the option period. Upon exercise by
the purchaser, the writer of a put option has the obligation to purchase the
underlying security at the exercise price. A put option on a securities index
is similar to a put option on an individual security, except that the value of
the option depends on the weighted value of the group of securities comprising
the index and all settlements are made in cash.
The Balanced Fund, Convertible Fund, Growth Fund, High Yield Fund and the
Aggressive Growth Fund may invest up to 2% of its total assets in
exchange-traded call and put options on securities and securities indices for
the purpose of hedging against changes in the market value of its portfolio
securities. A Fund will invest in call and put options whenever, in the opinion
of its Adviser, a hedging transaction is consistent with the investment
objectives of the Fund. A 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 would
result in a net gain or loss depending on whether the amount received on the
sale is more or less than the premium and other transaction costs paid on the
call or put which is sold.
Purchasing a call or a put option involves the risk that a Fund may lose
the premium it paid plus transaction costs.
Warrants and Stock Rights
Warrants and stock rights are almost identical to call options in their
nature, use and effect except that they are issued by the issuer of the
underlying security rather than an option writer. A Fund may invest up to 5% of
its net assets in warrants or stock rights valued at the lower of cost or
market, but no more than 2% of its net assets may be invested in warrants or
stock rights not listed on the New York Stock Exchange or American Stock
Exchange.
Financial Futures and Related Options
All Funds, except the Money Market Fund and the U.S. Government Securities
Fund, may enter into financial futures contracts and related options. Financial
futures contracts and related options and associated risks are summarized below
and are described in more detail in the Statement of Additional Information.
Financial futures contracts consist of interest rate futures contracts and
securities index futures contracts. An interest
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rate futures contract obligates the seller of the contract to deliver, and the
purchaser to take delivery of, the interest rate securities called for in the
contract at a specified future time and at a specified price. A stock index
assigns relative values to the common stocks included in the index, and the
index fluctuates with changes in the market values of the common stocks so
included. A stock index futures contract is a bilateral agreement pursuant to
which two parties agree to take or make delivery of an amount of cash equal to
a specified dollar amount times the difference between the stock index value at
the close of the last trading day of the contract and the price at which the
futures contract is originally struck. An option on a financial futures
contract gives the purchaser the right to assume a position in the contract (a
long position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the period of the option.
A Fund may purchase and sell financial futures contracts which are traded
on a recognized exchange or board of trade and may purchase exchange or
board-traded put and call options on financial futures contracts as a hedge
against anticipated changes in the market value of its portfolio securities or
securities which it intends to purchase. Hedging is the initiation of a
position in the futures market which is intended as a temporary substitute for
the purchase or sale of the underlying securities in the cash market.
A Fund will engage in transactions in financial futures contracts and
related options only for hedging purposes and not for speculation. In addition,
a Fund will not purchase or sell any financial futures contract or related
option if, immediately thereafter, the sum of the cash or other liquid assets
initially committed with respect to a Fund's existing futures and related
options positions and the premiums paid for related options would exceed 2% of
the market value of the Fund's total assets. At the time of purchase of a
futures contract or a call option on a futures contract, any asset, including
equity securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily, equal to the market value of the
futures contract minus the Fund's initial margin deposit with respect thereto
will be deposited in a pledged account with the Fund's custodian bank to
collateralize fully the position and thereby ensure that it is not leveraged.
The extent to which a Fund may enter into financial futures contracts and
related options may also be limited by requirements of the Internal Revenue
Code for qualification as a regulated investment company.
Engaging in transactions in financial futures contracts involves certain
risks, such as the possibility of an imperfect correlation between futures
market prices and cash market prices and the possibility that the Adviser could
be incorrect in its expectations as to the direction or extent of various
interest rate movements, in which case the Fund's return might have been
greater had hedging not taken place. There is also the risk that a liquid
secondary market may not exist and the loss from investing in futures contracts
is potentially unlimited because the Fund may be unable to close its position.
The risk in purchasing an option on a financial futures contract is that a Fund
will lose the premium it paid. Also, there may be circumstances when the
purchase of an option on a financial futures contract would result in a loss to
a Fund while the purchase or sale of the contract would not have resulted in a
loss. Futures and options may fail as hedging techniques in cases where the
price movements of the securities underlying the options and futures do not
follow the price movements of the portfolio securities subject to the hedge.
Losses relating to futures and options are potentially unlimited.
Foreign Securities
Each of the Funds, except the Money Market Fund and the U.S. Government
Securities Fund, may purchase foreign securities, including emerging market
securities and those issued by foreign branches of U.S. banks. Such investment
in foreign securities will be limited to 25% of the total net asset value of
the Balanced Fund, Convertible Fund and Growth Fund. The High Yield Fund may
invest up to 35% of its total net asset value in foreign securities and the
Aggressive Growth Fund may invest up to 10% of its total net asset value in
foreign securities. The Funds may invest in a broad range of foreign securities
including equity, debt and convertible securities and foreign government
securities. In connection with investments in foreign securities, the Funds may
enter into forward foreign currency exchange contracts for the purpose of
protecting against losses resulting from fluctuations in exchange rates between
the U.S. dollar and a particular foreign currency denominating a security which
the Funds hold or intend to acquire. The Funds will not speculate in forward
foreign currency exchange contracts.
Investing in the securities of foreign companies involves special risks
and considerations not typically associated with investing in U.S. companies.
These include differences in accounting, auditing and financial reporting
standards, generally higher commission rates on foreign portfolio transactions,
the possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations, political instability which could
affect U.S. investments in foreign countries, difficulty in invoking legal
process abroad and potential restrictions on the flow of international capital.
Additionally, dividends payable on foreign securities may be subject to foreign
taxes withheld prior to distribution. Foreign securities often trade with less
frequency and volume than domestic securities and therefore may exhibit greater
price volatility. Changes in foreign exchange rates will affect the value of
those securities which are denominated or quoted in currencies other than the
U.S. dollar. Many of the foreign securities held by the Funds will not be
registered with the Securities and Exchange Commission and many of the issuers
of foreign securities will not be subject to the Commission's reporting
requirements. Accordingly, there may be less publicly available information
about the securities and about the foreign company or government issuing them
than is available about a domestic company or government entity. Moreover,
individual foreign economies may compare favorably or unfavorably with the
United States economy with respect to such factors as rate of growth, rate of
inflation, capital reinvestment, resource self--
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sufficiency and balance of payment positions, and economic trends in foreign
countries may be difficult to assess.
Particular risks are posed by investments in third world countries or
so-called "emerging markets." These securities may be especially volatile based
on relative economic, political and market conditions present in these
countries. The economies of developing countries generally are heavily
dependent upon international trade and, accordingly, have been and may continue
to be adversely affected by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures
imposed or negotiated by the countries with which they trade. These economies
also have been and may continue to be adversely affected by economic conditions
in the countries with which they trade. Certain emerging market countries are
either comparatively undeveloped or are in the process of becoming developed
and may consequently be economically based on a relatively few or closely
interdependent industries. A high proportion of the shares of many emerging
market issuers may also be held by a limited number of large investors trading
significant blocks of securities. While the Adviser will strive to be sensitive
to publicized reversals of economic conditions, political unrest and adverse
changes in trading status, unanticipated political and social developments may
affect the values of a Fund's investments in such countries and the
availability of additional investments in such countries.
The Trust 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 Trust's foreign securities transactions. The use of a
foreign custodian invokes considerations which are not ordinarily associated
with domestic custodians. These considerations include the possibility of
expropriation, restricted access to books and records of the foreign custodian,
inability to recover assets that are lost while under the control of the
foreign custodian, and the impact of political, social or diplomatic
developments.
The Funds will calculate their net asset values and complete orders to
purchase, exchange or redeem shares only on a Monday-Friday basis (excluding
holidays on which the New York Stock Exchange is closed). Foreign securities in
which the Funds may invest may be primarily listed on foreign stock exchanges
which may trade on other days (such as Saturdays). As a result, the net asset
values of the Funds may be affected by such trading on days when a shareholder
has no access to the Funds.
Leverage
The Trust may from time to time increase the Convertible Fund's or the
Aggressive Growth Fund's ownership of securities holdings above the amounts
otherwise possible by borrowing from banks at fixed amounts of interest and
investing the borrowed funds. The Trust will borrow only from banks, and only
if immediately after such borrowing the value of the assets of a Fund
(including the amount borrowed) less its liabilities (not including any
borrowings) is at least three times the amount of funds borrowed for investment
purposes. The effect of this provision is to permit the Trust to borrow up to
25% of the total assets of a Fund, including the proceeds of any such
borrowings. However, the amount of the borrowings will be dependent upon the
availability and cost of credit from time to time. If, due to market
fluctuations or other reasons, the value of such Fund's assets computed as
provided above becomes less than three times the amount of the borrowings for
investment purposes, the Trust, within three business days, is required to
reduce bank debt to the extent necessary to meet the required 300% asset
coverage.
Interest on money borrowed will be an expense of the Fund with respect to
which the borrowing has been made. Because such expense would not otherwise be
incurred, the net investment income of such Fund is not expected to be as high
as it otherwise would be during periods when borrowings for investment purposes
are substantial.
Bank borrowings for investment purposes must be obtained on an unsecured
basis. Any such borrowing must also be made subject to an agreement by the
lender that any recourse is limited to the assets of the Fund with respect to
which the borrowing has been made.
Any investment gains made with the additional monies borrowed in excess of
interest paid will cause the net asset value of a Fund's shares to rise faster
than would otherwise be the case. On the other hand, if the investment
performance of the additional securities purchased fails to cover their cost
(including any interest paid on the monies borrowed) to the Fund, the net asset
value of the Fund will decrease faster than would otherwise be the case.
INVESTMENT RESTRICTIONS
The Trust may not invest more than 25% of the assets of any one Fund in
any one industry, except the Money Market Fund may invest more than 25% of its
assets in the domestic banking industry. If the Trust loans the portfolio
securities of any Fund, the market value of the securities loaned may not
exceed 25% of the market value of the total assets of such Fund. The Trust may
borrow money for any Fund only for temporary administrative purposes, provided
that any such borrowing does not exceed 10% of the market value of the total
assets of the Fund. The Trust may also borrow for investment purposes as
described under "Leverage" above. In order to secure any such borrowing, the
Trust may pledge, mortgage or hypothecate up to 10% of the market value of the
assets of such Fund. With the exception of the Convertible Fund and the
Aggressive Growth Fund, no Fund may invest in portfolio securities while the
amount of borrowing of the Fund exceeds 5% of the total assets of such Fund.
In addition to the investment restrictions described above, each Fund's
investment program is subject to further restrictions which are described in
the Statement of Additional Information. The restrictions for each Fund
described above are fundamental and may not be changed without shareholder
approval.
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MANAGEMENT OF THE FUNDS
The Trust is a mutual fund known as an open-end, diversified investment
company. The Trustees of the Trust ("Trustees") are responsible for the overall
supervision of the Trust and perform the various duties imposed on Trustees by
the 1940 Act and the laws of the Commonwealth of Massachusetts.
The Adviser
The Trust's investment adviser is Phoenix Investment Counsel, Inc. (the
"Adviser"), which is located at 56 Prospect Street, Hartford, Connecticut
06115-0480. All of the outstanding stock of the Adviser is owned by Phoenix
Equity Planning Corporation ("Equity Planning"), a subsidiary of Phoenix Duff &
Phelps Corporation. Prior to November 1, 1995, the Adviser and Equity Planning
were indirect wholly-owned subsidiaries of Phoenix Home Life Mutual Insurance
Company ("Phoenix Home Life") of Hartford, Connecticut. Phoenix Home Life is a
majority shareholder of Phoenix Duff & Phelps Corporation. Phoenix Home Life is
in the business of writing ordinary and group life and health insurance and
annuities. Its principal offices are located at One American Row, Hartford,
Connecticut 06115. Phoenix Duff and Phelps Corporation is a New York Stock
Exchange traded company that provides various financial advisory services to
institutional investors, corporations and individuals through operating
subsidiaries. The Adviser also acts as the investment adviser to other entities
including Phoenix Multi-Portfolio Fund (all portfolios other than the Real
Estate Securities Portfolio), Phoenix Strategic Allocation Fund, Inc., Phoenix
Strategic Equity Series Fund (except the Equity Opportunities Fund), Phoenix
Duff & Phelps Institutional Funds (except Real Estate Equity Securities
Portfolio and Enhanced Reserves Portfolio), Phoenix Growth and Income Fund of
Phoenix Equity Series Fund, Phoenix Investment Trust 97 and The Phoenix Edge
Series Fund (all Series other than the Real Estate Securities Series and
Aberdeen New Asia Series) and as subadviser to the SunAmerica Series Trust,
among other investment advisory clients. As of September 30, 1997, PIC had
approximately $20.2 billion in assets under management. The Adviser was
originally organized in 1932 as John P. Chase, Inc.
The shareholders of each Fund approved the Investment Advisory Agreement
at a shareholder meeting held on November 22, 1993. The Investment Advisory
Agreement provides that for its services to all Funds of the Trust the Adviser
is entitled to a fee, payable monthly, at the following annual rates:
FUND 1st $1 Billion $1-2 Billion $2+ Billion
Growth Fund .70% .65% .60%
Aggressive Growth
Fund .70% .65% .60%
Convertible Fund .65% .60% .55%
High Yield Fund .65% .60% .55%
Balanced Fund .55% .50% .45%
U.S. Government
Securities Fund .45% .40% .35%
Money Market Fund .40% .35% .30%
For its services to all Funds of the Trust during the fiscal year ended
October 31, 1997, the Adviser received a fee of $34,413,328. The Adviser has
agreed to assume expenses and reduce the advisory fee for the benefit of the
Money Market Fund to the extent that operating expenses of that Fund exceed
0.85% for Class A Shares and 1.60% for Class B Shares of the average daily net
asset value of the Fund.
The Portfolio Managers
Balanced Fund
Investment and trading decisions for the Balanced Fund are made by a team
of equity investment professionals and a team of fixed income investment
professionals.
Convertible Fund
Mr. John H. Hamlin has served as Portfolio Manager of the Convertible Fund
since 1992 and as such, Mr. Hamlin is primarily responsible for the day-to-day
management of the Fund's portfolio. Mr. Hamlin is a Portfolio Manager,
Equities, of Phoenix Investment Counsel, Inc. and National Securities &
Research Corporation.
Growth Fund
Investment and trading decisions for the Growth Fund are made by a team of
equity investment professionals.
Aggressive Growth Fund
Mr. William J. Newman serves as Portfolio Manager of the Aggressive Growth
Fund and as such is primarily responsible for the day to day management of the
Fund's investments. Mr. Newman also serves as Portfolio Manager of three of the
series of Phoenix Strategic Equity Series Fund and as Portfolio Manager of Mid
Cap Portfolio of Phoenix Multi-Portfolio Fund. Mr. Newman is Chief Investment
Strategist and Executive Vice President of the Adviser and National Securities
& Research Corporation. Mr. Newman is also a Senior Vice President of the Fund,
and of The Phoenix Edge Series Fund, Phoenix Multi-Portfolio Fund, Phoenix
Income and Growth Fund, Phoenix Strategic Allocation Fund, Inc., Phoenix
Strategic Equity Series Fund, Phoenix Worldwide Opportunities Fund,
Phoenix-Aberdeen Series Fund, and Phoenix Duff & Phelps Institutional Mutual
Funds. Prior to his current position, Mr. Newman was Chief Investment
Strategist and Managing Director of Phoenix Home Life Mutual Insurance Company
from April through November, 1995, Chief Investment Strategist for Kidder
Peabody in New York from May, 1993 to December, 1994, and Managing Director at
Bankers Trust from March, 1991 to May, 1993.
High Yield Fund
Mr. Curtiss O. Barrows has served as Portfolio Manager of the High Yield
Fund since 1985 and, as such, is primarily responsible for the day-to-day
management of the Fund's portfolio. Mr. Barrows is also Vice President and
Portfolio Manager of the Multi-Sector Fixed Income Series of The Phoenix Edge
Series Fund. Mr. Barrows is a Managing Director, Fixed Income, of Phoenix
Investment Counsel, Inc. and National Securities & Research Corporation.
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Money Market Fund
Ms. Julie Sapia is the Portfolio Manager of the Money Market Fund and as
such is primarily responsible for the day-to-day management of the Fund. Ms.
Sapia is also Vice President and Portfolio Manager for The Phoenix Edge Series
Fund, Money Market Series and Phoenix Duff & Phelps Institutional Mutual Funds,
Money Market Portfolio. She is also Vice President of the Phoenix-Aberdeen
Series Fund. From April, 1997 to the present she has been Head Money Market
Trader of PIC; from 1995 to 1997 she served as Money Market Trader of PIC; and
from 1991 to 1995 she served as Money Market Trader for Phoenix Home Life
Mutual Insurance Company.
U.S. Government Securities Fund
Mr. Christopher Saner and Mr. Andrew Szabo have served as Co-Portfolio
Managers of the Phoenix U.S. Government Securities Fund since January, 1998 and
as such are primarily responsible for the day-to-day management of the Fund's
portfolio. Mr. Saner is also a Director, Phoenix Investment Counsel, Inc.
The Financial Agent
Equity Planning also acts as financial agent of the Trust and, as such,
performs administrative, bookkeeping and pricing services and certain other
administrative functions for the Trust. As compensation, Equity Planning is
entitled to a fee, payable monthly and based upon (a) the average of the
aggregate daily net asset values of each Fund, at the following incremental
annual rates:
First $100 million .05 %
$100 million to $300 million .04 %
$300 million through $500 million .03 %
Greater than $500 million .015%
(b) a minimum fee based on the predominant type of assets of the Fund; and (c)
an annual fee of $12,000 for each class of shares beyond one. For its services
during the Trust's fiscal year ended October 31, 1997, Equity Planning received
$1,567,552 or 0.03% of average net assets.
The Custodian and Transfer Agent
The custodian of the assets of the Trust is State Street Bank and Trust
Company, P.O. Box 351, Boston, Massachusetts, 02101. The Trust has authorized
the custodian to appoint one or more subcustodians for the assets of the Trust
held outside the United States. The securities and other assets of each Fund of
the Trust are held by the custodian or any subcustodian separate from the
securities and assets of each other Fund.
Pursuant to a Transfer Agent and Service Agreement with the Phoenix Funds,
Equity Planning acts as transfer agent for the Trust (the "Transfer Agent") for
which it is paid $19.25 for daily dividend accounts and $14.95 for non-daily
dividend shareholder accounts plus out-of-pocket expenses. The Transfer Agent
is authorized to engage sub-agents to perform certain shareholder servicing
functions from time to time for which such agents shall be paid a fee by Equity
Planning.
Brokerage Commissions
Although the Conduct Rules of the National Association of Securities
Dealers, Inc. ("NASD") prohibit its members from seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such Rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Trust. The Adviser may also
select an affiliated broker-dealer to execute transactions for the Trust,
provided that the commissions, fees or other remuneration paid to such
affiliated broker is reasonable and fair as compared to that paid to
non-affiliated brokers for comparable transactions.
DISTRIBUTION PLANS
The offices of Equity Planning, the National Distributor of the Trust's
shares, are located at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. Philip R. McLoughlin is a Trustee and President of the
Trust and a director and officer of Equity Planning. David R. Pepin, a director
and officer of Equity Planning, is an officer of the Trust. Michael E. Haylon,
a director of Equity Planning, is an officer of the Trust. G. Jeffrey Bohne,
Nancy G. Curtiss, William E. Keen, III, William R. Moyer, Leonard J. Saltiel,
and Thomas N. Steenburg are officers of the Trust and officers of Equity
Planning.
Equity Planning and the Trust have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Trust shares sold subject to an initial sales charge and those
sold subject to a contingent deferred sales charge. The Trust has granted
Equity Planning the exclusive right to purchase from the Trust and resell, as
principal, shares needed to fill unconditional orders for Trust shares. Equity
Planning may sell Trust shares through its registered representatives or
through securities dealers with whom it has sales agreements. Equity Planning
may also sell Trust shares pursuant to sales agreements entered into with banks
or bank affiliated securities brokers who, acting as agent for their customers,
place orders for Trust shares with Equity Planning. Although the Glass-Steagall
Act prohibits banks and bank affiliates from engaging in the business of
underwriting, distributing or selling securities (including mutual fund
shares), banking regulators have not indicated that such institutions are
prohibited from purchasing mutual fund shares upon the order and for the
account of their customers. If, because of changes in law or regulations, or
because of new interpretations of existing law, it is determined that agency
transactions of banks or bank affiliated securities brokers are not permitted
under the Glass-Steagall Act, the Trustees will consider what action, if any,
is appropriate. It is not anticipated that termination of sales agreements with
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banks or bank affiliated securities brokers would result in a loss to their
customers or a change in the net asset value per share of a Fund of the Trust.
The sale of Trust shares through a bank or a securities broker affiliated
with a bank is not expected to preclude the Trust from borrowing from such bank
or from availing itself of custodial or transfer agency services offered by
such bank.
The Trustees have adopted separate amended and restated distribution plans
on behalf of all Funds of the Trust (excluding Class A Shares of the Money
Market Fund), pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Class A Plan," the "Class B Plan," the "Class C Plan," the "Class M Plan"
and collectively the "Plans"). The Plans authorize a Fund to reimburse the
Distributor for expenses in connection with the sale and promotion of such
Fund's shares and the furnishing of shareholder services. A 12b-1 fee paid by
one Fund may be used to finance distribution of the shares of another Fund
based on the number of shareholder accounts within the Funds. Pursuant to the
Class B and Class C Plans, a Fund is authorized to reimburse the Distributor
monthly for actual expenses of the Distributor up to 0.75% (0.50% of the Money
Market Fund's Class B Shares) annually for the average daily net assets of each
Fund's Class B and Class C Shares. Under the Class C and Class M Plans, the
Funds may reimburse the Distributor monthly for actual expenses of the
Distributor up to 0.75% and 0.25% annually of the average daily net assets of
the High Yield Fund's Class C and Class M Shares, respectively. In addition,
under the Plans the Funds will pay the Distributor 0.25% annually of the average
daily net assets of the Funds for providing services to shareholders, including
assistance in connection with inquiries related to shareholder accounts (the
"Service Fee").
Expenditures incurred under the Plans may consist of: (i) commissions to
sales personnel for selling shares of the Trust (including underwriting
commissions and finance charges related to the payment of commissions for sales
of Class B Shares); (ii) compensation, sales incentives and payments to sales,
marketing and service personnel; (iii) payments to broker-dealers and other
financial institutions which have entered into agreements with the Distributor
for services rendered in connection with the sale and distribution of shares of
the Trust; (iv) payment of expenses incurred in sales and promotional
activities including advertising expenditures related to the Trust; (v) the
costs of preparing and distributing promotional materials; (vi) the costs of
printing the Trust's Prospectus and Statement of Additional Information for
distribution to potential investors; and (vii) such other similar services that
the Trustees determine are reasonably calculated to result in the sale of
shares of the Trust. From the Service Fee, the Distributor expects to pay a
quarterly fee to qualifying broker-dealer firms, as compensation for providing
personal services and/or the maintenance of shareholder accounts, with respect
to shares sold by such firms. This fee will not exceed on an annual basis 0.25%
of the average annual net asset value of such shares, and will be in addition
to sales charges on Trust shares which are reallowed to such firms. To the
extent that the entire amount of the Service Fee is not paid to such firms, the
balance will serve as compensation for personal and account maintenance
services furnished by the Distributor.
In order to receive payments under the Plans, participants must meet such
qualifications as are to be established in the sole discretion of the
Distributor, such as services to the Trust's shareholders; or services
providing the Trust with more efficient methods of offering shares to groups of
clients, members or prospects of a participant; or services permitting bulking
of purchases or sales, or transmissions of such purchases or sales by
computerized tape or other electronic equipment; or other batch processing.
For the fiscal year ended October 31, 1997, the Trust paid $13,410,632
under the Class A Plan and $1,568,465 under the Class B Plan. The fees were
used to compensate broker-dealers for servicing shareholder's accounts,
including $1,358,415 paid to W.S. Griffith & Co., Inc., an affiliate,
compensating sales personnel and reimbursing the Distributor for commission
expenses and expenses related to preparation of the marketing material. On a
quarterly basis, the Trust's Trustees review a report on expenditures under
each Plan and the purposes for which expenditures were made. The Trustees
conduct an additional more extensive review annually in determining whether
each Plan will be continued. By its terms, continuation of each Plan from year
to year is contingent on annual approval by a majority of the Trust's Trustees
and by a majority of the Trustees who are not "interested persons" (as defined
in the 1940 Act) and who have no direct or indirect financial interest in the
operation of either Plan or any related agreements (the "Plan Trustees"). Each
Plan provides that it may not be amended to increase materially the costs which
the Trust may bear without approval of the applicable class of shareholders of
the Trust and that other material amendments must be approved by a majority of
the Plan Trustees by vote cast in person at a meeting called for the purpose of
considering such amendments. Each Plan further provides that while it is in
effect, the selection and nomination of Trustees who are not "interested
persons" shall be committed to the discretion of the Trustees who are not
"interested persons." Each Plan may be terminated at any time by vote of a
majority of the Plan Trustees or a majority of the applicable class of
outstanding shares of the Trust.
The NASD regards certain distribution fees as asset-based sales charges
subject to NASD sales load limits. The NASD's maximum sales charge rule may
require the Trustees to suspend distribution fees or amend either or both
Plans.
HOW TO BUY SHARES
How do you invest?
You may open a fund account with an initial investment of $500. This
amount is reduced to $25 for investments made under the "Investo-Matic" plan
(see the Funds' Application), individual retirement accounts or under the
systematic exchange privilege described below. The initial investment
requirement is waived for investments made under pension, profit sharing or
employee benefit plans as well as in connection with reinvested dividends and
distributions.
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You may make additional investments at any time with at least $25. The
subsequent investment minimum is waived for investments made under pension,
profit sharing or employee benefit plans as well as in connection with
reinvested dividends and distributions.
An application should be completed to open a new Phoenix Funds account. A
check for the amount you wish to invest, made payable to the "Phoenix Funds,"
(along with the completed application if opening a new account), must be sent
to: Phoenix Funds, c/o State Street Bank and Trust Company ("State Street
Bank"), P.O. Box 8301, Boston, MA 02266-8301. You may also write to the
Distributor at 100 Bright Meadow Boulevard, Enfield, Connecticut 06083-2200 or
call (800) 243-1574.
Shares are sold at the public offering price based on the net asset value
for the class of shares bought next determined after State Street Bank receives
your order. In most cases, in order to receive that day's public offering
price, State Street Bank must receive your order before the close of trading on
the New York Stock Exchange. Shares purchased will be recorded electronically
in book-entry form by the Transfer Agent. No share certificates are available.
See "Net Asset Value."
What are the classes and how do they differ?
The Funds presently offer investors four classes of shares which bear
sales and distribution charges in different amounts. Currently, only the High
Yield Fund offers Class C and M Shares.
Class A Shares. If you buy Class A Shares, you will pay a sales charge at
the time of purchase equal to 4.75% of the offering price (4.99% of the amount
invested). The sales charge may be reduced or waived under certain conditions.
Class A Shares are not subject to any charges by the Funds when they are sold.
Class A Shares have lower Rule 12b-1 fees and pay higher dividends than any
other class.
Class B Shares. If you buy Class B Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class B Shares within the first 5
years after they are bought, you will pay a sales charge of up to 5% of your
shares' value. See "Deferred Sales Charge Alternative--Class B Shares." This
charge declines to zero over a period of 5 years and may be waived under
certain conditions. Class B shares have higher Rule 12b-1 fees and pay lower
dividends than Class A and M Shares. Class B Shares automatically convert to
Class A Shares eight years after purchase. The Distributor intends to limit
investments in Class B Shares to: (a) $250,000 for any person; (b) $1 million
for any unallocated employer sponsored plan; and (c) $250,000 for each
participant in any allocated qualified employer sponsored plan, including
401(k) plans, provided such plan uses an approved participant tracking system.
Class B Shares will not be sold to any qualified employee benefit plan,
endowment fund or foundation if, on the date of the initial investment, such
entity has assets of over $10 million or more than 200 participant employees.
Class B Shares will not be sold to anyone who is over 85 years old.
Class C Shares. If you buy Class C Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class C Shares within the first year
after they are bought, you will pay a sales charge of 1% of your shares' value.
See "Deferred Sales Charge Alternative--Class C Shares." Class C Shares have
the same Rule 12b-1 fees and pay comparable dividends as Class B Shares. Class
C Shares do not convert to any other class of shares of the Fund. Class C
Shares are not currently offered for all Phoenix Funds.
Class M Shares. If you buy Class M Shares, you will pay a sales charge at
the time of purchase equal to 3.50% of the offering price (3.63% of the amount
invested). Class M Shares are not subject to any charges by the Funds when they
are sold. Class M Shares have lower Rule 12b-1 fees and pay higher dividends
than Class B and C Shares. Class M Shares do not convert to any other class of
shares of the Funds. Class M Shares are not currently offered for all Phoenix
Funds.
What arrangement is best for you?
The alternative purchase arrangement permits you to choose the method of
buying shares that is most beneficial to you given the amount of the purchase,
the length of time you expect to hold the shares, whether you wish to receive
distributions in cash or to reinvest them in additional shares, and other
circumstances. You should consider whether, during the anticipated term of your
investment, the accumulated continuing distribution and service fees and
contingent deferred sales charges of one class would be more than the initial
sales charge and accumulated distribution and service fees of another class of
shares bought at the same time. See "Distribution Plans" and "Fund Expenses."
Initial Sales Charge Alternative--Class A and M Shares
The public offering price of Class A and M Shares is the net asset value
plus a sales charge that varies depending on the size of any "person's" (see
"How To Obtain Reduced Initial Sales Charges--Class A and M Shares: Combination
Purchase Privilege") purchase. Shares issued based on the automatic
reinvestment of income dividends or capital gains distributions are not subject
to any sales charges. The sales charge is divided between your investment
dealer and the Distributor as shown on the following tables.
Class A Shares
Sales Charge as
a percentage of
-----------------------
Amount of Net Dealer Discount
Transaction Offering Amount Percentage of
at Offering Price Price Invested Offering Price
- -------------------- ---------- ---------- ----------------
Under $50,000 4.75% 4.99% 4.25%
$50,000 but under
$100,000 4.50 4.71 4.00
$100,000 but under
$250,000 3.50 3.63 3.00
$250,000 but under
$500,000 3.00 3.09 2.75
$500,000 but under
$1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None
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Class M Shares (High Yield Fund Only)
Sales Charge as
a percentage of
-----------------------
Amount of Net Dealer Discount
Transaction Offering Amount Percentage of
at Offering Price Price Invested Offering Price
- ------------------- ---------- ---------- ----------------
Under $50,000 3.50% 3.63% 3.00%
$50,000 but under
$100,000 2.50 2.56 2.00
$100,000 but under
$250,000 1.50 1.52 1.00
$250,000 but under
$500,000 1.00 1.01 1.00
$500,000 or more None None None
Deferred Sales Charge Alternative--
Class B and C Shares
Class B and C Shares are purchased without an initial sales charge;
however, shares sold within a specified time period are subject to a declining
contingent deferred sales charge (the "CDSC") at the rates set forth below. The
charge will be multiplied by the then current market value or the initial cost
of the shares being redeemed, whichever is less. No sales charge will be
imposed on increases in net asset value. In addition, shares issued based on
the automatic reinvestment of income dividends or capital gains distributions
are not subject to any sales charges. To minimize the CDSC, shares not subject
to any charge will be redeemed first, followed by shares held the longest time.
The Distributor will add up all shares bought in any month and use the last day
of the preceding month in calculating the amount of shares owned and time
period held for Class B Shares. The trade date will be used for purposes of
aging Class C Share investments.
Deferred Sales charge you may pay to sell Class B Shares
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
(High Yield Fund Only)
Year 1 2+
- ------ ---- ----
CDSC 1% 0%
Dealer Concessions
In addition to the dealer discount on purchases of Class A and M Shares,
the Distributor intends to pay investment dealers a sales commission of 4% of
the sale price of Class B Shares and a sales commission of 1% of the sale price
of Class C Shares sold by such dealers. Your broker, dealer or investment
adviser may also charge you additional commissions or fees for their services
in selling shares to you provided they notify the Distributor of their
intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of
the Funds and/or for providing other shareholder services. Depending on the
nature of the services, these fees may be paid either from the Funds through
distribution fees, service fees or transfer agent fees or in some cases, the
Distributor may pay certain fees from its own profits and resources. From its
own profits and resources, the Distributor does intend to: (a) sponsor sales
contests, training and educational meetings and provide additional compensation
to qualifying dealers in the form of trips, merchandise or expense
reimbursements; (b) from time to time pay special incentive and retention fees
to qualified wholesalers, registered financial institutions and third party
marketers; (c) pay broker/dealers an amount equal to 1% of the first $3 million
of Class A Share purchases by an account held in the name of a qualified
employee benefit plan with at least 100 eligible employees, 0.50% on the next
$3 million, plus 0.25% on the amount in excess of $6 million; and (d) excluding
purchases as described in (c) above, pay broker/dealers an amount equal to 1%
of the amount of Class A Shares sold above $1 million but under $3 million,
0.50% on the next $3 million, plus 0.25% on the amount in excess of $6 million.
If part or all of such investment, including investments by qualified employee
benefit plans, is subsequently redeemed within one year of the investment date,
the broker-dealer will refund to the Distributor such amounts paid with respect
to the investment. In addition, the Distributor may pay the entire applicable
sales charge on purchases of Class A Shares to selected dealers and agents. Any
dealer who receives more than 90% of a sales charge may be deemed to be an
"underwriter" under the Securities Act of 1933.
How To Obtain Reduced Initial Sales Charges--Class A and M Shares
Investors choosing Class A or M Shares may be entitled to reduced sales
charges. The five ways in which sales charges may be avoided or reduced are
described below.
Qualified Purchasers. If you fall within any one of the following
categories, you will not have to pay a sales charge on your purchase of Class A
or M Shares: (1) trustee, director or officer of the Phoenix Funds, 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; (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
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shares from an established Phoenix Fund, Phoenix-Engemann Fund or
Phoenix-Seneca Fund qualified plan; (11) any Phoenix Home Life separate account
which funds group annuity contracts offered to qualified employee benefit
plans; (12) any state, county, city, department, authority or similar agency
prohibited by law from paying a sales charge; (13) any fully matriculated
student in any U.S. service academy; (14) any unallocated account held by a
third party administrator, registered investment adviser, trust company, or
bank trust department which exercises discretionary authority and holds the
account in a fiduciary, agency, custodial or similar capacity, if in the
aggregate such accounts held by such entity equal or exceed $1,000,000; (15)
any person who is investing redemption proceeds from investment companies other
than the Phoenix Funds, Phoenix-Engemann Fund or Phoenix-Seneca Fund if, in
connection with the purchases or redemption of the redeemed shares, the
investor paid a prior sales charge provided such investor supplies verification
that the redemption occurred within 90 days of the Phoenix Fund purchase and
that a sales charge was paid; (16) any deferred compensation plan established
for the benefit of any Phoenix Fund, Phoenix-Engemann Fund or Phoenix-Seneca
Fund trustee or director; provided that sales to persons listed in (1) through
(15) above are made upon the written assurance of the purchaser that the
purchase is made for investment purposes and that the shares so acquired will
not be resold except to the Fund; (17) purchasers of Class A or M Shares bought
through investment 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; or (19) clients of investment advisors or financial
planners who buy shares for their own accounts but only if their accounts are
linked to a master account of their investment advisor or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of the investors
described in (17) through (19) may be charged a fee by the broker, agent or
financial intermediary for purchasing shares).
Combination Purchase Privilege. Your purchase of any class of shares of
this or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 403(b)
plans for the same employer; (d) multiple accounts (up to 200) under a
qualified employee benefit plan or administered by a third party administrator;
or (e) trust companies, bank trust departments, registered investment advisers,
and similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority
and which are held in a fiduciary, agency, custodial or similar capacity,
provided all shares are held of record in the name, or nominee name, of the
entity placing the order.
An "Affiliated Phoenix Fund" means any other mutual fund advised,
subadvised or distributed by the Adviser or Distributor or any corporate
affiliate of either or both the Adviser and Distributor provided such other
mutual fund extends reciprocal privileges to shareholders of the Phoenix Funds.
Letter of Intent. If you sign a Letter of Intent, your purchase of any
class of shares of this or any other Affiliated Phoenix Fund (other than
Phoenix Money Market Fund Series Class A Shares), if made by the same person
within a thirteen month period, will be added together to determine whether you
are entitled to an immediate reduction in sales charges. Sales charges are
reduced based on the overall amount you indicate that you will buy under the
Letter of Intent. The Letter of Intent is a mutually non-binding arrangement
between you and the Distributor. Since the Distributor doesn't know whether you
will ultimately fulfill the Letter of Intent, shares worth 5% of the amount of
each purchase will be set aside until you fulfill the Letter of Intent. When
you buy enough shares to fulfill the Letter of Intent, these shares will no
longer be restricted. If, on the other hand, you do not satisfy the Letter of
Intent, or otherwise wish to sell any restricted shares, you will be given the
choice of either buying enough shares to fulfill the Letter of Intent or paying
the difference between any sales charge you previously paid and the otherwise
applicable sales charge based on the intended aggregate purchases described in
the Letter of Intent. You will be given 20 days to make this decision. If you
do not exercise either election, the Distributor will automatically redeem the
number of your restricted shares needed to make up the deficiency in sales
charges received. The Distributor will redeem restricted Class A or M Shares
before Class C or B Shares, respectively. Oldest shares will be redeemed before
selling newer shares. Any remaining shares will then be deposited to your
account.
Right of Accumulation. Your purchase of any class of shares of this or any
other Affiliated Phoenix Fund, if made over time by the same person may be
added together to determine whether the combined sum entitles you to a
prospective reduction in sales charges. You must provide certain account
information to the Distributor to exercise this right.
Associations. Certain groups or associations may be treated as a "person"
and qualify for reduced Class A Share sales charges. The group or association
must: (1) have been in
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existence for at least six months; (2) have a legitimate purpose other than to
purchase mutual fund shares at a reduced sales charge; (3) work through an
investment dealer; or (4) not be a group whose sole reason for existing is to
consist of members who are credit card holders of a particular company,
policyholders of an insurance company, customers of a bank or a broker-dealer
or clients of an investment adviser.
How To Obtain Reduced Deferred Sales Charges--
Class B and C Shares
The CDSC is waived on the redemption (sale) of Class B and C Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section
72(m)(7); (c) as a mandatory distribution upon reaching age 701/2 under any
retirement plan qualified under Code Sections 401, 408 or 403(b) or resulting
from the tax-free return of an excess contribution to an IRA; (d) by 401(k)
plans using an approved participant tracking system for participant hardships,
death, disability or normal retirement, and loans which are subsequently
repaid; (e) based on the exercise of exchange privileges among Class B and C
Shares of this or any other Affiliated Phoenix Fund; (f) based on any direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into an Affiliated Phoenix Fund IRA by participants terminating
from the qualified plan; and (g) based on the systematic withdrawal program
(Class B Shares only). If, as described in condition (a) above, an account is
transferred to an account registered in the name of a deceased's estate, the
CDSC will be waived on any redemption from the estate account occurring within
one year of the death. If the Class B or C Shares are not redeemed within one
year of the death, they will remain subject to the applicable CDSC.
Conversion Feature--Class B Shares
Class B Shares will automatically convert to Class A Shares of the same
Fund eight years after they are bought. Conversion will be on the basis of the
then prevailing net asset value of Class A and B Shares. There is no sales
load, fee or other charge for this feature. Class B Shares acquired through
dividend or distribution reinvestments will be converted into Class A Shares at
the same time that other Class B Shares are converted based on the proportion
that the reinvested shares bear to purchased Class B Shares. The conversion
feature is subject to the continuing availability of an opinion of counsel or a
ruling of the Internal Revenue Service that the assessment of the higher
distribution fees and associated costs with respect to Class B Shares does not
result in any dividends or distributions constituting "preferential dividends"
under the Code, and that the conversion of shares does not constitute a taxable
event under federal income tax law. If the conversion feature is suspended,
Class B Shares would continue to be subject to the higher distribution fee for
an indefinite period. Even if the Funds were unable to obtain such assurances,
it might continue to make distributions if doing so would assist in complying
with its general practice of distributing sufficient income to reduce or
eliminate federal taxes otherwise payable by the Funds.
INVESTOR ACCOUNT SERVICES
The Funds mail periodic statements and reports to shareholders. In order
to reduce the volume and cost of mailings, to the extent possible, only one
copy of most Fund reports will be mailed to households for multiple accounts
with the same surname at the same household address. Please contact Equity
Planning to request additional copies of shareholder reports toll free at (800)
243-4361.
In most cases, changes to any shareholder account may be accomplished by
calling Shareholder Services at (800) 243-1574. More information relating to
the shareholder account services can be found in the Funds' Statement of
Additional Information ("SAI").
Bank Draft Investing Program (Investo-Matic Plan). By completing the
Investo-Matic Section of the New Account Application, you may authorize the
bank named in the form to draw $25 or more from your personal checking or
savings account to be used to purchase additional shares for your account. The
amount you designate will be made available, in form payable to the order of
the Transfer Agent, by the bank on the date the bank draws on your account and
will be used to purchase shares at the applicable offering price.
Distribution Option. Each Fund currently declares all income dividends and
all capital gain distributions, if any, payable in shares of the Fund at net
asset value or, at your option, in cash. By exercising the distribution option,
you may elect to: (1) receive both dividends and capital gain distributions in
additional shares or (2) receive dividends in cash and capital gain
distributions in additional shares or (3) receive both dividends and capital
gain distributions in cash. If you elect to receive dividends and/or
distributions in cash and the check cannot be delivered or remains uncashed due
to an invalid address, then the dividend and/or distribution will be reinvested
after the Transfer Agent has been informed that the proceeds are undeliverable.
Additional shares will be purchased in your account at the then current net
asset value. Dividends and capital gain distributions received in shares are
taxable to you and credited to your account in full and fractional shares
computed at the closing net asset value on the next business day after the
record date. No interest will accrue on amounts represented by uncashed
distribution or redemption checks.
Systematic Withdrawal Program. The Systematic Withdrawal Program allows
you to periodically redeem a portion of your account on a predetermined
monthly, quarterly, semiannual or annual basis. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the month
at the closing net
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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 Series worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. Participants
in the Program redeeming Class C Shares will be subject to any applicable
contingent deferred sales charge. The purchase of shares while participating in
the withdrawal program will ordinarily be disadvantageous to the Class A or M
Shares investor since a sales charge will be paid by the investor on the
purchase of Class A or M Shares at the same time as other shares are being
redeemed. For this reason, investors in Class A or M Shares may not participate
in an automatic investment program while participating in the Systematic
Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any
applicable contingent deferred sales charge on all shares redeemed.
Accordingly, the purchase of Class B Shares will generally not be suitable for
an investor who anticipates withdrawing sums in excess of the above limits
shortly after purchase.
Tax Sheltered Retirement Plans. Shares of the Funds are offered in
connection with the following qualified prototype retirement plans: IRA,
Rollover IRA, SEP-IRA, SIMPLE IRA, SIMPLE 401(k), Profit-Sharing and Money
Purchase Pension Plans which can be adopted by self-employed persons ("Keogh")
and by corporations and 403(b) Retirement Plans. Write or call Equity Planning
at (800) 243-4361 for further information about the plans.
Exchange Privileges
You may exchange shares of one Phoenix Fund (except for Class A Shares of
the Money Market Fund) for shares of another Phoenix Fund or any other
Affiliated Phoenix Fund without paying any fees or sales charges. On exchanges
with share classes that carry a contingent deferred sales charge, the CDSC
schedule of the original shares purchased continues to apply. Shares held in
book-entry form may be exchanged for shares of the same class of other Phoenix
Funds or any other Affiliated Phoenix Fund, provided the following conditions
are met: (1) the shares that will be acquired in the exchange (the "Acquired
Shares") are available for sale; (2) the Acquired Shares are the same class as
the shares to be surrendered (the "Exchanged Shares"); (3) the Acquired Shares
will be registered to the same shareholder account as the Exchanged Shares; (4)
the account value of the Fund whose shares are to be acquired must equal or
exceed the minimum initial investment amount required by that Fund after the
exchange is made; and (5) if you have elected not to use the telephone exchange
privilege (see below), a properly executed exchange request must be received by
the Distributor. Exchanges may be made over the telephone or in writing and may
be made at one time or systematically over a period of time. Note, each Fund
has different investment objectives and policies. You should read the
prospectus of the Phoenix Fund or any other Affiliated Phoenix Fund into which
the exchange is to be made before making any exchanges. This privilege may be
modified or terminated at any time on 60 days' notice.
Market Timer Restrictions. Because excessive trading can hurt Fund
performance and harm shareholders, the Funds reserve the right to temporarily
or permanently terminate exchange privileges or reject any specific order from
anyone whose transactions seem to follow a timing pattern, including those who
request more than one exchange out of a fund within any 30 day period. The
Distributor has entered into agreements with certain market timer entities
permitting them to exchange their clients' shares by telephone. These
privileges are limited under those agreements. The Distributor has the right to
reject or suspend these privileges upon reasonable notice.
Telephone Exchanges. If permitted in your state and unless you waive this
privilege in writing, you or your broker may sell or exchange your shares over
the phone by calling the Distributor at (800) 243-1574. Reasonable procedures
will be used to confirm that telephone instructions are genuine. In addition to
requiring that the exchange is only made between accounts with identical
registrations, the Distributor may require address or other forms of
identification and will record telephone instructions. All exchanges will be
confirmed in writing to you. If procedures reasonably designed to prevent
unauthorized telephone exchanges are not followed, the Trust and/or Distributor
may be liable for following telephone instructions that prove to be fraudulent.
Broker/dealers other than the Distributor assume the risk of any loss resulting
from any unauthorized telephone exchange instructions from their firm or their
registered representatives. You assume the risk if the Distributor acts upon
unauthorized instructions it reasonably believes to be genuine. During times of
severe economic or market changes, this privilege may be difficult to exercise
or may be temporarily suspended. In such event, an exchange may be effected by
written request by the registered shareowner(s).
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close
of trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The net asset value per share of a Fund is
determined by adding the values of all securities and other assets of the Fund,
subtracting liabilities, and dividing by the total number of outstanding shares
of the Fund. The total liability allocated to a class, plus that class's
distribution fee and any other
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expenses allocated solely to that class, are deducted from the proportionate
interest of such class in the assets of the Fund, and the resulting amount of
each is divided by the number of shares of that class outstanding to produce
the net asset value per share.
The Funds' investments are valued at market value or, where market
quotations are not available, at fair value as determined in good faith by the
Trustees or their delegates. The assets of the Money Market Fund are valued on
an amortized cost basis absent extraordinary or unusual market conditions.
Foreign and domestic debt securities (other than short-term investments) are
valued on the basis of broker quotations or valuations provided by a pricing
service approved by the Trustees when such prices are believed to reflect the
fair value of such securities. Foreign and domestic equity securities are
valued at the last sale price or, if there has been no sale that day, at the
last bid price, generally. Short-term investments having a remaining maturity
of less than sixty-one days are valued at amortized cost, which the Trustees
have determined approximates market value. For further information about
security valuations, see the Statement of Additional Information.
HOW TO REDEEM SHARES
You have the right to have the Trust buy back shares at the net asset
value next determined after receipt of a redemption order, and any other
required documentation in proper form, by Phoenix Funds c/o State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. In the case of a Class
B or C Share redemption, you will be subject to the applicable deferred sales
charge, if any, for such shares (see "Deferred Sales Charge Alternative--Class
B and C Shares," above). Subject to certain restrictions, shares may be
redeemed by telephone or in writing. In addition, shares may be sold through
securities dealers, brokers or agents who may charge customary commissions or
fees for their services. The Funds do not charge any redemption fees. Payment
for shares redeemed is made within seven days, provided that redemption
proceeds will not be disbursed until each check used for purchases of shares
has been cleared for payment by your bank, which may take up to 15 days after
receipt of the check.
The requirements to redeem shares are outlined in the table below.
Additional documentation may be required for redemptions by corporations,
partnerships or other organizations, executors, administrators, trustees,
custodians, guardians, or from IRA's or other retirement plans, or if
redemption is requested by anyone but the shareholder(s) of record. To avoid
delay in redemption or transfer, shareholders having questions about specific
requirements should contact the Funds at (800) 243-1574. Redemption requests
will not be honored until all required documents in proper form have been
received.
How can I sell my Shares?
[TELEPHONE] [bullet] Sales up to $50,000
By Phone [bullet] Not available on most retirement accounts
(800) 243-1574 [bullet] Requests received after 4PM will be
executed on the following business day
[ENVELOPE] [bullet] Letter of instruction from the registered
In Writing owner including the fund and account
number and the number of shares or dollar
amount you wish to sell
[bullet] No signature guarantee is required if your
shares are registered individually, jointly,
or as custodian under the Uniform Gifts to
Minors Act or Uniform Transfers to Minors
Act, the proceeds of the redemption do not
exceed $50,000, and the proceeds are
payable to the registered owner(s) at the
address of record
[CHECK WRITING] [bullet] Select checkwriting on your New Account
By Check Application
[bullet] High Yield Fund, Money Market Fund and
U.S. Government Securities Fund only
[bullet] $500 or more per check
[bullet] Cannot be used to close an account
Shares previously issued in certificate form cannot be redeemed until the
certificated shares have been deposited to your account.
Telephone Redemptions
The Trust and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. Address and bank account
information will be verified, telephone redemption instructions will be
recorded on tape, and all redemptions will be confirmed in writing to you. If
there has been an address change within the past 60 days, a telephone
redemption will not be authorized. To the extent that procedures reasonably
designed to prevent unauthorized telephone redemptions are not followed, the
Trust and/or the Transfer Agent may be liable for following telephone
instructions for redemption transactions that prove to be fraudulent.
Broker/dealers other than Equity Planning have agreed to bear the risk of any
loss resulting from any unauthorized telephone redemption instruction from the
firm or its registered representatives. However, you would bear the risk of
loss resulting from instructions entered by an unauthorized third party that
the Trust and/or the Transfer Agent reasonably believe to be genuine. The
Telephone Redemption Privilege may be modified or terminated at any time on 60
days' notice to shareholders. In addition, during times of drastic economic or
market changes, the Telephone Redemption Privilege may be difficult to exercise
or may be temporarily suspended. In such event, a redemption may be effected by
written request by following the procedure outlined above.
Written Redemptions
If you elect not to use the telephone redemption or telephone exchange
privileges, you must submit your request in writing. If the shares are being
exchanged between accounts that are
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not identically registered, the signature on such request must be guaranteed by
an eligible guarantor institution as defined by the Transfer Agent in
accordance with its signature guarantee procedures. Currently, such procedures
generally permit guarantees by banks, broker dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies and
savings associations.
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 Funds at the beginning
of such period. This election has been made pursuant to Rule 18f-1 under the
Investment Company Act of 1940 Act and is irrevocable while the Rule is in
effect unless the Securities and Exchange Commission, by order, permits the
withdrawal thereof. In case of a redemption in kind, securities delivered in
payment for shares would be readily marketable and valued at the same value
assigned to them in computing the net asset value per share of the Funds. A
shareholder receiving such securities would incur brokerage costs when he sold
the securities.
Account Reinstatement Privilege
You have a one time privilege of using redemption proceeds from Class A,
B, C and M Shares to purchase Class A Shares of any Phoenix Fund or any other
Affiliated Phoenix Fund with no sales charge (at net asset value next
determined after the request for reinvestment is made). For Federal income tax
purposes, a redemption and reinvestment will be treated as a sale and purchase
of shares. Special rules may apply in computing the amount of gain or loss in
these situations. (See "Dividends, Distributions and Taxes" for information on
the Federal income tax treatment of a disposition of shares.) A written request
to reinstate your account must be received by the Transfer Agent within 180
days of the redemption, accompanied by payment for the shares (not in excess of
the redemption value). Class B shareholders who have had the contingent
deferred sales charge waived through participation in the Systematic Withdrawal
Program are not eligible to use the Reinstatement Privilege.
Redemption of Small Accounts
Due to the relatively high cost of maintaining small accounts, the Funds
reserve the right to redeem, at net asset value, the shares of any shareholder
whose account has a value, due to redemptions, of less than $200. Before the
Funds redeem these shares, the shareholder will be given notice that the value
of the shares in the account is less than the minimum amount and will be
allowed 60 days to make an additional investment in an amount which will
increase the value of the account to at least $200.
DIVIDENDS, DISTRIBUTIONS AND TAXES
All dividends and distributions with respect to the shares of any class of
any Fund will be payable in shares of such class of the Fund at net asset value
or, at the option of the shareholder, in cash. Any shareholder who purchases
shares of a Fund prior to the close of business on the record date for a
dividend or distribution will be entitled to receive such dividend or
distribution. Dividends and distributions (whether received in shares or in
cash) are treated either as ordinary income or long-term capital gains for
Federal income tax purposes.
The Balanced Fund and the Convertible Fund each will distribute its net
investment income to its shareholders on a quarterly basis and net realized
capital gains, if any, to its shareholders on an annual basis.
The Growth Fund and the Aggressive Growth Fund each will distribute its
net investment income semi-annually and net realized capital gains, if any, at
least annually.
The High Yield Fund, and the U.S. Government Securities Fund each will
distribute its net investment income to its shareholders on a monthly basis and
net realized capital gains, if any, to its shareholders on an annual basis.
The net income of the Money Market Fund will be declared as dividends
daily. Dividends will be invested or distributed in cash monthly. The net
income of the Money Market Fund for Saturdays, Sundays and other days on which
the New York Stock Exchange is closed will be declared as dividends on the next
business day. Each Fund is treated as a separate entity for Federal income tax
purposes. Each Fund intends to qualify and elect to be taxed as a "regulated
investment company" under the provisions of Subchapter M of the Internal
Revenue Code, as amended (the "Code") and the Trustees believe that each Fund
so qualified for the last taxable year. Because each Fund intends to distribute
all of its net investment income and net capital gains to shareholders in
accordance with the timing requirements imposed by the Code, it is not expected
that the Funds will be required to pay any federal income or excise taxes.
Distributions, whether received by shareholders in shares or in cash, will
be taxable to them as income or capital gains. Distributions of net realized
long-term capital gains, if designated as such by a Fund, are taxable to
shareholders as long-term capital gains, regardless of how long they have owned
shares in the Fund. Shareholders who are not subject to tax on their income
will not be required to pay tax on amounts distributed to them. Written notices
will be sent to shareholders following the end of each calendar year regarding
the tax status of all distributions made during each taxable year.
The foregoing is only a summary of some of the important tax
considerations generally affecting the Funds and their shareholders.
Shareholders should consult competent tax advisers regarding specific tax
situations.
ADDITIONAL INFORMATION
Organization of the Trust
The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest. The Trust
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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. Regular shareholder meetings are held every third
calendar year for the purpose of electing the Trustees. In addition, the
Trustees will call a meeting when at least 10% of the outstanding shares so
request in writing. If the Trustees fail to call a meeting after being so
notified, the Shareholders may call the meeting. The Trustees will assist the
Shareholders by identifying other shareholders or mailing communications, as
required under Section 16(c) of the 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 and that every written agreement, undertaking or
obligation made or issued by the Trust shall contain a provision to that
effect. The Declaration of Trust provides for indemnification out of the Trust
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability, which is considered remote,
is limited to circumstances in which the Trust itself would be unable to meet
its obligations.
Additional Inquiries
Inquiries and requests for the Statement of Additional Information, the
Annual Report to Shareholders and the Semi-Annual Report to Shareholders should
be directed to Equity Planning at (800) 243-4361 or 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200.
APPENDIX
A-1 and P-1 Commercial Paper Ratings
The Money Market Fund will only invest in commercial paper which at the
date of investment is rated A-1 by Standard & Poor's Corporation or P-1 by
Moody's Investors Services, Inc., or, if not rated, is issued or guaranteed by
companies which at the date of investment have an outstanding debt issue rated
AA or higher by Standard & Poor's or Aa or higher by Moody's.
Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P") has
the following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and
cash flow have an upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well established and the issuer has a
strong position within the industry. The reliability and quality of management
are unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Services, Inc. ("Moody's"). Among the factors considered by Moody's
in assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationship which exists with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
Moody's Investors Service, Inc., Corporate Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper
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medium grade obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a susceptibility
to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Standard and Poor's Corporation's Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
BB-B-CCC-CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
35
<PAGE>
BACKUP WITHHOLDING INFORMATION
Step 1. Please make sure that the social security number or taxpayer
identification number (TIN) which appears on the Application complies
with the following guidelines:
Account Type Give Social Security Number or Tax Identification Number
of:
<TABLE>
<S> <C>
Individual Individual
Joint (or Joint Tenant) Owner who will be paying tax
Uniform Gifts to Minors Minor
Legal Guardian Ward, Minor or Incompetent
Sole Proprietor Owner of Business (also provide owner's name)
Trust, Estate, Pension Plan Trust Trust, Estate, Pension Plan Trust (not personal TIN of fiduciary)
Corporation, Partnership,
Other Organization Corporation, Partnership, Other Organization
Broker/Nominee Broker/Nominee
</TABLE>
Step 2. If you do not have a TIN, you must obtain Form SS-5 (Application for
Social Security Number) or Form SS-4 (Application for Employer
Identification Number) from your local Social Security or IRS office and
apply for one. Write "Applied For" in the space on the application.
Step 3. If you are one of the entities listed below, you are exempt from
backup withholding.
[bullet] A corporation
[bullet] Financial institution
[bullet] Section 501(a) exempt organization (IRA, Corporate Retirement
Plan, 403(b), Keogh)
[bullet] United States or any agency or instrumentality thereof
[bullet] A State, the District of Columbia, a possession of the United
States, or any subdivision or instrumentality thereof
[bullet] International organization or any agency or instrumentality
thereof
[bullet] Registered dealer in securities or commodities registered in
the U.S. or a possession of the U.S.
[bullet] Real estate investment trust
[bullet] Common trust fund operated by a bank under section 584(a)
[bullet] An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1)
[bullet] Regulated Investment Company
If you are in doubt as to whether you are exempt, please contact the Internal
Revenue Service.
Step 4. IRS Penalties--If you do not supply us with your TIN, you will be
subject to an IRS $50 penalty unless your failure is due to reasonable
cause and not willful neglect. If you fail to report interest, dividend
or patronage dividend income on your federal income tax return, you will
be treated as negligent and subject to an IRS 5% penalty tax on any
resulting underpayment of tax unless there is clear and convincing
evidence to the contrary. If you falsify information on this form or
make any other false statement resulting in no backup withholding on an
account which should be subject to a backup withholding, you may be
subject to an IRS $500 penalty and certain criminal penalties including
fines and imprisonment.
- -----------
This Prospectus sets forth concisely the information about the Phoenix Series
Fund (the "Trust") which you should know before investing. Please read it
carefully and retain it for future reference.
The Trust has filed with the Securities and Exchange Commission a Statement of
Additional Information, dated February 27, 1998. The Statement contains more
detailed information about the Trust and is incorporated into this Prospectus
by reference. You may obtain a free copy of the Statement by writing the Trust
c/o Phoenix Equity Planning Corporation, 100 Bright Meadow, P.O. Box 2200,
Enfield, Connecticut 06083-2200.
Financial information relating to the Trust is contained in the Annual Report
to Shareholders for the year ended October 31, 1997 and is incorporated into
the Statement of Additional Information by reference.
[RECYCLE LOGO] Printed on recycled paper using soybean ink
<PAGE>
<PAGE>
[BACK COVER]
Phoenix Series Fund | BULK RATE MAIL |
PO Box 2200 | U.S. POSTAGE |
Enfield CT 06083-2200 | PAID |
| SPRINGFIELD, MA |
| PERMIT NO. 444 |
[LOGOTYPE] PHOENIX
DUFF & PHELPS
PDP 393 (2/98)
<PAGE>
PHOENIX SERIES FUND
101 Munson Street
Greenfield, Massachusetts 01301
Statement of Additional Information
February 27, 1998
This Statement of Additional Information is not the Prospectus but expands
upon and supplements the information contained in the current Prospectus of
Phoenix Series Fund (the "Trust"), dated February 27, 1998 and should be read
in conjunction with it. The Trust's Prospectus may be obtained by calling
Phoenix Equity Planning Corporation ("Equity Planning") at (800) 243-4361, or
by writing to Phoenix Funds c/o State Street Bank and Trust Company, P.O. Box
8301, Boston, MA 02266-8301.
TABLE OF CONTENTS*
PAGE
INVESTMENT POLICIES ..................................................... 1
INVESTMENT RESTRICTIONS ............................................... 7
PERFORMANCE INFORMATION ............................................... 8
PERFORMANCE COMPARISONS ............................................... 10
PORTFOLIO TURNOVER ..................................................... 10
PORTFOLIO TRANSACTIONS AND BROKERAGE ................................... 10
THE INVESTMENT ADVISER .................................................. 11
NET ASSET VALUE ........................................................ 13
HOW TO BUY SHARES ..................................................... 14
ALTERNATIVE PURCHASE ARRANGEMENTS ...................................... 14
Purchases of Shares of the Money Market Fund .......................... 15
INVESTOR ACCOUNT SERVICES ............................................... 15
HOW TO REDEEM SHARES .................................................. 16
TAX-SHELTERED RETIREMENT PLANS ......................................... 17
DIVIDENDS, DISTRIBUTIONS AND TAXES ...................................... 17
THE DISTRIBUTOR AND DISTRIBUTION PLANS ................................ 18
MANAGEMENT OF THE TRUST ............................................... 20
OTHER INFORMATION ..................................................... 28
Customer Service: (800) 243-1574
Sales Information: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunication Device TTY: (800) 243-1926
PDP427B (2/98)
<PAGE>
INVESTMENT POLICIES
The investment objectives and policies of each Fund are described in the
"Investment Objectives and Policies" section of the Prospectus. The following
specific policies supplement the information contained in that section of the
Prospectus.
Money Market Instruments. Certain money market instruments used
extensively by the Money Market Fund, and to a lesser extent by the other
Funds, are described below.
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 Trust
maintained in a central depository of book-entry system or by physical delivery
of the securities to the Trust'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.
Certificates of Deposit. Certificates of deposit are generally short-term,
interest-bearing negotiable certificates issued by banks or savings and loan
associations against funds deposited in the issuing institution.
Time Deposits. Time deposits are deposits in a bank or other financial
institution for a specified period of time at a fixed interest rate for which a
negotiable certificate is not received.
Banker's Acceptances. A bankers' acceptance is a time draft drawn on a
commercial bank by a borrower usually in connection with an international
commercial transaction (to finance the import, export, transfer or storage of
goods). The borrower, as well as the bank, is liable for payment, and the bank
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most acceptances have maturities of six months or less and are traded in
secondary markets prior to maturity.
Commercial Paper. Commercial paper refers to short-term, unsecured
promissory notes issued by corporations to finance short-term credit needs.
Commercial paper is usually sold on a discount basis and has a maturity at the
time of issuance not exceeding nine months.
Corporate Debt Securities. Corporate debt securities with a remaining
maturity of less than one year tend to become extremely liquid and are traded
as money market securities.
U.S. Government Obligations. Securities issued or guaranteed as to
principal and interest by the United States Government include a variety of
Treasury securities, which differ only in their interest rates, maturities, and
times of issuance. Treasury bills have maturities of one year or less. Treasury
notes have maturities of one to ten years, and Treasury bonds generally have
maturities of greater than ten years.
Agencies of the United States Government which issue or guarantee
obligations include, among others, Export-Import Banks of the United States,
Farmers Home Administration, Federal Housing Administration, Government
National Mortgage Association, Maritime Administration, Small Business
Administration and The Tennessee Valley Authority. Obligations of
instrumentalities of the United States Government include securities issued or
guaranteed by, among others, the Federal National Mortgage Association, Federal
Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal Intermediate
Credit Banks, Banks for Cooperatives, and the U.S. Postal Service. Some of
these securities are supported by the full faith and credit of the U.S.
Government; others are supported by the right of the issuer to borrow from the
Treasury, while still others are supported only by the credit of the
instrumentality. The U.S. Government Securities Series will invest primarily in
securities which are supported by the full faith and credit of the U.S.
Government.
Securities and Index Options. All Funds, except the Money Market Fund and
U.S. Government Securities Fund, may write covered call options and purchase
call and put options. Options and the related risks are summarized below.
Writing and Purchasing Options. 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.
Call options written by a Fund normally will have expiration dates between
three and nine months from the date written. During the option period a Fund
may be assigned an exercise notice by the broker-dealer through which the call
option was sold, requiring the Fund to deliver
1
<PAGE>
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 the Fund effects a
closing purchase transaction. A closing purchase transaction cannot be effected
with respect to an option once the Fund has received an exercise notice.
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. A 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.
A 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, a Fund will realize a gain
in the amount of the premium on the option less the commission paid.
The option activities of a Fund may increase its portfolio turnover rate
and the amount of brokerage commissions paid. A Fund will pay a commission each
time it purchases or sells a security in connection with the exercise of an
option. These commissions may be higher than those which would apply to
purchases and sales of securities directly.
Limitations on Options. A Fund may write call options only if they are
covered and if they remain covered so long as a Fund is obligated as a writer.
If a Fund writes a call option on an individual security, a Fund will own the
underlying security at all times during the option period. A 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, a Fund will be required to deposit qualified
securities. A "qualified security" is a security against which a Fund has not
written a call option and which has not been hedged by a 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, a Fund will deposit an
amount of cash or liquid assets equal in value to the difference. In addition,
when a Fund writes a call on an index which is "in-the-money" at the time the
call is written, a Fund will segregate with its custodian bank cash or liquid
assets equal in value to the amount by which the call is "in-the-money" times
the multiplier times the number of contracts. Any amount segregated may be
applied to a Fund's obligation to segregate 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.
A Fund may invest up to 2% of its total assets in exchange-traded call and
put options. A 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.
In connection with a Fund qualifying as a regulated investment company
under the Internal Revenue Code, other restrictions on a Fund's 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.
The risk of purchasing a call option or a put option is that a Fund may
lose the premium it paid plus transaction costs. If a 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 a Fund 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 a Fund if it so desires, can close out its position by
effecting a closing transaction. If the writer of a covered call
2
<PAGE>
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 the following: (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. The Adviser believes that the position
limits established by the exchanges will not have any adverse impact upon a
Fund or all of the Funds, in the aggregate.
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 a 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 a Fund 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, a 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 a 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, a Fund will write call options on indices only subject to the
limitations described above.
Price movements in securities in a Fund's portfolio will not correlate
perfectly with movements in the level of the index and, therefore, a Fund bears
the risk that the price of the securities held by the 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 a
Fund's portfolio securities. It is also possible that the index may rise when
the value of a 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 a Fund has other liquid assets which are sufficient to satisfy the
exercise of a call on an index, a 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 a Fund fails to
anticipate an exercise, it may have to borrow from a bank (in an amount not
exceeding 10% of a Fund's total assets) 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 a 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 a Fund is able to sell securities in its portfolio. As
with options on portfolio securities, a 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 a Fund would be able to deliver the underlying
security in settlement, a Fund may have to sell part of its portfolio
securities in order to make settlement in cash, and the price of such
securities might decline before they could be sold.
If a Fund exercises a put option on an index which it has purchased before
final determination of the closing index value for that day, it runs the risk
that the level of the underlying index may change before closing. If this
change causes the exercised option to fall "out-of-the-money" a 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 a 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.
3
<PAGE>
Financial Futures Contracts and Related Options. All of the Funds except
the Money Market Fund and the U.S. Government Securities 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 a Fund may wish to
purchase in the future by purchasing futures contracts.
A Fund 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 a Fund upon the purchase or sale of a
financial futures contract. Initially, a 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.
A Fund 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. A Fund may not
engage in transactions in financial futures contracts or related options for
speculative purposes but only as a hedge against anticipated changes in the
market value of its portfolio securities or securities which it intends to
purchase. A Fund may not purchase or sell financial futures contracts or
related options if, immediately thereafter, the sum of the amount of initial
margin deposits on a Fund's existing futures and related options positions and
the premiums paid for related options would exceed 2% of the market value of a
Fund's total assets after taking into account unrealized profits and losses on
any such contracts. At the time of purchase of a futures contract or a call
option on a futures contract, any asset, including equity securities and
non-investment grade debt so long as the asset is liquid, unencumbered and
marked to market daily, equal to the market value of the futures contract minus
the Fund's initial margin deposit with respect thereto will be deposited in a
pledged account with the Fund's custodian bank to collateralize fully the
position and thereby ensure that it is not leveraged.
The extent to which a Fund may enter into financial futures contracts and
related options also may be limited by the requirements of the Internal Revenue
Code of 1986 for qualification as a regulated investment company. See
"Dividends, Distributions and Taxes."
Risks Relating to Futures Contracts and Related Options. Positions in
futures contracts and related options may be closed out only on an exchange
which provides a secondary market for such contracts or options. A Fund will
enter into an option
4
<PAGE>
or 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 option or futures contract at any specific time. Thus, it
may not be possible to close out a futures or related option position. In the
case of a futures position, in the event of adverse price movements a Fund
would continue to be required to make daily margin payments. In this situation,
if a Fund has insufficient cash to meet daily margin requirements it may have
to sell portfolio securities to meet its margin obligations at a time when it
may be disadvantageous to do so. In addition, a 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 a
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 limit a hedger's opportunity to benefit
fully from a favorable market movement. In addition, investing in futures
contracts and options on futures contracts will cause a Fund to incur
additional brokerage commissions and may cause an increase in a Fund's
portfolio turnover rate.
The successful use of futures contracts and related options also depends
on the ability of the Adviser to forecast correctly the direction and extent of
market movements, interest rates and other market factors within a given time
frame. To the extent market prices remain stable during the period a futures
contract or option is held by a Fund or such prices move in a direction
opposite to that anticipated, a Fund may realize a loss on the hedging
transaction which is not offset by an increase in the value of its portfolio
securities. Options and futures may also fail as a hedging technique in cases
where the movements of the securities underlying the options and futures do not
follow the price movements of the hedged portfolio securities. As a result, a
Fund's total return for the period may be less than if it had not engaged in
the hedging transaction.
Utilization of futures contracts by a Fund involves the risk of imperfect
correlation in movements in the price of futures contracts and movements in the
price of the securities which are being hedged. If the price of the futures
contract moves more or less than the price of the securities being hedged, a
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 a Fund has
sold futures contracts to hedge its portfolio against a decline in the market,
the market may advance and the value of securities held in the Fund's portfolio
may decline. If this occurred, a 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 a 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 a 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, a Fund will realize a loss on the futures that would not be
offset by a reduction in the price of the securities purchased.
The market prices of futures contracts may be affected if participants in
the futures market elect to close out their contracts through off-setting
transactions rather than to meet margin deposit requirements. In such case,
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 because such action would reduce the
liquidity of the futures market. In addition, from the point of view of
speculators, because 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.
Compared to the purchase or sale of futures contracts, the purchase of put
or call options on futures contracts involves less potential risk for a Fund
because the maximum amount at risk is the premium paid for the options plus
transaction costs. However, there may be circumstances when the purchase of an
option on a futures contract would result in a loss to a Fund while the
purchase or sale of the futures contract would not have resulted in a loss,
such as when there is no movement in the price of the underlying securities.
Leverage. The Trust may from time to time increase the Convertible Fund's
ownership or the Aggressive Growth Fund's ownership of securities holdings
above the amounts otherwise possible by borrowing from banks at fixed amounts
of interest and investing the borrowed funds. The Trust will borrow only from
banks, and only if immediately after such borrowing the value of the assets of
a Fund (including the amount borrowed) less its liabilities (not including any
borrowings) is at least three times the amount of funds borrowed for investment
purposes. The effect of this provision is to permit the Trust to borrow up to
25% of the total assets of a Fund, including the proceeds of any such
borrowings. However, the amount of the borrowings will be dependent upon the
availability and cost of credit from time to time. If, due to market
fluctuations or other reasons, the value of such Fund's assets computed as
provided above becomes at any time less than three times the amount of the
borrowings for investment purposes, the Trust, within three business days, is
required to reduce bank debt to the extent necessary to meet the required 300%
asset coverage.
Interest on money borrowed will be an expense of the Fund with respect to
which the borrowing has been made. Because such expense would not otherwise be
incurred, the net investment income of such Fund is not expected to be as high
as it otherwise would be during periods when borrowings for investment purposes
are substantial.
Bank borrowings for investment purposes must be obtained on an unsecured
basis. Any such borrowing must also be made subject to an agreement by the
lender that any recourse is limited to the assets of the Fund with respect to
which the borrowing has been made.
5
<PAGE>
Any investment gains made with the additional monies borrowed in excess of
interest paid will cause the net asset value of a Fund's shares to rise faster
than would otherwise be the case. On the other hand, if the investment
performance of the additional securities purchased fails to cover their cost
(including any interest paid on the monies borrowed) to the Fund, the net asset
value of the Fund will decrease faster than would otherwise be the case.
Foreign Securities. Each of the Funds, except the Money Market Fund and
the U.S. Government Securities Fund may purchase foreign securities, including
those issued by foreign branches of U.S. banks. In any event, such investments
in foreign securities will be limited to 25% of the total net asset value of
the Balanced Fund, Convertible Fund and Growth Fund. The Aggressive Growth Fund
may invest up to 10% of its total net asset value in foreign securities and the
High Yield Fund may invest up to 35% of its total net asset value in foreign
securities. Investments in foreign securities, particularly those of
non-governmental issuers, involve considerations which are not ordinarily
associated with investing in domestic issues. These considerations include
changes in currency rates, currency exchange control regulations, the
possibility of expropriation, the unavailability of financial information, the
difficulty of interpreting financial information prepared under foreign
securities markets, the impact of political, social or diplomatic developments,
difficulties in invoking legal process abroad and the difficulty of assessing
economic trends in foreign countries.
The Trust 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 Trust's foreign securities transactions. The use of a
foreign custodian invokes considerations which are not ordinarily associated
with domestic custodians. These considerations include the possibility of
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.
Mortgage-Backed Securities. Securities issued by Government National
Mortgage Association ("GNMA") are, and securities issued by Federal National
Mortgage Association ("FNMA") include, mortgage-backed securities representing
part ownership of a pool of mortgage loans.
In the case of GNMA, the mortgages are insured by the Federal Housing
Administration or Farmers' Home Administration or guaranteed by the Veteran's
Administration. In the case of FNMA, the mortgages are not insured by an agency
of the U.S. Government.
The prices of mortgage-backed securities are inversely affected by changes
in interest rates and, therefore, are subject to the risk of market price
fluctuations. Mortgage-backed securities issued by GNMA and FNMA currently
offer yields which are higher than those available on other securities of the
U.S. Government and its agencies and instrumentalities, but may be less
effective than these other securities as a means of "locking in" attractive
long-term interest rates. This is a result of the need to reinvest prepayment
of principal and the possibility of significant unscheduled prepayments
resulting from declines in mortgage interest rates. As a result, these
securities have less potential for capital appreciation during periods of
declining interest rates than other investments of comparable risk of decline
in value during periods of rising rates.
Lower Rated Convertible Securities. Convertible securities which are not
rated in the four highest categories, in which the Convertible Fund may invest,
are predominantly speculative with respect to the issuer's capacity to repay
principal and interest and may include issues on which the issuer defaults.
Nonpublicly Offered Debt Securities. The High Yield Fund may purchase
securities which cannot be sold in the public market without first being
registered with the Securities and Exchange Commission ("SEC") provided that
the Adviser has determined that such securities meet prescribed standards for
being considered as "liquid" securities. See "Investment Restrictions." Liquid
restricted securities may offer higher yields than comparable publicly traded
securities. Such securities ordinarily can be sold by the Trust in secondary
market transactions to certain qualified investors pursuant to rules
established by the SEC, in privately negotiated transactions to a limited
number of purchasers or in a public offering made pursuant to an effective
registration statement under governing law. Private 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 of previously
restricted securities generally involve the time and expense of the preparation
and processing of a registration statement (and the possible decline in value
of the securities during such period) and may involve the payment of
underwriting commissions. In some instances, the Trust may have to bear certain
costs of registration in order to sell such shares publicly.
Deferred Coupon Debt Securities. The High Yield Fund may invest in debt
obligations that do not make any interest payments for a specified period of
time prior to maturity ("deferred coupon" obligations). Because the deferred
coupon bonds do not make interest payments for a certain period of time, they
are purchased by the Fund at a deep discount and their value fluctuates more in
response to interest rate changes than does the value of debt obligations that
make current interest payments. The degree of fluctuation with interest rate
changes is greater when the deferred period is longer. Therefore, there is a
risk that the value of the Fund shares may decline more as a result of an
increase in interest rates than would be the case if the Fund did not invest in
deferred coupon bonds.
6
<PAGE>
Lending Portfolio Securities. In order to increase its return on
investments, the Trust may make loans of the portfolio securities of any Fund,
as long as the market value of the loaned securities does not exceed 25% of the
value of that Fund's total assets. Loans of portfolio securities will always be
fully collateralized at no less than 100% of the market value of the loaned
securities (as marked to market daily) and made only to borrowers considered 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.
Loan Participations. The High Yield Fund may invest up to 5% of its net
assets, determined at the time of investment, in loan participations. A loan
participation agreement involves the purchase of a share of a loan made by a
bank to a company in return for a corresponding share of the borrower's
principal and interest payments. Loan participations of the type in which the
Fund may invest include interests in both secured and unsecured corporate
loans. In the event that a corporate borrower failed to pay its scheduled
interest or principal payments on participations held by the Fund, the market
value of the affected participation would decline, resulting in a loss of value
of such investment to the Fund. Accordingly, such participations are
speculative and may result in the income level and net assets of the Fund being
reduced. Moreover, loan participation agreements generally limit the right of a
participant to resell its interest in the loan to a third party and, as a
result, loan participations will be deemed by the Trust to be illiquid
investments.
INVESTMENT RESTRICTIONS
The Trust's fundamental policies as they affect any Fund cannot be changed
without the approval vote of a majority of the outstanding shares of such Fund,
which is the lesser of (i) 67% or more of the voting securities of such Fund
present at a meeting if the holders of more than 50% of the outstanding voting
securities of such Fund are present or represented by proxy or (ii) more than
50% of the outstanding voting securities of such Fund. A proposed change in
fundamental policy or investment objective will be deemed to have been
effectively acted upon with respect to any Fund if a majority of the
outstanding voting securities of that Fund votes for the approval of the
proposal as provided above, notwithstanding (1) that such matter has not been
approved by a majority of the outstanding securities of any other Fund affected
by such matter and (2) that such matter has not been approved by a majority of
the outstanding voting securities of the Trust.
The following investment restrictions are fundamental policies of the
Trust with respect to all Funds and may not be changed except as described
above. The Trust may not:
1. Purchase for any Fund securities of any issuer, other than obligations
issued or guaranteed as to principal and interest by the United States
Government or its agencies or instrumentalities, if immediately thereafter (i)
more than 5% of such Fund's total assets (taken at market value) would be
invested in the securities of such issuer or (ii) more than 10% of the
outstanding securities of any class of such issuer would be held by such Fund
or by all Funds of the Trust in the aggregate.
2. Concentrate the portfolio investments of any Fund in any one industry.
To comply with this restriction, no security may be purchased for a Fund if
such purchase would cause the value of the aggregate investment of such Fund in
any one industry to exceed 25% of that Fund's total assets (taken at market
value). However, the Money Market Fund may invest more than 25% of its assets
in the domestic banking industry.
3. Act as securities underwriter except as it technically may be deemed to
be an underwriter under the Securities Act of 1933 in selling a portfolio
security.
4. Purchase securities on margin, but it may obtain short-term credit as
may be necessary for the clearance of purchases and sales of securities.
5. Make short sales of securities or maintain a short position.
6. Make cash loans, except that the Trust may (i) purchase bonds, notes,
debentures or similar obligations which are customarily purchased by
institutional investors whether publicly distributed or not, and (ii) enter
into repurchase agreements, provided that no more than 10% of any Fund's net
assets (taken at market value) may be subject to repurchase agreements maturing
in more than seven days.
7. Make securities loans, except that the Trust may make loans of the
portfolio securities of any Fund, provided that the market value of the
securities subject to any such loans does not exceed 25% of the value of the
total assets (taken at market value) of such Fund.
8. Make investments in real estate or commodities or commodity contracts,
although (i) the Trust may purchase securities of issuers which deal in real
estate or commodities and may purchase securities which are secured by
interests in real estate, specifically, securities issued by real estate
investment trusts and (ii) any Fund (excluding the Money Market Fund and the
U.S. Government Securities Fund) may engage in transactions in financial
futures contracts and related options, provided that the sum of the initial
margin deposits on such Fund's existing futures positions and the premiums paid
for related options would not exceed in the aggregate 2% of such Fund's total
assets.
7
<PAGE>
9. Invest in oil, gas or other mineral exploration or development
programs, although the Trust may purchase securities of issuers which engage in
whole or in part in such activities.
10. Invest in puts, calls, straddles and any combination thereof, except
that any Fund (excluding the Money Market Fund and the U.S. Government
Securities Fund) may (i) write (sell) exchange-traded covered call options on
portfolio securities and on securities indices and engage in related closing
purchase transactions and (ii) invest up to 2% of its total assets in
exchange-traded call and put options on securities and securities indices.
11. Purchase securities of companies for the purpose of exercising management
or control.
12. Participate in a joint or joint and several trading account in securities.
13. Purchase securities of any other investment company except in the open
market at customary brokers' commission rates or as a part of a plan of merger
or consolidation.
14. Purchase for any Fund securities of any issuer which together with
predecessors has a record of less than three years' continuous operation, if as
a result more than 5% of the total net assets (taken at market value) of such
Fund would then be invested in such securities.
15. Purchase or retain securities of any issuer if any officer or Trustee
of the Trust, or officer or director of its investment adviser, owns
beneficially more than 1/2 of 1% of the outstanding securities or shares, or
both, of such issuer and all such persons owning more than 1/2 of 1% of such
securities or shares together own beneficially more than 5% of such securities
or shares.
16. Borrow money, except that the Trust may (i) borrow money for any Fund
for temporary administrative purposes provided that any such borrowing does not
exceed 10% of the value of the total assets (taken at market value) of such
Fund and (ii) borrow money for any Fund for investment purposes, provided that
any such borrowing for investment purposes with respect to any such Fund is (a)
authorized by the Trustees prior to any public distribution of the shares of
such Fund or is authorized by the shareholders of such Fund thereafter, (b) is
limited to 25% of the value of the total assets (taken at market value and
including any borrowings) of such Fund, and (c) is subject to an agreement by
the lender that any recourse is limited to the assets of that Fund with respect
to which the borrowing has been made. With the exception of the Convertible
Fund and the Aggressive Growth Fund, no Fund may invest in portfolio securities
while the amount of borrowing of the Fund exceeds 5% of the total assets of
such Fund. Borrowing for investment purposes has not been authorized for any
Fund (except the Convertible Fund and the Aggressive Growth Fund) whose shares
are offered by the Trust.
17. Pledge, mortgage or hypothecate the assets of any Fund to an extent
greater than 10% of the total assets (taken at market value) of such Fund to
secure borrowings made pursuant to the provisions of item 16 above.
18. Issue senior securities as defined in the Investment Company Act of
1940, except to the extent that it is permissible to (a) borrow monthly from
banks pursuant to the Trust's investment restrictions regarding the borrowing
of money, and (b) enter into transactions involving forward foreign currency
contracts, foreign currency contracts and options thereon, as described in the
Trust's Prospectus and this Statement of Additional Information.
The Trust may purchase illiquid securities including repurchase agreements
providing for settlement more than seven days after notice and restricted
securities (securities that must be registered with the Securities and Exchange
Commission before they can be sold to the public) deemed to be illiquid
provided such securities will not constitute more than 15% (or 10% in the case
of the Money Market Fund) of each Fund's net assets. The Board of Trustees, or
the Adviser acting at its direction, values these securities, taking into
consideration quotations available from broker-dealers and pricing services and
other information deemed relevant.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage beyond the specified limit resulting
from a change in values of portfolio securities or amount of net assets shall
not be considered a violation of the restrictions.
PERFORMANCE INFORMATION
Performance information for each Fund (and Class of a Fund) may appear in
advertisements, sales literature, or reports to shareholders or prospective
shareholders. Performance information in advertisements and sales literature
may be expressed as yield and effective yield of the Money Market Fund, as
yield of the other Funds offered, or any Class of such Fund, and as total
return of any Fund or Class thereof. The current yield for the Money Market
Fund will be based on the change in the value of a hypothetical investment
(exclusive of capital changes) over a particular 7-day period, less a
hypothetical charge reflecting deductions for expenses during the period (the
"base period"), and stated as a percentage of the investment at the start of
the base period (the "base period return"). The base period return is then
annualized by multiplying by 365/7, with the resulting yield figure carried to
at least the nearest hundredth of one percent. "Effective yield" for the Money
Market Fund (and each Class of
8
<PAGE>
such Fund) assumes that all dividends received during an annual period have
been reinvested. Calculation of "effective yield" begins with the same "base
period return" used in the calculation of yield, which is then annualized to
reflect weekly compounding pursuant to the following formula:
Effective Yield = [(Base Period Return) + 1) (365/7)] -1
For the 7-day period ending October 31, 1997, the yield of the Class A
Shares of the Money Market Fund was 4.79% and the effective yield of the Class
A Shares of this Fund was 4.89%.
Quotations of yield for the High Yield, Convertible, U.S. Government
Securities and Balanced Funds will be based on all investment income per share
earned during a particular 30-day period (including dividends and interest),
less expenses (including pro rata Trust expenses and expenses applicable to
each particular Fund or Class of a Fund) accrued during the period ("net
investment income"), and are computed by dividing net investment income by the
value of a share of the Fund or Class on the last day of the period, according
to the following formula:
YIELD = 2[((a-b))+ 1)(6) -1]
(cd)
where a = dividends and interest earned during the period by the Fund,
b = expenses accrued for the period (net of any reimbursements),
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the
period.
For the period ended October 31, 1997, the yield of the Class A Shares of
the Funds were as follows: 8.95% for the High Yield Fund; 1.35% for the
Convertible Fund; 4.89% for the U.S. Government Securities Fund; and 2.40% for
the Balanced Fund. For the same period, the yield of the Class B Shares of the
Funds were as follows: High Yield 8.63%; Convertible 0.65%; U.S. Government
4.38%; and Balanced 1.77%.
As summarized in the Prospectus under the heading "Performance History,"
total return is a measure of the change in value of an investment in a Fund, or
Class thereof, over the period covered. The formula for total return used
herein includes four steps: (1) adding to the total number of shares purchased
by a hypothetical $1,000 investment in the Fund or a Class of a Fund; (2)
calculating the value of the hypothetical initial investment of $1,000 as of
the end of the period by multiplying the total number of shares of a class
owned at the end of the period by the net asset value on the last trading day
of the period; (3) assuming maximum sales charge deducted and reinvestment of
all dividends at net asset value and (4) dividing this account value for the
hypothetical investor by the initial $1,000 investment. Total return will be
calculated for one year, five years and ten years or the time period during
which the registration statement including the Fund was in effect if a Fund has
not been in existence for at least ten years.
The manner in which total return will be calculated for public use is
described above. The following table summarizes the calculation of total return
for each Fund, where applicable, through October 31, 1997.
AVERAGE ANNUAL TOTAL RETURN AS OF OCTOBER 31, 1997
<TABLE>
<CAPTION>
PERIODS ENDED
-------------------------------------------------
10 YEAR OR
FUND 1 YEAR 5 YEAR SINCE INCEPTION*
- -------------------------------------- ----------- --------------- -----------------
<S> <C> <C> <C>
BALANCED (CLASS A) 12.41% 9.12% 10.71%
BALANCED (CLASS B) 13.13% N/A 12.60%
CONVERTIBLE (CLASS A) 11.82% 9.44% 10.02%
CONVERTIBLE (CLASS B) 12.49% N/A 11.67%
GROWTH (CLASS A) 18.88% 13.39% 13.40%
GROWTH (CLASS B) 19.89% N/A 19.53%
AGGRESSIVE GROWTH (CLASS A) 13.98% 15.75% 12.82%
AGGRESSIVE GROWTH (CLASS B) 14.70% N/A 20.95%
HIGH YIELD (CLASS A) 9.57% 10.89% 10.75%
HIGH YIELD (CLASS B) 10.18% N/A 7.74%
U.S. GOVERNMENT SECURITIES (CLASS A) 2.75% 5.37% 7.56%
U.S. GOVERNMENT SECURITIES (CLASS B) 2.94% N/A 4.84%
</TABLE>
9
<PAGE>
* Since inception, July 15, 1994 for Class B Balanced, Convertible and Growth;
July 21, 1994 for Class B Aggressive Growth; February 16, 1994 for Class B
High Yield; and February 24, 1994 for U.S. Government Class B.
NOTE: Average annual total return assumes a hypothetical initial payment of
$1,000. At the end of each period, a total redemption is assumed. The
ending redeemable value is divided by the original investment to
calculate total return.
Performance information for any Fund or Class reflects only the
performance of a hypothetical investment in the Fund or Class during the
particular time period on which the calculations are based. Performance
information should be considered in light of the investment objectives and
policies, characteristics and quality of the particular Fund, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future.
PERFORMANCE COMPARISONS
Each Fund or Class of a Fund may from time to time include in
advertisements containing total return the ranking of those performance figures
relative to such figures for groups of mutual funds having similar investment
objectives as categorized by ranking services such as Lipper Analytical
Services, Inc., CDA Investment Technologies, Inc., Weisenberger Financial
Services, Inc. and rating services such as Morningstar, Inc. Additionally, a
Fund or Class of a Fund may compare its 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 and 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 and Poors The Outlook, and Personal Investor. A Fund
may, from time to time, illustrate the benefits of tax deferral by comparing
taxable investments to investments made through tax-deferred retirement plans.
The total return may also be used to compare the performance of the Fund or the
Class of a Fund against certain widely acknowledged outside standards or
indices for stock and bond market performance, such as the Standard & Poor's
500 Composite Stock Price Index (the "S&P 500"), Dow Jones Industrial Average,
Europe Australia Far East Index (EAFE), Consumer Price Index, Lehman Brothers
Corporate Index and Lehman Brothers T-Bond Index. The S&P 500 is a commonly
quoted measure of stock market performance and represents common stocks of
companies of varying sizes segmented across 90 different industries which are
listed on the New York Stock Exchange, the American Stock Exchange and traded
over the NASDAQ National Market System.
Advertisements, sales literature, and other communications may contain
information about the Adviser's current investment strategies and management
style. Current strategies and style may change to allow the Trust to respond
quickly to changing market and economic conditions. From time to time the Trust
may include specific portfolio holdings or industries. To illustrate components
of overall performance, the Trust may separate its cumulative and average
annual returns into income and capital gains components; or cite separately as
a return figure the equity or bond portion of the Trust's portfolio; or compare
the Trust's equity or bond return figure to well-known indices of market
performance, including but not limited to: the S&P 500 Index, Dow Jones
Industrial Average, Russell 2000 Growth Index, Salomon Brothers 90-Day Treasury
Bill Index, CS First Boston High Yield Index and Salomon Brothers Corporate
Bond and Government Bond Indices.
PORTFOLIO TURNOVER
Each Fund has a different expected annual rate of portfolio turnover,
which is calculated by dividing the lesser of purchases or sales of portfolio
securities during the fiscal year by the monthly average of the value of the
Funds' securities (excluding from the computation all securities, including
options, with maturities at the time of acquisition of one year or less). A
high rate of portfolio turnover generally involves correspondingly greater
brokerage commission expenses, which must be borne directly by the Fund.
Turnover rates may vary greatly from year to year as well as within a
particular year and may also be affected by cash requirements for redemptions
of each Fund's shares and by requirements which enable the Trust to receive
certain favorable tax treatment (see "Taxes"). Historical annual rates of
portfolio turnover for all Funds except the Money Market Fund (which for this
purpose does not calculate a portfolio turnover rate) are set forth in the
prospectus, a copy of which must precede or accompany this Statement of
Additional Information.
Balanced Fund
In the fiscal years ended October 31, 1996 and October 31, 1997, the
turnover rates for the equity portion of the Balanced Fund were 170% and 193%,
respectively. The turnover rates for the fixed income securities were 229% and
225%, respectively for the same periods.
PORTFOLIO TRANSACTIONS AND BROKERAGE
In effecting portfolio transactions for the Trust, the Adviser adheres to
the Trust's policy of seeking best execution and price, determined as described
below, except to the extent it is permitted to pay higher brokerage commissions
for "brokerage and research services" as defined herein. The Adviser may cause
the Trust to pay a broker an amount of commission for effecting a securities
transaction in excess of the amount of commission which another broker or
dealer would have charged for effecting the transaction
10
<PAGE>
if the Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or that any offset of direct expenses of a Fund yields
the best net price. As provided in Section 28(e) of the Securities Exchange Act
of 1934, "brokerage and research services" include giving advice as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities; furnishing analyses and reports
concerning issuers, industries, economic factors and trends, portfolio strategy
and the performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement).
Brokerage and research services provided by brokers to the Trust or to the
Adviser are considered to be in addition to and not in lieu of services
required to be performed by the Adviser under its contract with the Trust and
may benefit both the Trust and other clients of the Adviser. Conversely,
brokerage and research services provided by brokers to other clients of the
Adviser may benefit the Trust.
If the securities in which a particular Fund of the Trust invests are
traded primarily in the over-the-counter market, where possible the Fund will
deal directly with the dealers who make a market in the securities involved
unless better prices and execution are available elsewhere. Such dealers
usually act as principals for their own account. On occasion, securities may be
purchased directly from the issuer. Bonds and money market instruments are
generally traded on a net basis and do not normally involve either brokerage
commission or transfer taxes. In addition, transactions effected on foreign
securities exchanges which do not permit the negotiation of brokerage
commissions and where the Adviser would, under the circumstances, seek to
obtain best price and execution on orders for the Trust.
The determination of what may constitute best execution and price in the
execution of a securities transaction by a broker involves a number of
considerations including, without limitation, the overall direct net economic
result to the Trust (involving both price paid or received and any net
commissions and other costs paid), the efficiency with which the transaction is
effected, the ability to effect the transaction at all where a large block is
involved, the availability of the broker to stand ready to execute possibly
difficult transactions in the future and the financial strength and stability
of the broker. Such considerations are judgmental and are weighed by the
Adviser in determining the overall reasonableness of brokerage commissions paid
by the Trust. Some portfolio transactions are, subject to the Conduct Rules of
the National Association of Securities Dealers, Inc. and subject to obtaining
best prices and executions, effected through dealers (excluding Equity
Planning) who sell shares of the Trust.
The Trust has adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to
lower commission costs on a per-share and per-dollar basis. According to the
bunching procedures, the Adviser shall aggregate transactions unless it
believes in its sole discretion that such aggregation is inconsistent with its
duty to seek best execution (which shall include the duty to seek best price)
for the Trust. No advisory account of the Adviser is to be favored over any
other account and each account that participates in an aggregated order is
expected to participate at the average share price for all transactions of the
Adviser in that security on a given business day, with all transaction costs
shared pro rata based on the Trust's participation in the transaction. If the
aggregated order is filled in its entirety, it shall be allocated among the
Adviser's accounts in accordance with the allocation order, and if the order is
partially filled, it shall be allocated pro rata based on the allocation order.
Notwithstanding the foregoing, the order may be allocated on a basis different
from that specified in the allocation order if all accounts of the Adviser
whose orders are allocated receive fair and equitable treatment and the reason
for such different allocation is explained in writing and is approved in
writing by the Adviser's compliance officer as soon as practicable after the
opening of the markets on the trading day following the day on which the order
is executed. If an aggregated order is partially filled and allocated on a
basis different from that specified in the allocation order, no account that is
benefited by such different allocation may intentionally and knowingly effect
any purchase or sale for a reasonable period following the execution of the
aggregated order that would result in it receiving or selling more shares than
the amount of shares it would have received or sold had the aggregated order
been completely filled. The Trustees will annually review these procedures or
as frequently as shall appear appropriate.
For the fiscal years ended October 31, 1995, 1996 and 1997, brokerage
commissions paid by the Trust on portfolio transactions totaled $10,324,000,
$9,322,374 and $13,168,358 respectively. Brokerage commissions of $8,318,038
paid during the fiscal year ended October 31, 1997, were paid on portfolio
transactions aggregating $8,226,419,731 executed by brokers who provided
research and other statistical and factual information. None of such
commissions was paid to a broker who was an affiliated person of the Trust or
an affiliated person of such a person or, to the knowledge of the Trust, to a
broker an affiliated person of which was an affiliated person of the Trust, its
adviser or its national distributor.
THE INVESTMENT ADVISER
The offices of the Adviser, Phoenix Investment Counsel, Inc., are located
at 56 Prospect Street, Hartford, Connecticut 06115. Philip R. McLoughlin, a
Trustee and officer of the Trust, is a director of the Adviser. All other
executive officers of the Trust are officers of the Adviser.
All of the outstanding stock of the Adviser is owned by Phoenix Equity
Planning Corporation ("Equity Planning"), a subsidiary of Phoenix Duff & Phelps
Corporation. Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life")
owns a controlling interest in Phoenix Duff & Phelps Corporation. Phoenix Home
Life is in the business of writing ordinary and group life and health
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insurance and annuities. Equity Planning, the Distributor of the Trust's
shares, also performs bookkeeping, pricing, and administrative services for the
Trust. (See "The Distributor and Distribution Plans"). Equity Planning is
registered as a broker-dealer in fifty states. 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 100 Bright Meadow Blvd., P.O.
Box 2200, Enfield, Connecticut 06083-2200.
All costs and expenses (other than those specifically referred to as being
borne by the Adviser) incurred in the operation of the Trust are borne by the
Trust. 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 allocation of direct
expenses to each Fund or an alternative allocation method can be more fairly
made. Such expenses include, but shall not be limited to, all expenses incurred
in the operation of the Trust and any public offering of its shares, including,
among others, interest, taxes, brokerage fees and commissions, fees of Trustees
who are not fulltime 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 Trust), expenses of printing and mailing stock certificates
representing shares of the Trust, association membership dues, charges of
custodians, transfer agents, dividend disbursing agents and financial agents,
bookkeeping, auditing, and legal expenses. The Trust 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 Trust or to any shareholder of the Trust for any error of
judgment or mistake of law or for any loss suffered by the Trust or by any
shareholder of the Trust 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
Trust, the Adviser is entitled to a fee, payable monthly, as described in the
Prospectus. There is no assurance that the Trust will reach net asset levels
high enough to realize reductions in the rates of the advisory fees.
The Adviser has agreed to reimburse the Trust for the amount, if any, by
which the total operating and management expenses of any Fund (including the
Adviser's compensation, but excluding interest, taxes, brokerage fees and
commissions and extraordinary expenses) for any fiscal year exceed the level of
expenses which such Fund is permitted to bear under the most restrictive
expense limitation imposed on mutual funds by any state in which shares of such
Fund are then qualified for sale. Present expense limitations, to the knowledge
of the Trust, require that the Adviser reimburse the Trust, to the extent of
the compensation received by it from the Trust, for the amount, if any, by
which total operating and management expenses (excluding interest, taxes,
brokerage fees and commissions and extraordinary expenses) of any Fund in any
fiscal year exceed 2.5% of the first $30,000,000, 2% of the next $70,000,000
and 1.5% of any excess over $100,000,000 of such Fund's average net asset value
for such fiscal year. In the event legislation were to be adopted in each state
so as to eliminate this restriction, the Trust would take such action necessary
to eliminate this expense limitation.
The Adviser has agreed to assume expenses and reduce the advisory fee for
the benefit of the Money Market Fund to the extent that operating expenses
(excluding interest, taxes, brokerage fees and commissions and extraordinary
expenses) exceed 0.85% and 1.60% of average daily net asset values for Class A
Shares and Class B Shares, respectively. Such reimbursement will be made
monthly.
The agreement continues in force from year to year for all Funds, 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 the Funds. 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 investment advisory agreement
provides that upon termination of the agreement, or at the request of the
Adviser, the Trust will eliminate all reference to Phoenix from its name, and
will not thereafter transact business in a name using the word Phoenix.
For services to the Trust during the fiscal years ended October 31, 1995,
1996, and 1997, the Adviser received fees of $34,684,220, $35,372,083 and
$34,413,328 respectively under the investment advisory agreements in effect. Of
these totals, the Adviser received fees from each Fund as follows:
1995 1996 1997
------------- ------------- ------------
Growth Fund $14,508,081 $15,914,996 $16,439,785
Aggressive Growth Fund 1,052,902 1,537,430 1,735,384
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1995 1996 1997
------------ ------------ ----------
High Yield Fund 3,336,889 3,366,120 3,713,370
U.S. Government Fund 1,137,873 1,016,243 885,257
Convertible Fund 1,438,064 1,444,901 1,361,661
Balanced Fund 12,384,575 11,281,357 9,489,765
Money Market Fund 825,836 811,036 788,106
For the fiscal years ended October 31, 1995, 1996 and 1997, the Adviser
was not reimbursed for any expenses incurred in providing services which would
otherwise have been provided at the expense of the Trust.
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close
of trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. Since the Trust does 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
Trust. The net asset value per share of a Fund is determined by adding the
values of all securities and other assets of the Fund, subtracting liabilities,
and dividing by the total number of outstanding shares of the Fund. Assets and
liabilities are determined in accordance with generally accepted accounting
principles and applicable rules and regulations of the Securities and Exchange
Commission. The total liability allocated to a class, plus that class's
distribution fee and any other expenses allocated solely to that class, are
deducted from the proportionate interest of such class in the assets of the
Fund, and the resulting amount of each is divided by the number of shares of
that class outstanding to produce the net asset value per share.
A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world,
the calculation of net asset value may not take place for any Fund which
invests in foreign securities contemporaneously with the determination of the
prices of the majority of the portfolio securities of such Fund. All assets and
liabilities initially expressed in foreign currency values will be converted
into United States dollar values at the mean between the bid and ask quotations
of such currencies against United States dollars as last quoted by any
recognized dealer. If an event were to occur after the value of an investment
was so established but before the net asset value per share was determined,
which was likely to materially change the net asset value, then the instrument
would be valued using fair value considerations by the Trustees or their
delegates. If at any time a Fund has investments where market quotations are
not readily available, such investments are valued at the fair value thereof as
determined in good faith by the Trustees although the actual calculations may
be made by persons acting pursuant to the direction of the Trustees.
Money Market Fund
The assets of the Money Market Fund are valued on the basis of amortized
cost absent extraordinary or unusual market conditions. Under the amortized
cost method of valuation, securities are valued at cost on the date of
purchase. Thereafter the value of a security is increased or decreased
incrementally each day so that at maturity any purchase discount or premium is
fully amortized and the value of the security is equal to its principal amount.
Due to fluctuations in interest rates, the amortized cost value of the Money
Market Fund securities may at times be more or less than their market value. By
using amortized cost valuation, the Money Market Fund seeks to maintain a
constant net asset value of $1.00 per share despite minor shifts in the market
value of its portfolio securities.
The yield on a shareholder's investment may be more or less than that
which would be recognized if the Fund's net asset value per share was not
constant and was permitted to fluctuate with the market value of the Fund's
portfolio securities. However, as a result of the following procedures, it is
believed that any difference will normally be minimal. The deviation is
monitored periodically by comparing the Fund's net asset value per share as
determined by using available market quotations with its net asset value per
share as determined through the use of the amortized cost method of valuation.
The Adviser makes such comparisons at least weekly and will advise the Trustees
promptly in the event of any significant deviation. If the deviation exceeds
1/2 of 1%, the Trustees will consider what action, if any, should be initiated
to provide fair valuation of the Fund's portfolio securities and prevent
material dilution or other unfair results to shareholders. Such action may
include redemption of shares in kind, selling portfolio securities prior to
maturity, withholding dividends or utilizing a net asset value per share as
determined by using available market quotations. Furthermore, the assets of the
Fund will not be invested in any security with a maturity of greater than 397
days, and the average weighted maturity of its portfolio will not exceed 90
days. Portfolio investments will be limited to U.S. dollar-denominated
securities which present minimal credit risks and are of high quality as
determined either by a major rating service or, if not rated, by the Trustees.
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<PAGE>
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 the 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 Trust has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust 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 (except Class A Shares of
the Money Market Fund), 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 Fund,
the accumulated continuing distribution services fee and contingent deferred
sales charges on Class B or C Shares would be less than the initial sales
charge and accumulated distribution services fee on Class A or M Shares
purchased at the same time. Note, only the High Yield Fund offers Class C and
Class M Shares.
Dividends paid by the Fund, 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 services fee 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 Fund's aggregate average daily net assets attributable to the
Class A Shares. In addition, certain purchases of Class A Shares qualify for
reduced initial sales charges. See the Funds' current Prospectus for additional
information.
Class B Shares
Class B Shares do not incur a sales charge when they are purchased, but
they are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions. See the Funds' current Prospectus for additional
information.
Class B Shares are subject to an ongoing distribution and services fee at
an aggregate 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 and services fee paid by
Class B Shares will cause such shares to have a higher expense ratio and to pay
lower dividends, to the extent any dividends are paid, than those related to
Class A Shares. Class B Shares will automatically convert to Class A Shares
eight years after the end of the calendar month in which the shareholder's
order to purchase was accepted, in the circumstances and subject to the
qualifications described in the Funds' Prospectus. 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 and services fee. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge.
For purposes of conversion to Class A Shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares
in a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class
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<PAGE>
B Shares in the shareholder's Fund account (other than those in the
sub-account) convert to Class A, an equal pro rata portion of the Class B Share
dividends in the sub-account will also convert to Class A Shares.
Class C Shares--High Yield Fund Only
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 and
services fee at an aggregate annual rate of up to 1.00% of the Fund's aggregate
average daily net assets attributable to Class C Shares. See the Funds' current
Prospectus for more information.
Class M Shares--High Yield Fund Only
Class M Shares incur a sales charge at the time of purchase but are not
subject to any sales charge when redeemed. Certain purchases of Class M Shares
may qualify for reduced initial sales charges as described in the Funds'
Prospectus. Class M Shares are subject to an ongoing distribution and services
fee at an aggregate annual rate of up to 0.50% of the Fund's aggregate average
daily net assets attributable to Class M Shares.
Purchases of Shares of the Money Market Fund
The minimum initial investment and the minimum subsequent investment for
the purchase of shares of the Money Market Fund is set forth in the Prospectus.
Shares of the Money Market Fund are sold through registered representatives of
Equity Planning or through brokers or dealers with whom Equity Planning has
sales agreements. (See "Distribution Plans"). Initial purchases of shares may
also be made by mail by completing an application and mailing it directly to
Phoenix Funds c/o State Street Bank and Trust Company, P.O. Box 8301, Boston,
MA 02266-8301. Subsequent purchases should be sent to State Street Bank and
Trust Company. An investment is accepted when funds are credited to the
purchaser. Investments are credited not later than the second business day
after receipt by the Trust of checks drawn on U.S. banks payable in U.S. funds.
Shares purchased begin earning dividends the day after funds are credited.
Certified checks are not necessary.
INVESTOR ACCOUNT SERVICES
The Funds offer combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange privileges
as described in the Funds' current Prospectus. Certain privileges may not be
available in connection with all classes. In most cases, changes to account
services may be accomplished over the phone. Inquiries regarding policies and
procedures relating to shareholder account services should be directed to
Shareholder Services at (800) 243-1574.
Exchanges. Under certain circumstances, shares of any Phoenix Fund (except
Class A Shares of the Money Market Fund) may be exchanged for shares of the
same Class of another Phoenix Fund or any other Affiliated Phoenix Fund on the
basis of the relative net asset values per share at the time of the exchange.
Exchanges are subject to the minimum initial investment requirement of the
designated Fund, Series, or Portfolio, except if made in connection with the
Systematic Exchange privilege. Shareholders may exchange shares held in
book-entry form for an equivalent number (value) of the same class of shares of
any other Phoenix Fund, if currently offered. On exchanges with share classes
that carry a contingent deferred sales charge, the CDSC schedule of the
original shares purchased continues to apply. The exchange of shares is treated
as a sale and purchase for federal income tax purposes (see also "Dividends,
Distributions and Taxes").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Phoenix Fund or any other 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 Phoenix Fund.
This requirement does not apply to Phoenix "Self Security" program
participants. Systematic exchanges will be executed upon the close of business
on the 10th day of each month or the next succeeding business day. Systematic
exchange forms are available from the Distributor. Exchanges will be based upon
each Fund's net asset value per share next computed after the close of business
on the 10th day of each month (or next succeeding business day), without sales
charge.
Dividend Reinvestment Across Accounts. If you maintain an account balance
of at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account of
one of the other Phoenix Funds 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
15
<PAGE>
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.
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. This service may also be used to request redemption of
shares of the Money Market Fund, the proceeds of which are transferred to the
shareholder's bank the second day following receipt of the verbal request. The
Trust may delay the mailing of a check for redemption proceeds of Trust shares
purchased with a check or via Invest-by-Phone service until the Trust has
assured itself that good payment has been collected for the purchase of the
shares, which may take up to 15 days.
The Trust 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.
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 Trust 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
receipt of the check. See the Funds' current Prospectus for further
information.
The Trust has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust 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.
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 60 day period the shareholder has the right to
add to the account to bring its value to $200 or more. See the Funds' current
Prospectus for more information.
By Mail
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written
request to Equity Planning that the Trust redeem the shares. See the Funds'
current Prospectus for more information.
Telephone Redemptions
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Funds' current Prospectus for
additional information.
By Check (U.S. Government Securities Fund, High Yield Fund and
Money Market Fund Only)
Any shareholder of these Funds may elect to redeem shares held in his Open
Account by check. Checks will be sent to an investor upon receipt by Equity
Planning of a completed application and signature card (attached to the
application). If the signature card accompanies an individual's initial account
application, the signature guarantee section of the form may be disregarded.
However, the Trust reserves the right to require that all signatures be
guaranteed prior to the establishment of a check writing service account. When
an authorization form is submitted after receipt of the initial account
application, all signatures must be guaranteed regardless of account value.
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<PAGE>
Checks may be drawn payable to any person in an amount of not less than
$500, provided that immediately after the payment of the redemption proceeds
the balance in the shareholder's Open Account is $500 or more.
When a check is presented to Equity Planning for payment, a sufficient
number of full and fractional shares in the shareholder's Open Account will be
redeemed to cover the amount of the check. The number of shares to be redeemed
will be determined on the date the check is received by the Transfer Agent.
Presently there is no charge to the shareholder for the check writing service,
but this may be changed or modified in the future upon two weeks written notice
to shareholders. Checks drawn from Class B and Class C accounts are subject to
the applicable deferred sales charge, if any.
The checkwriting procedure for redemption enables a shareholder to receive
income accruing on the shares to be redeemed until such time as the check is
presented to Equity Planning for payment. Inasmuch as canceled checks are
returned to shareholders monthly, no confirmation statement is issued at the
time of redemption.
Shareholders utilizing withdrawal checks will be subject to Equity
Planning's rules governing checking accounts. A shareholder should make sure
that there are sufficient shares in his Open Account to cover the amount of any
check drawn. If insufficient shares are in the account and the check is
presented to Equity Planning on a banking day on which the Trust does not
redeem shares (for example, a day on which the New York Stock Exchange is
closed), or if the check is presented against redemption proceeds of an
investment made by check which has not been in the account for at least fifteen
calendar days, the check may be returned marked "Non-sufficient Funds" and no
shares will be redeemed. A shareholder may not close his account by a
withdrawal check because the exact value of the account will not be known until
after the check is received by Equity Planning.
Reinvestment Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinvestment of their investment at net
asset value. See the Funds' current Prospectus for more information and
conditions attached to this privilege.
TAX-SHELTERED RETIREMENT PLANS
Shares of the Trust are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, Profit-Sharing and
Money Purchase Pension Plans which can be adopted by self-employed persons
("Keogh") and by corporations, and 403(b) Retirement Plans. Write or call
Equity Planning (800) 243-4361 for further information about the plans.
DIVIDENDS, DISTRIBUTIONS AND TAXES
As stated in the Prospectus, it will be the policy of the Trust and of
each Fund that each comply with provisions of the Internal Revenue Code (the
"Code") relieving investment companies which distribute substantially all of
their net income from Federal income tax on the amounts distributed.
The Federal tax laws also impose a four percent nondeductible excise tax
on each regulated investment company with respect to an amount, if any, by
which such company does not meet distribution requirements specified in such
tax laws. The Trust intends that each Fund will comply with such distribution
requirements and thus does not expect to incur the four percent nondeductible
excise tax.
As stated in the Prospectus, the Trust believes that each of its Funds
will be treated as a single entity. Prior to November 1, 1986, the Trust was
treated as a single entity.
To qualify for treatment as a regulated investment company ("RIC") each
Fund must, among other things: (a) 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; and (b) meet certain diversification requirements
imposed under the Code at the end of each quarter of the taxable year. Under
certain state tax laws, each Fund must also comply with the "short-short" test
to qualify for treatment as a RIC for state tax purposes. Under the
"short-short" test the Fund must derive less than 30% of its gross income each
taxable year as gains (without deduction for losses) from the sale or other
disposition of securities for less than three months. 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. In addition, if in any tax
year the Fund does not qualify as a RIC for state tax purposes a capital gain
dividend may not retain its character in the hands of the shareholder for state
tax purposes.
Income dividends and short-term capital gains distributions, whether
received in shares or in cash, are treated by shareholders as ordinary income
for Federal income tax purposes. Prior to January 1, 1987, income dividends
were eligible for the dividends received exclusion of $100 ($200 for a joint
return) available to individuals and the 85% dividends received deduction
available to corporate shareholders, subject, in either case, to reduction, for
various reasons, including the fact that dividends received from domestic
corporations in any year were less than 95% of the distributing Fund's gross
income, in the case of individual distributees, or 100% of the distributing
Fund's gross income, in the case of corporate distributees. Any income
dividends received after December 31, 1987 do not qualify for dividend
exclusion on an individual tax return but corporate shareholders are eligible
for a 70% dividends received deduction (80% in the case of a 20% shareholder)
subject to a reduction for various reasons including
17
<PAGE>
the fact that dividends received from domestic corporations in any year are
less than 100% of the distributing Fund's gross income. Gross income includes
the excess of net short-term capital gains over net long-term capital losses.
Distributions which are designated by the Trust as long-term capital
gains, whether received in shares or in cash, are taxable to shareholders as
long-term capital gains (regardless of how long such person has been a
shareholder) and are not eligible for the dividends received exclusion. Any
loss from the sale of shares held for six months or less will be treated as
long-term capital loss to the extent of any capital gain distributions paid
with respect to such shares.
Individuals are entitled to deduct "miscellaneous itemized deductions"
specified in the Code only to the extent they exceed two percent of the
individuals' "adjusted gross income." Effective January 1, 1988, included
within the miscellaneous itemized deductions subject to the two percent "floor"
are indirect deductions through certain pass-through entities such as the
Funds. The Secretary of the Treasury is authorized to prescribe regulations
relating to the manner in which the floor will be applied with respect to
indirect deductions and to the manner in which pass-through entities such as
the Funds will report such amounts to the individual shareholders. Individual
shareholders are advised that, pursuant to these rules, they may be required to
report as income amounts in excess of actual distributions made to them.
The Trust is required to withhold for income taxes, 31% of dividends,
distributions and redemption payments, if any of the following circumstances
exist: i) a shareholder fails to provide the Trust with a correct taxpayer
identification number ("TIN"); ii) the Trust is notified by the Internal
Revenue Service that the shareholder furnished an incorrect TIN; or iii) the
Trust is notified by the Internal Revenue Service that withholding is required
because the shareholder failed to report the receipt of dividends or interest
from other sources. Withholding may also be required for accounts with respect
to which a shareholder fails to certify that i) the TIN provided is correct and
ii) the shareholder is not subject to such withholding. However, withholding
will not be required from certain exempt entities nor those shareholders
complying with the procedures as set forth by the Internal Revenue Service. A
shareholder is required to provide the Trust with a correct TIN. The Trust in
turn is required to report correct taxpayer identification numbers when filing
all tax forms with the Internal Revenue Service. Should the IRS levy a penalty
on the Trust for reporting an incorrect TIN and that TIN was provided by the
shareholder, the Trust will pass the penalty onto the shareholder.
Dividends paid by a Fund from net investment income and net realized
short-term capital gains to a shareholder who is a nonresident alien
individual, a foreign trust or estate, a foreign corporation or a foreign
partnership (a "foreign shareholder") will be subject to United States
withholding tax at a rate of 30% unless a reduced rate of withholding or a
withholding exemption is provided under applicable treaty law. Foreign
shareholders are urged to consult their own tax advisors concerning the
applicability of the United States withholding tax and any foreign taxes.
The discussion of "Dividends, Distributions and Taxes" in the Prospectus,
in conjunction with the foregoing, is a general and abbreviated summary of
applicable provisions of the Code and Treasury regulations now in effect as
currently interpreted by the courts and the Internal Revenue Service. The Code
and these Regulations, as well as the current interpretations thereof, may be
changed at any time by legislative, judicial, or administrative action.
Shareholders ordinarily will also be subject to state income taxes on the
dividends and distributions they receive from each Fund. Shareholders are urged
to consult counsel or other competent tax advisers regarding specific questions
as to Federal, state or local taxes.
THE DISTRIBUTOR AND DISTRIBUTION PLANS
Phoenix Equity Planning Corporation ("Equity Planning"), which has
undertaken to use its best efforts to find purchasers for shares of the Trust,
serves as the national distributor of the Trust's shares. Shares of each Fund
are offered on a continuous basis. Pursuant to distribution agreements for each
class of shares or distribution method, the Distributor will purchase shares of
the Trust for resale to the public, either directly or through securities
dealers or agents, and is obligated to purchase only those shares for which it
has received purchase orders. Equity Planning may also sell Trust shares
pursuant to sales agreements entered into with bank-affiliated securities
brokers who, acting as agent for their customers, place orders for Trust shares
with Equity Planning. Although the Glass-Steagall Act prohibits banks and bank
affiliates from engaging in the business of underwriting, distributing or
selling securities (including mutual fund shares), banking regulators have not
indicated that such institutions are prohibited from purchasing mutual fund
shares upon the order and for the account of their customers. In addition,
state securities laws on this issue may differ from the interpretations of
federal law and banks and financial institutions may be required to register as
dealers pursuant to state law. If, because of changes in law or regulations, or
because of new interpretations of existing law, it is determined that agency
transactions of bank-affiliated securities brokers are not permitted, the
Trustees will consider what action, if any, is appropriate. It is not
anticipated that termination of sales agreements with bank-affiliated
securities brokers would result in a loss to their customers or a change in the
net asset value per share of a Fund.
For the fiscal years ended October 31, 1995, 1996, and 1997, Equity
Planning's gross commissions on sales of Trust shares totaled $6,774,491,
$6,512,356 and $5,398,731, respectively. Of these gross selling commissions,
$856,873, $912,483 and $1,156,623, respectively, were allowed to Equity
Planning as dealer.
18
<PAGE>
Equity Planning also acts as administrative agent of the Trust and as such
performs administrative, bookkeeping and pricing functions for the Trust. As
compensation for such services, Equity Planning is entitled to a fee, payable
monthly and based upon the average of the aggregate daily net asset values of
each Fund, at the following incremental annual rates:
First $100 million .05% plus a minimum fee
$100 million to $300 million .04%
$300 million through $500 million .03%
Greater than $500 million .015%
A minimum fee applies to each Fund as follows:
Money Market Fund $35,000
Aggressive Growth Fund $50,000
Growth Fund $50,000
Balanced Fund $60,000
Convertible Fund $60,000
High Yield Fund $70,000
U.S. Government Securities Fund $70,000
In addition, Equity Planning is paid $12,000 for each class of shares of
each Fund beyond one. For its services during the Trust's fiscal year ended
October 31, 1997, Equity Planning received $1,567,552.
Distribution Plans
The Funds have adopted separate amended and restated distribution plans
under Rule 12b-1 of the 1940 Act for each class of shares of the Funds other
than Class A Shares of the Money Market Fund (the "Class A Plan," the "Class B
Plan," the "Class C Plan," the "Class M Plan" and collectively the "Plans").
The Plans permit the Funds to reimburse the Distributor for expenses incurred
in connection with activities intended to promote the sale of shares of each
class of shares of the Funds.
Pursuant to the Class B Plan, each Fund may reimburse the Distributor
monthly for actual expense of the Distributor up to 0.75% (0.50% for the Money
Market Fund) of the average daily net assets of the Class B Shares of such
Fund. Under the Class C and Class M Plans, each Fund may reimburse the
Distributor monthly for actual expenses of the Distributor up to 0.75% and
0.25% of the average daily net assets of the Fund's Class C and Class M Shares,
respectively. Expenditures under the Plans shall consist of: (i) commissions to
sales personnel for selling shares of the Funds: (ii) compensation, sales
incentives and payments to sales, marketing and service personnel; (iii)
payments to broker-dealers and other financial institutions which have entered
into agreements with the Distributor in the form of the Dealer Agreement for
Phoenix Funds for services rendered in connection with the sale and
distribution of shares of the Funds; (iv) payment of expenses incurred in sales
and promotional activities, including advertising expenditures related to the
Funds; (v) the costs of preparing and distributing promotional materials; (vi)
the cost of printing the Funds' Prospectus and Statement of Additional
Information for distribution to potential investors; and (vii) such other
similar services that the Trustees of the Funds determine are reasonably
calculated to result in the sale of shares of the Funds. In addition, the Funds
will pay the Distributor 0.25% annually of the average daily net assets of the
Funds' shares for providing services to the shareholders, including assistance
in connection with inquiries related to shareholder accounts (the "Service
Fee").
Each Plan requires that at least quarterly the Trustees of the Trust
review a written report with respect to the amounts expended under the Plan and
the purposes for which such expenditures were made. While each Plan is in
effect, the Trust will be required to commit the selection and nomination of
candidates for Trustees who are not interested persons of the Trust to the
discretion of other Trustees who are not interested persons. Each Plan
continues in effect from year to year only provided such continuance is
approved annually in advance by votes of the majority of both (a) the Board of
Trustees of the Trust and (b) the Rule 12b-1 Trustees, cast in person at a
meeting called for the purpose of voting on the Plan and any agreements related
to each Plan. No interested person of the Trust and no Trustee who is not an
interested person of the Trust, as that term is defined in the Investment
Company Act of 1940, has any direct or indirect financial interest in the
operation of the Plans.
For the fiscal year ended October 31, 1997, the Funds paid Rule 12b-1 Fees
in the amount of $14,979,097, of which the principal underwriter received
$3,044,353, W.S. Griffith & Co., Inc., an affiliate received $1.358,415 and
unaffiliated broker-dealers received $10,576,329. Distributor expenses under the
Plans consisted of: (1) advertising ($1,202,861); (2) printing and mailing of
prospectuses to other than current shareholders ($48,128); (3) compensation to
dealers ($14,234,376); (4) compensation to sales personnel ($2,292,849); (5)
service costs ($815,113) and (6) other ($455,735).
19
<PAGE>
MANAGEMENT OF THE TRUST
The trustees and executive officers of the Trust and their principal
occupations for at least the last five years are set forth below. Unless
otherwise noted, the address of each executive officer and trustee is 56
Prospect Street, Hartford, Connecticut 06115-0480.
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- --------------------- --------- ----------------------
<S> <C> <C>
Robert Chesek (63) Trustee Trustee/Director (1981-present) and Chairman (1989-1994), Phoenix
49 Old Post Road Funds. Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Wethersfield, CT 06109 Phelps Institutional Mutual Funds (1996-present). Vice President,
Common Stock, Phoenix Home Life Mutual Insurance Company
(1980-1994). Director/Trustee, the National Affiliated Investment
Companies (until 1993).
E. Virgil Conway (68) Trustee Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (1978-present), Atlantic Mutual
Insurance Company (1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Freddie Mac Mortgage
Securities Fund (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), The Harlem Youth Development Foundation (1987-
present), Accuhealth (1994-present), Trism, Inc. (1994-present),
Realty Foundation of New York (1972-present), New York Housing
Partnership Development Corp. (Chairman) (1981-present) and Fund
Directions (Advisory Director) (1993-present). Director/Trustee,
Phoenix Funds (1993-present). Trustee, Phoenix-Aberdeen Series
Fund and Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present). Director, Duff & Phelps Utilities Tax-Free Income Inc. and
Duff & Phelps Utility and Corporate Bond Trust Inc. (1995-present).
Chairman, Audit Committee of the City of New York (1981-1996).
Advisory Director, Blackrock Fannie Mae Mortgage Securities Fund
(1989-1996). Chairman, Financial Accounting Standards Advisory
Council (1992-1995). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Harry Dalzell-Payne (68) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee, Phoenix-
330 East 39th Street Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
Apartment 29G Mutual Funds (1996-present). Director, Duff & Phelps Utilities
New York, NY 10016 Tax-Free Income Inc. and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1995-present). Director, Farragut Mortgage Co., Inc.
(1991-1994). Director/Trustee, the National Affiliated Investment
Companies (1983-1993). Formerly a Major General of the British
Army.
*Francis E. Jeffries (67) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-
6585 Nicholas Blvd. Aberdeen Series Inc. and Phoenix Duff & Phelps Institutional Mutual
Apt. 1601 Funds (1996-present). Director, Duff & Phelps Utilities Income Inc.
Naples, FL 33963 (1987-present), Duff & Phelps Utilities Tax-Free Income Inc. (1991-
present) and Duff & Phelps Utility and Corporate Bond Trust Inc.
(1993-present). Director, The Empire District Electric Company
(1984-present). Director (1989-1997), Chairman of the Board (1993-
1997), President (1989-1993), and Chief Executive Officer (1989-
1995), Phoenix Duff & Phelps Corporation.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- --------------------- --------- ----------------------
<S> <C> <C>
Leroy Keith, Jr. (58) Trustee Chairman and Chief Executive Officer, Carson Products Company
Chairman and Chief (1995-present). Director/Trustee, Phoenix Funds (1980-present).
Executive Officer Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Carson Product Company Institutional Mutual Funds (1996-present). Director, Equifax Corp.
64 Ross Road (1991-present) and Keystone International Fund, Inc. (1989-present).
Savannah, GA 30750 Trustee, Keystone Liquid Trust, Keystone Tax Exempt Trust, Keystone
Tax Free Fund, Master Reserves Tax Free Trust, and Master Reserves
Trust. President, Morehouse College (1987-1994). Chairman and
Chief Executive Officer, Keith Ventures (1992-1994). Director/
Trustee, the National Affiliated Investment Companies (until 1993).
Director, Blue Cross/Blue Shield (1989-1993) and First Union Bank
of Georgia (1989-1993).
*Philip R. McLoughlin (51) Trustee and Chairman (1997-present), Vice Chairman (1995-1997) and
President Chief Executive Officer (1995-present), Phoenix Duff & Phelps
Corporation. Director (1994-present) and Executive Vice President,
Investments (1988-present), Phoenix Home Life Mutual Insurance
Company. Director/Trustee and President, Phoenix Funds (1989-present).
Trustee and President, Phoenix-Aberdeen Series Fund and Phoenix Duff
& Phelps Institutional Mutual Funds (1996-present). Director, Duff &
Phelps Utilities Tax-Free Income Inc. (1995-present) and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present). Director (1983-
present) and Chairman (1995-present), Phoenix Investment Counsel, Inc.
Director (1984-present) and President (1990- present), Phoenix Equity
Planning Corporation. Director (1993-present), Chairman (1993-present)
and Chief Executive Officer (1993-1995), National Securities &
Research Corporation. Director, Phoenix Realty Group, Inc. (1994-
present), Phoenix Realty Advisors, Inc. (1987-present), Phoenix Realty
Investors, Inc. (1994-present), Phoenix Realty Securities, Inc. (1994-
present), PXRE Corporation (Delaware) (1985-present), and World Trust
Fund (1991-present). Director and Executive Vice President, Phoenix
Life and Annuity Company (1996-present). Director and Executive Vice
President, PHL Variable Insurance Company (1995-present). Director,
Phoenix Charter Oak Trust Company (1996-present). Director and Vice
President, PM Holdings, Inc. (1985-present). Director and President,
Phoenix Securities Group, Inc. (1993-1995). Director (1992-present) and
President (1992-1994), W.S. Griffith & Co., Inc. Director (1992-present)
and President (1992-1994), Townsend Financial Advisers, Inc. Director/
Trustee, the National Affiliated Investment Companies (until 1993).
Everett L. Morris (69) Trustee Vice President, W.H. Reaves and Company (1993-present). Director/
164 Laird Road Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
Colts Neck, NJ 07722 Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free Income
Inc. (1991-present) and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1993-present). Director, Public Service Enterprise Group,
Incorporated (1986-1993). President and Chief Operating Officer,
Enterprise Diversified Holdings, Incorporated (1989-1993).
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- --------------------- --------- ----------------------
<S> <C> <C>
*James M. Oates (51) Trustee Chairman, IBEX Capital Markets LLC (1997-present). Managing
Managing Director Director, Wydown Group (1994-present). Director, Phoenix Duff &
The Wydown Group Phelps Corporation (1995-present). Director/Trustee, Phoenix Funds
IBEX Capital Markets LLC (1987-present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
60 State Street Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Suite 950 Govett Worldwide Opportunity Funds, Inc. (1991-present), Blue Cross
Boston, MA 02109 and Blue Shield of New Hampshire (1994-present), Investors
Financial Service Corporation (1995-present), Investors Bank & Trust
Corporation (1995-present), Plymouth Rubber Co. (1995-present) and
Stifel Financial (1996-present). Member, Chief Executives
Organization (1996-present). Director (1984-1994), President (1984-
1994) and Chief Executive Officer (1986-1994), Neworld Bank.
Director/Trustee, the National Affiliated Investment Companies
(until 1993).
*Calvin J. Pedersen (55) Trustee Director (1986-present), President (1993-present) and Executive Vice
Phoenix Duff & Phelps President (1992-1993), Phoenix Duff & Phelps Corporation. Director/
Corporation Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
55 East Monroe Street Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
Suite 3600 (1996-present). President and Chief Executive Officer, Duff & Phelps
Chicago, IL 60603 Utilities Tax-Free Income Inc. (1995-present), Duff & Phelps Utilities
Income Inc. (1994-present) and Duff & Phelps Utility and Corporate
Bond Trust Inc. (1995-present).
Herbert Roth, Jr. (69) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee, Phoenix-
134 Lake Street Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
P.O. Box 909 Mutual Funds (1996-present). Director, Boston Edison Company
Sherborn, MA 01770 (1978-present), Phoenix Home Life Mutual Insurance Company
(1972-present), Landauer, Inc. (medical services) (1970-present),Tech
Ops./Sevcon, Inc. (electronic controllers) (1987-present), and Mark IV
Industries (diversified manufacturer) (1985-present). Director, Key
Energy Group (oil rig service) (1988-1994). Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Richard E. Segerson (51) Trustee Managing Director, Mullin Associates (1993-present). Director/
102 Valley Road Trustee, Phoenix Funds (1993-present). Trustee, Phoenix-Aberdeen
New Canaan, CT 07840 Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Vice President and General Manager, Coats & Clark,
Inc. (previously Tootal American, Inc.) (1991-1993). Director/Trustee,
the National Affiliated Investment Companies (1984-1993).
Lowell P. Weicker, Jr. (66) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee, Phoenix-
731 Lake Avenue Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
Greenwich, CT 06830 Mutual Funds (1996-present). Director, UST Inc. (1995-present),
HPSC Inc. (1995-present), Duty Free International, Inc. (1997-
present) and Compuware (1996-present). Visiting Professor, University
of Virginia (1997-present). Chairman, Dresing, Lierman, Weicker
(1995-1996). Governor of the State of Connecticut (1991-1995).
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- --------------------- --------- ----------------------
<S> <C> <C>
Michael E. Haylon (40) Executive Director and Executive Vice President--Investments, Phoenix Duff &
Vice Phelps Corporation (1995-present). Executive Vice President, Phoenix
President Funds (1993-present) and Phoenix-Aberdeen Series Fund (1996-
present). Executive Vice President (1997-present), Vice President (1996-
1997), Phoenix Duff & Phelps Institutional Mutual Funds. Director
(1994-present), President (1995-present), Executive Vice President
(1994-1995), Vice President (1991-1994), Phoenix Investment Counsel,
Inc. Director (1994-present), President (1996-present), Executive Vice
President (1994-1996), Vice President (1993-1994), National Securities
& Research Corporation. Director, Phoenix Equity Planning Corporation
(1995-present). Senior Vice President, Securities Investments, Phoenix
Home Life Mutual Insurance Company (1993-1995). Various other
positions with Phoenix Home Life Mutual Insurance Company
(1990-1993).
David R. Pepin (55) Executive Executive Vice President, Phoenix Funds, Phoenix-Aberdeen Series
Vice Fund and Phoenix Duff & Phelps Institutional Mutual Funds (1996-
President present). Director (1997-present) and Executive Vice President (1996-
present), Phoenix Duff & Phelps Corporation. Managing Director,
Phoenix-Aberdeen International Advisers, LLC (1996-present). Director
and Executive Vice President, Phoenix Equity Planning Corp. (1996-
present). Director, Phoenix Investment Counsel, Inc. and National
Securities & Research Corporation (1996-present). Various positions with
Phoenix Home Life Mutual Insurance Company (1994-1995). Vice
President and General Manager, Finance and Health, Digital Equipment
Corporation (1980-1994).
William J. Newman (58) Senior Executive Vice President (1995-present) and Chief Investment
Vice Strategist (1996-present), Phoenix Investment Counsel, Inc. Senior
President Vice President (1995-1996), Executive Vice President and Chief
Investment Strategist (1996-present), National Securities & Research
Corporation. Senior Vice President, Phoenix Equity Planning
Corporation (1995-1996). Vice President, Common Stock and Chief
Investment Strategist, Phoenix Home Life Insurance Company (April,
1995-November, 1995). Senior Vice President, Phoenix Strategic
Equity Series Fund (1996-present), The Phoenix Edge Series Fund
(1995-present), Phoenix Multi-Portfolio Fund (1995-present), Phoenix
Income and Growth Fund (1996-present), Phoenix Series Fund (1996-
present), Phoenix Strategic Allocation Fund, Inc. (1996-present),
Phoenix Worldwide Opportunities Fund (1996-present), Phoenix Duff
& Phelps Institutional Funds (1996-present), and Phoenix-Aberdeen
Series Fund (1996-present). Chief Investment Strategist, Kidder,
Peabody Co., Inc. (1993-1994). Managing Director, Equities, Bankers
Trust Company (1991-1993).
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- --------------------- --------- ----------------------
<S> <C> <C>
James D. Wehr (40) Senior Vice Managing Director, Fixed Income (1996-present), Vice President
President (1991-1996), Phoenix Investment Counsel, Inc. Managing Director,
Fixed Income (1996-present), Vice President (1993-1996), National
Securities & Research Corporation. Senior Vice President (1997-
present), Vice President (1988-1997) Phoenix Multi-Portfolio Fund;
Senior Vice President (1997-present), Vice President (1990-1997)
Phoenix Series Fund; Senior Vice President (1997-present), Vice
President (1991-1997) The Phoenix Edge Series Fund; Senior Vice
President (1997-present), Vice President (1993-1997) Phoenix
California Tax Exempt Bonds, Inc., and Senior Vice President
(1997-present), Vice President (1996-1997) Phoenix Duff & Phelps
Institutional Mutual Funds. Senior Vice President (1997-present)
Phoenix Multi-Sector Fixed Income Fund, Inc., Phoenix Multi-Sector
Short Term Bond Fund, Phoenix Income and Growth Fund and
Phoenix Strategic Allocation Fund, Inc. Managing Director, Public
Fixed Income, Phoenix Home Life Insurance Company (1991-1995).
David L. Albrycht (36) Vice Managing Director, Fixed Income (1996-present) and Vice President
President (1995-1996), Phoenix Investment Counsel, Inc. Managing Director,
Fixed Income (1996-present) and Investment Officer (1994-1996),
National Securities & Securities Research Corporation. Vice
President, Phoenix Multi-Portfolio Fund (1993-present), Phoenix
Multi-Sector Short Term Bond Fund (1993-present), Phoenix Multi-
Sector Fixed Income Fund, Inc. (1994-present), The Phoenix Edge
Series Fund (1997-present) and Phoenix Series Fund (1997-present).
Portfolio Manager, Phoenix Home Life Mutual Insurance Company
(1995-1996).
Curtiss O. Barrows (46) Vice Managing Director, Fixed Income (1996-present), Vice President
President (1991-1996), Phoenix Investment Counsel, Inc. Managing Director,
Fixed Income (1996-present), Vice President (1993-1996), National
Securities & Research Corporation. Vice President, Phoenix Series
Fund (1985-present), The Phoenix Edge Series Fund (1986-present)
and Phoenix Multi-Portfolio Fund (1995-1997). Portfolio Manger,
Public Bonds, Phoenix Home Life Insurance Company (1991-1995).
Various positions with Phoenix Home Life Mutual Insurance Company
(1985-1995).
Steven L. Colton (38) Vice Managing Director/Senior Portfolio Manager, Phoenix Investment
President Counsel, Inc. (1997-present). Vice President/Senior Portfolio Manager,
American Century Investment Management (1987-1997). Portfolio
Manager, American Century/Benham Income and Growth Fund
(1990-1997), American Century/Benham Equity Growth Fund (1991-
1996) and American Century/Benham Utilities Income Fund (1993-
1997). Vice President, The Phoenix Edge Series Fund, Phoenix Series
Fund, Phoenix Equity Series Fund (1997-present).
John M. Hamlin (39) Vice Portfolio Manager, Equities (1996-present), Vice President (1995-
President 1996), Phoenix Investment Counsel, Inc. Portfolio Manager, Equities
(1996-present), Investment Officer (1993-1996), National Securities &
Research Corporation. Vice President, Phoenix Income and Growth
Fund (1993-present) and Phoenix Series Fund (1994- present).
Portfolio Manager, Common Stock, Phoenix Home Life Insurance
Company (1989-1995).
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- --------------------- --------- ----------------------
<S> <C> <C>
John D. Kattar (42) Vice Managing Director/Senior Portfolio Manager (1997-present), Phoenix
President Investment Counsel, Inc. Vice President (1997-present), The Phoenix
Edge Series Fund, Phoenix Series Fund and Phoenix-Aberdeen Series
Fund. Director (1989-1997), Senior Vice President (1993-1996)
Baring Asset Management Company, Inc. Director, (1995-1997)
Baring Mutual Fund Management (Luxembourg).
William E. Keen, III (34) Vice Assistant Vice President, Phoenix Equity Planning Corporation
100 Bright Meadow Blvd. President (1996-present). Vice President, Phoenix Funds, Phoenix Duff &
P.O. Box 2200 Phelps Institutional Mutual Funds and Phoenix-Aberdeen Series
Enfield, CT 06083-2200 Fund (1996-present). Assistant Vice President, USAffinity
Investments LP (1994-1995). Treasurer and Secretary, USAffinity
Funds (1994-1995). Manager, Fund Administration, SEI Corporation
(1991-1994).
Christopher J. Kelleher (42) Vice Managing Director, Fixed Income (1996-present), Vice President
President (1991-1996), Phoenix Investment Counsel, Inc. Managing Director,
Fixed Income (1996-present), Vice President (1993-1996), National
Securities & Research Corporation. Vice President, Phoenix Series
Fund (1989-present), The Phoenix Edge Series Fund (1989-1997) and
Phoenix Duff & Phelps Institutional Mutual Funds. (1996-present).
Portfolio Manager, Public Bonds, Phoenix Home Life Insurance
Company (1991-1995).
William R. Moyer (53) Vice Senior Vice President and Chief Financial Officer, Phoenix Duff &
100 Bright Meadow Blvd. President Phelps Corporation (1995-present). Senior Vice President, Finance
P.O. Box 2200 (1990-present), Chief Financial Officer (1996-present), and Treasurer
Enfield, CT 06083-2200 (1994-1996), Phoenix Equity Planning Corporation. Senior Vice
President (1990-present), Chief Financial Officer (1996-present) and
Treasurer (1994-present), Phoenix Investment Counsel, Inc. Senior
Vice President, Finance (1993-present), Chief Financial Officer
(1996-present), and Treasurer (1994-present), National Securities &
Research Corporation. Senior Vice President and Chief Financial
Officer, Duff & Phelps Investment Management Co. (1996-present).
Vice President, Phoenix Funds (1990-present), Phoenix-Duff &
Phelps Institutional Mutual Funds (1996-present) and Phoenix-
Aberdeen Series Fund (1996-present). Senior Vice President and
Chief Financial Officer, W. S. Griffith & Co., Inc. (1992-
1995) and Townsend Financial Advisers, Inc. (1993-1995). Vice
President, the National Affiliated Investment Companies (until 1993).
Vice President, Investment Products Finance, Phoenix Home Life
Mutual Insurance Company (1990-1995).
Leonard J. Saltiel (43) Vice Managing Director, Operations and Service (1996-present), Senior Vice
President President (1994-1996), Phoenix Equity Planning Corporation. Vice
President, Phoenix Funds (1994-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present) and Phoenix-Aberdeen Series
Fund (1996-present). Vice President, National Securities & Research
Corporation (1994-1995). Vice President, Investment Operations,
Phoenix Home Life Mutual Insurance Company (1994-1995). Various
positions with Home Life Insurance Company and Phoenix Home Life
Mutual Insurance Company (1987-1994).
Julie L. Sapia (40) Vice Head Money Market Trader (1997-present), Money Market Trader
President (1995-1997), Phoenix Investment Counsel, Inc. Vice President (1997-
present), The Phoenix Edge Series Fund, Phoenix Series Fund,
Phoenix Duff & Phelps Institutional Mutual Funds and Phoenix-
Aberdeen Series Fund. Various positions with Phoenix Home Life
Mutual Insurance Company (1985-1995).
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Trust During Past Five Years
- --------------------- --------- ----------------------
<S> <C> <C>
Dorothy J. Skaret (45) Vice Director, Money Market Trading (1996-present), Vice President
President (1991-1996), Phoenix Investment Counsel Inc. Director, Money
Market Trading (1996-present), Vice President (1993-1996), National
Securities & Research Corporation. Vice President, Phoenix Series
Fund (1990-present), The Phoenix Edge Series Fund (1990-present),
Phoenix-Aberdeen Series Fund (1996-present), Phoenix Realty
Securities, Inc. (1995-present), and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director, Public Fixed
Income, Phoenix Home Life Mutual Insurance Company (1991-1995).
Various positions with Phoenix Home Life Mutual Insurance Company
(1986-1991).
Pierre G. Trinque (42) Vice Vice President (1997-present), The Phoenix Edge Series Fund and
President Phoenix Series Fund. Managing Director, Equities (March, 1997-
November, 1997), Managing Director, Director of Equity Research
(October, 1996-March, 1997), Senior Research Analyst, Equities
(January, 1996-October, 1996) and Associate Portfolio Manager-
Institutional Funds (1992-1995), Phoenix Investment Counsel, Inc.
Nancy G. Curtiss (45) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer (1996-
present), Phoenix Equity Planning Corporation. Treasurer, Phoenix Funds
(1994-present), Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present) and Phoenix-Aberdeen Series Fund (1996-present).
Second Vice President and Treasurer, Fund Accounting, Phoenix Home
Life Mutual Insurance Company (1994-1995). Various positions with
Phoenix Home Life Insurance Company (1987-1994).
G. Jeffrey Bohne (50) Secretary Vice President and General Manager, Phoenix Home Life Mutual
101 Munson Street Insurance Co. (1993-present). Vice President, Transfer Agent
Greenfield, MA 01301 Operations (1993-1996). Vice President, Mutual Fund Customer
Service (1996-present), Phoenix Equity Planning Corporation,
Secretary and/or Clerk, Phoenix Funds (1993-present), Phoenix Duff
& Phelps Institutional Mutual Funds (1996-present) and Phoenix-
Aberdeen Series Fund (1996-present). Vice President, Home Life of
New York Insurance Company (1984-1992).
</TABLE>
- -----------
*Trustees identified with an asterisk are considered to be interested persons
of the Trust (within the meaning of the Investment Company Act of 1940, as
amended) because of their affiliation with Phoenix Investment Counsel, Inc.,
or Phoenix Equity Planning Corporation or Phoenix Duff & Phelps Corporation.
26
<PAGE>
Principal Shareholders
The following table sets forth information as of October 31, 1997 with
respect to each person who owns of record or is known by the Trust to own of
record or beneficially own 5% or more of any class of the Trust's equity
securities.
<TABLE>
<CAPTION>
Name of shareholder Name of Fund Number of shares Percent of Class
- ------------------------------------ ------------------ ------------------ -----------------
<S> <C> <C> <C>
Trustees of Phoenix Savings and Aggressive 877,591.291 6.18%
Investment Plan Growth Fund
100 Bright Meadow Blvd Class A
PO Box 1900
Enfield, CT 06083-1900
Phoenix Securities Group Inc. Money Market 29,576,711.080 14.26%
100 Bright Meadow Blvd Fund Class A
Enfield, CT 06082
MLPF&S for the sole benefit of its U.S. Government 90,650.000 15.44%
customers* Securities Fund
ATTN: Fund Administration Class B
4800 Deer Lake Dr E 3rd Fl
Jacksonville, FL 32246-6484
MLPF&S for the sole benefit of its High Yield Fund 960,215.000 15.69%
customers* Class B
ATTN: Fund Administration
4800 Deer Lake Dr E 3rd Fl
Jacksonville, FL 32246-6484
MLPF&S for the sole benefit of its Convertible Fund 87,702.000 22.20%
customers* Class B
ATTN: Fund Administration
4800 Deer Lake Dr E 3rd Fl
Jacksonville, FL 32246-6484
MLPF&S for the sole benefit of its Growth Fund 135,582.839 5.45%
customers* Class B
ATTN: Fund Administration
4800 Deer Lake Dr E 3rd Fl
Jacksonville, FL 32246-6484
</TABLE>
*Record owner only for its individual customers. To the Trust's knowledge, no
customer beneficially owned 5% or more of the total outstanding shares of any
Class of any Fund.
At October 31, 1997, the Trustees and officers as a group owned less than
1% of the then outstanding shares of the Trust.
For services rendered to the Trust during the fiscal year ended October
31, 1997, the Trustees received an aggregate of $141,173 from the Trust as
Trustees' fees. For services on the Board of Trustees of the Phoenix Funds,
each Trustee who is not a full-time employee of the Adviser or any of its
affiliates currently receives a retainer at the annual rate of $40,000 and
$2,500 per joint meeting of the Boards. Each Trustee who serves on the Audit
Committee receives a retainer at the annual rate of $2,000 and a fee of $2,000
per joint Audit Committee meeting attended. Each Trustee who serves on the
Nominating Committee receives an annual retainer at the annual rate of $1,000
and a fee of $1,000 per joint Nominating Committee meeting attended. Each
Trustee who serves on the Executive Committee and who is not an interested
person of the Trust receives a retainer at the annual rate of $1,000 and $1,000
per joint Executive Committee meeting attended. The function of the Executive
Committee is to serve as a contract review, compliance review and performance
review delegate of the full Board of Trustees. Costs are allocated equally to
each of the Series and the Funds within the Phoenix Fund complex. The foregoing
fees do not include reimbursement of expenses incurred in connection with
meeting attendance. Officers and employees of the Adviser who are not
interested persons are compensated for their services by the Adviser and
receive no compensation from the Trust.
27
<PAGE>
For the Trust's last fiscal year ending October 31, 1997, 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 (13 Funds)
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
- ------------------------ -------------- --------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
C. Duane Blinn** $ 12,600* $132,500
Robert Chesek $ 11,078 $118,000
E. Virgil Conway+ $ 13,860 $146,500
Harry Dalzell-Payne+ $ 12,075 $130,000
Francis E. Jeffries $ 7,875* None None $ 85,000
Leroy Keith, Jr. $ 11,078 for any for any $118,000
Philip R. McLoughlin+ $ 0 Trustee Trustee $ 0
Everett L. Morris+ $ 11,498* $126,000
James M. Oates+ $ 11,498 $124,500
Calvin J. Pedersen $ 0 $ 0
Philip R. Reynolds** $ 11,078 $118,000
Herbert Roth, Jr.+ $ 14,438* $152,500
Richard E. Segerson $ 12,285 $131,000
Lowell P. Weicker, Jr. $ 11,813 $125,000
</TABLE>
*This compensation (and the earnings thereon) will be deferred pursuant to the
Deferred Compensation Plan. At October 31, 1997, the total amount of deferred
compensation (including interest and other accumulation earned on the original
amounts deferred) accrued for Messrs. Blinn, Jeffries, Morris and Roth was
$395,602, $49,350, $108,675 and $135,965, respectively. At present, by
agreement among the Fund, the Distributor and the electing director, director
fees that are deferred are paid by the Fund to the Distributor. The liability
for the deferred compensation obligation appears only as a liability of the
Distributor.
**Pursuant to the retirement policy of the Phoenix Funds, Messrs. Blinn and
Reynolds retired from the Board of Trustees effective January 1, 1998.
+Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
OTHER INFORMATION
Financial Statements
Financial information relating to the Trust is contained in the Annual
Report to Shareholders for the year ended October 31, 1997 and is available by
calling Equity Planning at (800) 243-4361, or by writing to Equity Planning at
100 Bright Meadow Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200. The
Annual Report is incorporated into this Statement of Additional Information by
reference. A copy of the Annual Report must precede or accompany this Statement
of Additional Information.
Independent Accountants
Price Waterhouse LLP, 160 Federal Street, Boston, MA 02110, has been
selected independent accountants for the Trust. Price Waterhouse LLP audits the
Trust's 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 Trust's assets (the "Custodian")
and Equity Planning acts as Transfer Agent for the Trust (the "Transfer Agent").
Report to Shareholders
The fiscal year of the Trust ends on October 31. The Trust will send
financial statements to its shareholders at least semiannually. An Annual
Report containing financial statements audited by the Trust's independent
accountants will be sent to shareholders each year.
28
<PAGE>
Phoenix Balanced Fund Series
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1997
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- -------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--18.6%
U.S. Treasury Bonds--2.7%
U.S. Treasury Bonds 6.375%,
8/15/27 .................................... AAA $44,700 $ 46,068,938
------------
U.S. Treasury Notes--10.7%
U.S. Treasury Notes 6.875%,
3/31/00 .................................... AAA 61,000 62,561,600
U.S. Treasury Notes 6%,
8/15/00 .................................... AAA 46,000 46,373,750
U.S. Treasury Notes 5.75%,
10/31/02 .................................... AAA 31,500 31,549,203
U.S. Treasury Notes 6.50%,
10/15/06 .................................... AAA 44,005 45,697,872
------------
186,182,425
------------
Agency Mortgage-Backed Securities--5.2%
FNMA 6.85%, 5/17/20 ........................... AAA 13,600 13,668,000
GNMA 6.50%, '23-26 ........................... AAA 76,494 76,089,771
------------
89,757,771
------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $318,536,384) ....................................... 322,009,134
------------
NON-CONVERTIBLE BONDS--7.5%
Asset-Backed Securities--1.8%
AESOP Funding II LLC 144A
97-1, A2 6.40%, 10/20/03 (c) .AAA 8,500 8,561,094
Associates Manufactured
Housing Pass Through 97-2
A6 7.075%, 3/15/28 ........................ AAA 3,000 3,015,000
Fleetwood Credit Corp. 96-B, A
6.90%, 3/15/12 .............................. AAA 3,103 3,143,347
Green Tree Financial Corp.
96-2, M1 7.60%, 4/15/27 ..................... AA- 9,150 9,610,359
Green Tree Financial Corp.
96-4, A6 7.40%, 6/15/27 ..................... AAA 4,500 4,649,063
TLFC Equipment Lease Trust
96-1, A 5.98%, 11/20/02 ..................... AAA 1,845 1,843,695
------------
30,822,558
------------
Non-Agency Mortgage-Backed Securities--5.4%
CS First Boston Mortgage 95-
AE, B 7.182%, 11/25/27 ..................... AA- 6,260 6,322,600
Chase Commercial Mortgage
Securities Corp. 96-2, A1
6.70%, 7/19/03 .............................. AAA 1,045 1,067,101
DLJ Mortgage Acceptance Corp.
96-CF1, A1B 144A 7.58%,
3/13/28 (c) ................................. AAA 4,975 5,303,039
First Union Lehman Bros.
97-C1, B 7.43%, 4/18/07 ..................... Aa(d) 8,532 8,951,934
G.E. Capital Mortgage Services,
Inc. 96-8, M 7.25%, 5/25/26 .AA 5,133 5,199,943
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- -------------
<S> <C> <C> <C>
Non-Agency Mortgage-Backed Securities--continued
Lehman Large Loan 97-LL1, B
6.95%, 3/12/07 .............................. AA $10,500 $ 10,714,922
Nationslink Funding Corp. 96-1,
B 7.69%, 12/20/05 ........................... AA 5,907 6,245,709
Prudential Home Mortgage
Securities 93-L, 2B3 144A
6.641%, 12/25/23 (c) ........................ A 5,000 4,892,187
Residential Asset Securitization
Trust 96-A8, A1 8%,
12/25/26 .................................... AAA 3,276 3,341,807
Residential Funding Mortgage
Securities I 96-S1, A11
7.10%, 1/25/26 .............................. AAA 7,000 7,096,250
Residential Funding Mortgage
Securities I 96-S4, M1 7.25%,
2/25/26 .................................... AA 5,930 5,965,380
Residential Funding Mortgage
Securities I 96-S8, A4 6.75%,
3/25/11 .................................... AAA 2,670 2,702,969
Resolution Trust Corp. 93-C1, B
8.75%, 5/25/24 .............................. Aa(d) 4,541 4,541,200
Resolution Trust Corp. 95-2, M2
7.009%, 5/25/29 ........................... Aa(d) 4,061 4,102,442
Securitized Asset Sales 93-J 2B
6.807%, 11/28/23 ........................... A 7,252 7,088,594
Structured Asset Securities
Corp. 93-C1, B 6.60%,
10/25/24 .................................... A+ 4,415 4,338,095
Structured Asset Securities
Corp. 95-C4, B 7%, 6/25/26 .................. AA 5,000 5,067,188
------------
92,941,360
------------
Paper & Forest Products--0.2%
Buckeye Cellulose Corp. 9.25%,
9/15/08 .................................... BB- 4,185 4,383,787
------------
Truckers--0.1%
Teekay Shipping Corp. 8.32%,
2/1/08 .................................... BB 1,675 1,725,250
------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $126,448,775) ............................................129,872,955
------------
FOREIGN GOVERNMENT SECURITIES--1.9%
Argentina--0.5%
Republic of Argentina Discount
L-GL Euro 6.875%, 3/31/23 (f). BB 5,100 4,035,375
Republic of Argentina Global
Bond 11.375%, 1/30/17 ..................... BB 800 764,000
Republic of Argentina Par L-GP
5.50%, 3/31/23 (f) ........................ BB 6,050 4,076,188
------------
8,875,563
------------
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Phoenix Balanced Fund Series
- --------------------------------------------------------------------------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- ------------
Brazil--0.4%
Republic of Brazil Discount Z-L
Euro 6.688%, 4/15/24 (f) ......... BB- $ 5,200 $ 4,043,000
Republic of Brazil Par Z-L Euro
5.25%, 4/15/24 (f) ............... BB- 5,000 3,306,250
-----------
7,349,250
-----------
Colombia--0.5%
Republic of Colombia 7.25%,
2/15/03 ........................ BBB- 8,950 8,685,259
-----------
Mexico--0.5%
United Mexican States Discount
B Euro 6.836%, 12/31/19 (e)(f) . BB 6,900 6,248,812
United Mexican States Series B
Euro 6.25%, 12/31/19 (e) ......... BB 1,500 1,200,000
-----------
7,448,812
-----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $29,872,715) .............................. 32,358,884
-----------
FOREIGN NON-CONVERTIBLE BONDS--0.2%
Chile--0.2%
Petropower I Funding Trust
144A 7.36%, 2/15/14 (c) ......... BBB 2,900 2,866,592
-----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $2,900,000) .............................. 2,866,592
-----------
MUNICIPAL BONDS--2.7%
California--1.7%
Kern County Pension Obligation
Taxable 7.26%, 8/15/14 ......... AAA 6,830 7,093,979
Long Beach Pension Obligation
Taxable 6.87%, 9/1/06 ............ AAA 3,090 3,164,284
Orange County Pension Series A
Taxable 7.62%, 9/1/08 ............ AAA 9,545 10,275,479
San Bernardino County
Obligation Revenue Taxable
6.87%, 8/1/08 .................. AAA 1,480 1,518,406
San Bernardino County
Obligation Revenue Taxable
6.94%, 8/1/09 .................. AAA 4,035 4,153,468
Ventura County Pension Taxable
6.58%, 11/1/06 .................. AAA 3,560 3,577,800
-----------
29,783,416
-----------
Florida--0.9%
Miami Beach Special Obligation
Taxable 8.60%, 9/1/21 ............ AAA 11,675 13,041,559
University of Miami
Exchangeable Revenue Series
A Taxable 7.65%, 4/1/20 ......... AAA 1,940 2,007,201
-----------
15,048,760
-----------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- ------------
Virginia--0.1%
Newport News Taxable Series B
7.05%, 1/15/25 .................. AA- $ 1,500 $ 1,490,550
-----------
TOTAL MUNICIPAL BONDS
(Identified cost $44,833,632) ............................ 46,322,726
-----------
CONVERTIBLE BONDS--0.7%
Retail (General Merchandise)--0.7%
Staples, Inc. Subordinate
Debenture Cv. 144A 4.50%,
10/1/00 (c) ..................... BB- 10,000 12,687,500
-----------
TOTAL CONVERTIBLE BONDS
(Identified cost $10,000,000) ............................ 12,687,500
-----------
SHARES
---------
PREFERRED STOCKS--1.1%
REITS--1.1%
Home Ownership Funding 2, Step-down
Pfd. 144A 13.338% (c) ..................... 20,000 19,826,900
-----------
TOTAL PREFERRED STOCKS
(Identified cost $19,371,530) ........................ 19,826,900
-----------
COMMON STOCKS--51.6%
Air Freight--0.2%
Federal Express Corp. (b) ..................... 53,400 3,564,450
-----------
Banks (Major Regional)--4.2%
AmSouth Bancorporation ........................ 64,700 3,109,644
BankBoston Corp. .............................. 60,400 4,896,175
Compass Bankshares, Inc. ..................... 50,100 1,888,144
First Union Corp. ........................... 35,000 1,717,188
Fleet Financial Group, Inc. .................. 80,100 5,151,431
Mellon Bank Corp. ........................... 380,000 19,593,750
NationsBank Corp. ........................... 420,400 25,171,450
Washington Mutual, Inc. ..................... 158,800 10,867,875
-----------
72,395,657
-----------
Banks (Money Center)--1.1%
BankAmerica Corp. ........................... 139,800 9,995,700
Citicorp .................................... 67,100 8,391,694
-----------
18,387,394
-----------
Biotechnology--0.1%
Centocor, Inc. (b) ........................... 35,600 1,566,400
-----------
Broadcasting (Television, Radio, & Cable)--0.1%
Chancellor Media Corp. (b) .................. 28,700 1,574,912
-----------
Chemicals--0.5%
Monsanto Co. ................................. 196,100 8,383,275
-----------
Communications Equipment--0.7%
Ciena Corp. (b) .............................. 66,800 3,674,000
Lucent Technologies, Inc. ..................... 107,000 8,820,812
-----------
12,494,812
-----------
Computers (Hardware)--2.0%
International Business Machines Corp. . 360,100 35,312,306
-----------
See Notes to Financial Statements
5
<PAGE>
Phoenix Balanced Fund Series
- --------------------------------------------------------------------------------
SHARES VALUE
--------- ------------
Computers (Networking)--0.6%
Cisco Systems, Inc. (b) ..................... 131,150 $10,758,392
-----------
Computers (Peripherals)--0.6%
EMC Corp. (b) ................................. 189,900 10,634,400
-----------
Computers (Software & Services)--1.7%
Adaptec, Inc. (b) ........................... 243,900 11,813,906
BMC Software, Inc. (b) ........................ 190,800 11,519,550
Compuware Corp. (b) ........................... 76,300 5,045,338
Edwards (J.D.) & Co. (b) ..................... 46,000 1,564,000
-----------
29,942,794
-----------
Distributors (Food & Health)--1.5%
Cardinal Health, Inc. ........................ 348,200 25,853,850
-----------
Electrical Equipment--1.2%
General Electric Co. ........................ 301,900 19,491,419
Honeywell, Inc. .............................. 10,500 714,656
-----------
20,206,075
-----------
Electronics (Instrumentation)--1.1%
Linear Technology Corp. ..................... 125,900 7,915,962
Perkin Elmer Corp. ........................... 192,700 12,043,750
-----------
19,959,712
-----------
Electronics (Semiconductors)--1.2%
National Semiconductor Corp. (b) ............ 262,800 9,460,800
Texas Instruments, Inc. ..................... 113,500 12,109,031
-----------
21,569,831
-----------
Entertainment--0.6%
Tele-Comm Liberty Media Group (b) ............ 56,100 1,952,981
Walt Disney Co. .............................. 103,900 8,545,775
-----------
10,498,756
-----------
Financial (Diversified)--1.7%
American Express Co. ........................ 48,700 3,798,600
Franklin Resources, Inc. ..................... 138,200 12,420,725
Price (T. Rowe) Associates .................. 209,600 13,886,000
-----------
30,105,325
-----------
Health Care (Diversified)--1.1%
Bristol-Myers Squibb Co. ..................... 215,000 18,866,250
-----------
Health Care (Drugs--Major Pharmaceuticals)--3.7%
Lilly (Eli) & Co. ........................... 271,600 18,163,250
Merck & Co., Inc. ........................... 164,900 14,717,325
Pfizer, Inc. ................................. 382,400 27,054,800
Watson Pharmaceuticals, Inc. (b) ............ 159,400 5,060,950
-----------
64,996,325
-----------
Health Care (Hospital Management)--0.9%
HBO & Co. .................................... 369,900 16,090,650
-----------
Health Care (Medical Products & Supplies)--1.7%
Baxter International, Inc. .................. 202,000 9,342,500
Guidant Corp. ................................. 195,600 11,247,000
Medtronic, Inc. .............................. 188,800 8,212,800
-----------
28,802,300
-----------
Household Furn. & Appliances--0.2%
Sunbeam Corp., Inc. ........................... 79,300 3,593,281
-----------
SHARES VALUE
--------- ------------
Household Products (Non-Durables)--1.6%
Colgate-Palmolive Co. ........................ 207,700 $13,448,575
Procter & Gamble Co. ........................ 202,000 13,736,000
-----------
27,184,575
-----------
Insurance (Multi-Line)--1.6%
Hartford Financial Services Group, Inc. 107,100 8,675,100
Travelers Group, Inc. ........................ 274,200 19,194,000
-----------
27,869,100
-----------
Insurance (Property-Casualty)--1.1%
Allstate Corp. .............................. 230,100 19,083,919
-----------
Investment Banking/Brokerage--0.9%
Merrill Lynch & Co., Inc. ..................... 239,400 16,189,425
-----------
Machinery (Diversified)--0.6%
Deere & Co. ................................. 193,800 10,198,725
-----------
Manufacturing (Diversified)--1.0%
Tyco International Ltd. ..................... 480,000 18,120,000
-----------
Natural Gas--0.4%
Columbia Gas System, Inc. ..................... 88,600 6,401,350
-----------
Oil (Domestic Integrated)--1.1%
Tosco Corp. ................................. 561,200 18,519,600
-----------
Oil & Gas (Drilling & Equipment)--5.4%
BJ Services Co. (b) ........................... 41,400 3,508,650
Diamond Offshore Drilling, Inc. ............... 90,700 5,646,075
ENSCO International, Inc. ..................... 127,800 5,375,588
Halliburton Co. .............................. 299,600 17,863,650
Nabors Industries, Inc. (b) .................. 158,000 6,497,750
Noble Drilling Corp. (b) ..................... 557,300 19,818,981
Rowan Companies, Inc. (b) ..................... 87,300 3,393,788
Schlumberger Ltd. ........................... 205,600 17,990,000
Transocean Offshore, Inc. ..................... 219,200 11,836,800
Veritas DGC, Inc. (b) ........................ 43,000 1,760,313
-----------
93,691,595
-----------
Oil & Gas (Exploration & Production)--0.7%
Apache Corp. ................................. 295,900 12,427,800
-----------
Paper & Forest Products--0.6%
Fort James Corp. .............................. 246,700 9,790,906
-----------
Personal Care--1.1%
Gillette Co. ................................. 206,700 18,409,219
-----------
Publishing (Newspapers)--0.6%
Gannett Co, Inc. .............................. 197,600 10,386,350
-----------
Retail (Building Supplies)--0.6%
Home Depot, Inc. .............................. 180,200 10,023,625
-----------
Retail (Drug Stores)--1.5%
CVS Corp. .................................... 261,700 16,045,481
Rite Aid Corp. .............................. 169,700 10,075,938
-----------
26,121,419
-----------
Retail (Food Chains)--0.6%
Safeway, Inc. (b) ........................... 180,900 10,514,812
-----------
Retail (General Merchandise)--1.2%
Borders Group, Inc. (b) ..................... 206,100 5,345,719
Staples, Inc. (b) ........................... 572,800 15,036,000
-----------
20,381,719
-----------
See Notes to Financial Statements
6
<PAGE>
Phoenix Balanced Fund Series
- --------------------------------------------------------------------------------
SHARES VALUE
--------- ---------------
Telecommunications (Cellular/Wireless)--1.2%
AirTouch Communications, Inc. (b) ......... 518,400 $20,023,200
-------------
Telephone--0.1%
LCI International, Inc. (b) ............... 65,200 1,687,050
-------------
Tobacco--1.8%
Philip Morris Companies, Inc. ............ 768,100 30,435,962
-------------
Waste Management--1.2%
U.S. Filter Corp. (b) ..................... 516,800 20,736,600
-------------
TOTAL COMMON STOCKS
(Identified cost $783,673,628) .................. 893,754,098
-------------
FOREIGN COMMON STOCKS--2.9%
Banks (Major Regional)--0.2%
Banco Rio de La Plata SA ADR
(Argentina) (b) ........................ 355,000 3,727,500
-------------
Household Furn. & Appliances--1.8%
Philips Electronics NV ADR NY
Registered (Netherlands) ............... 400,000 31,350,000
-------------
Oil (Domestic Integrated)--0.4%
YPF Sociedad Anonima Sponsored
ADR Class D (Argentina) ............... 244,400 7,820,800
-------------
Oil (International Integrated)--0.5%
Elf Aquitane Sponsored ADR (France) (b) 134,700 8,317,725
-------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $50,522,802)................... 51,216,025
-------------
TOTAL LONG-TERM INVESTMENTS--87.2%
(Identified cost $1,386,159,466) ............. 1,510,914,814
-------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------- ---------
SHORT-TERM OBLIGATIONS--10.2%
Commercial Paper--8.5%
Cargill Inc. 5.65%, 11/3/97 ...... A-1+ $ 3,765 3,763,818
Pitney Bowes Credit Corp.
5.57%, 11/4/97 ............... A-1+ 7,520 7,516,510
International Lease Finance
Corp. 5.50%, 11/5/97 ......... A-1 10,000 9,993,889
Sara Lee Corp. 5.51%, 11/5/97 .A-1+ 4,505 4,502,242
Sara Lee Corp. 5.50%, 11/7/97 .A-1+ 11,000 10,989,917
Ciesco L.P. 5.52%, 11/10/97 ...... A-1+ 2,775 2,771,171
General Re Corp. 5.50%,
11/10/97 ..................... A-1+ 12,895 12,877,269
Kimberly-Clark Corp. 5.57%,
11/10/97 ..................... A-1+ 8,000 7,988,860
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- ----------------------
Commercial Paper--continued
Kellogg Co. 5.52%,
11/13/97 .................. A-1+ $ 5,300 $ 5,290,248
Enterprise Funding Corp.
5.57%, 11/17/97 ............ A-1+ 2,192 2,186,574
Kimberly-Clark Corp.
5.48%, 11/18/97 ............ A-1+ 7,560 7,540,436
Preferred Receivables
Funding Corp. 5.53%,
11/18/97 .................. A-1 7,150 7,131,329
Albertson's Inc. 5.49%,
11/19/97 .................. A-1 7,800 7,778,589
Albertson's Inc. 5.50%,
11/19/97 .................. A-1 10,665 10,635,671
AlliedSignal Inc. 5.53%,
11/19/97 .................. A-1 1,870 1,864,829
Abbott Laboratories,
5.50%, 11/20/97 ............ A-1+ 200 199,419
Receivables Capital Corp.
5.55%, 11/20/97 ............ A-1+ 5,121 5,106,000
Private Export Funding
Corp. 5.48%, 12/3/97 ...... A-1+ 5,000 4,975,644
Private Export Funding
Corp. 5.51%, 12/3/97 ...... A-1+ 15,000 14,926,533
Private Export Funding
Corp. 5.57%, 12/4/97 ...... A-1+ 5,000 4,974,471
Preferred Receivables
Funding Corp. 5.52%,
12/11/97 .................. A-1 5,790 5,753,224
Heinz (H.J.) Co. 5.52%,
12/15/97 .................. A-1 8,540 8,482,383
--------------
147,249,026
--------------
Federal Agency Securities--1.7%
FFCB 5.50%, 11/3/97 ..................... 5,000 5,000,091
FHLMC 5.47%, 11/12/97 ..................... 11,785 11,765,303
FHLMC 5.46%, 11/13/97 ..................... 5,835 5,824,380
FNMA 5.46%, 11/24/97 ..................... 6,170 6,148,477
--------------
28,738,251
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $175,988,440) ..................... 175,987,277
--------------
TOTAL INVESTMENTS--97.4%
(Identified cost $1,562,147,906)..................... 1,686,902,091(a)
Cash and receivables, less liabilities--2.6% ...... 45,698,172
--------------
NET ASSETS--100.0% $1,732,600,263
==============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $145,763,717 and gross
depreciation of $24,122,475 for income tax purposes. At October 31, 1997,
the aggregate cost of securities for federal income tax purposes was
$1,565,260,849.
(b) Non-income producing.
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1997, these securities amounted to a value of $54,137,312 or 3.1% of net
assets.
(d) As rated by Moody's, Fitch or Duff & Phelps.
(e) Rights incorporated as a unit.
(f) Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
See Notes to Financial Statements
7
<PAGE>
Phoenix Balanced Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
Assets
Investment securities at value
(Identified cost $1,562,147,906) $1,686,902,091
Short-term investments held as collateral for loaned
securities 539,973
Cash 971,706
Receivables
Investment securities sold 48,531,371
Dividends and interest 5,249,560
Fund shares sold 889,210
--------------
Total assets 1,743,083,911
--------------
Liabilities
Payables
Investment securities purchased 5,641,600
Fund shares repurchased 2,408,668
Collateral on securities loaned 539,973
Investment advisory fee 798,944
Distribution fee 397,940
Transfer agent fee 358,400
Financial agent fee 33,481
Trustees' fee 3,636
Accrued expenses 301,006
--------------
Total liabilities 10,483,648
--------------
Net Assets $1,732,600,263
==============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $1,355,489,730
Undistributed net investment income 4,441,011
Accumulated net realized gain 247,915,337
Net unrealized appreciation 124,754,185
--------------
Net Assets $1,732,600,263
==============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $1,702,384,566) 94,226,804
Net asset value per share $ 18.07
Offering price per share
$18.07/(1-4.75%) $ 18.97
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $30,215,697) 1,675,102
Net asset value and offering price per share $ 18.04
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
Investment Income
Interest $ 52,009,109
Dividends 12,458,844
Security lending 844,196
------------
Total investment income 65,312,149
------------
Expenses
Investment advisory fee 9,489,765
Distribution fee--Class A 4,424,138
Distribution fee--Class B 282,982
Financial agent fee 423,306
Transfer agent 2,590,350
Printing 350,915
Custodian 147,813
Professional 35,929
Registration 31,799
Trustees 19,365
Miscellaneous 67,620
------------
Total expenses 17,863,982
------------
Net investment income 47,448,167
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 250,102,191
Net realized gain on written options 59,252
Net change in unrealized appreciation (depreciation) on
investments 404,566
------------
Net gain on investments 250,566,009
------------
Net increase in net assets resulting from
operations $298,014,176
============
See Notes to Financial Statements
8
<PAGE>
Phoenix Balanced Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------ -----------------
<S> <C> <C>
From Operations
Net investment income $ 47,448,167 $ 59,439,739
Net realized gain 250,161,443 195,766,527
Net change in unrealized appreciation (depreciation) 404,566 (9,808,717)
-------------- --------------
Increase in net assets resulting from operations 298,014,176 245,397,549
-------------- --------------
From Distributions to Shareholders
Net investment income--Class A (48,278,671) (62,440,078)
Net investment income--Class B (561,622) (463,570)
Net realized gains--Class A (194,038,812) (124,234,079)
Net realized gains--Class B (2,800,356) (996,128)
-------------- --------------
Decrease in net assets from distributions to shareholders (245,679,461) (188,133,855)
-------------- --------------
From Share Transactions
Class A
Proceeds from sales of shares (4,597,468 and 8,800,790 shares, respectively) 78,630,179 149,289,059
Net asset value of shares issued from reinvestment of distributions
(13,753,866 and 10,383,411 shares, respectively) 223,224,574 172,128,352
Cost of shares repurchased (32,162,386 and 48,762,578 shares, respectively) (548,027,979) (825,995,436)
-------------- --------------
Total (246,173,226) (504,578,025)
-------------- --------------
Class B
Proceeds from sales of shares (319,964 and 616,550 shares, respectively) 5,480,183 10,464,882
Net asset value of shares issued from reinvestment of distributions
(189,697 and 80,135, respectively) 3,074,179 1,326,954
Cost of shares repurchased (329,164 and 199,574 shares, respectively) (5,630,228) (3,374,422)
-------------- --------------
Total 2,924,134 8,417,414
-------------- --------------
Decrease in net assets from share transactions (243,249,092) (496,160,611)
-------------- --------------
Net decrease in net assets (190,914,377) (438,896,917)
Net Assets
Beginning of period 1,923,514,640 2,362,411,557
-------------- --------------
End of period (including undistributed net investment income of
$4,441,011 and $4,825,975, respectively) $1,732,600,263 $1,923,514,640
============== ==============
</TABLE>
See Notes to Financial Statements
9
<PAGE>
Phoenix Balanced Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------------------------------
Year Ended October 31,
1997 1996 1995 1994 1993
----------------- ---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.56 $17.04 $15.23 $16.64 $15.92
Income from investment operations
Net investment income 0.48 0.48 0.52 0.48 0.46
Net realized and unrealized gain (loss) 2.38 1.46 1.80 (1.01) 1.08
------------- ------------ ------------ ----------- ------------
Total from investment operations 2.86 1.94 2.32 (0.53) 1.54
------------- ------------ ------------ ----------- ------------
Less distributions
Dividends from net investment income ( 0.48) ( 0.49) (0.51) (0.49) (0.46)
Dividends from net realized gains ( 1.87) ( 0.93) -- (0.39) (0.36)
------------- ------------ ------------ ----------- ------------
Total distributions ( 2.35) ( 1.42) (0.51) (0.88) (0.82)
------------- ------------ ------------ ----------- ------------
Change in net asset value 0.51 0.52 1.81 (1.41) 0.72
------------- ------------ ------------ ----------- ------------
Net asset value, end of period $18.07 $17.56 $17.04 $15.23 $16.64
============= ============ ============ =========== ============
Total return(1) 18.04 % 12.03 % 15.52% (3.28)% 9.92%
Ratios/supplemental data:
Net assets, end of period (thousands) $1,702,385 $1,897,306 $2,345,440 $2,601,808 $3,126,014
Ratio to average net assets of:
Operating expenses 0.98 % 1.01 % 1.02% 0.96% 0.95%
Net investment income 2.65 % 2.74 % 3.27% 3.03% 2.88%
Portfolio turnover 206% 191% 197% 159% 130%
Average commission rate paid(4) $0.0541 $0.0546 N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------
From
Inception
Year Ended October 31, 7/15/94 to
1997 1996 1995 10/31/94
----------- ----------- ------------ -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $17.54 $17.01 $15.23 $15.27
Income from investment operations
Net investment income 0.35 0.35 0.40 0.09
Net realized and unrealized gain (loss) 2.37 1.47 1.80 (0.04)
-------- -------- ------- ----------
Total from investment operations 2.72 1.82 2.20 0.05
-------- -------- ------- ----------
Less distributions
Dividends from net investment income (0.35) (0.36) (0.42) (0.09)
Dividends from net realized gains (1.87) (0.93) -- --
-------- -------- ------- ----------
Total distributions (2.22) (1.29) (0.42) (0.09)
-------- -------- ------- ----------
Change in net asset value 0.50 0.53 1.78 (0.04)
-------- -------- ------- ----------
Net asset value, end of period $18.04 $17.54 $17.01 $15.23
======== ======== ======= ==========
Total return(1) 17.13% 11.24% 14.68% 0.34%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $30,216 $26,209 $16,971 $4,629
Ratio to average net assets of:
Operating expenses 1.73% 1.76% 1.78% 1.65%(2)
Net investment income 1.90% 1.96% 2.46% 2.36%(2)
Portfolio turnover 206% 191% 197% 159%
Average commission rate paid(4) $ 0.0541 $0.0546 N/A N/A
</TABLE>
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not reflect
mark-ups, mark-downs, or spreads on shares traded on a principal basis.
See Notes to Financial Statements
10
<PAGE>
Phoenix Convertible Fund Series
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1997
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- -------------
<S> <C> <C> <C>
CONVERTIBLE BONDS--47.8%
Advertising--1.3%
Interpublic Group Cv. 144A
1.80%, 9/16/04 (c) ..................... NR $ 2,500 $ 2,034,375
Omnicom Group, Inc. Cv. 144A
4.25%, 1/3/07 (c) ..................... A- 510 640,050
-----------
2,674,425
-----------
Communications Equipment--0.7%
BBN Corp. Cv. 6%, 4/1/12 .................. B(d) 1,500 1,447,500
-----------
Computers (Software & Services)--3.0%
Adaptec, Inc. Cv. 4.75%,
2/1/04 ................................. NR 2,000 2,297,500
EMC Corp. Cv. 144A 3.25%,
3/15/02 (c) ........................... BB+ 1,000 1,372,500
System Software Association
14%, 9/15/02 ........................... NR 2,750 2,681,250
-----------
6,351,250
-----------
Electrical Equipment--1.9%
Thermo Electron Corp. Cv.
144A 4.25%, 1/1/03 (c) ............... A- 3,500 3,950,625
-----------
Electronics (Instrumentation)--0.9%
Xilinx, Inc. Cv. 144A 5.25%,
11/1/02 (c) ........................... B 1,850 1,803,750
-----------
Health Care (Hospital Management)--1.0%
Tenet Healthcare Cv. 6%,
12/1/05 .............................. B+ 2,075 2,023,125
-----------
Health Care (Long Term Care)--0.8%
Sunrise Assisted Living Cv.
144A 5.50%, 6/15/02 (c) ............... B- 1,500 1,773,750
-----------
Leisuretime (Products)--6.0%
Family Golf Centers, Inc. Cv.
144A 5.75%, 10/15/04 (c) ............... NR 1,000 972,500
Imax Corp. Cv. 5.75%, 4/1/03 ............ NR 2,500 3,271,875
Time Warner, Inc. Cv. 0%,
12/17/12 .............................. BBB- 3,000 1,188,750
Time Warner, Inc. Cv. 0%,
6/22/13 .............................. BBB- 14,635 7,207,738
-----------
12,640,863
-----------
Lodging--Hotels--0.4%
Marriott International, Inc. Cv.
144A 0%, 3/25/11 (c) .................. BBB 1,390 900,025
-----------
Metals Mining--3.7%
Coeur d'Alene Euro Cv. 6%,
6/10/02 .............................. CCC+ 1,000 858,750
Coeur d'Alene Cv. 144A 7.25%,
10/31/05 (c) ........................... NR 6,000 5,475,000
Stillwater Mining Co. Cv. 7%,
5/1/03 ................................. NR 1,500 1,477,500
-----------
7,811,250
-----------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- -------------
Oil (Domestic Integrated)--0.5%
Pennzoil Co. Series US Cv.
4.75%, 10/1/03 ........................ BBB $ 730 $ 1,031,125
-----------
Oil & Gas (Drilling & Equipment)--5.2%
Baker Hughes, Inc. Cv. 0%,
5/5/08 ................................. A 2,100 1,858,500
Halter Marine Group, Inc. Cv.
144A 4.50%, 9/15/04 (c) ............... B+ 2,175 2,745,937
Key Energy Group Cv. 144A
5%, 9/15/04 (c) ........................ NR 2,000 2,037,500
Loews Corp. Cv. 3.125%,
9/15/07 .............................. A+ 2,000 2,277,500
Nabors Industries, Inc. Cv. 5%,
5/15/06 .............................. BBB- 805 1,873,638
-----------
10,793,075
-----------
Oil & Gas (Exploration & Production)--1.3%
Apache Corp. Cv. 144A 6%,
1/15/02 (c) ........................... BBB 2,000 2,750,000
-----------
Professional Services--1.5%
CORESTAFF, Inc. Cv. 2.94%,
8/15/04 .............................. NR 4,000 3,240,000
-----------
Publishing--1.1%
Hollinger, Inc. Yankee Series
US (LYONS) Cv. 0%,
10/5/13 .............................. BB- 6,000 2,280,000
-----------
Publishing (Newspapers)--0.7%
Times Mirror Co. Cv. 144A 0%,
4/15/17 (c) ........................... A 3,500 1,408,750
-----------
Retail (Drug Stores)--2.7%
Rite Aid Corp. Cv. 144A
5.25%, 9/15/02 (c) ..................... BBB 5,175 5,550,187
-----------
Retail (General Merchandise)--6.4%
Home Depot, Inc. Cv. 3.25%,
10/1/01 .............................. A+ 3,125 4,023,437
Office Depot, Inc. Cv. 0%,
11/1/08 .............................. BB- 5,000 3,112,500
Pep Boys Cv. 0%, 9/20/11 .................. BBB 7,775 4,169,344
Saks Holdings, Inc. Cv. 5.50%,
9/15/06 .............................. B 1,250 1,064,062
Sports Authority, Inc. (The) Cv.
144A 5.25%, 9/15/01 (c) ............... B 1,000 923,750
-----------
13,293,093
-----------
Telecommunications (Cellular/Wireless)--1.6%
Itron, Inc. Cv. 6.75%,
3/31/04 .............................. NR 1,000 1,110,000
U.S. Cellular Corp. Cv. 0%,
6/15/15 .............................. BBB- 6,000 2,205,000
-----------
3,315,000
-----------
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Phoenix Convertible Fund Series
- --------------------------------------------------------------------------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- -------------
Utility--Water--0.9%
Atria Communities, Inc. Cv.
144A 5%, 10/15/02 (c) ......... NR $ 1,000 $ 1,006,250
World Access, Inc. Cv. 144A
4.50%, 10/1/02 (c) ............ CCC+ 1,000 960,000
------------
1,966,250
------------
Waste Management--6.2%
Chemical Waste Management,
Inc. Cv. 0%, 8/16/10 ......... BBB+ 14,150 6,509,000
U.S.A. Waste Services, Inc. Cv.
4%, 2/1/02 .................. BBB- 2,650 2,822,250
WMX Technologies, Inc.
Subordinate Notes Cv. 2%,
1/24/05 ..................... BBB+ 4,485 3,700,125
------------
13,031,375
------------
TOTAL CONVERTIBLE BONDS
(Identified cost $96,840,155)........................... 100,035,418
------------
CONVERTIBLE FOREIGN BONDS--6.8%
Germany--0.6%
Volkswagen Cv. 144A 3%,
1/24/02 (c) .................. A+ 1,000 1,172,500
------------
Ireland--0.8%
Elan International Finance
(LYON) Cv. 0%, 10/16/12 ...... BBB- 1,500 1,629,375
------------
Switzerland--4.4%
Roche Holdings, Inc. Cv. 144A
0%, 5/6/12 (c) ............... NR 11,450 4,980,750
Sandoz Capital BVI Ltd. Cv.
144A 2%, 10/6/02 (c) ......... Aaa(d) 2,830 4,145,950
------------
9,126,700
------------
United Kingdom--1.0%
Grand Metropolitan PLC Cv.
144A 6.50%, 1/31/00 (c) ...... A+ 1,640 2,132,000
------------
TOTAL CONVERTIBLE FOREIGN BONDS
(Identified cost $12,059,638)........................... 14,060,575
------------
SHARES
--------
CONVERTIBLE PREFERRED STOCKS--16.8%
Airlines--1.0%
Trans World Air Cv. Pfd. 8% (b) ............ 72,000 2,106,000
---------
Broadcasting (Television, Radio & Cable)--0.9%
Merrill Lynch & Co. Series Cox
(STRYPES) Cv. Pfd. 6% ..................... 49,100 1,331,837
TCI Pacific Communications Cv. Pfd.
5% ....................................... 5,000 696,875
---------
2,028,712
---------
Computers (Software & Services)--0.4%
Microsoft Corp. Series A Cv. Pfd. $2.196 . 8,500 750,125
---------
SHARES VALUE
--------- -------------
Conglomerates--0.5%
USX Corp. Cv. Pfd. 6.75% ..................... 50,000 $ 1,125,000
-----------
Electric Companies--1.7%
AES Trust I Series A (TECONS) Cv. Pfd.
5.375% .................................... 20,000 1,280,000
Houston Industries, Inc. (ACES) Cv. Pfd.
7% (b) .................................... 40,300 2,206,425
-----------
3,486,425
-----------
Health Care (Diversified)--0.7%
McKesson Corp. Cv. Pfd. 144A $2.50 (c) . 20,500 1,566,969
-----------
Insurance (Multi-Line)--1.9%
St. Paul Capital LLC (MIPS) Cv. Pfd. 6% ...... 56,000 3,920,000
-----------
Metals Mining--0.8%
Coeur d'Alene Cv. Pfd. 7% ..................... 35,000 549,063
Timet Capital Trust I Cv. Pfd. 144A
6.625% (c) ................................. 20,000 1,040,000
-----------
1,589,063
-----------
Natural Gas--0.5%
MCN Energy Group, Inc. (PRIDES) Cv.
Pfd. 8.75% (b) ........................... 34,900 1,057,906
-----------
Oil & Gas (Drilling & Equipment)--1.0%
EVI, Inc. Cv. Pfd. 144A 5%,
11/1/27 (c) .............................. 42,000 2,115,750
-----------
Oil (Domestic Integrated)--4.2%
Lomak Petroleum Cv. Pfd. 144A 5.75% (c). 50,000 2,531,250
Occidental Petroleum Corp. Series 1993
Cv. Pfd. 144A $3.875 (c) .................. 101,000 6,274,625
-----------
8,805,875
-----------
Savings & Loan Companies--0.7%
Ahmanson (H. F.) & Co. Series D Cv.
Pfd. 6% .................................... 12,900 1,560,900
-----------
Telecommunications (Cellular/wireless)--1.9%
Airtouch Communication Series C Cv.
Pfd. 4.25% (b) ........................... 65,000 3,900,000
-----------
Telephone--0.6%
US West, Inc. Series D Cv. Pfd. 4.50% ......... 21,000 1,204,875
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified cost $30,644,298).............................. 35,217,600
-----------
COMMON STOCKS--12.2%
Communications Equipment--0.4%
Ciena Corp. (b) .............................. 19,000 1,045,000
-----------
Electronics (Instrumentation)--1.7%
Perkin Elmer Corp. ........................... 58,500 3,656,267
-----------
Health Care (Diversified)--0.5%
Warner-Lambert Co. ........................... 7,300 1,045,269
-----------
Health Care (Drugs--Major Pharmaceuticals)--1.5%
Lilly (Eli) & Co. ........................... 23,200 1,551,500
Pfizer, Inc. ................................. 21,600 1,528,200
-----------
3,079,700
-----------
See Notes to Financial Statements
14
<PAGE>
Phoenix Convertible Fund Series
- --------------------------------------------------------------------------------
SHARES VALUE
-------- -------------
Metals Mining--1.0%
NS Group, Inc. (b) ..................... 36,500 $ 976,375
Stillwater Mining Co. (b) ............... 49,300 1,022,975
------------
1,999,350
------------
Natural Gas--1.3%
El Paso Natural Gas Co. .................. 46,400 2,781,140
------------
Oil (Domestic Integrated)--0.8%
Forcenergy, Inc. (b) ..................... 12,100 394,763
Houston Exploration Co. (The) (b) ...... 29,000 703,250
Noble Affiliates, Inc. .................. 12,500 513,281
------------
1,611,294
------------
Oil & Gas (Drilling & Equipment)--1.5%
BJ Services Co. (b) ..................... 12,600 1,067,850
Noble Drilling Corp. (b) ............... 30,393 1,080,851
Rowan Companies, Inc. (b) ............... 26,800 1,041,850
------------
3,190,551
------------
Oil & Gas (Exploration & Production)--1.3%
Anadarko Petroleum Corp. ............... 9,000 659,250
Newfield Exploration Co. (b) ............ 15,300 415,013
United Meridian Corp. (b) ............... 46,300 1,571,306
------------
2,645,569
------------
Retail (Drug Stores)--1.1%
Rite Aid Corp. ........................... 39,297 2,333,259
------------
Telecommunications (Long Distance)--1.1%
AT&T Corp. .............................. 45,400 2,221,768
------------
TOTAL COMMON STOCKS
(Identified cost $23,630,452)........................ 25,609,167
------------
FOREIGN COMMON STOCKS--0.5%
Oil & Gas (Drilling & Equipment)--0.5%
Bouygues Offshore SA ADR (France) ...... 44,800 1,086,400
------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $1,154,663) ........................ 1,086,400
------------
TOTAL LONG-TERM INVESTMENTS--84.1%
(Identified cost $164,329,206) ..................... 176,009,160
------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- -----------------
SHORT-TERM OBLIGATIONS--11.5%
Commercial Paper--11.5%
Ciesco L.P. 5.70%, 11/3/97 ......... A-1+ $1,005 $ 1,004,682
Preferred Receivables Funding
Corp. 5.55%, 11/4/97 ............ A-1 3,425 3,423,416
Schering Corp. 5.52%, 11/4/97 .A-1+ 3,240 3,238,510
Asset Securitization Cooperative
Corp. 5.60%, 11/6/97 ............ A-1+ 500 499,611
Exxon Imperial U.S., Inc.
5.53%, 11/7/97 .................. A-1+ 3,380 3,376,885
General Electric Capital Corp.
5.53%, 11/17/97 ............... A-1+ 3,365 3,356,730
Kimberly-Clark Corp. 5.48%,
11/20/97 ........................ A-1+ 3,400 3,390,166
Abbott Laboratories 5.50%,
11/26/97 ........................ A-1+ 1,200 1,195,417
DuPont (E.I.) de Nemours &
Co. 5.50%, 12/2/97 ............ A-1+ 1,100 1,094,639
Preferred Receivables Funding
Corp. 5.55%, 12/8/97 ............ A-1 1,115 1,108,512
Preferred Receivables Funding
Corp. 5.55%, 12/18/97 ......... A-1 675 670,109
Corporate Receivables Corp.
5.58%, 1/28/98 .................. A-1 1,590 1,568,805
--------------
23,927,482
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $23,927,267) ........................ 23,927,482
--------------
TOTAL INVESTMENTS--95.6%
(Identified cost $188,256,473)........................ 199,936,642(a)
Cash and receivables, less liabilities--4.4% ......... 9,296,371
--------------
NET ASSETS--100.0% .................................... $209,233,013
=============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $16,055,557 and gross
depreciation of $4,383,965 for income tax purposes. At October 31, 1997,
the aggregate cost of securities for federal income tax purposes was
$188,265,050.
(b) Non-income producing.
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1997, these securities amounted to a value of $62,264,743 or 29.8% of net
assets.
(d) As rated by Moody's.
See Notes to Financial Statements
15
<PAGE>
Phoenix Convertible Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
Assets
Investment securities at value
(Identified cost $188,256,473) $199,936,642
Short-term investments held as collateral for loaned
securities 4,200,000
Cash 15,168
Receivables
Investment securities sold 10,387,476
Fund shares sold 1,047,115
Dividends and interest 771,822
------------
Total assets 216,358,223
------------
Liabilities
Payables
Collateral on securities loaned 4,200,000
Investment securities purchased 2,341,734
Fund shares repurchased 317,345
Investment advisory fee 119,007
Distribution fee 51,008
Transfer agent fee 34,580
Financial agent fee 9,192
Trustees' fee 3,636
Accrued expenses 48,708
------------
Total liabilities 7,125,210
------------
Net Assets $209,233,013
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $171,077,545
Undistributed net investment income 422,034
Accumulated net realized gain 26,053,265
Net unrealized appreciation 11,680,169
------------
Net Assets $209,233,013
============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $201,169,632) 9,808,361
Net asset value per share $ 20.51
Offering price per share
$20.51/(1-4.75%) $ 21.53
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $8,063,381) 394,604
Net asset value and offering price per share $ 20.43
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
Investment Income
Interest $ 6,784,461
Dividends 2,038,259
Security lending 33,035
-----------
Total investment income 8,855,755
-----------
Expenses
Investment advisory fee 1,361,661
Distribution fee--Class A 505,949
Distribution fee--Class B 71,069
Financial agent fee 98,407
Transfer agent 240,071
Printing 38,324
Custodian 21,258
Professional 19,969
Trustees 19,368
Registration 15,618
Miscellaneous 10,492
-----------
Total expenses 2,402,186
-----------
Net investment income 6,453,569
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 26,029,187
Net realized gain on foreign currency transactions 1,395
Net change in unrealized appreciation (depreciation) on
investments 1,273,001
-----------
Net gain on investments 27,303,583
-----------
Net increase in net assets resulting from
operations $33,757,152
===========
See Notes to Financial Statements
16
<PAGE>
Phoenix Convertible Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------ -----------------
<S> <C> <C>
From Operations
Net investment income $ 6,453,569 $ 8,303,695
Net realized gain 26,030,582 13,764,508
Net change in unrealized appreciation (depreciation) 1,273,001 6,532,321
------------- -------------
Increase in net assets resulting from operations 33,757,152 28,600,524
------------- -------------
From Distributions to Shareholders
Net investment income--Class A (6,482,244) (8,803,953)
Net investment income--Class B (177,737) (164,704)
Net realized gains--Class A (13,252,457) (6,839,551)
Net realized gains--Class B (398,476) (129,752)
------------- -------------
Decrease in net assets from distributions to shareholders (20,310,914) (15,937,960)
------------- -------------
From Share Transactions
Class A
Proceeds from sales of shares (701,929 and 906,746 shares, respectively) 13,664,448 16,946,702
Net asset value of shares issued from reinvestment of distributions (854,224 and
703,569 shares, respectively) 16,093,284 12,908,037
Cost of shares repurchased (2,904,061 and 2,489,652 shares, respectively) (56,421,242) (46,749,267)
------------- -------------
Total (26,663,510) (16,894,528)
------------- -------------
Class B
Proceeds from sales of shares (131,986 and 125,709 shares, respectively) 2,562,597 2,344,422
Net asset value of shares issued from reinvestment of distributions (21,826 and
11,529 shares, respectively) 410,540 211,321
Cost of shares repurchased (68,900 and 31,996 shares, respectively) (1,343,541) (602,797)
------------- -------------
Total 1,629,596 1,952,946
------------- -------------
Decrease in net assets from share transactions (25,033,914) (14,941,582)
------------- -------------
Net decrease in net assets (11,587,676) (2,279,018)
Net Assets
Beginning of period 220,820,689 223,099,707
------------- -------------
End of period (including undistributed net investment income of
$422,034 and $657,595, respectively) $ 209,233,013 $ 220,820,689
============= =============
</TABLE>
See Notes to Financial Statements
17
<PAGE>
Phoenix Convertible Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------------
Year Ended October 31,
1997 1996 1995 1994 1993
--------------- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.26 $18.23 $17.56 $19.34 $18.86
Income from investment operations
Net investment income 0.61(4) 0.70(4) 0.87 0.78 0.68
Net realized and unrealized gain (loss) 2.54 1.68 1.04 (1.06) 1.53
----------- ----------- ---------- --------- ----------
Total from investment operations 3.15 2.38 1.91 (0.28) 2.21
----------- ----------- ---------- --------- ----------
Less distributions
Dividends from net investment income (0.64) (0.77) (1.05) (0.69) (0.73)
Dividends from net realized gains (1.26) (0.58) (0.19) (0.81) (1.00)
----------- ----------- ---------- --------- ----------
Total distributions (1.90) (1.35) (1.24) (1.50) (1.73)
----------- ----------- ---------- --------- ----------
Change in net asset value 1.25 1.03 0.67 (1.78) 0.48
----------- ----------- ---------- --------- ----------
Net asset value, end of period $20.51 $19.26 $18.23 $17.56 $19.34
============ ============ ========== ========= ==========
Total return(1) 17.40% 13.55% 11.45% (1.48)% 12.58%
Ratios/supplemental data:
Net assets, end of period (thousands) $201,170 $214,874 $219,384 $226,294 $252,072
Ratio to average net assets of:
Operating expenses 1.12% 1.17% 1.18% 1.14% 1.15%
Net investment income 3.11% 3.75% 4.78% 4.27% 3.70%
Portfolio turnover 152% 141% 79% 91% 94%
Average commission rate paid(5) $0.0661 $0.0619 N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------------------
From
Inception
Year Ended October 31, 7/15/94 to
1997 1996 1995 10/31/94
--------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $19.20 $18.17 $17.55 $17.59
Income from investment operations
Net investment income 0.46(4) 0.55(4) 0.70(4) 0.15
Net realized and unrealized gain (loss) 2.52 1.68 1.07 (0.06)
----------- ----------- ----------- ---------
Total from investment operations 2.98 2.23 1.77 0.09
----------- ---------- ----------- ---------
Less distributions
Dividends from net investment income (0.49) (0.62) (0.96) (0.13)
Dividends from net realized gains (1.26) (0.58) (0.19) --
----------- ----------- ----------- ---------
Total distributions (1.75) (1.20) (1.15) (0.13)
----------- ----------- ----------- ---------
Change in net asset value 1.23 1.03 0.62 (0.04)
----------- ----------- ----------- ---------
Net asset value, end of period $20.43 $19.20 $18.17 $17.55
============ ============ =========== =========
Total return(1) 16.49% 12.72% 10.59% 0.49%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $8,063 $5,947 $3,715 $856
Ratio to average net assets of:
Operating expenses 1.87% 1.92% 1.95% 1.83%(2)
Net investment income 2.33% 2.95% 3.92% 3.29%(2)
Portfolio turnover 152% 141% 79% 91%
Average commission rate paid(5) $0.0661 $0.0619 N/A N/A
</TABLE>
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
18
<PAGE>
Phoenix Growth Fund Series
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1997
SHARES VALUE
----------- --------------
COMMON STOCKS--83.5%
Air Freight--0.9%
Federal Express Corp. (b) ...... 340,000 $ 22,695,000
------------
Banks (Major Regional)--5.5%
AmSouth Bancorporation ......... 145,000 6,969,062
BankBoston Corp. ............... 310,000 25,129,375
Compass Bankshares, Inc. ...... 185,100 6,975,956
Fleet Financial Group, Inc. ... 385,000 24,760,313
Mellon Bank Corp. ............... 800,000 41,250,000
Nationsbank Corp. ............... 625,000 37,421,875
------------
142,506,581
------------
Banks (Money Center)--2.9%
BankAmerica Corp. ............... 671,900 48,040,850
Citicorp ........................ 220,000 27,513,750
------------
75,554,600
------------
Broadcasting (Televison, Radio, &
Cable)--0.2%
Chancellor Media Corp. (b) ...... 105,100 5,767,363
------------
Communications Equipment--1.5%
Ciena Corp. (b) ............... 250,000 13,750,000
Lucent Technologies, Inc. ...... 317,100 26,140,931
------------
39,890,931
------------
Computers (Hardware)--4.2%
International Business Machines 1,100,000 107,868,750
------------
Corp.
Computers (Networking)--1.0%
Cisco Systems, Inc. (b) ......... 325,000 26,660,140
------------
Computers (Peripherals)--1.5%
EMC Corp. (b) .................. 700,000 39,200,000
------------
Computers (Software &
Services)--2.7%
Adaptec, Inc. (b) ............... 600,000 29,062,500
BMC Software, Inc. (b) ......... 400,000 24,150,000
Compuware Corp. (b) ............ 225,000 14,878,125
Edwards (J.D.) & Co. (b) ...... 64,500 2,193,000
------------
70,283,625
------------
Chemicals--1.3%
Monsanto Co. .................. 758,400 32,421,600
------------
Chemicals (Specialty)--0.6%
Solutia, Inc. (b) ............... 650,000 14,381,250
------------
Distributors (Food & Health)--1.7%
Cardinal Health, Inc. ......... 575,000 42,693,750
------------
Electrical Equipment--2.0%
General Electric Co. ............ 762,300 49,215,994
Honeywell, Inc. ............... 35,100 2,388,994
------------
51,604,988
------------
Electronics (Instrumentation)--0.5%
Linear Technology Corp. ......... 190,000 11,946,250
------------
Electronics (Semiconductors)--2.6%
National Semiconductor Corp. (b) 1,050,000 37,800,000
Texas Instruments, Inc. ......... 270,000 28,805,625
------------
66,605,625
------------
SHARES VALUE
----------- --------------
Entertainment--1.9%
Tele-Comm Liberty Media Group (b) ....1,400,000 . $ 48,737,500
------------
Financial (Diversified)--2.4%
American Express Co. ............ 505,000 39,390,000
Franklin Resources, Inc. ...... 160,000 14,380,000
Price (T. Rowe) Associates ...... 135,200 8,957,000
------------
62,727,000
------------
Health Care (Diversified)--1.9%
Bristol-Myers Squibb Co. ...... 550,000 48,262,500
------------
Health Care (Drugs--Major
Pharmaceuticals)--7.2%
Lilly (Eli) & Co. ............... 668,400 44,699,250
Merck & Co., Inc. ............... 500,000 44,625,000
Pfizer, Inc. .................. 1,200,000 84,900,000
Watson Pharmaceuticals, Inc. (b) 400,000 12,700,000
------------
186,924,250
------------
Health Care (Hospital
Management)--1.2%
HBO & Co. ..................... 720,000 31,320,000
------------
Health Care (Medical Products &
Supplies)--2.7%
Guidant Corp. .................. 774,300 44,522,250
Medtronic, Inc. ............... 600,000 26,100,000
------------
70,622,250
------------
Household Furn. & Appliances--0.5%
Sunbeam Corp., Inc. ............ 300,000 13,593,750
------------
Household Products
(Non-Durables)--1.0%
Colgate-Palmolive Co. ......... 385,000 24,928,750
------------
Insurance (Multi-Line)--2.9%
Hartford Financial Services Group, 375,000 30,375,000
Inc.
Travelers Group, Inc. ......... 625,000 43,750,000
------------
74,125,000
------------
Insurance (Property-Casualty)--1.8%
Allstate Corp. .................. 550,000 45,615,625
------------
Investment Banking/Brokerage--0.9%
Merrill Lynch & Co., Inc. ...... 360,000 24,345,000
------------
Machinery (Diversified)--1.2%
Deere & Co. ..................... 590,000 31,048,750
------------
Manufacturing (Diversified)--1.5%
Tyco International Ltd. ......... 1,000,000 37,750,000
------------
Oil (Domestic Integrated)--1.5%
Tosco Corp. ..................... 1,140,000 37,620,000
------------
Oil & Gas (Drilling & Equipment)--7.9%
BJ Services Co. (b) ............ 155,000 13,136,250
Diamond Offshore Drilling, Inc. 640,000 39,840,000
Halliburton Co. ............... 800,000 47,700,000
Nabors Industries, Inc. (b) ... 425,000 17,478,125
Schlumberger Ltd. ............... 500,000 43,750,000
Transocean Offshore, Inc. ...... 800,000 43,200,000
------------
205,104,375
------------
Oil & Gas (Refining &
Marketing)--1.1%
Santa Fe International Corp. (b) 560,000 27,545,000
------------
See Notes to Financial Statements
21
<PAGE>
Phoenix Growth Fund Series
- --------------------------------------------------------------------------------
SHARES VALUE
----------- ---------------
Paper & Forest Products--0.9%
Fort James Corp. ..................... 617,000 $ 24,487,188
--------------
Personal Care--1.7%
Gillette Co. ........................ 500,000 44,531,250
--------------
Retail (Building Supplies)--1.7%
Home Depot, Inc. ..................... 780,000 43,387,500
--------------
Retail (Drug Stores)--3.3%
CVS Corp. ........................... 700,000 42,918,750
Rite Aid Corp. ........................ 700,000 41,562,500
--------------
84,481,250
--------------
Retail (Food Chains)--2.2%
Safeway, Inc. (b) ..................... 1,000,000 58,125,000
--------------
Retail (General Merchandise)--1.6%
Borders Group, Inc. (b) ............... 625,000 16,210,938
Staples, Inc. (b) ..................... 1,000,000 26,250,000
--------------
42,460,938
--------------
Telecommunications
(Cellular/Wireless)--2.7%
AirTouch Communications, Inc. (b) ... 1,800,000 69,525,000
--------------
Tobacco--2.7%
Philip Morris Companies, Inc. ......... 1,750,000 69,343,750
--------------
TOTAL COMMON STOCKS
(Identified cost $1,879,996,673) ..................... 2,156,692,079
--------------
FOREIGN COMMON STOCKS--10.6%
Banks (Major Regional)--0.3%
Banco Rio de La Plata SA ADR
(Argentina) (b) ..................... 825,000 8,662,500
--------------
Biotechnology--2.6%
Elan PLC Sponsored ADR (Ireland) (b) 221,200 11,032,350
SmithKline Beecham PLC Sponsored
ADR (United Kingdom) (b) ............ 1,200,000 57,150,000
--------------
68,182,350
--------------
Household Furn. & Appliances--4.5%
Philips Electronics NV ADR NY
Registered (Netherlands) ............ 1,500,000 117,562,500
--------------
Oil (Domestic Integrated)--0.9%
YPF Sociedad Anonima Sponsored ADR
Class D (Argentina) ............... 735,000 23,520,000
--------------
Oil (International Integrated)--2.3%
Elf Aquitane Sponsored ADR (France) (b) 950,000 58,662,500
--------------
VALUE
---------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $181,238,257) $ 276,589,850
--------------
TOTAL LONG-TERM INVESTMENTS--94.1%
(Identified cost $2,061,234,930) 2,433,281,929
--------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------- ---------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--3.9%
Commercial Paper--3.9%
Associates Corp. of North
America 5.73%, 11/3/97 ......... A-1+ $12,250 12,246,100
Deutsche Bank Financial, Inc.
5.51%, 11/3/97 .................. A-1+ 1,575 1,574,518
Merrill Lynch & Co., Inc.
5.63%, 11/3/97 .................. A-1+ 12,000 11,996,246
Wal-Mart Stores, Inc. 5.55%,
11/4/97 ........................ A-1+ 19,476 19,466,992
Deutsche Bank Financial, Inc.
5.57%, 11/5/97 .................. A-1+ 24,105 24,090,082
AT&T Corp. 5.60%, 11/6/97 ......... A-1+ 20,000 19,984,444
AlliedSignal, Inc. 5.50%,
11/10/97 ........................ A-1 400 399,450
Corporate Asset Funding Co.,
Inc. 5.52%, 11/12/97 ............ A-1+ 1,250 1,247,720
Kellogg Co. 5.56%, 11/21/97 ...... A-1+ 8,000 7,975,289
General Electric Capital Corp.
5.58%, 11/26/97 ............... A-1+ 850 846,623
Campbell Soup Co. 5.52%,
1/9/98 ........................ A-1+ 190 188,042
Beta Finance, Inc. 5.58%,
3/12/98 ........................ A-1+ 1,180 1,156,530
----------
101,172,036
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $101,171,750).............................. 101,172,036
-----------
TOTAL INVESTMENTS--98.0%
(Identified cost $2,162,406,680) ........................... 2,534,453,965(a)
Cash and receivables, less liabilities--2.0% ............... 51,857,022
-------------
NET ASSETS--100.0% ........................... $ 2,586,310,987
================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $427,589,665 and gross
depreciation of $56,102,666 for income tax purposes. At October 31, 1997,
the aggregate cost of securities for federal income tax purposes was
$2,162,966,966.
(b) Non-income producing.
22 See Notes to Financial Statements
<PAGE>
Phoenix Growth Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $2,162,406,680) $2,534,453,965
Short-term investments held as collateral for loaned
securities 13,308,400
Cash 3,377
Receivables
Investment securities sold 64,495,306
Fund shares sold 2,418,914
Dividends and interest 1,899,387
--------------
Total assets 2,616,579,349
--------------
Liabilities
Payables
Collateral on securities loaned 13,308,400
Investment securities purchased 10,953,876
Fund shares repurchased 3,049,196
Investment advisory fee 1,494,692
Distribution fee 615,359
Transfer agent fee 409,890
Financial agent fee 44,969
Trustees' fee 3,636
Accrued expenses 388,344
--------------
Total liabilities 30,268,362
--------------
Net Assets $2,586,310,987
==============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $1,716,018,070
Accumulated net realized gain 498,245,632
Net unrealized appreciation 372,047,285
--------------
Net Assets $2,586,310,987
==============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $2,518,288,840) 90,493,451
Net asset value per share $ 27.83
Offering price per share
$27.83/(1-4.75%) $ 29.22
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $68,022,147) 2,472,870
Net asset value and offering price per share $ 27.51
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
Investment Income
Dividends $ 27,254,978
Interest 13,218,976
Security lending 212,693
------------
Total investment income 40,686,647
------------
Expenses
Investment advisory fee 16,439,785
Distribution fee--Class A 6,077,417
Distribution fee--Class B 589,972
Financial agent fee 540,063
Transfer agent 3,475,347
Printing 436,266
Custodian 142,661
Registration 44,577
Professional 35,805
Trustees 19,652
Miscellaneous 56,974
------------
Total expenses 27,858,519
------------
Net investment income 12,828,128
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 499,375,470
Net realized loss on foreign currency transactions (88,868)
Net change in unrealized appreciation (depreciation) on
investments 37,069,225
------------
Net gain on investments 536,355,827
------------
Net increase in net assets resulting from
operations $549,183,955
============
</TABLE>
See Notes to Financial Statements
23
<PAGE>
Phoenix Growth Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------ -----------------
<S> <C> <C>
From Operations
Net investment income $ 12,828,128 $ 18,992,565
Net realized gain 499,286,602 403,021,799
Net change in unrealized appreciation (depreciation) 37,069,225 (60,960,282)
-------------- --------------
Increase in net assets resulting from operations 549,183,955 361,054,082
-------------- --------------
From Distributions to Shareholders
Net investment income--Class A (17,472,939) (22,644,345)
Net investment income--Class B (64,123) (98,685)
Net realized gains--Class A (395,993,712) (149,324,628)
Net realized gains--Class B (8,267,051) (1,479,427)
-------------- --------------
Decrease in net assets from distributions to shareholders (421,797,825) (173,547,085)
-------------- --------------
From Share Transactions
Class A
Proceeds from sales of shares (10,576,129 and 9,835,907 shares, respectively) 270,447,275 250,496,105
Net asset value of shares issued from reinvestment of distributions
(16,237,740 and 6,641,514 shares, respectively) 381,717,419 158,927,977
Cost of shares repurchased (23,676,500 and 21,426,723 shares, respectively) (604,530,141) (546,897,194)
-------------- --------------
Total 47,634,553 (137,473,112)
-------------- --------------
Class B
Proceeds from sales of shares (938,817 and 1,000,869 shares, respectively) 23,549,010 25,339,947
Net asset value of shares issued from reinvestment of distributions
(325,555 and 59,359 shares, respectively) 7,574,359 1,409,232
Cost of shares repurchased (493,546 and 171,122 shares, respectively) (12,629,905) (4,348,366)
-------------- --------------
Total 18,493,464 22,400,813
-------------- --------------
Increase (decrease) in net assets from share transactions 66,128,017 (115,072,299)
-------------- --------------
Net increase in net assets 193,514,147 72,434,698
Net Assets
Beginning of period 2,392,796,840 2,320,362,142
-------------- --------------
End of period (including undistributed net investment income of $0 and
$4,797,802, respectively) $2,586,310,987 $2,392,796,840
============== ==============
</TABLE>
24 See Notes to Financial Statements
<PAGE>
Phoenix Growth Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
---------------------------------------
Year Ended October 31,
1997 1996
------------------- -------------------
<S> <C> <C>
Net asset value, beginning of period $ 26.87 $ 24.92
Income from investment operations(5)
Net investment income 0.14 (4) 0.20 (4)
Net realized and unrealized gain 5.62 3.63
-------------- --------------
Total from investment operations 5.76 3.83
-------------- --------------
Less distributions
Dividends from net investment income ( 0.21) ( 0.25)
Dividends from net realized gains ( 4.59) ( 1.63)
-------------- --------------
Total distributions ( 4.80) ( 1.88)
-------------- --------------
Change in net asset value 0.96 1.95
-------------- --------------
Net asset value, end of period $ 27.83 $ 26.87
============== ==============
Total return(1) 24.81 % 16.34 %
Ratios/supplemental data:
Net assets, end of period (thousands) $2,518,289 $2,347,471
Ratio to average net assets of:
Operating expenses 1.10 % 1.17 %
Net investment income 0.53 % 0.80 %
Portfolio turnover 196% 116%
Average commission rate paid(6) $ 0.0518 $ 0.0534
<CAPTION>
1995 1994 1993
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 21.24 $ 21.53 $ 20.76
Income from investment operations(5)
Net investment income 0.26 0.26 0.32
Net realized and unrealized gain 4.53 0.17 1.15
------------ ------------ ------------
Total from investment operations 4.79 0.43 1.47
------------ ------------ ------------
Less distributions
Dividends from net investment income (0.30) (0.24) (0.32)
Dividends from net realized gains (0.81) (0.48) (0.38)
------------ ------------ ------------
Total distributions (1.11) (0.72) (0.70)
------------ ------------ ------------
Change in net asset value 3.68 (0.29) 0.77
------------ ------------ ------------
Net asset value, end of period $ 24.92 $ 21.24 $ 21.53
============ ============ ============
Total return(1) 23.91% 2.06% 7.20%
Ratios/supplemental data:
Net assets, end of period (thousands) $2,300,251 $2,140,458 $2,563,442
Ratio to average net assets of:
Operating expenses 1.20% 1.19% 1.18%
Net investment income 0.92% 1.22% 1.55%
Portfolio turnover 109% 118% 176%
Average commission rate paid(6) N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
--------------------------------------------------------------------
From
Inception
Year Ended October 31, 7/15/94 to
1997 1996 1995 10/31/94
------------------ ------------ ------------ -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 26.63 $24.74 $ 21.19 $ 20.48
Income from investment operations(5)
Net investment income (loss) (0.06) (4) --(4) --(4) 0.01
Net realized and unrealized gain 5.57 3.61 4.60 0.70
--------- --------- --------- ---------
Total from investment operations 5.51 3.61 4.60 0.71
--------- --------- --------- ---------
Less distributions
Dividends from net investment income ( 0.04) ( 0.09) (0.24) --
Dividends from net realized gains ( 4.59) ( 1.63) (0.81) --
--------- --------- --------- ---------
Total distributions ( 4.63) ( 1.72) (1.05) --
--------- --------- --------- ---------
Change in net asset value 0.88 1.89 3.55 0.71
--------- --------- --------- ---------
Net asset value, end of period $ 27.51 $26.63 $ 24.74 $ 21.19
========= ========= ========= =========
Total return(1) 23.89 % 15.48 % 23.02% 3.47%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 68,022 $ 45,326 $20,111 $ 2,966
Ratio to average net assets of:
Operating expenses 1.85 % 1.93 % 1.97% 1.87%(2)
Net investment income ( 0.25 %) 0.01 % 0.01% 0.32%(2)
Portfolio turnover 196% 116% 109% 118%
Average commission rate paid(6) $ 0.0518 $ 0.0534 N/A N/A
</TABLE>
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from
anticipated results depending on the time of share purchases and
redemptions.
(6) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
25
<PAGE>
Phoenix Aggressive Growth Fund Series
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1997
See Notes to Financial Statements
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS--90.9%
Airlines--3.7%
AMR Corp. (b) ................................. 35,000 $ 4,075,313
Southwest Airlines Co. ........................ 100,000 3,262,500
U.S. Air Group, Inc. (b) ..................... 50,000 2,343,750
-----------
9,681,563
-----------
Banks (Major Regional)--2.4%
Southtrust Corp. .............................. 50,000 2,400,000
Zions Bancorporation ........................... 100,000 3,887,500
-----------
6,287,500
-----------
Biotechnology--4.2%
BioChem Pharma, Inc. (b) ..................... 100,000 2,506,250
Centocor, Inc. (b) ........................... 50,000 2,200,000
Immunex Corp. (b) .............................. 95,000 6,080,000
-----------
10,786,250
-----------
Broadcasting (Televison, Radio & Cable)--4.1%
Clear Channels Communications, Inc. (b) ...... 60,000 3,960,000
Heftel Broadcasting Corp. Class A (b) ......... 25,000 1,662,500
Univision Communications, Inc. Class A (b) 80,000 4,960,000
-----------
10,582,500
-----------
Communications Equipment--8.3%
Antec Corp. (b) .............................. 76,100 1,198,575
Ciena Corp. (b) .............................. 55,000 3,025,000
Intermedia Communications, Inc. (b) ............ 100,000 4,537,500
Lucent Technologies, Inc. ..................... 50,000 4,121,875
Newbridge Networks Corp. (b) .................. 40,000 2,120,000
Nextel Communications, Inc. Class A (b) ...... 100,000 2,625,000
QUALCOMM, Inc. (b) ........................... 70,000 3,946,250
-----------
21,574,200
-----------
Computers (Hardware)--0.6%
Compaq Computer Corp. (b) ..................... 25,000 1,593,750
-----------
Computers (Networking)--1.5%
Bay Networks, Inc. (b) ........................ 125,000 3,953,125
-----------
Computers (Software & Services)--10.0%
America Online, Inc. (b) ..................... 50,000 3,850,000
Citrix Systems, Inc. (b) ..................... 71,500 5,250,781
Concord Communications, Inc. (b) ............... 57,300 1,017,075
Excite, Inc. (b) .............................. 50,000 1,246,875
Genesys Telecommunications Laboratories,
Inc. (b) .................................... 50,000 1,600,000
Intuit, Inc. (b) .............................. 50,000 1,631,250
Microsoft Corp. (b) ........................... 35,000 4,550,000
Pinnacle Systems, Inc. (b) ..................... 75,000 2,025,000
RWD Technologies, Inc. (b) ..................... 26,200 589,500
Security Dynamics Technologies, Inc. (b) ...... 50,000 1,693,750
Veritas Software Corp. (b) ..................... 60,000 2,497,500
-----------
25,951,731
-----------
Consumer Finance--1.8%
Providian Financial Corp. ..................... 125,000 4,625,000
-----------
Electrical Equipment--1.0%
Westinghouse Electric Corp. .................. 100,000 2,643,750
-----------
SHARES VALUE
--------- ------------
<S> <C> <C>
Electronics (Instrumentation)--0.5%
Uniphase Corp. (b) ........................... 20,000 $ 1,342,500
-----------
Financial (Diversified)--2.1%
Amresco, Inc. (b) .............................. 100,000 3,137,500
Paine Webber Group, Inc. ..................... 50,000 2,209,375
-----------
5,346,875
-----------
Footwear--1.1%
Stage Stores, Inc. (b) ........................ 80,000 2,920,000
-----------
Health Care (Diversified)--2.3%
Pharmacopeia, Inc. (b) ........................ 100,000 1,762,500
Warner-Lambert Co. ........................... 30,000 4,295,625
-----------
6,058,125
-----------
Health Care (Drugs--Major Pharmaceuticals)--6.3%
Agouron Pharmaceuticals, Inc. (b) ............ 25,000 1,140,625
Coulter Pharmaceutical, Inc. (b) ............... 125,000 1,796,875
Dura Pharmaceuticals, Inc. (b) ............... 100,000 4,837,500
Guilford Pharmaceuticals, Inc. (b) ............ 50,000 1,218,750
Medicis Pharmaceuticals Corp. Class A (b) . 40,000 1,925,000
Pfizer, Inc. ................................. 75,000 5,306,250
-----------
16,225,000
-----------
Health Care (Hospital Management)--1.5%
HBO & Co. .................................... 90,000 3,915,000
-----------
Health Care (Medical Products & Supplies)--5.1%
Arterial Vascular Engineering, Inc. (b) ...... 70,000 3,718,750
Guidant Corp. ................................. 125,000 7,187,500
IDEC Pharmaceuticals Corp. (b) ............... 60,000 2,287,500
-----------
13,193,750
-----------
Household Furn. & Appliances--3.6%
Pier 1 Imports, Inc. ........................... 240,000 4,380,000
Sunbeam Corp., Inc. ........................... 110,000 4,984,375
-----------
9,364,375
-----------
Insurance (Multi-Line)--0.2%
PAULA Financial (b) ........................... 20,000 505,000
-----------
Investment Banking/Brokerage--1.1%
Merrill Lynch & Co., Inc. ..................... 40,000 2,705,000
-----------
Lodging--Hotels--1.5%
CKE Restaurants, Inc. ........................ 100,000 3,993,750
-----------
Metals Mining--0.5%
NS Group, Inc. (b) ........................... 50,000 1,337,500
-----------
Oil (Domestic Integrated)--1.6%
Brown (Tom), Inc. (b) ........................ 125,000 3,093,750
Forcenergy, Inc. (b) ........................... 30,000 978,750
-----------
4,072,500
-----------
Oil & Gas (Exploration & Production)--2.0%
Ocean Energy, Inc. (b) ........................ 30,000 1,852,500
Santa Fe Energy Resources, Inc. (b) ............ 250,000 3,265,625
-----------
5,118,125
-----------
</TABLE>
28
See Notes to Financial Statements
<PAGE>
Phoenix Aggressive Growth Fund Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C>
Oil & Gas (Drilling & Equipment)--12.4%
BJ Services Co. (b) ........................... 70,000 $ 5,932,500
Camco International, Inc. ..................... 50,000 3,612,500
Diamond Offshore Drilling, Inc. ............... 60,000 3,735,000
Falcon Drilling Co., Inc. (b) .................. 100,000 3,637,500
Nabors Industries, Inc. (b) .................. 150,000 6,168,750
Transocean Offshore, Inc. ..................... 50,000 2,700,000
UTI Energy Corp. (b) ........................... 100,000 4,462,500
Veritas DGC, Inc. (b) ........................ 50,000 2,046,875
------------
32,295,625
------------
Publishing--1.5%
HSN, Inc. (b) ................................. 100,000 4,000,000
------------
Retail (General Merchandise)--1.1%
A.C. Moore Arts & Crafts, Inc. (b) ............ 14,000 212,625
Abercrombie & Fitch Co. Class A (b) ............ 100,000 2,600,000
------------
2,812,625
------------
Services (Commercial & Consumer)--0.9%
ABR Information Services, Inc. (b) ............ 100,000 2,350,000
------------
Telecommunications (Cellular/Wireless)--2.4%
AirTouch Communications, Inc. (b) ............ 100,000 3,862,500
Qwest Communications International, Inc. (b) . 40,000 2,470,000
------------
6,332,500
------------
Telecommunications (Long Distance)--1.6%
Star Telecommunication, Inc. (b) ............... 175,000 4,046,875
------------
Telephone--4.0%
ICG Communications, Inc. (b) .................. 150,000 3,450,000
Pacific Gateway Exchange, Inc. (b) ............ 55,000 2,103,750
Teleport Communications Group, Inc.
Class A (b) ................................. 100,000 4,837,500
------------
10,391,250
------------
TOTAL COMMON STOCKS
(Identified cost $221,798,758) ........................ 236,005,744
------------
SHARES VALUE
--------- -------------
<S> <C> <C>
FOREIGN COMMON STOCKS--4.7%
Biotechnology--1.9%
Elan PLC Sponsored ADR (Ireland) (b) ......... 100,000 $ 4,987,500
------------
Communications Equipment--0.7%
RSL Communications, Ltd. (Bermuda) (b) ......... 76,000 1,786,000
------------
Computers (Software & Services)--1.0%
Check Point Software Technologies Ltd.
(Israel) (b) .............................. 62,200 2,651,275
------------
Oil & Gas (Drilling & Equipment)--1.1%
Coflexip SA Sponsored ADR (France) ............ 50,000 2,750,000
------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $11,387,942) .................. 12,174,775
------------
TOTAL LONG-TERM INVESTMENTS--95.6%
(Identified cost $233,186,700) ............... 248,180,519
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------- ---------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--4.0%
Commercial Paper--4.0%
Associates Corporation of
North America 5.73%,
11/3/97 (b) .............................. A-1+ $10,270 10,266,730
-------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $10,266,730) ............... 10,266,730
-------------
TOTAL INVESTMENTS--99.6%
(Identified cost $243,453,430) ............... 258,447,249(a)
Cash and receivables, less liabilities--0.4% 1,166,276
----------------
NET ASSETS--100.0% ........................... $ 259,613,525
================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $25,671,323 and gross
depreciation of $11,061,919 for income tax purposes. At October 31, 1997,
the aggregate cost of securities for federal income tax purposes was
$243,837,845.
(b) Non-income producing.
See Notes to Financial Statements
29
<PAGE>
Phoenix Aggressive Growth Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $243,453,430) $258,447,249
Short-term investments held as collateral for loaned
securities 20,087,632
Cash 5,469
Receivables
Investment securities sold 1,428,817
Fund shares sold 222,606
Dividends and interest 10,450
------------
Total assets 280,202,223
------------
Liabilities
Payables
Collateral on securities loaned 20,087,632
Fund shares repurchased 147,605
Investment advisory fee 164,760
Transfer agent fee 39,230
Distribution fee 68,315
Financial agent fee 11,283
Trustees' fee 3,636
Accrued expenses 66,237
------------
Total liabilities 20,588,698
------------
Net Assets $259,613,525
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $192,874,610
Accumulated net realized gain 51,745,096
Net unrealized appreciation 14,993,819
------------
Net Assets $259,613,525
============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $246,002,105) 14,303,846
Net asset value per share $ 17.20
Offering price per share
$17.20/(1-4.75%) $ 18.06
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $13,611,420) 812,371
Net asset value and offering price per share $ 16.76
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
Investment Income
Dividends $ 855,997
Interest 679,291
Security lending 136,950
------------
Total investment income 1,672,238
------------
Expenses
Investment advisory fee 1,735,384
Distribution fee--Class A 588,719
Distribution fee--Class B 124,245
Financial agent fee 113,460
Transfer agent 357,665
Printing 56,110
Registration 30,447
Professional 22,459
Custodian 21,651
Trustees 19,598
Miscellaneous 8,070
------------
Total expenses 3,077,808
------------
Net investment loss (1,405,570)
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 54,155,507
Net change in unrealized appreciation (depreciation) on
investments (8,722,108)
------------
Net gain on investments 45,433,399
------------
Net increase in net assets resulting from
operations $ 44,027,829
============
</TABLE>
30 See Notes to Financial Statements
<PAGE>
Phoenix Aggressive Growth Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------ -----------------
<S> <C> <C>
From Operations
Net investment loss $ (1,405,570) $ (1,821,362)
Net realized gain 54,155,507 39,039,816
Net change in unrealized appreciation (depreciation) (8,722,108) (4,196,804)
-------------- --------------
Increase in net assets resulting from operations 44,027,829 33,021,650
-------------- --------------
From Distributions to Shareholders
Net investment income--Class A -- (230,621)
Net investment income--Class B -- --
Net realized gains--Class A (33,833,409) (24,390,155)
Net realized gains--Class B (1,733,847) (370,937)
-------------- --------------
Decrease in net assets from distributions to shareholders (35,567,256) (24,991,713)
-------------- --------------
From Share Transactions
Class A
Proceeds from sales of shares (4,764,191 and 20,593,244 shares, respectively) 76,429,442 339,736,195
Net asset value of shares issued from reinvestment of distributions
(2,152,050 and 1,566,906 shares, respectively) 31,462,960 22,579,121
Cost of shares repurchased (6,476,002 and 19,216,354 shares, respectively) (103,491,166) (316,940,541)
-------------- --------------
Total 4,401,236 45,374,775
-------------- --------------
Class B
Proceeds from sales of shares (787,300 and 739,574 shares, respectively) 12,236,599 12,090,017
Net asset value of shares issued from reinvestment of distributions
(104,653 and 23,041 shares, respectively) 1,500,729 329,024
Cost of shares repurchased (711,043 and 277,273 shares, respectively) (10,939,843) (4,550,009)
-------------- --------------
Total 2,797,485 7,869,032
-------------- --------------
Increase in net assets from share transactions 7,198,721 53,243,807
-------------- --------------
Net increase in net assets 15,659,294 61,273,744
Net Assets
Beginning of period 243,954,231 182,680,487
-------------- --------------
End of period (including undistributed net investment income of $0 and
$0, respectively) $ 259,613,525 $ 243,954,231
============== ==============
</TABLE>
See Notes to Financial Statements
31
<PAGE>
Phoenix Aggressive Growth Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------------
Year Ended October 31,
1997 1996 1995 1994 1993
----------------- ------------------ --------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.84 $ 16.51 $ 13.33 $ 14.56 $ 13.56
Income from investment operations(5)
Net investment income (loss) ( 0.08)(4) ( 0.13)(4) 0.06(4) 0.27 0.22
Net realized and unrealized gain (loss) 2.95 2.64 4.21 (0.21) 1.62
--------- ------------ ----------- ---------- ----------
Total from investment operations 2.87 2.51 4.27 0.06 1.84
--------- ------------ ----------- ---------- ----------
Less distributions
Dividends from net investment income -- ( 0.02) (0.19) (0.22) (0.23)
Dividends from net realized gains ( 2.51) ( 2.16) (0.90) (1.07) (0.61)
--------- ------------ ----------- ---------- ----------
Total distributions ( 2.51) ( 2.18) (1.09) (1.29) (0.84)
--------- ------------ ----------- ---------- ----------
Change in net asset value 0.36 0.33 3.18 (1.23) 1.00
--------- ------------ ----------- ---------- ----------
Net asset value, end of period $ 17.20 $ 16.84 $ 16.51 $ 13.33 $ 14.56
========= ============ =========== ========== ==========
Total return(1) 19.67 % 17.43 % 35.14% 0.37% 14.15%
Ratios/supplemental data:
Net assets, end of period (thousands) $ 246,002 $233,488 $180,288 $140,137 $143,035
Ratio to average net assets of:
Operating expenses 1.20 % 1.20 % 1.29% 1.26% 1.17%
Net investment income (loss) ( 0.53)% ( 0.81)% 0.43% 1.97% 1.58%
Portfolio turnover 518 % 401 % 331% 306% 192%
Average commission rate paid(6) $ 0.0586 $ 0.0655 N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------------------------
Year Ended October 31,
From
Inception
7/21/94 to
1997 1996 1995 10/31/94
----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.57 $ 16.38 $ 13.31 $ 13.09
Income from investment operations(5)
Net investment income (loss) ( 0.20)(4) ( 0.25)(4) (0.12) (4) 0.02
Net realized and unrealized gain 2.90 2.60 4.26 0.20
--------- --------- --------- ---------
Total from investment operations 2.70 2.35 4.14 0.22
--------- --------- --------- ---------
Less distributions
Dividends from net investment income -- -- (0.17) --
Dividends from net realized gains ( 2.51) ( 2.16) (0.90) --
--------- --------- --------- ---------
Total distributions ( 2.51) ( 2.16) (1.07) --
--------- --------- --------- ---------
Change in net asset value 0.19 0.19 3.07 0.22
--------- --------- --------- ---------
Net asset value, end of period $ 16.76 $ 16.57 $ 16.38 $ 13.31
========= ========= ========= =========
Total return(1) 18.70 % 16.52 % 34.15 % 1.68%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 13,611 $ 10,466 $ 2,393 $ 330
Ratio to average net assets of:
Operating expenses 1.96 % 1.95 % 2.04 % 1.81%(2)
Net investment income (loss) ( 1.28)% ( 1.57)% (0.83)% 1.45%(2)
Portfolio turnover 518 % 401 % 331 % 306%
Average commission rate paid(6) $ 0.0586 $ 0.0655 N/A N/A
</TABLE>
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from
anticipated results depending on the timing of share purchases and
redemptions.
(6) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
32 See Notes to Financial Statements
<PAGE>
Phoenix High Yield Fund Series
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1997
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- -------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--3.5%
U.S. Treasury Notes--3.5%
U.S. Treasury Notes 6.125%,
8/15/07 .................................... Aaa $20,000 $20,437,500
-----------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $20,125,781) .......................................... 20,437,500
-----------
NON-CONVERTIBLE BONDS--60.7%
Asset-Backed Securities--0.5%
DLJ Mortgage Acceptance
Corp. 94-MF4, B2 8.50%,
4/18/01 .................................... BB(c) 3,000 2,920,313
-----------
Building & Materials--0.8%
Neenah Corp. Series B
11.125%, 5/1/07 ........................... B 4,120 4,449,600
-----------
Containers (Metal & Glass)--1.8%
Portola Packaging, Inc. Sr.
Note 10.75%, 10/1/05 ........................ B 10,000 10,500,000
-----------
Electronics--1.2%
Anacomp, Inc. 10.875%,
4/1/04 .................................... NR 7,000 7,262,500
-----------
Health Care--0.7%
Integrated Health Services
144A 9.25%, 1/15/08 (b) ..................... B 4,000 4,090,000
-----------
Industrial--1.0%
Polymer Group, Inc. 9%,
7/1/07 .................................... NR 6,000 6,075,000
-----------
Leasing/Rental--0.6%
Williams Scotsman, Inc.
144A 9.875%, 6/1/07 (b) ..................... B(c) 3,700 3,801,750
-----------
Leisure Time (Products)--0.9%
Autotote Corp. 144A
10.875%, 8/1/04 (b) ........................ B 5,000 5,175,000
-----------
Natural Gas--1.2%
Forcenergy, Inc. 8.50%,
2/15/07 .................................... B 7,000 7,017,500
-----------
Non-Agency Mortgage-Backed Securities--3.9%
First Chicago/Lennar Trust
97-CHL1, E 144A 8.11%,
2/28/11 (b) ................................. B(c) 10,000 8,381,250
Fund America Structured
Trust 96-1, A 144A 0%,
10/25/30 (b) .............................. Baa 2,313 1,810,300
Ryland Mortgage Security
Corp. III 92-A, 1C 8.27%,
3/29/30 .................................... BB(c) 1,000 815,781
SML, Inc. 94-C1, B2 10.30%,
9/20/99 .................................... BB(c) 5,000 4,950,000
Salomon Brothers Mortgage
VII 95, C1 144A 6.801%,
9/30/08 (b) ................................. B 8,220 6,576,169
-----------
22,533,500
-----------
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- -------------
<S> <C> <C> <C>
Oil--8.4%
Benton Oil & Gas Co.
11.625%, 5/1/03 (f) ........................ B $ 9,800 $10,927,000
Benton Oil & Gas Co. 144A
9.375%, 11/1/07 (b) ........................ B 2,750 2,770,625
Flores & Rucks, Inc. 9.75%,
10/1/06 (f) ................................. B 5,000 5,350,000
Lomak Petroleum, Inc.
8.75%, 1/15/07 .............................. B 2,000 2,015,000
Nuevo Energy Co. 9.50%,
4/15/06 .................................... B 13,500 14,242,500
Ocean Energy, Inc. 8.875%,
7/15/07 .................................... NR 7,000 7,245,000
Snyder Oil Corp. 8.75%,
6/15/07 .................................... B 6,750 6,817,500
-----------
49,367,625
-----------
-----------
Oil Service & Equipment--1.5%
Bellwether Exploration Co.
10.875%, 4/1/07 ..................... B 8,000 8,680,000
-----------
Paper & Forest Products--4.1%
Buckeye Cellulose Corp.
9.25%, 9/15/08 (f) .................. Ba 5,500 5,761,250
Riverwood International Corp.
144A 10.625%, 8/1/07 (b) .B 6,900 7,245,000
Riverwood International Corp.
10.875%, 4/1/08 (f) .................. Caa 6,000 5,940,000
SD Warren Co. Series B Sr.
Subordinate Notes 12%,
12/15/04 .............................. B 4,250 4,791,875
-----------
23,738,125
-----------
Personal Care--1.4%
Revlon Worldwide Corp.
Series B 0%, 3/15/01 .................. B 12,000 8,340,000
-----------
Publishing, Broadcasting, Printing & Cable--16.2%
Cablevision Systems Corp.
9.875%, 4/1/23 (f) .................. B 6,750 7,155,000
Comcast Cellular 144A
9.50%, 5/1/07 (b) ..................... Ba 12,500 12,937,500
Fox Kids Worldwide 144A
0%, 11/1/07 (b) (e) .................. B 43,000 24,402,500
Fox/Liberty Networks LLC
144A 0%, 8/15/07 (b) (e) ............ B 13,000 8,255,000
Fox/Liberty Networks LLC
144A 8.875%, 8/15/07 (b) .B 5,000 5,012,500
Hollinger International Publishing,
Inc. 9.25%, 3/15/07 .................. B 3,400 3,502,000
ITT Publimedia 144A
9.375%, 9/15/07 (b) .................. B 14.375 14,698,437
Outdoor Communications
9.25%, 8/15/07 ........................ B 6,500 6,500,000
Poland Communications, Inc.
Series B 9.875%, 11/1/03 .B 12,200 12,261,000
-----------
94,723,937
===========
</TABLE>
<PAGE>
Phoenix High Yield Fund Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- --------------
<S> <C> <C> <C>
Retail (General Merchandise)--0.5%
Scotty's, Inc. Series A Debentures
11.25%, 12/15/15 ............ NR $ 3,018 $ 2,882,190
------------
Telecommunications--13.9%
Brooks Fiber Properties 0%,
3/1/06 (e) .................. NR 8,500 6,927,500
Call-Net Enterprises 0%,
12/1/04 (e) .................. B 7,000 6,282,500
CommNet Cellular
Subordinate Notes 11.25%,
7/1/05 ........................ Caa 4,000 4,620,000
Hermes Europe Railtel B.V.
144A 11.50%, 8/15/07 (b) B 6,500 7,052,500
InterAmericas
Communications Corp. Unit
144A 14%, 10/27/07
(b) (h) ..................... NR 11,990 12,109,900
NTL, Inc. 10%, 2/15/07 (f) ...... B 8,000 8,280,000
NTL, Inc. Series B 0%,
2/1/06 (e) .................. B 7,000 5,145,000
Orion Network Systems 0%,
1/15/07 (e) .................. B 8,000 5,720,000
RCN Corp. 144A 0%,
10/15/07 (b) (e) ............ B 17,250 10,048,125
Sprint Spectrum L. P. 0%,
8/15/06 (e) (f) ............... B 19,950 15,261,750
------------
81,447,275
------------
Truckers & Marine--1.2%
Global Ocean Carriers 144A
10.25%, 7/15/07 (b) ......... B 7,000 6,982,500
------------
Waste Management--0.9%
Allied Waste Industries 144A
0%, 6/1/07 (b) (e) ............ B 7,500 5,062,500
------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $345,679,464) ........................... 355,049,315
------------
FOREIGN GOVERNMENT SECURITIES--5.2%
Dominican Republic--0.3%
Dominican Republic 6.875%,
8/30/24 (e) .................. B(c) 2,500 1,778,125
------------
Mexico--0.9%
United Mexican States Global
Bond 11.50%, 5/15/26 ......... Ba 5,000 5,281,250
------------
Russia--2.0%
Russia Principal Loans WI
6.719%, 12/15/20 (g) ......... NR 20,000 11,800,000
------------
Venezuela--2.0%
Banco Central Venezuela
NMB B-NP 6.75%,
12/18/05 (e) .................. Ba 1,000 887,500
Republic of Venezuela Series A
NMB 6.875%, 12/18/05 (e) .Ba 4,000 3,550,000
Republic of Venezuela 144A
9.125%, 6/18/07 (b) ......... Ba 8,100 7,330,500
------------
11,768,000
------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $33,702,170) ........................... 30,627,375
------------
</TABLE>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- -------------
FOREIGN NON-CONVERTIBLE BONDS--25.2%
Argentina--2.5%
Bridas Corp. Yankee, Sr.
Notes, 12.50%, 11/15/99 ......... Ba $ 6,500 $ 6,987,500
CEI Citicorp Holdings 144A
9.75%, 2/14/07 (b) ............ BB(c) 8,500 7,735,000
-----------
14,722,500
-----------
Bahamas--1.1%
Sun International Hotels 9%,
3/15/07 (f) ..................... Ba 6,000 6,150,000
-----------
Bermuda--1.4%
AES China Generating Co.
Yankee 10.125%, 12/15/06 .Ba 8,220 8,261,100
-----------
Brazil--6.5%
Arisco Prod Alimenticios
144A 10.75%, 5/22/05 (b) .NR 3,750 3,468,750
Globo Communicacoes
Participacoes 144A
10.50%, 12/20/06 (b) ............ B 10,000 9,400,000
Localiza Rent a Car 144A
10.25%, 10/1/05 (b) ............ B 8,000 7,200,000
Paging Network Do Brasil
144A 13.50%, 6/6/05 (b) ......... NR 5,000 4,750,000
RBS Participacoes SA 144A
11%, 4/1/07 (b) ............... BB(c) 5,000 4,925,000
Tevecap SA 12.625%,
11/26/04 ........................ NR 8,225 8,389,500
-----------
38,133,250
-----------
Canada--0.8%
Metronet Communications Units
144A 12%, 8/15/07 (b) (h) ...... NR 4,000 4,510,000
-----------
China--0.3%
Greater Beijing 144A 9.50%,
6/15/07 (b) ..................... Ba 1,650 1,501,500
-----------
Germany--1.8%
Kabelmedia Holding 0%,
8/1/06 (e) ..................... B 15,000 10,612,500
-----------
Greece--2.0%
Antenna TV SA 144A 9%,
8/1/07 (b) ..................... Ba 4,250 4,228,750
Fage Dairy Industries SA 9%,
2/1/07 ........................ B 8,000 7,720,000
-----------
11,948,750
-----------
Hong Kong--0.3%
Road King Infrastructure
144A 9.50%, 7/15/07 (b) ......... BB(c) 2,000 1,860,000
-----------
Mexico--4.7%
Copamex Industries SA 144A
11.375%, 4/30/04 (b) ............ B 8,000 8,560,000
Hylsa SA de C.V. 144A
9.25%, 9/15/07 (b) ............ BB(c) 5,000 4,912,500
Ispat Mexicana SA Euro
10.375%, 3/15/01 ............... NR 12,000 12,000,000
Petroleos Mexicanos 144A
9.50%, 9/15/27 (b) ............ NR 2,000 1,820,000
-----------
27,292,500
-----------
See Notes to Financial Statements
36
<PAGE>
Phoenix High Yield Fund Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- -------------
<S> <C> <C> <C>
Netherlands--1.0%
Netia Holdings 144A 0%,
11/1/07 (b) (e) ............... NR $ 9,750 $ 5,874,375
------------
United Kingdom--2.3%
Diamond Cable Co. 0%,
2/15/07 (e) .................. B 15,000 9,787,500
Telewest Communications
PLC 0%, 10/1/07 (e) ......... B 5,000 3,737,500
------------
13,525,000
------------
Venezuela--0.5%
CanTV Finance Ltd. VNT
9.25%, 2/1/04 (f) ............ Ba 3,000 2,955,000
------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $150,184,266) ........................... 147,346,475
------------
FOREIGN CONVERTIBLE BONDS--0.5%
Russia--0.5%
Lukinter Finance Cv. WI
144A 1%, 11/3/03 (b) (g) . NR 3,500 3,115,000
------------
TOTAL FOREIGN CONVERTIBLE BONDS
(Identified cost $3,380,000).............................. 3,115,000
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------
<S> <C> <C>
PREFERRED STOCKS--2.7%
Paper & Forest Products--0.7%
SD Warren Co. Series B Pfd.
PIK 14% ..................... 115,000 4,082,587
---------
Publishing--2.0%
American Radio Systems Pfd.
PIK 11.375% .................. 100,017 11,902,034
----------
TOTAL PREFERRED STOCKS
(Identified cost $12,523,141) ............ 15,984,621
----------
CONVERTIBLE PREFERRED STOCKS--0.3%
Publishing--0.3%
Granite Broadcasting Corp.
Cv. Pfd. $1.938............... 30,000 1,488,750
----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified cost $2,025,000) ............ 1,488,750
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C>
COMMON STOCKS--0.0%
Publishing--0.0%
Sullivan Holdings, Inc.
Class C (d) .................. 76 $ 0
------------
TOTAL COMMON STOCKS
(Identified cost $357,881) ............... 0
------------
WARRANTS--0.1%
Orion Network Systems,
Inc. Warrants (d) ............ 8,000 140,000
SD Warren Warrants 144A
(b) (d) ..................... 115,000 575,000
------------
715,000
------------
TOTAL WARRANTS
(Identified cost $568,100) ............... 715,000
------------
TOTAL LONG-TERM INVESTMENTS--98.2%
(Identified cost $568,545,803) ............ 574,764,036
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------- --------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--1.9%
Commercial Paper--1.3%
Associates Corporation of
North America 5.73%,
11/3/97 .................. A-1+ $7,240 7,237,695
---------
Repurchase Agreement--0.6%
State Street Bank
Repurchase Agreement
4% dated 10/31/97 due
11/3/97, repurchase
price $3,558,186,
collateralized by U.S.
Treasury Note 8.875%,
2/15/19, market value
$3,630,363 ............... 3,557 3,557,000
---------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $10,794,695) ..................... 10,794,695
----------
TOTAL INVESTMENTS--100.1%
(Identified cost $579,340,498)..................... 585,558,731(a)
Cash and receivables, less liabilities--(0.1%) ... (468,944)
-----------
NET ASSETS--100.0% ................................. $ 585,089,787
==============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $19,805,751 and gross
depreciation of $13,677,743 for income tax purposes. At October 31, 1997,
the aggregate cost of securities for federal income tax purposes was
$579,430,723.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1997, these securities amounted to a value of $228,177,931 or 39% of net
assets.
(c) As rated by Standard & Poor's, Duff & Phelps or Fitch.
(d) Non-income producing.
(e) Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
(f) All or a portion segregated as collateral.
(g) When issued.
(h) Warrants incorporated as a unit.
See Notes to Financial Statements
37
<PAGE>
Phoenix High Yield Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
Assets
Investment securities at value
(Identified cost $579,340,498) $ 585,558,731
Receivables
Investment securities sold 42,813,392
Dividends and interest 11,854,601
Fund shares sold 1,253,055
-------------
Total assets 641,479,779
-------------
Liabilities
Payables
Custodian 7,377,577
Investment securities purchased 47,419,697
Fund shares repurchased 853,797
Investment advisory fee 341,921
Distribution fee 165,332
Transfer agent fee 95,525
Financial agent fee 18,677
Trustees' fee 3,636
Accrued expenses 113,830
-------------
Total liabilities 56,389,992
-------------
Net Assets $ 585,089,787
=============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $ 658,238,146
Undistributed net investment income 1,920,695
Accumulated net realized loss (81,287,287)
Net unrealized appreciation 6,218,233
-------------
Net Assets $ 585,089,787
=============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $532,905,726) 58,643,449
Net asset value per share $ 9.09
Offering price per share
$9.09/(1-4.75%) $ 9.54
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $52,184,061) 5,754,039
Net asset value and offering price per share $ 9.07
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
Investment Income
Interest $ 54,780,941
Dividends 1,605,229
Security lending 11,206
-------------
Total investment income 56,397,376
-------------
Expenses
Investment advisory fee 3,713,370
Distribution fee--Class A 1,335,223
Distribution fee--Class B 371,984
Financial agent fee 205,073
Transfer agent 759,805
Printing 107,246
Custodian 30,271
Registration 29,693
Professional 26,945
Trustees 19,555
Miscellaneous 10,560
-------------
Total expenses 6,609,725
-------------
Net investment income 49,787,651
-------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 43,737,254
Net change in unrealized appreciation (depreciation) on
investments (14,877,655)
-------------
Net gain on investments 28,859,599
-------------
Net increase in net assets resulting from
operations $ 78,647,250
=============
See Notes to Financial Statements
38
<PAGE>
Phoenix High Yield Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------ -----------------
<S> <C> <C>
From Operations
Net investment income $ 49,787,651 $ 47,719,085
Net realized gain 43,737,254 26,433,066
Net change in unrealized appreciation (depreciation) (14,877,655) 2,635,081
-------------- --------------
Increase in net assets resulting from operations 78,647,250 76,787,232
-------------- --------------
From Distributions to Shareholders
Net investment income--Class A (47,205,499) (46,688,677)
Net investment income--Class B (3,142,933) (1,579,272)
-------------- --------------
Decrease in net assets from distributions to shareholders (50,348,432) (48,267,949)
-------------- --------------
From Share Transactions
Class A
Proceeds from sales of shares (19,095,734 and 8,790,783 shares, respectively) 171,457,073 73,572,017
Net asset value of shares issued from reinvestment of distributions (2,704,031 and
2,806,249 shares, respectively) 24,329,132 23,385,527
Cost of shares repurchased (21,233,985 and 15,647,656 shares, respectively) (191,152,369) (131,021,265)
-------------- --------------
Total 4,633,836 (34,063,721)
-------------- --------------
Class B
Proceeds from sales of shares (4,404,860 and 1,998,410 shares, respectively) 39,804,503 16,749,310
Net asset value of shares issued from reinvestment of distributions (142,554 and
76,435 shares, respectively) 1,286,205 639,323
Cost of shares repurchased (1,757,872 and 616,763 shares, respectively) (15,793,311) (5,170,475)
-------------- --------------
Total 25,297,397 12,218,158
-------------- --------------
Increase (decrease) in net assets from share transactions 29,931,233 (21,845,563)
-------------- --------------
Net increase in net assets 58,230,051 6,673,720
Net Assets
Beginning of period 526,859,736 520,186,016
-------------- --------------
End of period (including undistributed net investment income of
$1,920,695 and $2,038,026, respectively) $ 585,089,787 $ 526,859,736
============== ==============
</TABLE>
See Notes to Financial Statements
39
<PAGE>
Phoenix High Yield Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------
Year Ended October 31,
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.63 $ 8.17 $ 8.11 $ 9.11 $ 8.14
Income from investment operations
Net investment income 0.80 0.78 0.80 0.76 0.74
Net realized and unrealized gain (loss) 0.46 0.46 0.04 (0.97) 0.97
------ ------ ------ ------ ------
Total from investment operations 1.26 1.24 0.84 (0.21) 1.71
------ ------ ------ ------ ------
Less distributions
Dividends from net investment income (0.80) (0.78) (0.78) (0.76) (0.74)
Tax return of capital -- -- -- (0.03) --
------ ------ ------ ------ ------
Total distributions (0.80) (0.78) (0.78) (0.79) (0.74)
------ ------ ------ ------ ------
Change in net asset value 0.46 0.46 0.06 (1.00) 0.97
------ ------ ------ ------ ------
Net asset value, end of period $ 9.09 $ 8.63 $ 8.17 $ 8.11 $ 9.11
====== ====== ====== ====== ======
Total return(1) 15.03% 15.95% 11.19% (2.57)% 21.87%
Ratios/supplemental data:
Net assets end of period (thousands) $532,906 $501,265 $507,855 $531,773 $182,333
Ratio to average net assets of:
Operating expenses 1.11% 1.17% 1.21% 1.19% 1.04%
Net investment income 8.76% 9.21% 10.01% 9.01% 8.46%
Portfolio turnover 167% 162% 147% 222% 157%
</TABLE>
<TABLE>
<CAPTION>
Class B
------------------------------------------------------
From
Inception
Year Ended October 31, 2/16/94 to
1997 1996 1995 10/31/94
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.63 $ 8.19 $ 8.13 $ 9.38
Income from investment operations
Net investment income 0.73 0.71 0.72 0.54
Net realized and unrealized gain (loss) 0.46 0.45 0.07 (1.25)
------ ------ ------ -------
Total from investment operations 1.19 1.16 0.79 (0.71)
------ ------ ------ -------
Less distributions
Dividends from net investment income (0.75) (0.72) (0.73) (0.52)
Tax return of capital -- -- -- (0.02)
------ ------ ------ -------
Total distributions (0.75) (0.72) (0.73) (0.54)
------ ------ ------ -------
Change in net asset value 0.44 0.44 0.06 (1.25)
------ ------ ------ -------
Net asset value, end of period $ 9.07 $ 8.63 $ 8.19 $ 8.13
====== ====== ====== =======
Total return(1) 14.18% 14.88% 10.44% (7.67)%(3)
Ratios/supplemental data:
Net assets end of period (thousands) $52,184 $25,595 $12,331 $6,056
Ratio to average net assets of:
Operating expenses 1.86% 1.92% 1.97% 1.80%(2)
Net investment income 8.00% 8.47% 9.18% 9.12%(2)
Portfolio turnover 167% 162% 147% 222%
</TABLE>
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
See Notes to Financial Statements
40
<PAGE>
Phoenix U.S. Government Securities Fund Series
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1997
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------------------- -------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--61.0%
U.S. Treasury Bonds--2.7%
U.S. Treasury Bonds 6.375%,
8/15/27 ........................ AAA $ 1,000 $ 1,030,625
U.S. Treasury Bonds WI
6.125%, 11/15/27 (h) ............ AAA 4,000 3,997,200
------------
5,027,825
------------
U.S. Treasury Notes--49.0%
U.S. Treasury Inflation Index
Notes 3.375%, 1/15/07 (i) . AAA 9,165 9,176,200
U.S. Treasury Notes 5.625%,
10/31/99 ........................ AAA 24,220 24,227,557
U.S. Treasury Notes 6.25%,
8/31/02 (e) ..................... AAA 43,000 43,791,630
U.S. Treasury Notes 6.625%,
5/15/07 ........................ AAA 10,800 11,373,750
U.S. Treasury Notes 6.125%,
8/15/07 ........................ AAA 3,350 3,423,281
------------
91,992,418
------------
Agency Mortgage-Backed Securities--9.3%
FNMA 10%, 5/25/04 ............... AAA 3,003 3,200,211
FNMA 6.50%, 5/25/18 ............... AAA 1,500 1,513,125
FNMA 8.50%, 11/25/19 ............ AAA 58 57,509
FNMA 6.85%, 5/17/20 ............... AAA 10,000 10,050,000
FNMA 6.75%, '19-'21 ............... AAA 2,000 2,045,010
GNMA 8%, '05-'06 .................. AAA 141 148,769
GNMA 8.50%, '01-'22 ............... AAA 446 467,935
------------
17,482,559
------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $112,858,455) ....................................... 114,502,802
------------
MUNICIPAL BONDS--20.6%
Atlanta Downtown
Development Authority
Lease Revenue Taxable
6.875%, 2/1/21 (e) (f) ......... AAA 5,100 5,142,381
Chicago Public Building
Taxable 6.25%, 1/1/99 (c) ...... AAA 2,000 2,009,500
Chicago Public Building
Taxable 6.65%, 1/1/01 (c) ...... AAA 1,000 1,017,180
Chicago Public Building
Taxable 7%, 1/1/06 (c) ......... AAA 2,000 2,088,280
Chicago Public Building
Taxable 7%, 1/1/07 (c) ......... AAA 1,050 1,097,974
E-470 Public Highway
Authority Colorado Revenue
5%, 9/1/26 ..................... AAA 5,000 4,765,900
Harristown Development
Corporation PA Special
Taxable 6.15%, 2/1/16 ......... Aaa(g) 5,000 4,668,550
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------------------- -------------
<S> <C> <C> <C>
MUNICIPAL BONDS--continued
Massachusetts Turnpike
Authority Metropolitan
Highway System Revenue
5%, 1/1/27 ..................... AAA $ 5,000 $ 4,750,600
Port St. Lucie, Florida Utility
Revenue 5.125%, 9/1/27 ......... AAA 5,000 4,848,350
San Francisco City & County
Redevelopment Agency
Revenue Taxable 9.75%,
6/1/13 (c) (e) .................. AAA 4,800 6,300,816
Texas Water Development
Board Revenue-ST
Revolving Fund 5%,
7/15/19 ........................ AAA 2,000 1,945,680
------------
TOTAL MUNICIPAL BONDS
(Identified cost $38,067,152).........................................................
38,635,211
------------
NON-CONVERTIBLE BONDS--6.2%
Leisure Time (Products)--2.3%
Mashantucket Pequot Revenue
144A 6.91%, 9/1/12 (b) ......... AAA 4,200 4,273,710
------------
Non-Agency Mortgage-Backed Securities--3.9%
PNC Mortgage Securities Corp.
96-3, A5 8%, 12/25/26 ......... Aaa(g) 4,588 4,854,498
Resolution Trust Corp. 95-2,
M1 7.15%, 5/25/29 ............... Aa(g) 2,509 2,551,563
------------
7,406,061
------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $11,507,396).........................................................
11,679,771
------------
SHARES
------
PREFERRED STOCKS--5.3%
REITS--5.3%
Home Ownership Funding 2,
Step-down Pfd. 144A
13.338% (b) (d) ............... 10,000 9,913,450
------------
TOTAL PREFERRED STOCKS
(Identified cost $9,660,265) .......................................... 9,913,450
------------
TOTAL LONG-TERM INVESTMENTS--93.1%
(Identified cost $172,093,268) ......................................................
174,731,234
------------
</TABLE>
See Notes to Financial Statements
43
<PAGE>
Phoenix U.S. Government Securities Fund Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
VALUE
(000) VALUE
--------- ------------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--8.2%
Federal Agency Securities--8.2%
FHLMC 5.65%, 11/3/97 ...... $15,315 $15,310,193
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $15,310,193) ...... 15,310,193
===========
</TABLE>
<TABLE>
<CAPTION>
VALUE
------------
<S> <C>
TOTAL INVESTMENTS--101.3%
(Identified cost $187,403,461) $190,041,427(a)
Cash and receivables, less
liabilities--(1.3%) (2,469,860)
------------
NET ASSETS--100.0% $187,571,567
=============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $2,580,887 and gross
depreciation of $307,456 for income tax purposes. At October 31, 1997, the
aggregate cost of securities for federal income tax purposes was
$187,767,996.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1997 these securities amounted to a value of $14,187,160 or 7.6% of net
assets.
(c) These bonds are fully defeased by U.S. Government Treasury Obligations.
(d) Dividend payments backed by FHLMC ("Freddie Mac") Participation
Certificates.
(e) All or a portion segregated as collateral.
(f) The revenue from this security is backed by the U.S. Government.
(g) As rated by Moody's, Fitch or Duff & Phelps.
(h) When issued.
(i) Variable or step coupon security; interest rate shown reflects rate
currently in effect.
See Notes to Financial Statements
44
<PAGE>
Phoenix U.S. Government Securities Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $187,403,461) $ 190,041,427
Cash 3,344
Receivables
Interest and dividends 1,754,606
Fund shares sold 438,157
-------------
Total assets 192,237,534
-------------
Liabilities
Payables
Investment securities purchased 3,995,045
Fund shares repurchased 443,481
Investment advisory fee 71,336
Distribution fee 42,882
Transfer agent fee 40,785
Financial agent fee 8,209
Trustees' fee 3,636
Accrued expenses 60,593
-------------
Total liabilities 4,665,967
-------------
Net Assets $ 187,571,567
=============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $ 195,357,302
Undistributed net investment income 694,705
Accumulated net realized loss (11,118,406)
Net unrealized appreciation 2,637,966
-------------
Net Assets $ 187,571,567
=============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $182,250,364) 18,874,419
Net asset value per share $ 9.66
Offering price per share
$9.66/(1-4.75%) $ 10.14
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $5,321,203) 554,129
Net asset value and offering price per share $ 9.60
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
Investment Income
Interest $12,482,271
Dividends 446,860
Security lending 71,932
-----------
Total investment income 13,001,063
-----------
Expenses
Investment advisory fee 885,257
Distribution fee--Class A 479,186
Distribution fee--Class B 50,496
Financial agent fee 93,466
Transfer agent 314,694
Printing 48,172
Registration 26,304
Professional 22,032
Trustees 19,633
Custodian 18,620
Miscellaneous 3,531
-----------
Total expenses 1,961,391
-----------
Net investment income 11,039,672
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 517,260
Net change in unrealized appreciation (depreciation) on
investments 2,715,533
-----------
Net gain on investments 3,232,793
-----------
Net increase in net assets resulting from
operations $14,272,465
===========
</TABLE>
See Notes to Financial Statements
45
<PAGE>
Phoenix U.S. Government Securities Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------ -----------------
<S> <C> <C>
From Operations
Net investment income $ 11,039,672 $ 12,502,080
Net realized gain (loss) 517,260 (2,717,827)
Net change in unrealized appreciation (depreciation) 2,715,533 (904,425)
------------- -------------
Increase in net assets resulting from operations 14,272,465 8,879,828
------------- -------------
From Distributions to Shareholders
Net investment income--Class A (10,634,100) (11,752,701)
Net investment income--Class B (259,835) (201,921)
------------- -------------
Decrease in net assets from distributions to shareholders (10,893,935) (11,954,622)
------------- -------------
From Share Transactions
Class A
Proceeds from sales of shares (2,629,037 and 3,190,243 shares, respectively) 24,689,395 30,366,623
Net asset value of shares issued from reinvestment of distributions (639,861 and
680,397 shares, respectively) 6,046,315 6,412,886
Cost of shares repurchased (6,412,210 and 6,419,884 shares, respectively) (60,334,761) (61,087,957)
------------- -------------
Total (29,599,051) (24,308,448)
------------- -------------
Class B
Proceeds from sales of shares (165,395 and 241,903 shares, respectively) 1,565,869 2,287,444
Net asset value of shares issued from reinvestment of distributions (16,313 and
11,893 shares, respectively) 153,651 111,576
Cost of shares repurchased (143,485 and 119,425 shares, respectively) (1,354,825) (1,122,209)
------------- -------------
Total 364,695 1,276,811
------------- -------------
Decrease in net assets from share transactions (29,234,356) (23,031,637)
------------- -------------
Net decrease in net assets (25,855,826) (26,106,431)
Net Assets
Beginning of period 213,427,393 239,533,824
------------- -------------
End of period (including undistributed net investment income of
$694,705 and $264,123, respectively) $ 187,571,567 $ 213,427,393
============= =============
</TABLE>
See Notes to Financial Statements
46
<PAGE>
Phoenix U.S. Government Securities Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------
Year Ended October 31,
1997 1996 1995 1994 1993
------- --------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.47 $ 9.60 $8.88 $ 9.87 $ 9.91
Income from investment operations
Net investment income 0.55 0.52 0.55 0.64 0.62(1)
Net realized and unrealized gain (loss) 0.17 (0.15) 0.72 (1.02) 0.34
------ ------ ----- ------ -------
Total from investment operations 0.72 0.37 1.27 (0.38) 0.96
------ ------ ----- ------ -------
Less distributions
Dividends from net investment income (0.53) (0.50) 0.55) (0.45) (0.62)
Dividends from net realized gains -- -- -- (0.02) (0.38)
Tax return of capital -- -- -- (0.14) --
------ ------ ----- ------ -------
Total distributions (0.53) (0.50) 0.55) (0.61) (1.00)
------ ------ ----- ------ -------
Change in net asset value 0.19 (0.13) 0.72 (0.99) (0.04)
------ ------ ----- ------ -------
Net asset value, end of period $ 9.66 $ 9.47 $9.60 $ 8.88 $ 9.87
====== ====== ===== ====== =======
Total return(2) 7.85% 4.05% 14.81% (3.98)% 10.18%
Ratios/supplemental data:
Net assets, end of period (thousands) $182,250 $208,552 $235,879 $262,157 $57,072
Ratio to average net assets of:
Operating expenses 0.98% 1.03% 0.99% 0.98% 0.75%
Net investment income 5.63% 5.55% 6.01% 5.92% 6.19%
Portfolio turnover 377% 379% 178% 101% 264%
</TABLE>
<TABLE>
<CAPTION>
Class B
---------------------------------------------------------
From
Inception
Year Ended October 31, 2/24/94 to
1997 1996 1995 10/31/94
------- ------- ------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.45 $ 9.58 $ 8.86 $9.61
Income from investment operations
Net investment income 0.47 0.44 0.48 0.39
Net realized and unrealized gain (loss) 0.17 (0.14) 0.72 (0.75)
------ ------ ------ -----
Total from investment operations 0.64 0.30 1.20 (0.36)
------ ------ ------ -----
Less distributions
Dividends from net investment income (0.49) (0.43) (0.48) (0.30)
Dividends from net realized gains -- -- -- --
Tax return of capital -- -- -- (0.09)
------ ------ ------ -----
Total distributions (0.49) (0.43) (0.48) (0.39)
------ ------ ------ -----
Change in net asset value 0.15 (0.13) 0.72 (0.75)
------ ------ ------ -----
Net asset value, end of period $ 9.60 $ 9.45 $ 9.58 $8.86
====== ====== ====== =====
Total return(2) 6.94% 3.39% 13.82% (3.83)%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $5,321 $4,875 $3,655 $1,238
Ratio to average net assets of:
Operating expenses 1.71% 1.78% 1.73% 2.00%(3)
Net investment income 4.91% 4.79% 5.23% 4.49%(3)
Portfolio turnover 377% 379% 178% 101%
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.03.
(2) Maximum sales load is not reflected in the total return calculation.
(3) Annualized
(4) Not annualized
See Notes to Financial Statements
47
<PAGE>
Phoenix Money Market Fund Series
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1997
<TABLE>
<CAPTION>
Face
Value Interest Maturity
(000) Description Rate Date Value
- -------- -------------------------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
FEDERAL AGENCY SECURITIES--10.1%
$3,500 FHLB ........................... 5.69 % 11/20/97 $ 3,500,000
3,000 FHLB ........................... 5.79 1/21/98 3,000,000
6,500 FHLB ........................... 5.78 1/28/98 6,500,000
7,500 SLMA ........................... 6.00 6/30/98 7,500,000
-----------
TOTAL FEDERAL AGENCY SECURITIES ........................... 20,500,000
-----------
FEDERAL AGENCY SECURITIES--VARIABLE--18.9% (b)
Reset
Date
--------
4,500 FFCB (final maturity 4/1/99) ... 5.28 11/1/97 4,500,000
10,500 FFCB (final maturity 7/24/00) 5.79 11/1/97 10,503,231
1,000 SLMA (final maturity
11/24/97) ..................... 5.27 11/4/97 1,000,000
3,500 SLMA (final maturity
11/10/98) ..................... 5.29 11/4/97 3,498,106
2,000 SLMA (final maturity 2/22/99) . 5.30 11/4/97 2,000,000
5,000 SLMA (final maturity 2/8/99) ... 5.31 11/4/97 5,000,000
3,000 SLMA (final maturity 3/7/01) ... 5.36 11/4/97 3,000,000
3,000 FHLMC (final maturity
6/22/98) ..................... 5.405 11/20/97 2,999,055
3,000 FNMA (final maturity
12/14/98) ..................... 5.36 12/14/97 2,998,158
3,000 SBA (final maturity 10/25/22) 6.00 1/1/98 2,996,251
-----------
TOTAL FEDERAL AGENCY SECURITIES--VARIABLE 38,494,801
-----------
</TABLE>
<TABLE>
<CAPTION>
Standard
& Poor's
Rating Maturity
(Unaudited) Date
------------- ----------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER--65.7%
502 Heinz (H.J.) Co. ......... A-1 5.50 11/3/97 501,847
1,060 Merrill Lynch & Co., Inc. A-1+ 5.54 11/3/97 1,059,674
1,000 Pfizer, Inc. ............ A-1+ 5.52 11/3/97 999,693
5,235 Pitney Bowes Credit
Corp. ..................... A-1+ 5.70 11/3/97 5,233,342
500 Preferred Receivables
Funding Corp. ............ A-1 5.80 11/3/97 499,839
750 BellSouth
Telecommunications,
Inc. ..................... A-1+ 5.57 11/4/97 749,652
747 Receivables Capital Corp. A-1+ 5.54 11/4/97 746,655
500 Du Pont (E.I.) de
Nemours & Co. ............ A-1+ 5.55 11/6/97 499,615
3,000 Goldman, Sachs & Co. A-1+ 5.62 11/6/97 2,997,656
1,642 Receivables Capital Corp. A-1+ 5.55 11/6/97 1,640,734
2,500 Kimberly-Clark Corp. ...... A-1+ 5.65 11/7/97 2,497,646
4,570 Colgate-Palmolive Co. A-1 5.54 11/10/97 4,563,671
</TABLE>
<TABLE>
<CAPTION>
Standard
Face & Poor's
Value Rating Interest Maturity
(000) Description (Unaudited) Rate Date Value
- --------- ----------------------- ------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER--continued
$ 2,700 Corporate Asset
Funding Co., Inc. . A-1+ 5.55% 11/10/97 $2,696,254
3,300 CXC, Inc. ............ A-1+ 5.52 11/12/97 3,294,434
1,200 Coca-Cola Co. ......... A-1+ 5.52 11/12/97 1,197,976
565 Corporate Asset
Funding Co., Inc. . A-1+ 5.51 11/12/97 564,049
2,750 Exxon Imperial U.S.,
Inc. .................. A-1+ 5.52 11/12/97 2,745,370
1,550 Cargill, Inc. ......... A-1+ 5.50 11/13/97 1,547,158
3,000 Enterprise Funding
Corp. ............... A-1+ 5.73 11/13/97 2,994,270
3,470 AlliedSignal, Inc. ... A-1 5.55 11/14/97 3,463,046
450 Beta Finance, Inc. ... A-1+ 5.55 11/14/97 449,098
3,000 Corporate Receivables
Corp. ............... A-1 5.35 11/14/97 2,994,204
1,000 Gannett Co. ......... A-1 5.52 11/14/97 998,007
3,500 General Electric
Capital Corp. ......... A-1+ 5.53 11/17/97 3,491,398
1,465 Pitney Bowes Credit
Corp. ............... A-1+ 5.65 11/17/97 1,461,321
2,516 Receivables Capital
Corp. ............... A-1+ 5.54 11/17/97 2,509,805
1,800 General Electric
Capital Corp. ......... A-1+ 5.50 11/19/97 1,795,050
3,255 Greenwich Funding
Corp. ............... A-1+ 5.53 11/20/97 3,245,500
3,165 Preferred Receivables
Funding Corp. ......... A-1 5.52 11/21/97 3,155,294
700 Cargill, Inc. ......... A-1+ 5.52 11/24/97 697,531
1,129 Greenwich Funding
Corp. ............... A-1+ 5.55 11/24/97 1,124,997
4,170 Beta Finance, Inc. ... A-1+ 5.52 11/25/97 4,154,654
600 Beta Finance, Inc. ... A-1+ 5.55 11/25/97 597,780
1,600 Enterprise Funding
Corp. ............... A-1+ 5.71 11/25/97 1,593,909
3,650 General Electric
Capital Corp. ......... A-1+ 5.54 11/26/97 3,635,958
5,000 Goldman, Sachs & Co. A-1+ 5.53 11/28/97 4,979,263
315 Enterprise Funding
Corp. ............... A-1+ 5.53 12/1/97 313,548
600 Enterprise Funding
Corp. ............... A-1+ 5.57 12/1/97 597,215
3,680 Greenwich Funding
Corp. ............... A-1+ 5.56 12/1/97 3,662,949
1,600 Receivables Capital
Corp. ............... A-1+ 5.54 12/1/97 1,592,613
3,645 Du Pont (E.I.) de
Nemours & Co. ......... A-1+ 5.50 12/2/97 3,627,737
</TABLE>
See Notes to Financial Statements
50
<PAGE>
Phoenix Money Market Fund Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Face & Poor's
Value Rating Interest Maturity
(000) Description (Unaudited) Rate Date Value
- --------- ------------------------- ------------- ---------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER--continued
$ 3,000 Private Export
Funding Corp. ......... A-1+ 5.53% 12/4/97 $ 2,984,792
5,000 Private Export
Funding Corp. ......... A-1+ 5.51 12/5/97 4,973,981
2,000 Private Export
Funding Corp. ......... A-1+ 5.57 12/5/97 1,989,479
377 International Lease
Finance Corp. ......... A-1 5.55 12/9/97 374,791
1,875 Receivables Capital
Corp. .................. A-1+ 5.53 12/10/97 1,863,767
1,075 Receivables Capital
Corp. .................. A-1+ 5.55 12/10/97 1,068,537
2,500 Kimberly-Clark Corp. .A-1+ 5.50 12/12/97 2,484,340
2,800 Preferred Receivables
Funding Corp. ......... A-1 5.55 12/18/97 2,779,712
500 General Re Corp. ...... A-1+ 5.51 12/26/97 495,791
790 International Lease
Finance Corp. ......... A-1 5.55 1/20/98 780,257
3,500 CXC, Inc. ............... A-1+ 5.57 1/27/98 3,452,887
2,000 Corporate Receivables
Corp. .................. A-1 5.58 1/28/98 1,972,720
3,250 Merrill Lynch & Co.,
Inc. .................. A-1+ 5.58 1/30/98 3,204,662
3,000 Pitney Bowes Credit
Corp. .................. A-1+ 5.52 1/30/98 2,958,600
Standard
Face & Poor's
Value Rating Interest Maturity
(000) Description (Unaudited) Rate Date Value
- --------- ------------------------- ------------- ---------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER--continued
$ 900 AT&T Corp. ............ A-1+ 5.57% 2/12/98 $ 885,657
2,500 Corporate Receivables
Corp. .................. A-1 5.55 2/18/98 2,457,990
2,890 Preferred Receivables
Funding Corp. ......... A-1 5.56 2/23/98 2,839,117
3,816 Enterprise Funding
Corp. .................. A-1+ 5.69 2/27/98 3,744,829
850 Du Pont (E.I.) de
Nemours & Co. ......... A-1+ 5.57 3/9/98 833,561
1,800 Beta Finance, Inc. ...... A-1+ 5.58 3/12/98 1,763,451
2,900 Beta Finance, Inc. ...... A-1+ 5.60 4/29/98 2,819,251
---------
TOTAL COMMERCIAL PAPER
133,898,584
--------------
MEDIUM-TERM NOTES--1.5%
3,100 Associates Corporation
of North America ...... AA- 6.38 8/15/98 3,110,600
---------
TOTAL MEDIUM-TERM NOTES
3,110,600
--------------
CERTIFICATES OF DEPOSIT--1.2%
2,500 Deutsche Bank N.Y. Yankee ......................................................
5.64 1/15/98 2,500,000
---------
TOTAL CERTIFICATES OF DEPOSIT
2,500,000
--------------
TOTAL INVESTMENTS--97.4%
(Identified cost $198,503,985) ............... 198,503,985(a)
Cash and receivables, less liabilities--2.6% 5,204,094
--------------
NET ASSETS--100.0% $203,708,079
===== ============
</TABLE>
(a) Federal Income Tax Information: At October 31, 1997, the aggregate cost of
securities was the same for book and tax purposes.
(b) Variable rate demand notes. The interest rates shown reflect the rates
currently in effect.
See Notes to Financial Statements
51
<PAGE>
Phoenix Money Market Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $198,503,985) $198,503,985
Receivables
Fund shares sold 6,960,757
Interest 1,058,585
------------
Total assets 206,523,327
------------
Liabilities
Payables
Custodian 13,876
Fund shares repurchased 2,440,746
Dividend distributions 108,695
Transfer agent fee 87,680
Investment advisory fee 63,558
Financial agent fee 8,224
Distribution fee 6,388
Trustees' fee 3,636
Accrued expenses 82,445
------------
Total liabilities 2,815,248
------------
Net Assets $203,708,079
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $203,708,079
------------
Net Assets $203,708,079
============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $188,694,703) 188,694,703
Net asset value and offering price per share $ 1.00
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $15,013,376) 15,013,376
Net asset value and offering price per share $ 1.00
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
Investment Income
Interest $10,948,988
-----------
Total investment income 10,948,988
-----------
Expenses
Investment advisory fee 788,106
Distribution fee--Class B 77,717
Financial agent fee 93,776
Transfer agent fee 492,272
Registration 55,120
Printing 51,923
Custodian 29,261
Professional 27,499
Trustees 19,555
Miscellaneous 6,745
-----------
Total expenses 1,641,974
-----------
Net investment income $ 9,307,014
===========
</TABLE>
See Notes to Financial Statements
52
<PAGE>
Phoenix Money Market Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------ -------------------
<S> <C> <C>
From Operations
Net investment income $ 9,307,014 $ 9,418,637
-------------- ----------------
From Distributions to Shareholders
Net investment income--Class A (8,890,389) (9,064,115)
Net investment income--Class B (416,625) (354,522)
-------------- ----------------
Decrease in net assets from distributions to shareholders (9,307,014) (9,418,637)
-------------- ----------------
From Share Transactions
Class A
Proceeds from sales of shares (732,054,689 and 1,212,801,272 shares, respectively) 732,054,689 1,212,801,272
Net asset value of shares issued from reinvestment of distributions (8,138,566 and
8,374,618
shares, respectively) 8,138,566 8,374,618
Cost of shares repurchased (744,357,959 and 1,221,850,524 shares, respectively) (744,357,959) (1,221,850,524)
-------------- ----------------
Total (4,164,704) (674,634)
-------------- ----------------
Class B
Proceeds from sales of shares (35,539,707 and 16,991,839 shares, respectively) 35,539,707 16,991,839
Net asset value of shares issued from reinvestment of distributions (329,335 and 281,654
shares, respectively) 329,335 281,654
Cost of shares repurchased (31,078,203 and 15,556,837 shares, respectively) (31,078,203) (15,556,837)
-------------- ----------------
Total 4,790,839 1,716,656
-------------- ----------------
Increase in net assets from share transactions 626,135 1,042,022
-------------- ----------------
Net increase in net assets 626,135 1,042,022
Net Assets
Beginning of period 203,081,944 202,039,922
-------------- ----------------
End of period $ 203,708,079 $ 203,081,944
============== ================
</TABLE>
See Notes to Financial Statements
53
<PAGE>
Phoenix Money Market Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------
Year Ended October 31,
1997 1996 1995 1994 1993
--------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.048 0.047 0.053 0.032 0.025(1)
-------- -------- -------- -------- ---------
Total from investment operations 0.048 0.047 0.053 0.032 0.025
-------- -------- -------- -------- ---------
Less distributions
Dividends from net investment income (0.048) (0.047) (0.053) (0.032) (0.025)
-------- -------- -------- -------- ---------
Change in net asset value -- -- -- -- --
-------- -------- -------- -------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== =========
Total return 4.76% 4.67% 5.32% 3.20% 2.50%
Ratios/supplemental data:
Net assets, end of period (thousands) $188,695 $192,859 $193,534 $196,566 $170,334
Ratio to average net assets of:
Operating expenses 0.79% 0.84% 0.71% 0.85% 0.85%
Net investment income 4.76% 4.68% 5.31% 3.19% 2.53%
</TABLE>
<TABLE>
<CAPTION>
Class B
---------------------------------------------------
From
Inception
7/15/94
Year Ended October 31, to
1997 1996 1995 10/31/94
-------- ------- -------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $1.00
Income from investment operations
Net investment income 0.040 0.039 0.046 0.007
------- ------- ------- -------
Total from investment operations 0.040 0.039 0.046 0.007
------- ------- ------- -------
Less distributions
Dividends from net investment income (0.040) (0.039) (0.046) (0.007)
------- ------- ------- --------
Change in net asset value -- -- -- --
------- ------- ------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $1.00
======= ======= ======= ========
Total return 4.02 % 3.93 % 4.63 % 0.70%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $15,013 $10,223 $ 8,506 $2,086
Ratio to average net assets of:
Operating expenses 1.55 % 1.59 % 1.44 % 1.60%(2)
Net investment income 4.02 % 3.92 % 4.62 % 3.46%(2)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.0001.
(2) Annualized.
(3) Not annualized.
See Notes to Financial Statements
54
<PAGE>
PHOENIX SERIES FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Series Fund (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. Each Series has
distinct investment objectives. The Balanced Fund Series seeks to provide
reasonable income, long-term capital growth and conservation of capital. The
Convertible Fund Series seeks as its investment objectives income and the
potential for capital appreciation; these objectives are to be considered as
relatively equal. The Growth Fund Series seeks long-term appreciation of
capital. The Aggressive Growth Fund Series seeks appreciation of capital
through the use of aggressive investment techniques. The High Yield Fund Series
seeks to provide high current income. The U.S. Government Securities Fund
Series seeks a high level of current income by investing in U.S. Government
guaranteed or backed securities. The Money Market Fund Series seeks to provide
as high a level of current income consistent with capital preservation and
liquidity.
Each Series offers both Class A and Class B shares. Class A shares are
sold with a front-end sales charge of up to 4.75%. Class B shares are sold with
a contingent deferred sales charge which declines from 5% to zero depending on
the period of time the shares are held. Both classes of shares have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that each class bears different distribution expenses and
has exclusive voting rights with respect to its distribution plan. Income and
expenses of each Series are borne pro rata by the holders of both classes of
shares, except that each class bears distribution expenses unique to that
class.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. Security valuation:
Equity securities are valued at the last sale price, or if there had been
no sale that day, at the last bid price. Debt securities are valued on the
basis of broker quotations or valuations provided by a pricing service which
utilizes information with respect to recent sales, market transactions in
comparable securities, quotations from dealers, and various relationships
between securities in determining value. Short-term investments having a
remaining maturity of 60 days or less are valued at amortized cost which
approximates market. All other securities and assets are valued at their fair
value as determined in good faith by or under the direction of the Trustees.
The Money Market Fund Series uses the amortized cost method of security
valuation which, in the opinion of the Trustees, represents the fair value of
the particular security. The Trustees monitor the deviations between the
classes' net asset value per share as determined by using available market
quotations and its amortized cost per share. If the deviation exceeds -1/2 of
1%, the Board of Trustees will consider what action, if any, should be
initiated to provide a fair valuation. This valuation procedure allows each
class of the Series to maintain a constant net asset value of $1 per share.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign securities,
as soon as the Series is notified. Interest income is recorded on the accrual
basis. The Trust does not amortize premiums except for the Money Market Fund
Series, but does amortize discounts using the effective interest method.
Realized gains and losses are determined on the identified cost basis.
C. Income taxes:
Each of the Series is treated as a separate taxable entity. It is the
policy of each Series in the 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 Series intends to distribute an amount sufficient to avoid imposition of
any excise tax under Section 4982 of the Code. Therefore, no provision for
federal income taxes or excise taxes has been made.
D. Distributions to shareholders:
Distributions are recorded by each Series on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, 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, 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
55
<PAGE>
PHOENIX SERIES FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1997 (Continued)
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 of the Series, except U.S. Government Securities Fund Series and
Money Market Fund Series, may enter into forward currency contracts in
conjunction with the planned purchase or sale of foreign denominated securities
in order to hedge the U.S. dollar cost or proceeds. Forward currency contracts
involve, to varying degrees, elements of market risk in excess of the amount
recognized in the statement of assets and liabilities. Risks arise from the
possible movements in foreign exchange rates or if the counterparty does not
perform under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded directly between currency traders and
their customers. The contract is marked-to-market daily and the change in
market value is recorded by each Series as an unrealized gain (or loss). When
the contract is closed, the Series records a realized gain (or loss) equal to
the change in the value of the contract when it was opened and the value at the
time it was closed.
G. Security lending:
The Trust loans securities to qualified brokers through an agreement with
State Street Bank & Trust (the Custodian). Under the terms of the agreement,
the Trust receives collateral with a market value not less than 100% of the
market value of loaned securities. Collateral is adjusted daily in connection
with changes in the market value of securities on loan. Collateral consists of
cash, securities issued or guaranteed by the U.S. Government or its agencies
and the sovereign debt of foreign countries. Interest earned on the collateral
and premiums paid by the borrower are recorded as income by the Trust net of
fees charged by the Custodian for its services in connection with this
securities lending program. Lending portfolio securities involves a risk of
delay in the recovery of the loaned securities or in the foreclosure on
collateral. At October 31, 1997, the Trust had the following amounts of
security loans:2
Value of
Value of Securities
Collateral on Loan
-------------- -------------
Balanced Fund Series ............... $143,021,673 $140,115,192
Convertible Fund Series ............ 4,200,000 4,034,490
Growth Fund Series .................. 31,830,000 31,018,950
Aggressive Growth Fund Series ...... 20,087,632 19,421,015
U.S. Government Securities Fund Series 11,062,500 10,841,880
H. Expenses:
Expenses incurred by the Trust with respect to any two or more Series are
allocated in proportion to the net assets of each Series, except where
allocation of direct expense to each Series or an alternative allocation method
can be more fairly made.
I. Options:
The Trust, except for U.S. Government and Money Market Series, 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.
The Series 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
received. 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 Series, except for U.S. Government and Money Market Series, may
purchase options which are included in the Series' 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.
J. When-issued and delayed delivery transactions:
Each Series may engage in when-issued or delayed delivery transactions.
The Series record when-issued securities on the trade date and maintain
collateral for the securities purchased. Securities purchased on a when-issued
or delayed delivery basis begin earning interest on the settlement date.
NOTE 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 Series:
1st $1 $1-2 $2+
Series Billion Billion Billion
- ----------------------------------------- --------- --------- --------
Growth Fund Series ..................... 0.70% 0.65% 0.60%
Aggressive Growth Fund Series ......... 0.70% 0.65% 0.60%
Convertible Fund Series ............... 0.65% 0.60% 0.55%
High Yield Fund Series .................. 0.65% 0.60% 0.55%
Balanced Fund Series .................. 0.55% 0.50% 0.45%
U.S. Government Securities Fund Series 0.45% 0.40% 0.35%
Money Market Fund Series ............... 0.40% 0.35% 0.30%
56
<PAGE>
PHOENIX SERIES FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1997 (Continued)
The Adviser has agreed to assume expenses and reduce the advisory fee for
the benefit of the Money Market Fund Series to the extent that total expenses
(excluding interest, taxes, brokerage fees and commissions and extraordinary
expenses) exceed 0.85% for Class A shares and 1.60% for Class B shares of the
average of the aggregate daily net asset value.
Phoenix Equity Planning Corporation (PEPCO), an indirect majority-owned
subsidiary of PHL, which serves as the national distributor of the Trust's
shares, has advised the Trust that it retained selling commissions of $525,072
for Class A shares and deferred sales charges of $631,551 for Class B shares,
for the year ended October 31, 1997. In addition, each Series except the Money
Market Fund Series pays PEPCO a distribution fee of an annual rate of 0.25% for
Class A shares and 1.00% for Class B shares applied to the average daily net
assets of each Series; the distribution fee for the Money Market Fund Series is
0% and 0.75% for Class A and Class B, respectively. The distributor has advised
the Series that of the total amount expensed for the year ended October 31,
1997, $3,044,353 was earned by the Distributor, $10,576,329 was earned by
unaffiliated participants, and $1,358,415 was paid to W.S. Griffith, an
indirect subsidiary of PHL.
As Financial Agent of the Trust, PEPCO received a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.03% of the average
daily net assets of the Fund through December 31, 1996, and starting on January
1, 1997, at an annual rate of 0.05% of average daily net assets up to $100
million, 0.04% of average daily net assets of $100 million to $300 million,
0.03% of average daily net assets of $300 million through $500 million, and
0.015% of average daily net assets greater than $500 million; a minimum fee may
apply. PEPCO serves as the Trust's Transfer Agent with State Street Bank and
Trust Company as sub-transfer agent. For the year ended October 31, 1997,
transfer agent fees were $8,230,205 of which PEPCO retained $3,505,548 which is
net of fees paid to State Street.
At October 31, 1997, PHL and affiliates held Phoenix Series Fund shares
which aggregated the following:
Aggregate
Net Asset
Shares Value
----------- -----------
Aggressive Growth Fund Series Class B 11,387 $ 190,735
High Yield Fund Series Class A ...... 395 3,592
U.S. Government Securities Fund Series
Class A ........................... 298 2,883
Money Market Fund Series Class A ... 7,197,226 7,197,226
NOTE 3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended October 31, 1997
(excluding U.S. Government and agency securities and short-term securities)
aggregated the following:
Purchases Sales
---------------- ---------------
Balanced Fund Series ......... $2,007,465,298 $2,398,704,549
Convertible Fund Series ...... 279,807,350 347,511,171
Growth Fund Series ............ 4,367,595,466 4,592,376,556
Aggressive Growth Fund Series 1,238,101,677 1,268,403,142
High Yield Fund Series ......... 837,633,569 827,550,266
U.S. Government Securities
Fund Series .................. 56,183,141 2,628,609
Purchases and sales of U.S. Government and agency securities during the
year ended October 31, 1997, aggregated the following:
Purchases Sales
---------------- ---------------
Balanced Fund Series ......... $1,354,721,837 $1,486,596,557
Convertible Fund Series ...... 7,663,219 7,778,563
High Yield Fund Series ...... 112,710,173 98,383,816
U.S. Government Securities
Fund Series ............... 663,320,784 736,681,917
Written option activity for the year ended October 31, 1997, aggregated
the following:
Balanced Fund Series Call Options
- ------------------------------- --------------------------
Number of Amount
Options of Premiums
----------- ------------
Options outstanding at
October 31, 1996 ............ -- $ --
Options written ............... 8,362 1,114,302
Options canceled in closing
purchase transactions ...... (1,060) (256,733)
Options expired ............... (4,274) (363,130)
Options exercised ............ (3,028) (494,439)
------ ---------
Options outstanding at
October 31, 1997 ............ -- --
====== =========
NOTE 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.
57
<PAGE>
PHOENIX SERIES FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1997 (Continued)
NOTE 5. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Series have recorded
several reclassifications in the capital accounts. These reclassifications have
no impact on the net asset value of the Series and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of October 31, 1997,
the Series 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 (loss) gains (losses) interest
---------------- ---------------- --------------
Balanced Fund Series $1,007,162 $ (259,853) $ (747,309)
Convertible Fund
Series ............ (29,149) 32,223 (3,074)
Growth Fund Series ... (88,868) 88,868 --
Aggressive Growth
Fund Series ...... 1,405,570 (1,405,570) --
High Yield Fund
Series ............ 443,450 (43,907,142) 43,463,692
U.S. Government
Securities Fund
Series ............ 284,845 (516,595) 231,750
NOTE 6. CAPITAL LOSS CARRYOVERS
The following Series have capital loss carryforwards which may be used to
offset future capital gains.
U.S.
Government
Expiration High Yield Securities
Date Fund Series Fund Series
- -------------- -------------- ------------
1998 ......... $ 66,472,552 $ 1,816,304
2002 ......... 14,103,053 8,684,579
2003 ......... 46,929,335 --
2004 ......... -- 2,433,827
------------ -----------
Total ...... $127,504,940 $12,934,710
============ ===========
Included in the High Yield Fund Series amount expiring in 1998,
$46,426,813 was acquired in connection with the merger of the National Bond
Fund.
For the years ended October 31, 1997, the following Series had losses
deferred in the prior year which were utilized or expired in the current year.
U.S. Government
High Yield Securities Fund
Fund Series Series
-------------- ----------------
Utilized ...... $ 43,463,693 $ 596,285
Expired ...... 133,573,091 13,326,574
TAX INFORMATION NOTICE (Unaudited)
For the fiscal year ended October 31, 1997, the following Series
distributed long-term capital gains dividends as follows:
Balanced Fund Series ............... $ 96,737,966
Convertible Fund Series ............ 4,550,151
Growth Fund Series .................. 334,316,017
Aggressive Growth Fund Series ...... 7,965,676
For federal income tax purposes, 4.0% and 11.5% of the ordinary income
dividends paid by the Balanced Fund Series and the Growth Fund Series,
respectively, qualify for the dividends received deduction for corporate
shareholders.
This report is not authorized for distribution to prospective investors
in the Phoenix Series Fund unless preceded or accompanied by an effective
Prospectus which includes information concerning the sales charge, Fund's
record and other pertinent information.
58
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGOTYPE]Price Waterhouse LLP [LOGO]
To the Shareholders and Trustees of
Phoenix Series Fund
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 Balanced Fund Series, the Convertible Fund Series, the Growth Fund Series,
the Aggressive Growth Fund Series, the High Yield Fund Series, the U.S.
Government Securities Fund Series and the Money Market Fund Series
(constituting the Phoenix Series Fund, hereinafter referred to as the "Fund")
at October 31, 1997, the results of each of their operations for the year then
ended, the changes in each of their net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund'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 generally accepted auditing standards 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 October 31, 1997 by correspondence with the custodian and
brokers, and the application of alternative auditing procedures where
confirmations from brokers were not received, provide a reasonable basis for
the opinion expressed above.
/s/ Price Waterhouse LLP
Boston, Massachusetts
December 12, 1997
59
<PAGE>
PHOENIX SERIES FUND
PART C--OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Condensed Financial Information and Financial Statements are included in
the Annual Report to Shareholders for the year ended October 31, 1997,
incorporated by reference in Part B of the Registration Statement.
(b) Exhibits
1.1 Agreement and Declaration of Trust, as amended, previously filed
and filed via EDGAR with Post-Effective Amendment No. 84 on
February 27, 1997 and incorporated herein by reference.
1.2 Amendments dated May 25, 1994 and August 24, 1994 to Agreement
and Declaration of Trust, as amended, filed with Post-Effective
Amendment No. 82 on March 1, 1995 and filed via EDGAR with
Post-Effective Amendment No. 84 on February 27, 1997 and
incorporated herein by reference.
1.3 Amendment dated November 15, 1995 to Agreement and Declaration
of Trust, as amended, filed via EDGAR with Post-Effective
Amendment No. 83 on February 28, 1996 and incorporated herein by
reference.
1.4 Amendment dated May 22, 1996 to Agreement and Declaration of
Trust, as amended, filed via EDGAR with Post-Effective Amendment
No. 84 on February 27, 1997 and incorporated herein by
reference.
4. Reference is made to Article IV of the Registrant's Declaration
of Trust, as amended, and filed with the Registration Statement
referred to in Exhibit 1.1.
5. Investment Advisory Agreement between the Registrant and Phoenix
Investment Counsel, Inc. dated January 1, 1994 covering the
Phoenix Balanced Fund Series, Phoenix Convertible Fund Series,
Phoenix Growth Fund Series, Phoenix High Yield Fund Series,
Phoenix Money Market Fund Series, Phoenix Aggressive Growth Fund
Series and Phoenix U.S. Government Securities Fund Series, filed
with Post- Effective Amendment No. 82 on March 1, 1995 and filed
via EDGAR with Post-Effective Amendment No. 84 on February 27,
1997 and incorporated herein by reference.
6.1 Underwriting Agreement between Registrant and Phoenix Equity
Planning Corporation dated November 19, 1997 and filed herewith
via EDGAR and incorporated herein by reference.
6.2 Form of Sales Agreement between Phoenix Equity Planning
Corporation and dealers, filed herewith via EDGAR and
incorporated herein by reference.
6.3 Form of Supplement to Phoenix Family of Funds Sales Agreement
filed herewith via EDGAR and incorporated herein by reference.
6.4 Form of Financial Institution Sales Contract for the Phoenix
Family of Funds filed herewith via EDGAR and incorporated herein
by reference.
8.1 Custodian Contract between Registrant and State Street Bank and
Trust Company dated May 1, 1997, filed herewith via EDGAR and
incorporated herein by reference.
9.1 Transfer Agency and Service Agreement between Registrant and
Phoenix Equity Planning Corporation dated June 1, 1994, filed
with Post-Effective Amendment No. 82 on March 1, 1995 and filed
via EDGAR with Post-Effective Amendment No. 84 on February 27,
1997 and incorporated herein by reference.
9.2 Amended and Restated Financial Agent Agreement Between
Registrant and Phoenix Equity Planning Corporation dated
November 19, 1997 and filed herewith via EDGAR and incorporated
herein by reference.
9.3 Sub-Transfer Agent Agreement Between Phoenix Equity Planning
Corporation filed herewith via EDGAR and incorporated herein by
reference.
10 Opinion of Counsel as to legality of the shares, filed with
Post-Effective Amendment No. 82 on March 1, 1995, and filed via
EDGAR with Post-Effective Amendment No. 84 on February 27, 1997
and incorporated by reference.
11 Written Consent of Price Waterhouse filed herewith via EDGAR.
15.1 Class A Shares Amended and Restated Distribution Plan pursuant
to Rule 12-b 1 under the Investment Company Act of 1940, as
amended and filed herewith via EDGAR and incorporated herein by
reference.
15.2 Class B Shares Amended and Restated Distribution Plan pursuant
to Rule 12-b 1 under the Investment Company Act of 1940, as
amended and filed herewith via EDGAR and incorporated herein by
reference.
C-1
<PAGE>
15.3 Form of Class C Shares Amended and Restated Distribution Plan
pursuant to Rule 12-b 1 under the Investment Company Act of
1940, as amended and filed herewith via EDGAR and incorporated
herein by reference.
15.4 Form of Class M Shares Amended and Restated Distribution Plan
pursuant to Rule 12-b 1 under the Investment Company Act of
1940, as amended and filed herewith via EDGAR and incorporated
herein by reference.
16 Schedule for Computation of Performance Quotations filed with
Post-Effective Amendment No. 82 on March 1, 1995 and filed via
EDGAR with Post-Effective Amendment No. 84 on February 27, 1997
and incorporated herein by reference
18.1 Amended and Restated Rule 18f-3 Dual Distribution Plan effective
November 19, 1997 and filed herewith via EDGAR and incorporated
herein by reference.
19. Powers of Attorney, filed via EDGAR with Post-Effective
Amendment No. 84 on February 27, 1997 and incorporated herein by
reference.
27. Financial Data Schedule filed herewith and reflected on EDGAR as
Exhibit 27.
Item 25. Persons Controlled By or Under Common Control With Registrant
None.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Shareholder Accounts
Title of Class as of October 31, 1997
- -------------- ----------------------
<S> <C>
Phoenix Balanced Fund
Class A shares/Class B shares 104,994/2,525
Phoenix Convertible Fund
Class A shares/Class B shares 9,835/470
Phoenix Growth Fund
Class A shares/Class B shares 146,258/6,377
Phoenix High Yield Fund
Class A shares/Class B shares/Class C shares/Class M shares 31,343/2,002/0/0
Phoenix Money Market Fund
Class A shares/Class B shares 12,491/1,079
Phoenix Aggressive Growth Fund
Class A shares/Class B shares 13,254/2,203
Phoenix U.S. Government Securities Fund
Class A shares/Class B shares 12,438/350
</TABLE>
Item 27. Indemnification
Incorporated herein by reference is Post-Effective Amendment No. 53 to
Registrant's Registration Statement (No. 2-14069) under the Securities Act of
1933.
Item 28. Business and Other Connections of Investment Adviser
See "Management of the Funds" in the Prospectus and "Services of the
Adviser" and "Management of the Trust" in the Statement of Additional
Information, each of which is included in this Post-Effective Amendment to the
Registration Statement.
For information as to the business, profession, vocation or employment of
a substantial nature of director and officers of the Adviser reference is made
to the Adivser's current Form ADV (SEC File No. 801-5995) filed under the
Investment Advisers Act of 1940 and incorporated herein by reference.
C-2
<PAGE>
Item 29. Principal Underwriters
(a) Equity Planning also serves as the principal underwriter for the following
other registrants:
Phoenix Strategic Allocation Fund, Inc., Phoenix Multi-Sector Fixed Income
Fund, Inc., Phoenix Multi-Sector Short Term Bond Fund, Phoenix
Multi-Portfolio Fund, Phoenix California Tax Exempt Bonds, Inc., Phoenix
Income and Growth Fund, Phoenix Worldwide Opportunities Fund, Phoenix
Strategic Equity Series Fund, Phoenix Equity Series Fund, Phoenix-Engemann
Funds, Phoenix Investment Trust 97, Phoenix Duff & Phelps Institutional
Mutual Funds, Phoenix Home Life Variable Universal Life Account, Phoenix
Home Life Variable Accumulation Account, PHL Variable Accumulation Account,
Phoenix Life and Annuity Variable Universal Life Account and PHL Variable
Separate Account 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 Vice President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
David R. Pepin Director and Executive Vice Executive Vice President
56 Prospect St. President, Strategy
P.O. Box 150480
Hartford, CT 06115-0480
Leonard J. Saltiel Managing Director, Vice President
56 Prospect St. Infrastructure
P.O. Box 150480
Hartford, CT 06115-0480
Paul A. Atkins Senior Vice President and None
56 Prospect St. Sales Manager
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Senior Vice President and Vice President
100 Bright Meadow Blvd. Chief Financial Officer
P.O. Box 1900
Enfield, CT 06083-1900
John F. Sharry Executive Vice President, None
56 Prospect St. Mutual Fund Sales and
P.O. Box 150480 Operations
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Mutual Fund Secretary
101 Munson Street Customer Service
P.O. Box 810
Greenfield, MA 01302-0810
Eugene A. Charon Vice President and Controller None
100 Bright Meadow Blvd.
P.O. Box 1900
Enfield, CT 06083-1900
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect St. Fund Accounting
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>
Elizabeth R. Sadowinski Vice President, None
56 Prospect St. Administration
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel and Assistant Secretary
56 Prospect St. Secretary
P.O. Box 150480
Hartford, CT 06115-0480
William E. Keen, III Assistant Vice President, Vice President
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 1900
Enfield, CT 06083-1900
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an
affiliated person of the Registrant or an affiliated person of such
affiliated person, directly or indirectly, from the Registrant during the
Registrant's last fiscal year.
Item 30. Location of Accounts and Records
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder include herein described
Series' investment adviser, Phoenix Investment Counsel, Inc.; Registrant's
financial agent, transfer agent and principal underwriter, Phoenix Equity
Planning Corporation; Registrant's dividend disbursing agent and custodian,
State Street Bank and Trust Company. The address of the Secretary of the Trust
is 101 Munson Street, Greenfield, Massachusetts 01301; the address of Phoenix
Investment Counsel, Inc. is 56 Prospect Street, Hartford, Connecticut 06115;
the address of Phoenix Equity Planning Corporation is 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200; the address of the
dividend disbursing agent is P.O. Box 8301, Boston, Massachusetts 02266-8301,
Attention: Phoenix Funds, and the address of the custodian is P.O. Box 351,
Boston, Massachusetts 02101.
Item 31. Management Services
All management-related service contracts are discussed in Part A or B of
this Registration Statement.
Item 32. Undertakings
(a) The information called for by Item 5A of Form N-1A is contained in the
Fund's annual report to shareholders; accordingly, the Fund hereby
undertakes to furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest annual report, upon request and without charge.
(b) Registrant undertakes to call a special meeting of shareholders for the
purpose of voting upon the question of removal of a trustee or trustees and
to assist in communications with other shareholders, as required by Section
16(c) of the 1940 Act, if requested to do so by holders of at least 10% of
a Series' outstanding shares.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Hartford and the State of Connecticut
on the 29th day of December, 1997.
PHOENIX SERIES FUND
ATTEST: /s/ Thomas N. Steenburg BY: /s/ Philip R. McLoughlin
------------------------------- ----------------------------------
Thomas N. Steenburg Philip R. McLoughlin
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities indicated, on this 29th day of December, 1997.
Signature Title
--------- -----
- ---------------------------- Trustee
C. Duane Blinn*
- ---------------------------- Trustee
Robert Chesek*
- ---------------------------- Trustee
E. Virgil Conway*
- ---------------------------- Treasurer (Principal
Nancy G. Curtiss* Financial and
Accounting Officer)
- ---------------------------- Trustee
Harry Dalzell-Payne*
- ---------------------------- Trustee
Francis E. Jeffries*
- ---------------------------- Trustee
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin Trustee and President
- ---------------------------- (Principal Executive Officer)
Philip R. McLoughlin
- ---------------------------- Trustee
Everett L. Morris*
- ---------------------------- Trustee
James M. Oates*
- ---------------------------- Trustee
Calvin J. Pedersen*
- ---------------------------- Trustee
Philip R. Reynolds*
- ---------------------------- Trustee
Herbert Roth, Jr.*
- ---------------------------- Trustee
Richard E. Segerson*
- ---------------------------- Trustee
Lowell P. Weicker, Jr.*
By /s/ Philip R. McLoughlin
--------------------------
* Philip R. McLoughlin Attorney-in-fact pursuant to powers of attorney
previously filed.
C-5
UNDERWRITING AGREEMENT
THIS AGREEMENT made as of this 19th day of November, 1997, by and between
Phoenix Series Fund, a Massachusetts business trust having a place of business
located at 101 Munson Street, Greenfield, Massachusetts (the "Fund") and Phoenix
Equity Planning Corporation, a Connecticut corporation having a place of
business located at 100 Bright Meadow Boulevard, Enfield, Connecticut (the
"Underwriter").
WITNESSETH THAT:
1. The Fund hereby grants to the Underwriter the right to purchase shares of
beneficial interest of each class of each series of the Fund established and
designated as of the date hereof and of any additional series and classes
thereof which the Board of Directors or Board of Trustees, as applicable
("Trustees") may establish and designate during the term of this Agreement
(called the "Series" and "Classes", respectively) and to resell shares of
various Classes, as applicable, of each Series (collectively called the
"Shares") as principal and not as agent. The Underwriter accepts such
appointment and agrees to render the services described in this Agreement for
the compensation herein provided.
2. The Underwriter's right to purchase Shares shall be exclusive except that the
terms of this Agreement shall not apply to Shares issued or transferred:
a) pursuant to an offer of exchange exempted under Section 22(d) of the
Investment Company Act of 1940, as amended (the "Act") by reason of
the fact that said offer is permitted by Section 11 of the Act,
including any offer made pursuant to clause (1) or (2) of Section
11(b);
b) upon the sale to a registered unit investment trust which is the
issuer of periodic payment plan certificates the net proceeds of which
are invested in redeemable securities;
c) pursuant to an offer made solely to all registered holders of Shares,
or all registered holders of Shares of any Series, proportionate to
their holdings or proportionate to any cash distribution made to them
by the Fund (subject to appropriate qualifications designed solely to
avoid issuance of fractional securities);
d) in connection with any merger or consolidation of the Fund or of any
Series with any other investment company or the acquisition by the
Fund, by purchase or otherwise, of any other investment company;
<PAGE>
e) pursuant to sales exempted from Section 22(d) of the Act, by rule or
regulation or order of the Securities and Exchange Commission as
provided in the then current registration statement of the Fund; or
f) in connection with the reinvestment by Fund shareholders of dividend
and capital gains distributions.
3. The "Net Asset Value" and the "Public Offering Price" of the Shares as
referred to in this Agreement shall be computed in accordance with the
provisions of the then current registration statement of the Fund. The
Underwriter shall be notified promptly by the Fund of such computations.
4. The Underwriter has and shall enter into written sales agreements with
broker/dealers ("dealers") and with banks as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended, (Exchange Act) that are not
required to register as a broker/dealer under the Exchange Act or the
regulations thereunder ("Banks"). Such sales agreements shall provide that
dealers or Banks shall use their best efforts to promote the sale of Shares.
Such sales agreements shall include such terms and conditions as Underwriter may
determine not inconsistent with this Agreement; provided, however, that such
sales agreements shall specify a) that the dealer is registered as a
broker/dealer under the Exchange Act and a member of the National Association of
Securities Dealers, Inc. or, in the alternative, that the Bank is exempt from
broker/dealer registration under the Exchange Act; and b) that such dealers and
Banks agree that they will comply with all applicable state, and federal laws
and the rules and regulations of applicable regulatory agencies.
5. Each day the Underwriter shall have the right to purchase from the Fund, as
principal, the amount of Shares needed to fill unconditional orders for such
Shares received by the Underwriter from dealers, Banks, or investors, but no
more than the Shares needed, at a price equal to the Net Asset Value of the
Shares. Any purchase of Shares by the Underwriter under this Agreement shall be
subject to reasonable adjustment for clerical errors, delays and errors of
transmission and cancellation of orders.
6. With respect to transactions other than with dealers or Banks, the
Underwriter will sell Shares only at the Public Offering Price then in effect,
except to the extent that sales at less than the Public Offering Price may be
allowed by the Act, any rule or regulation promulgated thereunder or by order of
the Securities and Exchange Commission, provided, however, that any such sales
at less than the Public Offering Price shall be consistent with the terms of the
then current registration statement of the Fund. The Underwriter will sell at
Net Asset Value Shares of any Classes which are offered by the then current
registration statement or prospectus of the Fund for sale at such Net Asset
Value or at Net Asset Value with a contingent deferred sales
2
<PAGE>
charge ("CDSC Shares"). The Underwriter shall receive from the Fund all
contingent deferred sales charges applied on redemptions of CDSC Shares.
7. Sales at a discount from the Public Offering Price shall be made in
accordance with the terms and conditions of the terms of the current
registration statement of the Fund allowing such discounts. Such discounts shall
not exceed the difference between the Net Asset Value and the Public Offering
Price; however, the Underwriter may offer compensation in excess of the
difference between the Net Asset Value and the Public Offering Price, at its
discretion and from its own profits and resources, and only as described in the
current registration statement of the Fund. With respect to sales of CDSC
Shares, the Underwriter, in accordance with the terms of the current
registration statement of the Fund, shall pay dealers a commission on such sales
from its own profits and resources.
8. As reimbursement for expenditures made in connection with providing certain
distribution-related services, the Underwriter may receive from the Fund a
distribution service fee under the terms and conditions set forth in the Fund's
distribution plan adopted under Rule 12b-1 under the Investment Company Act of
1940, as amended, as the plan may be amended from time to time and subject to
any further limitations on such fees as the Trustees may impose. The Underwriter
may receive from the Fund a service fee to be retained by the Underwriter as
compensation for providing services to shareholders of the Fund or to be paid to
dealers and Banks for providing services to their clients who are also
shareholders of the Fund.
9. The Fund shall furnish the Underwriter with copies of its organizational
documents, as amended from time to time. The Fund shall also furnish the
Underwriter with any other documents of the Fund which will assist the
Underwriter in the performance of its duties hereunder.
10. The Underwriter agrees to use its best efforts (in states where it may
lawfully do so) to obtain from investors unconditional orders for Shares
authorized for issue by the Fund and registered under applicable Federal
securities laws, and, so long as it does so, nothing herein contained shall
prevent the Underwriter from entering into similar arrangements with other
registered investment companies. The Underwriter may, in the exercise of its
discretion, refuse to accept orders for Shares from any person.
11. Upon receipt by the Fund of a purchase order from the Underwriter,
accompanied by proper delivery instructions, the Fund shall, as promptly as
practicable thereafter, cause evidence of ownership of Shares to be delivered as
indicated in such purchase order. Payment for such Shares shall be made by the
Underwriter to the Fund in a manner acceptable to the Fund, provided that the
Underwriter shall pay for such Shares no later than the third business day after
the Underwriter shall have contracted to purchase such shares.
3
<PAGE>
12. In connection with offering for sale and selling Shares, the Fund authorizes
the Underwriter to give only such information and to make only such statements
or representations as are contained in the then current registration statement
of the Fund. The Underwriter shall be responsible for the approval and filing of
sales material as required under SEC and NASD regulations.
13. The Fund agrees to pay the following expenses:
a) the cost of mailing stock certificates representing Shares;
b) fees and expenses (including legal expenses) of registering and
maintaining registrations of the Fund and of each Series and Class
with the Securities and Exchange Commission including the preparation
and printing of registration statements and prospectuses for filing
with said Commission;
c) fees and expenses (including legal expenses) incurred in registering
and qualifying Shares for sale with any state regulatory agency and
fees and expenses of maintaining, renewing, increasing or amending
such registrations and qualifications;
d) the expense of any issue or transfer taxes upon the sale of Shares to
the Underwriter by the Fund;
e) the cost of preparing and distributing reports and notices to
shareholders. ; and
f) fees and expenses of the transfer agent, including the cost of
preparing and mailing notices to shareholders pertaining to
transactions with respect to such shareholders accounts.
14. The Underwriter agrees to pay the following expenses:
a) all expenses of printing prospectuses and statements of additional
information used in connection with the sale of Shares and printing
and preparing all other sales literature;
b) all fees and expenses in connection with the qualification of the
Underwriter as a dealer in the various states and countries;
c) the expense of any stock transfer tax required in connection with the
sale of Shares by the Underwriter as principal to dealers or to
investors; and
4
<PAGE>
d) all other expenses in connection with offering for sale and the sale
of Shares which have not been herein specifically allocated to the
Fund.
15. The Fund hereby appoints the Underwriter its agent to receive requests to
accept the Fund's offer to repurchase Shares upon such terms and conditions as
may be described in the Fund's then current registration statement. The agency
granted in this paragraph 15 is terminable at the discretion of the Fund. As
compensation for acting as such agent and as part of the consideration for
acting as underwriter, Underwriter shall receive from the Fund all contingent
deferred sales charges imposed upon the redemption of Shares. Whether and to
what extent a contingent deferred sales charge will be imposed shall be
determined in accordance with, and in the manner set forth in, the Fund's
prospectus.
16. The Fund agrees to indemnify and hold harmless the Underwriter, its officers
and directors and each person, if any, who controls the Underwriter within the
meaning of section 15 of the Securities Act of 1933, as amended, against any
losses, claims, damages, liabilities and expenses (including the cost of any
legal fees incurred in connection therewith) which the Underwriter, its
officers, directors or any such controlling person may incur under said Act,
under any other statute, at common law or otherwise, arising out of or based
upon
a) any untrue statement or alleged untrue statement of a material fact
contained in the Fund's registration statement or prospectus
(including amendments and supplements thereto), or
b) any omission or alleged omission to state a material fact required to
be stated in the Fund's registration statement or prospectus or
necessary to make the statements in either not misleading, provided,
however, that insofar as losses, claims, damages, liabilities or
expenses arise out of or are based upon any such untrue statement or
omission or alleged untrue statement or omission made in reliance and
in conformity with information furnished to the Fund by the
Underwriter for use in the Fund's registration statement or
prospectus, such indemnification is not applicable. In no case shall
the Fund indemnify the Underwriter or its controlling persons as to
any amounts incurred for any liability arising out of or based upon
any action for which the Underwriter, its officers and directors or
any controlling person would otherwise be subject to liability by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of the reckless disregard of
its obligations and duties under this Agreement.
17. The Underwriter agrees to indemnify and hold harmless the Fund, its officers
and trustees and each person, if any, who controls the Fund within the meaning
of Section 15 of the Securities Act of 1933, as amended, against any losses,
claims, damages, liabilities and expenses (including
5
<PAGE>
the cost of any legal fees incurred in connection therewith) which the Fund, its
officers, trustees or any such controlling person may incur under said Act,
under any other statute, at common law or otherwise arising out of the
acquisition of any shares by any person which
a) may be based upon any wrongful act by the Underwriter or any of its
employees or representatives, or
b) may be based upon any untrue statement or alleged untrue statement of
a material fact contained in the Fund's registration statement,
prospectus (including amendments and supplements thereto) or sales
material, or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in
reliance upon information furnished or confirmed in writing to the
Fund by the Underwriter.
18. It is understood that:
a) trustees, officers, employees, agents and shareholders of the Fund are
or may be interested persons, as that term is defined in the Act
("Interested Persons"), of the Underwriter as directors, officers,
stockholders or otherwise;
b) directors, officers, employees, agents and stockholders of the
Underwriter are or may be Interested Persons of the Fund as trustees,
officers, shareholders or otherwise;
c) the Underwriter may be an Interested Person of the Fund as shareholder
or otherwise; and
d) the existence of any such dual interest shall not offset the validity
hereof or of any transactions hereunder.
19. The Fund may terminate this Agreement by 60 days written notice to the
Underwriter at any time, without the payment of any penalty, by vote of the
Trustees or by a vote of a majority of the outstanding voting securities, as
that term is defined in the Act, of the Fund. The Underwriter may terminate this
Agreement by 60 days written notice to the Fund, without the payment of any
penalty. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in the Act.
20. Subject to prior termination as provided in paragraph 19, this Agreement
shall continue in force for one year from the date of execution and from year to
year thereafter so long as the continuance after such one year period shall be
specifically approved at least annually by vote of
6
<PAGE>
the Trustees, or by a vote of a majority of the appropriate class of outstanding
voting securities, as that term is defined in the Act, of the Fund.
Additionally, each annual renewal of this Agreement must be approved by the vote
of a majority of the Trustees who are not parties to the Agreement or Interested
Persons of any such party, cast in person at a meeting of the Trustees called
for the purpose of voting on such approval.
21. It is expressly agreed that the obligations of the Fund hereunder shall not
be binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Fund personally, but bind only the trust property of the Fund,
as provided in the Declaration of Trust. The execution and delivery of this
Agreement by the President of the Fund has been authorized by the Trustees
acting as such, and neither such execution and delivery by such officer nor such
authorization by such Trustees shall be deemed to have been made by any of them
individually or be binding upon or impose any liability on any of them
personally, but shall bind only the trust property of the Fund as provided in
the Declaration of Trust. The Declaration of Trust is on file with the Secretary
of the Commonwealth of Massachusetts.
22. This Agreement shall become effective upon the date first set forth above.
This Agreement shall be governed by the laws of the State of Connecticut and
shall be binding on the successors and assigns of the parties to the extend
permitted by law.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first written above.
PHOENIX SERIES FUND
By: /s/ Philip R. McLoughlin
------------------------------
Philip R. McLoughlin
President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ David R. Pepin
------------------------------
David R. Pepin
Executive Vice President
7
[logo]PHOENIX Phoenix Funds
DUFF&PHELPS Sales Agreement
- --------------------------------------------------------------------------------
PHOENIX EQUITY PLANNING CORPORATION
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, Connecticut 06083-2200
Dealer Name:
Address:
Phoenix Equity Planning Corporation ("PEPCO", "we", "us", or "our") invites you
to participate in the sale and distribution of shares of registered investment
companies (which shall collectively be referred to hereinafter as the "Funds")
for which we are national distributor or principal underwriter, and which may be
listed in Annex A hereto which such Annex may be amended by us from time to
time. Upon acceptance of this agreement by PEPCO, you may offer and sell shares
of each of the Funds (hereafter "Shares") subject, however, to the terms and
conditions hereof including our right to suspend or cease the sale of such
shares. For the purposes hereof, the above referenced dealer shall be referred
to as "you".
1. You understand and agree that in all sales of Shares to the public, you
shall act as dealer for your own account. All purchase orders and
applications are subject to acceptance or rejection by us in our sole
discretion and are effective only upon confirmation by us. Each purchase
will be deemed to have been consummated in our principal office subject to
our acceptance and effective only upon confirmation to you by us.
2. You agree that all purchases of Shares by you shall be made only for the
purpose of covering purchase orders already received from your customers
(who may be any person other than a securities dealer or broker) or for
your own bona-fide investment.
3. You shall offer and sell Shares pursuant to this agreement for the purpose
of covering purchase orders of your customers, to the extent applicable,
(a) at the current public offering price ("Offering Price") for Class A
Shares or (b) at the Net Asset Value for Class B shares as set forth in the
current prospectus of each of the funds. The offer and sale of Class B
Shares by you is subject to Annex B hereto, "Compliance Standards for the
Sale of the Phoenix Funds Under Their Alternative Purchase Arrangements".
4. You shall pay us for Shares purchased within three (3) business days of the
date of our confirmation to you of such purchase or within such time as
required by applicable rule or law. The purchase price shall be (a) the
Offering Price, less only the applicable dealer discount (Dealer Discount)
for Class A Shares, if applicable, or (b) the Net Asset Value, less only
the applicable sales commission (Sales Commission) for Class B Shares, if
applicable, as set forth in the current prospectus at the time the purchase
is received by us. We have the right, without notice, to cancel any order
for which payment of good and sufficient funds has not been received by us
as provided in this paragraph, in which case you may be held responsible
for any loss suffered resulting from your failure to make payment as
aforesaid.
5. You understand and agree that any Dealer Discount, Sales Commission or fee
is subject to change from time to time without prior notice. Any orders
placed after the effective date of any such change shall be subject to the
Dealer Discount or Sales Commission in effect at the time such order is
received by us.
6. You understand and agree that Shares purchased by you under this Agreement
will not be delivered until payment of good and sufficient funds has been
received by us. Delivery of Shares will be made by credit to a shareholder
open account unless delivery of certificates is specified in the purchase
order. In order to avoid unnecessary delay, it is understood that, at your
request, any Shares resold by you to one of your customers will be
delivered (whether by credit to a shareholder open account or by delivery
of certificates) in the name of your customer.
<PAGE>
7. You understand that on all purchases of Shares to which the terms of this
Agreement are applicable by a shareholder for whom you are dealer of
record, we will pay you an amount equal to the Dealer Discount, Sales
Commission or fees which would have been paid to you with respect to such
Shares if such Shares had been purchased through you. You understand and
agree that the dealer of record for this purpose shall be the dealer
through whom such shareholder most recently purchased Shares of such fund,
unless the shareholder or you have instructed us otherwise. You understand
that all amounts payable to you under this paragraph and currently payable
under this agreement will be paid as of the end of the month unless
specified otherwise for the total amount of Shares to which this paragraph
is applicable but may be paid more frequently as we may determine in our
discretion. Your request for Dealer Discount or Sales Commission reclaims
will be considered if adequate verification and documentation of the
purchase in question is supplied to us, and the reclaim is requested within
three years of such purchase.
8. We appoint the transfer agent (or identified sub-transfer agent) for each
of the Funds as our agent to execute the purchase transaction of Shares and
to confirm such purchases to your customers on your behalf, and you
guarantee the legal capacity of your customers so purchasing such Shares.
You further understand that if a customer's account is established without
the customer signing the application form, you hereby represent that the
instructions relating to the registration and shareholder options selected
(whether on the application form, in some other document or orally) are in
accordance with the customer's instructions and you agree to indemnify the
Funds, the transfer agent (or identified sub-transfer agent) and us for any
loss or liability resulting from acting upon such instructions.
9. Upon the purchase of Class A Shares pursuant to a Letter of Intent, you
will promptly return to us any excess of the Dealer Discount previously
allowed or paid to you over that allowable in respect to such larger
purchases.
10. Unless at the time of transmitting a purchase order you advise us to the
contrary, we may consider that the investor owns no other Shares and may
further assume that the investor is not entitled to any lower sales charge
than that accorded to a single transaction in the amount of the purchase
order, as set forth in the current prospectus.
11. You understand and agree that if any Shares purchased by you under the
terms of this Agreement are, within seven (7) business days after the date
of our confirmation to you of the original purchase order for such Shares,
repurchased by us as agent for such fund or are tendered to such fund for
redemption, you shall forfeit the right to, and shall promptly pay over to
us the amount of any Dealer Discount or Sales Commission allowed to you
with respect to such Shares. We will notify you of such repurchase or
redemption within ten (10) days of the date upon which certificates are
delivered to us or to such fund or the date upon which the holder of Shares
held in a shareholder open account places or causes to be placed with us or
with such fund an order to have such shares repurchased or redeemed.
12. You agree that, in the case of any repurchase of any Shares made more than
seven (7) business days after confirmation by us of any purchase of such
Shares, except in the case of Shares purchased from you by us for your own
bona fide investment, you will act only as agent for the holders of such
Shares and will place the orders for repurchase only with us. It is
understood that you may charge the holder of such Shares a fair commission
for handling the transaction.
13. Our obligations to you under this Agreement are subject to all the
provisions of the respective distribution agreements entered into between
us and each of the Funds. You understand and agree that in performing your
services under this agreement you are acting in the capacity of an
independent contractor, and we are in no way responsible for the manner of
your performance or for any of your acts or omissions in connection
therewith. Nothing in the Agreement shall be construed to constitute you or
any of your agents, employees, or representatives as our agent, partner or
employee, or the agent, partner of employee of any of the Funds.
In connection with the sale and distribution of shares of Phoenix Funds,
you agree to indemnify and hold us and our affiliates, employees, and/or
officers harmless from any damage or expense as a result of (a) the
negligence, misconduct or wrongful act by you or any employee,
representative, or agent of yours and/or (b) any actual or alleged
violation of any securities laws, regulations or orders. Any indebtedness
or obligation of yours to us whether arising hereunder or otherwise, and
any liabilities incurred or moneys paid by us to any person as a result of
any misrepresentation, wrongful or unauthorized act or omission, negligence
of, or failure of you or your employees, representatives or agents to
comply with the Sales Agreement, shall be set off against any compensation
payable under this agreement. Any differential between such expenses and
compensation payable hereunder shall be payable to us upon demand. The
terms of this provision shall not be impaired by the termination of this
agreement.
In connection with the sale and distribution of shares of Phoenix Funds, we
agree to indemnify and hold you, harmless from any damage or expense on
account of the gross and willful negligence, misconduct or wrongful act of
us or any employee, representative, or agent of ours which arises out of or
is based upon any untrue statement or alleged untrue statement of material
fact, or the omission or alleged omission of a material fact in: (i) any
registration statement, including any prospectus or any post-effective
amendment thereto; or (ii) any material prepared and/or supplied by us for
use in conjunction with the offer or sale of Phoenix Funds; or (iii) any
state registration or other document filed in any state or jurisdiction in
order to qualify any Fund under the securities laws of such state or
jurisdiction. The terms of this provision shall not be impaired by the
termination of this agreement.
<PAGE>
14. We will supply you with reasonable quantities of the current prospectus,
periodic reports to shareholders, and sales materials for each of the
Funds. You agree not to use any other advertising or sales material
relating to the sale of shares of any of the Funds unless such other
advertising or sales material is pre-approved in writing by us.
15. You agree to offer and sell Shares only in accordance with the terms and
conditions of the then current prospectus of each of the Funds and subject
to the provisions of this Agreement, and you will make no representations
not contained in any such prospectus or any authorized supplemental sales
material supplied by us. You agree to use your best efforts in the
development and promotion of sales of the Shares covered by this Agreement,
and agree to be responsible for the proper instruction, training and
supervision of all sales representatives employed by you in order that such
Shares will be offered in accordance with the terms and conditions of this
Agreement and all applicable laws, rules and regulations. All expenses
incurred by you in connection with your activities under this Agreement
shall be borne by you. In consideration for the extension of the right to
exercise telephone exchange and redemption privileges to you and your
registered representatives, you agree to bear the risk of any loss
resulting from any unauthorized telephone exchange or redemption
instructions from you or your registered representatives. In the event we
determine to refund any amounts paid by any investor by reason of such
violation on your part, you shall forfeit the right to, and pay over to us,
the amount of any Dealer Discount or Sales Commission allowed to you with
respect to the transaction for which the refund is made.
16. You represent that you are properly registered as a broker or dealer under
the Securities and Exchange Act of 1934 and are member of the National
Association of Securities Dealers, Inc. (NASD) and agree to maintain
membership in the NASD or in the alternative, that you are a foreign dealer
not eligible for membership in the NASD. You agree to notify us promptly of
any change, termination or suspension of the foregoing status. You agree to
abide by all the rules and regulations of the NASD including Section 26 of
Article III of the Rules of Fair Practice, which is incorporated herein by
reference as if set forth in full. You further agree to comply with all
applicable state and Federal laws and the rules and regulations of
applicable regulatory agencies. You further agree that you will not sell,
or offer for sale, Shares in any jurisdiction in which such Shares have not
been duly registered or qualified for sale. You agree to promptly notify us
with respect to (a) the initiation and disposition of any formal
disciplinary action by the NASD or any other agency or instrumentality
having jurisdiction with respect to the subject matter hereof against you
or any of your employees or agents; (b) the issuance of any form of
deficiency notice by the NASD or any such agency regarding your training,
supervision or sales practices; and (c) the effectuation of any consensual
order with respect thereto.
17. Either party may terminate this agreement for any reason by written or
electronic notice to the other party which termination shall become
effective fifteen (15) days after the date of mailing or electronically
transmitting such notice to the other party. We may also terminate this
agreement for cause or as a result of a violation by you, as determined by
us in our discretion, of any of the provisions of this Agreement, said
termination to be effective on the date of mailing written or transmitting
electronic notice to you of the same. Without limiting the generality of
the foregoing, your own expulsion from the NASD will automatically
terminate this Agreement without notice. Your suspension from the NASD or
violation of applicable state or Federal laws or rules and regulations of
applicable regulatory agencies will terminate this Agreement effective upon
the date of our mailing written notice or transmitting electronic notice to
you of such termination. Our failure to terminate this Agreement for any
cause shall not constitute a waiver of our right to so terminate at a later
date.
18. All communications and notices to you or us shall be sent to the addresses
set forth at the beginning of this Agreement or to such other address as
may be specified in writing from time to time.
19. This agreement shall become effective upon the date of its acceptance by us
as set forth herein. This agreement may be amended by PEPCO from time to
time. This Agreement and all rights and obligations of the parties
hereunder shall be governed by and construed under the laws of the State of
Connecticut. This agreement is not assignable or transferable, except that
we may assign or transfer this agreement to any successor distributor of
the Shares described herein.
ACCEPTED ON BEHALF OF ACCEPTED ON BEHALF OF
PHOENIX EQUITY PLANNING DEALER FIRM:
CORPORATION:
Date ______________________________ Date __________________________________
By /s/ John F. Sharry By
________________________________ ____________________________________
Print Name John F. Sharry Print Name
_________________________ ____________________________
Managing Director, Retail Sales
Print Title _______________________ Print Title ___________________________
NASD CRD Number _______________________
<PAGE>
[logo]PHOENIX Amended Annex A, Dealer Agreement with
DUFF&PHELPS Phoenix Equity Planning Corporation, Nov. 5, 1997
- --------------------------------------------------------------------------------
I. Phoenix Family of Funds
- --------------------------------------------------------------------------------
Phoenix Series Fund
Balanced Fund Series
Convertible Fund Series
Growth Fund Series
Aggressive Growth Fund Series
High Yield Fund Series
Money Market Fund Series
U.S. Government Securities Fund Series
Phoenix-Aberdeen Series Fund
Aberdeen New Asia Fund
Aberdeen Global Small Cap Fund
Phoenix Multi-Portfolio Fund
Tax-Exempt Bond Portfolio
Mid Cap Portfolio
International Portfolio
Real Estate Securities Portfolio
Emerging Markets Bond Portfolio
Phoenix Strategic Equity Series Fund
Equity Opportunities Fund
Strategic Theme Fund
Small Cap Fund
Phoenix Equity Series Fund
Core Equity Fund
Growth and Income Fund
Phoenix California Tax Exempt Bonds, Inc.
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Worldwide Opportunities Fund
Phoenix Strategic Allocation Fund, Inc.
Phoenix Income and Growth Fund
Phoenix Value Equity Fund
Phoenix Small Cap Value Fund
(effective 11-20-97)
- --------------------------------------------------------------------------------
Equity Planning may sponsor, to all qualifying dealers, on non-discriminatory
basis, sales contests, training and educational meetings and provide to all
qualifying broker/dealers, from its own profits and resources, additional
compensation in the form of trips, merchandise or expense reimbursement. Brokers
or dealers other than Equity Planning may also make customary additional charges
for their services in effecting purchases, if they notify the Fund of their
intention to do so. Applicable waivers of Class A sales loads and Class B
contingent deferred sales charges are described in the prospectus.
- --------------------------------------------------------------------------------
Class A Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares (Except Multi-Sector Short Term Multi-Sector Short Term
Bond Fund & Money Market) Bond Fund Class A Shares
Dealer Discount Dealer Discount
Sales Charge or Agency Fee Sales Charge or Agency Fee
Amount of as Percentage of as Percentage of as Percentage of as Percentage of
Transaction Offering Price Offering Price Offering Price Offering Price
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.25% 2.25% 2.00%
- -------------------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 4.50 4.00 1.25 1.00
- -------------------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 3.50 3.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 3.00 2.75 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 2.00 1.75 0.75 0.75
- -------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more None None None None
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Shares of the Money Market Series are offered to the public at their constant
net asset value of $1.00 per share with no sales charge on Class A shares.
Finders Fee: In connection with Class A Share purchases of $1,000,000 or more
(or subsequent purchases in any amount), Equity Planning may pay broker/dealers,
from its own profits and resources, a percentage of the net asset value of
shares sold (excluding Money Market shares) as set forth in the table below. If
part or all of such investment, is subsequently redeemed within one year of the
investment date, the broker/dealer will refund to Equity Planning any such
amounts paid with respect to the investment.
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchase Amount $1,000,000 to $3,000,000 $3,000,001 to $6,000,000 $6,000,001 or more
- -------------------------------------------------------------------------------------------------------------------------------
Payment to Broker/Dealers 1% 0.50 of 1% 0.25 of 1%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*In the case of accounts held in the name of qualified employees, 1% is paid on
the first $1 million.
Trail: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of Class A shares sold by such broker/dealers (except
Money Market Series) and remaining outstanding on the Funds' books during the
period in which the fee is calculated. Dealers must have an aggregate value of
$50,000 or more in one Fund to qualify for payment in that Fund.
<PAGE>
- --------------------------------------------------------------------------------
Class B Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Shares
(Except Multi-Sector Short Term Bond Fund) Multi-Sector Short Term Bond Fund Class B
<S> <C>
Sales Commission 4.00% Sales Commission 2.00%
</TABLE>
Broker/Dealer firms maintaining house/omnibus accounts, upon redemption of a
customer account within the time frames specified below, shall forward to Equity
Planning the indicated contingent deferred sales charge.
<TABLE>
<CAPTION>
Years Since Purchase Contingent Deferred Contingent Deferred
Sales Charges Sales Charges
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
First 5.00% 2.00%
- ---------------------------------------------------------------------------------------------------------------------------
Second 4.00 1.50
- ---------------------------------------------------------------------------------------------------------------------------
Third 3.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------
Fourth and Fifth 2.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------
Sixth 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Trail: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of shares sold by such broker/dealers (except Money Market
Series) and remaining outstanding on the Funds' books during the period in which
the fee is calculated, commencing one year after the investment date. Dealers
must have an aggregate value of $50,000 or more in one Fund to qualify for
payment in that Fund.
- --------------------------------------------------------------------------------
Class C Shares - Multi-Sector Short Term Bond Fund Only
- --------------------------------------------------------------------------------
Trail: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
Finders Fee:
In connection with Class C Share purchases of $250,000 or more (or subsequent
purchases in any amount) excluding purchases by qualified employee benefit plans
with at least 100 eligible employees, Equity Planning may pay broker-dealers,
from its own resources, an amount equal to 0.50% of purchases above $250,000
but under $3 million plus 0.25% on purchases in excess of $3 million.
If all or part of the investment is subsequently redeemed, except for exchanges
or purchases of other Phoenix funds, within one year of the investment date, the
broker-dealer will refund to the Distributor such amount paid with respect to
the investment.
- --------------------------------------------------------------------------------
Class C Shares - Available only for the Funds listed below:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Core Equity Fund Multi-Sector Fixed Income Fund Value Equity Fund
Growth and Income Fund Strategic Theme Fund Small Cap Value Fund
(effective 11-20-97)
</TABLE>
Sales Commission: 1%. Contingent deferred sales charge: 1% for one year from the
date of each purchase. Broker/Dealer firms maintaining house/omnibus accounts,
upon redemption of a customer account within one year of purchase date, shall
forward to Equity Planning the indicated contingent deferred sales charge.
Trail and Service Fee: Equity Planning intends to pay a fee after the first year
to qualifying broker/dealer firms at the equivalent of 0.75% annually, and a
Service Fee at the equivalent of 0.25% annually, based on the average daily net
asset value of shares sold by such broker/dealers and remaining outstanding on
the Funds' books during the period in which the fee is calculated. Dealers must
have an aggregate value of $50,000 or more in the Fund to qualify for payment.
<PAGE>
- --------------------------------------------------------------------------------
Class M Shares - Available only for the Funds listed below:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Core Equity Fund Multi-Sector Fixed Income Fund Value Equity Fund
Growth and Income Fund Strategic Theme Fund Small Cap Value Fund
(effective 11-20-97)
</TABLE>
<TABLE>
<CAPTION>
Dealer Discount
Sales Charge or Agency Fee
Amount of as Percentage of as Percentage of
Offering Price Offering Price Offering Price
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 3.50% 3.00%
- ----------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 2.50 2.00
- ----------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 1.50 1.00
- ----------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 1.00 1.00
- ----------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 None None
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Trail: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
- --------------------------------------------------------------------------------
II. A. Phoenix Duff & Phelps Institutional Mutual Funds
- --------------------------------------------------------------------------------
Balanced Portfolio Growth Stock Portfolio
Enhanced Reserves Portfolio Money Market Portfolio
Managed Bond Portfolio U.S. Government Securities Portfolio
Finder's Fee: Equity Planning may pay broker/dealers, from its own profits and
resources, a percentage of the net asset value of Class X and Class Y shares
sold as set forth in the table below. If part of any investment is subsequently
redeemed within one year of the investment date, the broker/dealer will refund
to Equity Planning any such amounts paid with respect to the investment.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchase Amount 0 to $5,000,000 $5,000,001 to $10,000,000 $10,000,001 or more
- -----------------------------------------------------------------------------------------------------------------------------------
Payment to Broker/Dealers 0.50% 0.25% 0.10%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Trail: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold (except Money Market Portfolio) by
such broker/dealers and remaining outstanding on the Funds' books during the
period in which the fee is calculated, subject to future amendment or
termination.
- --------------------------------------------------------------------------------
II. B. Phoenix Duff & Phelps Institutional Mutual Funds
- --------------------------------------------------------------------------------
Phoenix Real Estate Equity Securities Portfolio
Trail: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold by such broker/dealers and
remaining outstanding on the Funds' books during the period in which the fee is
calculated, subject to future amendment or termination.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sales Promotion:
- --------------------------------------------------------------------------------
In connection with net purchases of any combination of classes of eligible Funds
between October 1, 1997 and December 31, 1997, Equity Planning may pay
participating broker/dealers, from its profits and resources, an additional
dealer discount or sales commission equal to 0.50% of the purchase price. This
promotion will not apply to shares acquired through non-commissionable
exchanges.
Eligible Funds:
Phoenix Value Equity Fund Phoenix Small Cap Value Fund
(effective 11-20-97)
Phoenix-Engemann Funds:
Growth Fund Nifty Fifty Fund
Balanced Return Fund Global Growth Fund
Small & Mid-Cap Growth Fund Value 25 Fund
Phoenix Equity Series Fund:
Core Equity Fund Growth and Income Fund
<PAGE>
- --------------------------------------------------------------------------------
III. Phoenix - Engemann Funds
- --------------------------------------------------------------------------------
Nifty Fifty Fund Growth Fund
Small & Mid-Cap Growth Fund Global Growth Fund
Balanced Return Fund Value 25 Fund
Equity Planning at its expense, may from time to time also provide additional
compensation to dealers who sell shares of any of the Funds. Compensation may
include financial assistance to dealers in connection with conferences, sales
training or promotional programs for their employees, seminars for the public,
advertising campaigns regarding one or more of the Funds and/ or other
dealer-sponsored special events.
Service Fees: Dealers may be eligible to receive a continuing service fee equal
to 0.25% per annum of the average net asset value of the Funds' shares held by
such persons in order to compensate them for providing certain services to their
clients, including processing redemption transactions and providing account
maintenance and certain information and assistance with respect to the Funds,
and responding to shareholder inquiries.
Class B and C CDSC: Broker/Dealer firms maintaining house/omnibus accounts, upon
redemption of a customer account within the time frames specified below, shall
forward to Equity Planning the indicated contingent deferred sales charge.
- --------------------------------------------------------------------------------
III. A. Phoenix - Engemann Funds: Class A Shares
- --------------------------------------------------------------------------------
Class A Shares for Initial Sales Charge Alternative
The public offering price of Class A shares for purchasers choosing the initial
sales charge alternative is the net asset value per share plus a sales charge
depending upon the amount purchases as described in the following table.
<TABLE>
<CAPTION>
Dealer Commission
Sales Charge as of Percentage of as percentage of
Amount of Purchase Public the Public
at the Public Offering Price Offering Price Offering Price
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 5.50% 5.00%
- ---------------------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 4.75 4.25
- ---------------------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 3.75 3.25
- ---------------------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 2.50 2.00
- ---------------------------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 2.00 1.75
- ---------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more None *
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Finders Fee: On purchases made at net asset value, as described in the
prospectus, dealers may receive a one-time fee, as follows: 1% on purchases up
through $2 million, plus 0.80% on the next $1 Million, plus 0.20% on the next $2
million, and 0.10% on the excess over $5 million.
- --------------------------------------------------------------------------------
III. B. Phoenix - Engemann Funds: Class B Shares
- --------------------------------------------------------------------------------
Class B Shares for Deferred Sales Charge Alternative
Equity Planning may pay out of its own resources to the selling dealer a
commission equal to 4.25% of the amount of the purchase.
Years Since Purchase CDSC as a Percentage of
Dollar Amount
Subject to Charge
- --------------------------------------------------------------------------------
First 5.00%
- --------------------------------------------------------------------------------
Second 4.00
- --------------------------------------------------------------------------------
Third 3.00
- --------------------------------------------------------------------------------
Fourth 3.00
- --------------------------------------------------------------------------------
Fifth and Thereafter None
- --------------------------------------------------------------------------------
III. C. Phoenix - Engemann Funds: Class C Shares
- --------------------------------------------------------------------------------
Equity Planning may pay out of its own resources to the selling dealer a
commission equal to 1% of the amount of the purchase.
Trail: To the extent dealer provides distribution, marketing or administrative
services in connection with the sale of the Shares of a Fund, dealer may receive
a fee based on the average net asset value of such Shares which are attributable
to customers of dealer, at the rate of 0.75% per annum.
Global Growth Fund, Small & Mid-Cap Growth Fund, Value 25 Fund only: 1% CDSC for
1 year.
PDP80A (11-97) Distributed by Phoenix Equity Planning Corporation,
Enfield, CT, 06083
<PAGE>
[logo]PHOENIX Annex B To Dealer Agreement With
DUFF&PHELPS Phoenix Equity Planning Corporation
- --------------------------------------------------------------------------------
Compliance Standards for
the Sale of the Phoenix Funds
Under Their Alternative Purchase Arrangements
As national distributor or principal underwriter of the Phoenix Funds, which
offer their shares on both a front-end and deferred sales charge basis, Phoenix
Equity Planning Corporation ("PEPCO") has established the following compliance
standards which set forth the basis upon which shares of the Phoenix Funds may
be sold. These standards are designed for those broker/dealers ("dealers") that
distribute shares of the Phoenix Funds and for each dealer's financial
advisors/registered representatives.
As shares of the Phoenix Funds are offered with two different sales arrangements
for sales and distribution fees, it is important for an investor not only to
choose a mutual fund that best suits his investment objectives, but also to
choose the sales financing method which best suits his particular situation. To
assist investors in these decisions and to ensure proper supervision of mutual
fund purchase recommendations, we are instituting the following compliance
standards to which dealers must adhere when selling shares of the Phoenix Funds:
1. Any purchase of a Phoenix Fund for less than $250,000 may be either of
shares subject to a front-end load (Class A shares) or subject to deferred
sales charge (Class B shares).
2. Any purchase of a Phoenix Fund by an unallocated qualified employer
sponsored plan for less than $1,000,000 may be either of shares subject to
a front-end load (Class A shares) or subject to deferred sales charge
(Class B shares). Class B shares sold to allocated qualified employer
sponsored plans will be limited to a maximum total value of $250,000 per
participant.
3. Any purchase of a Phoenix Fund for $250,000 or more (except as noted above)
or which qualifies under the terms of the prospectus for net asset value
purchase of Class A shares should be for Class A shares.
General Guidelines
These are instances where one financing method may be more advantageous to an
investor than the other. Class A shares are subject to a lower distribution fee
and, accordingly, pay correspondingly higher dividends per share. However,
because initial sales charges are deducted at the time of purchase, such
investors would not have all of their funds invested initially and, therefore,
would initially own fewer shares. Investors not qualifying for reduced initial
sales charges who expect to maintain their investment for an extended period of
time might consider purchasing Class A Shares because the accumulated continuing
distribution charges on Class B Shares may exceed the initial sales charge on
Class A Shares during the life of the investment.
Again, however, such investors must weigh this consideration against the fact
that, because of such initial sales charge, not all of their funds will be
invested initially. However, other investors might determine that it would be
more advantageous to purchase Class B Shares to have all of their funds invested
initially, although remaining subject to higher continuing distribution charges
and, for a five-year period, being subject to a contingent deferred sales charge
(three years for Asset Reserve).
A National Association of Securities Dealers rule specifically prohibits
"breakpoint sales" of front-end load shares. A "breakpoint sale" is a sale to
the client of an amount of front-end load (Class A) shares just below the amount
which would be subject to the next breakpoint on the fund's sales charge
schedule. Because the deferred sales charge on Class B shares is reduced by 1%
for each year the shares are held, a redemption of Class B shares just before an
"anniversary date" is in some ways analogous to a breakpoint sale. A client
might wish to redeem just before an anniversary date for tax or other reasons,
and a client who chose to wait would continue to be at market risk.
Nevertheless, investment executives should inform clients intending to redeem
Class B shares near an anniversary date that, if the redemption were delayed,
the deferred sales charge would be reduced.
Responsibilities of Branch Office Manager (or other appropriate reviewing
officer).
A dealer's branch manger or other appropriate reviewing officer ("the Reviewing
Officer") must ensure that the financial advisor/registered representative has
advised the client of the available financing methods offered by the Phoenix
Funds, and the impact of choosing one method over another. In certain instances,
it may be appropriate for the Reviewing Officer to discuss the purchase directly
with the client. The reviewing officer should review purchases for Class A or
Class B shares given the relevant facts and circumstances, including but not
limited to: (a) the specific purchase order dollar amount; (b) the length of
time the investor expects to hold his shares; and (c) any other relevant
circumstances, such as the availability of purchases under letters of intent or
pursuant to rights of accumulation and distribution requirements. The foregoing
guidelines, as well as the examples cited above, should assist the Reviewing
Officer in reviewing and supervising purchase recommendations and orders.
Effectiveness
These compliance guidelines are effective immediately with respect to any order
for shares of those Phoenix Funds which offer their shares pursuant to the
alternative purchase arrangement.
Questions relating to these compliance guidelines should be directed by the
dealer to its national mutual fund sales and market group or its legal
department or compliance director. PEPCO will advise dealers in writing of any
future changes in these guidelines.
PEP80B 11/95
PHOENIX EQUITY PLANNING CORPORATION
SUPPLEMENT TO PHOENIX FAMILY OF FUNDS
SALES AGREEMENT
It is hereby agreed that this AGREEMENT, dated this __________ day
of __________, 19__, between ________________________________________ ("Dealer")
and Phoenix Equity Planning Corporation ("Distributor"), supplements and amends
the Sales Agreement between Dealer and Distributor dated by Distributor
_______________________ 19__ ("Sales Agreement').
WHEREAS, Dealer wishes to use shares of the Funds in a fee-based
program made available by Dealer to clients of Dealer (the "Fee-Based Program");
WHEREAS, Dealer wishes to afford its fee-based clients the
opportunity to qualify for the ability to purchase shares of the Funds at net
asset value; and
WHEREAS, Distributor is willing to allow Dealer to purchase shares
of the Funds for clients in the Fee-Based Program subject to the provisions of
this agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by both parties, Dealer
and Distributor hereby agree as follows:
1. Dealer may sell shares of any Funds made available by
Distributor, from time to time, at net asset value to bona fide clients of
Dealer for use solely in their Fee-Based Program. Dealer will earn no concession
or commission on any such sale.
2. Distributor, after consulting Dealer, will determine, from time
to time, which Funds it will make available to Dealer for use in the Fee-Based
Program. Dealer will comply with all provisions of the Prospectus and Statement
of Additional Information of each Fund.
1
<PAGE>
3. All shares made available to Dealer under the Fee-Based Program
must be purchased by Dealer for the benefit of Dealer's clients participating in
its Fee-Based Program under which Dealer provides portfolio management and other
services to such clients for a fee. Such fee to be paid in connection with
investment in the Funds shall at all times be at a level acceptable to
Distributor. Dealer acknowledges that it has sent the Distributor the current
fee schedule for the Fee-Based Program and Dealer agrees to notify Distributor
at least thirty (30) days in advance in writing of any amendment to such fee
schedule. The current fee schedule is attached. Dealer shall not prepare, use or
distribute brochures, written materials or advertising in any form that refers
to sales of the Funds as no-load or at net asset value except, in the case of
brochures, it may refer to the Funds as available at net asset value under the
Fee-Based Program if the fees and expenses of the Fee-Based Program are given at
least equal prominence. Notwithstanding the foregoing, in connection with
explaining the fees and expenses of the Fee-Based Program, representatives of
Dealer may describe to customers the option of purchasing Fund shares through
the Fee-Based Program at net asset value.
4. Distributor warrants that all necessary disclosures regarding
the sale of shares at net asset value will be set forth in the Prospectus and
Statement of Additional Information of the Funds available under this Agreement.
5. Dealer may maintain either an omnibus account(s) solely for the
clients of its Fee-Based program or may maintain separate accounts for each
client of its Fee-Based Program with the Fund's transfer agent. If an omnibus
account(s) is maintained, Dealer shall be solely responsible for meeting all
legal obligations with respect to each beneficial owner including, but not
limited to, the delivery of proxies, annual and semi-annual reports and other
materials.
6. This Agreement shall be governed and interpreted in accordance
with the laws of the State of Connecticut. This Agreement shall not relieve
Dealer or Distributor from any obligations either may have under any other
agreements between them (except with respect to the payment of service fees),
including but not limited to the Sales Agreement, which is incorporated by
reference herein and shall control in case of any conflict with this Agreement.
7. Distributor is not endorsing, recommending or otherwise involved
in providing any investment product or advisory service of Dealer (including but
not limited to the Fee-Based Program). Distributor is merely affording Dealer
the opportunity to use shares of the Funds distributed by Distributor as an
investment medium for the Fee-Based Program.
8. This Agreement is not exclusive and may be terminated by either
party upon sixty (60) days prior written notice to the other party. It shall
terminate automatically upon termination of the Sales Agreement between the
parties. This Agreement may be amended only by a written instrument, signed by
both parties.
IN WITNESS WHEREOF, this Agreement has been executed as of the date set
forth above by a duly authorized officer of each party.
2
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
By: _______________________________________
John F. Sharry
Managing Director, Retail Sales
Dealer: _____________________________
By: _________________________________
Name: _______________________________
Title: ______________________________
Address: ____________________________
____________________________
____________________________
Phone: ______________________________
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P O Box 2200
Enfield, CT 06083-2200
(230) 253-1000
3
FINANCIAL INSTITUTION SALES CONTRACT
FOR THE PHOENIX FAMILY OF FUNDS
Between: and
PHOENIX EQUITY PLANNING CORPORATION
Distributor of: The Phoenix Family of Funds
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
As distributor of The Phoenix Family of Funds (the "Funds"), we agree that you
may make available to your customers, under an agency relationship with your
customers, shares of beneficial interest issued by the Funds (the "Shares"),
subject to any limitation imposed by the Funds and to confirmation by us of each
transaction. By your acceptance hereof, you agree to all of the following terms
and conditions:
I. Offering Prices and Fees
The public offering price at which you may make Shares available to your
customers is the net asset value thereof, as computed from time to time, plus
any applicable sales charge described in the then current prospectus of the
applicable Fund. In the case of purchases by you, as agent for your customers,
of shares sold with a sales charge, you will receive an agency fee consisting of
a portion of the public offering price, determined on the same basis as the
"dealer discount" described in the then current Prospectus of the Funds, and
such other compensation to dealers as may be described therein, which shall be
payable to you at the same time and on the same basis as the same is paid to
such dealers, consistent with applicable law, rules and regulations. In
determining the amount of any agency fee payable to you hereunder, we reserve
the right to revise the agency fee referred to herein upon written notice to
you. We will furnish you upon request with the public offering prices for the
Shares and you agree to quote such prices in connection with any Shares made
available by you as agent for your customers. Each purchase of Shares by your
customers is made subject to confirmation by us at the public offering price
next computed after receipt of the order. There is no sales charge or agency fee
to you on the reinvestment of dividends and distributions.
II. Manner of Making Shares Available for Purchase
We will, upon request, deliver to you a copy of each Fund's then current
Prospectus and will provide you with such number of copies of each Fund's
current Prospectus, Statement of Additional Information and shareholder reports
and of supplementary sales materials prepared by us, as you may reasonably
request. It shall be your obligation to ensure that all such information and
materials are distributed to your customers who own Shares in accordance with
securities and/or banking law and regulations and any other applicable
regulations. Neither you nor any other person is authorized to give any
information or make any representations other than those contained in such
prospectuses, Statements of Additional Information and shareholder reports or in
such supplemental sales materials. You shall not furnish or cause to be
furnished to any person, display or publish any information or materials
relating to any Fund (including, without limitation, promotional materials and
sales literature, advertisements, press releases, announcements, statements,
posters, signs or similar material), except such information and materials as
may be furnished to you by us or the Fund, and such other information and
materials as may be approved in writing by us. We reserve the right to reject
any purchases for any accounts which we reasonably determine are not made in
accordance with the terms of the applicable Fund Prospectus and the provisions
of this Agreement.
You hereby agree:
(i) to not purchase any Shares as agent for any customer, unless you
deliver or cause to be delivered to such customer, at or prior to the
time of such purchase, a copy of the then-current Prospectus of the
applicable Fund unless such customer has acknowledged receipt of the
Prospectus of such Fund. You hereby represent that you understand your
obligation to deliver a prospectus to customers who purchase Shares
pursuant to federal securities laws and you have taken all necessary
steps to comply with such prospectus delivery requirements;
PEP 613 12-92
<PAGE>
(ii) to transmit to us promptly upon receipt any and all orders received by
you, it being understood that no conditional orders will be accepted;
(iii) to obtain from each customer for whom you act as agent for the
purchase of Shares any taxpayer identification number certification
and backup withholding information required under the Internal Revenue
Code, as amended from time to time (the "Code"), and the regulations
set forth thereunder, or other sections of the Code which may become
applicable and to provide us or our designee with timely written
notice of any failure to obtain such taxpayer identification number
certification or information in order to enable the implementation of
any required backup withholding in accordance with the Code and the
regulations thereunder;
(iv) to pay to us the offering price, less any agency fee to which you are
entitled, within five (5) business days of our confirmation of your
customer's order, or such shorter time as may be required by law. You
may, subject to our approval, remit the total public offering price to
us, and we will return to you your agency fee. If such payment is not
received within said time period, we reserve the right, without prior
notice, to cancel the sale, or at our option to return the Shares to
the issuer for redemption or repurchase. In the latter case, we shall
have the right to hold you responsible for any loss resulting to us.
Should payment be made by local bank check, liquidation of Shares may
be delayed pending clearance of your check; and
(v) to offer and sell Shares, and execute telephone transactions only in
accordance with the terms and conditions of the then current
prospectuses of the relevant Funds and to make no representations not
contained in any such prospectus or in any authorized supplemental
material supplied to you. In addition, in consideration for the
extension of the right to exercise telephone transaction privileges,
you acknowledge that neither the Funds nor the Transfer Agent nor
Equity Planning will be liable for any loss, injury or damage incurred
as a result of acting upon, nor will they be responsible for the
authenticity of, any telephone instructions, and you agree to
indemnify and hold harmless the Funds, Equity Planning and the
Transfer Agent against any loss, injury or damage resulting from any
unauthorized telephone transaction instruction from you or your
representatives. (Telephone instructions will be recorded on tape).
Unless otherwise mutually agreed in writing or except as provided below, each
transaction placed by you shall be promptly confirmed by us in writing to you,
and shall be confirmed to the customer promptly upon receipt by us of
instructions from you as to such customer. In the case of a purchase order by
customer's application, each transaction shall be promptly confirmed in writing
directly to the customer and a copy of each confirmation shall be sent
simultaneously to you. You understand that in the case of an Omnibus Account we
shall send a confirmation to you as the shareholder of record only. We reserve
the right, at our discretion and without notice, to suspend the sale of Shares
or withdraw entirely the sale of Shares of any or all of the Funds. All orders
are subject to acceptance or rejection by us in our sole discretion, and by the
Funds in their sole discretion. The procedure stated herein relating to the
pricing and handling of orders shall be subject to instructions which we may
forward to you from time to time.
III. Compliance With Law
You hereby represent that you are either (1) a "bank" as defined in Section
3(a)(6) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and at the time of each transaction in shares of the Funds, are not required to
register as a broker-dealer under the Exchange Act or regulations thereunder; or
(2) registered as a broker-dealer under the Exchange Act, a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD") and
affiliated with a bank.
(i) If you are a bank, not required to register as a broker-dealer under
the Exchange Act, you further represent and warrant to us that with
respect to any sales in the United States, you will use your best
efforts to ensure that any purchase of Shares by your customers
constitutes a suitable investment for such customers. You shall not
effect any transaction in, or induce any purchase or sale of, any
Shares by means of any manipulative deceptive or other fraudulent
device or contrivance and shall otherwise deal equitable and fairly
with your customers with respect to transactions in Shares of a Fund.
-2-
<PAGE>
(ii) If you are a NASD member broker-dealer affiliated with a bank and
registered under the Exchange Act, you further represent and warrant
to us that with respect to any sales in the United States, you agree
to abide by all of the applicable laws, rules and regulations
including applicable provisions of the Securities Act of 1933 as
amended, and the applicable rules and regulations of the NASD,
including, without limitation, its Rules of Fair Practice, and the
applicable rules and regulations of any jurisdiction in which you make
Shares available for sale to your customers. You agree not to make
available for sale to your customers the Shares in any jurisdiction in
which the Shares are not qualified for sale or in which you are not
qualified as a broker-dealer. We shall have no obligation or
responsibility as to your right to make Shares of any Fund available
to your customers in any jurisdiction. You agree to notify us
immediately in the event of (a) your expulsion or suspension from the
NASD or your becoming subject to any enforcement action by the
Securities and Exchange Commission, NASD, or any other self-regulatory
organization, or (b) your violation of any applicable federal or state
law, rule or regulation including, but not limited to, those of the
SEC, NASD, or other self-regulatory organization, arising out of or in
connection with this Agreement, or which may otherwise affect in any
material way your ability to act in accordance with the terms of this
Agreement.
You shall not make Shares of any Fund available to your customers, including
your fiduciary customers, except in compliance with all federal and state laws
and rules and regulations of regulatory agencies or authorities applicable to
you, or any of your affiliates engaging in such activity, which may affect your
business practices. You confirm that you are not in violation of any banking law
or regulations to which you are subject. You agree to hold us and the Funds
harmless and indemnify us in the event that you or any of your representatives
should violate any law, rule or regulation or any provisions of this Agreement.
In the event that we determine to refund any amounts paid by a customer in
connection with any such violation on your part, you shall forfeit the right to
the amount of any agency fee allowed by us with respect to the transaction for
which the refund is made. All expenses which you incur in connection with your
activities under this Agreement shall be borne by you.
IV. Relationship With Customer
With respect to any and all transactions in the Shares of any Fund pursuant to
this Agreement, it is understood and agreed in each case that: (i) you shall be
acting solely as agent for the account of your customer; (ii) each transaction
shall be initiated solely upon the order of your customer; (iii) we shall
execute transactions only upon receiving instructions from you acting as agent
for your customer or upon receiving instructions directly from your customer;
(iv) as between you and your customer, your customer will have full beneficial
ownership of all Shares; and (v) each transaction shall be for the account of
your customer and not for your account.
Subject to the foregoing, however, you may maintain record ownership of such
customers' Shares in an "Omnibus Account" or an account registered in your name
or the name of your nominee, for the benefit of such customers. You understand
that such Shares must be held in a separate account for each shareholder of such
Funds. You represent and warrant to us that you will have full right, power and
authority to effect transactions (including, without limitation, any purchases
and redemptions) in Shares on behalf of all customer accounts provided by you.
V. Relationship With Financial Institutions
Your obligations to us under this Agreement are subject to all the provisions of
the respective distribution agreements entered into between us and each of the
Funds. You understand and agree that in performing your services under this
Agreement you are acting in the capacity of an independent contractor, and we
are in no way responsible for the manner of your performance or for any of your
acts or omissions in connection therewith. It is further understood that neither
this Agreement nor the performance of the services of the respective parties
hereunder shall be considered to constitute an exclusive arrangement, or to
create a partnership, association or joint venture between you and us. In making
available Shares of the Funds under this Agreement, nothing herein shall be
construed to constitute you or any of your agents, employees or representatives
as our agent or employee, or as an agent or employee of the Funds, and you shall
not make any representations to the contrary. As distributor of the Funds, we
shall have full authority to take such action as we may deem advisable in
respect of all matters pertaining to the distribution of the Shares. We shall
not be under any obligation to you, except for obligations expressly assumed by
us in this Agreement.
-3-
<PAGE>
VI. Termination
Either party hereto may terminate this Agreement, without cause, upon ten days'
written notice to the other party. We may terminate this Agreement for cause
upon the violation by you of any of the provisions hereof, such termination to
become effective on the date such notice of termination is mailed to you. If you
are registered as a broker-dealer and affiliated with a bank, this Agreement
shall terminate automatically if either Party ceases to be a member of the NASD.
VII. Assignability
This Agreement is not assignable or transferable, except that we may assign or
transfer this Agreement to any successor distributor of the Funds.
VIII. Miscellaneous
(i) All communications mailed to us should be sent to the above address.
Any notice to you shall be duly given if mailed or delivered to you at
the address specified by you below.
(ii) This Agreement constitutes the entire agreement and understanding
between the parties and supersedes any and all prior agreements
between the parties.
(iii) This Agreement and the rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of
Connecticut.
Very truly yours,
PHOENIX EQUITY PLANNING CORPORATION
By _________________________________________
Authorized Signature
____________________________________________
Name and Title
We accept and agree to the foregoing Agreement as of the date set forth below
Financial Institution: __________________________________
By _________________________________________
Authorized Signature, Title
____________________________________________
____________________________________________
Address
(NASD CRD # if applicable _________________ )
Date: ______________________________________
Please return the signed copy of this Sales Contract to Phoenix Equity Planning
Corporation at the above address.
Exhibit 8.1
Custodian Contract
<PAGE>
CUSTODIAN CONTRACT
Between
EACH OF THE PARTIES LISTED ON APPENDIX 1
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Employment of Custodian and Property to be Held By It....................................................1
2. Duties of the Custodian with Respect to Property
of each Fund Held by the Custodian in the United States..................................................2
2.1 Holding Securities..............................................................................2
2.2 Delivery of Securities..........................................................................2
2.3 Registration of Securities......................................................................4
2.4 Bank Accounts...................................................................................4
2.5 Availability of Federal Funds...................................................................5
2.6 Collection of Income............................................................................5
2.7 Payment of Fund Moneys..........................................................................5
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.............................6
2.9 Appointment of Agents...........................................................................7
2.10 Deposit of Fund Assets in U.S. Securities System................................................7
2.11 Fund Assets Held in the Custodian's Direct Paper System.........................................8
2.12 Segregated Account..............................................................................9
2.13 Ownership Certificates for Tax Purposes.........................................................9
2.14 Proxies.........................................................................................9
2.15 Communications Relating to Fund Securities.....................................................10
3. Duties of the Custodian with Respect to Property of
each Fund Held Outside of the United States.............................................................10
3.1 Appointment of Foreign Sub-Custodians..........................................................10
3.2 Assets to be Held..............................................................................10
3.3 Foreign Securities Systems.....................................................................10
3.4 Holding Securities.............................................................................11
3.5 Agreements with Foreign Banking Institutions...................................................11
3.6 Access of Independent Accountants of each Fund.................................................11
3.7 Reports by Custodian...........................................................................11
3.8 Transactions in Foreign Custody Account........................................................12
3.9 Liability of Foreign Sub-Custodians............................................................12
3.10 Liability of Custodian.........................................................................12
3.11 Reimbursement for Advances.....................................................................13
3.12 Monitoring Responsibilities....................................................................13
3.13 Branches of U.S. Banks.........................................................................13
3.14 Tax Law........................................................................................13
4. Payments for Sales or Repurchase or Redemptions
of Shares of each Fund..................................................................................14
5. Proper Instructions.....................................................................................14
6. Actions Permitted Without Express Authority.............................................................15
7. Evidence of Authority...................................................................................15
8. Duties of Custodian With Respect to the Books of Account and Calculation of Net Asset Value
and Net Income..........................................................................................15
9. Records ................................................................................................16
10. Opinion of Fund's Independent Accountants...............................................................16
11. Reports to Fund by Independent Public Accountants.......................................................16
12. Compensation of Custodian...............................................................................16
13. Responsibility of Custodian.............................................................................16
14. Effective Period, Termination and Amendment.............................................................18
15. Successor Custodian.....................................................................................18
16. Interpretive and Additional Provisions..................................................................19
17. Additional Funds........................................................................................19
18. Massachusetts Law to Apply..............................................................................20
19. Prior Contracts.........................................................................................20
20. Shareholder Communications..............................................................................20
21. Limitation of Liability................................................................................21
</TABLE>
<PAGE>
MASTER CUSTODIAN CONTRACT
This Contract between each fund or series of a fund listed on Appendix 1
which evidences its agreement to be bound hereby by executing a copy of this
Contract (each such fund, any and all separate series or portfolios thereof and
any additional portfolios or separate series thereof which become subject to
this Contract pursuant to Section 17 hereof, are individually hereafter referred
to as a "Fund"), and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, each of the Funds has previously entered into a Custodian Contract
with the Custodian;
WHEREAS, the Custodian and each of the Funds desire to replace such
existing Custodian Contracts with this Master Custodian Contract between the
Custodian and all of the Funds;
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
-----------------------------------------------------
Each Fund hereby employs the Custodian as the custodian of the assets of
such Fund, including securities which such Fund desires to be held in places
within the United States ("domestic securities") and securities it desires to be
held outside the United States ("foreign securities") pursuant to the provisions
of such Fund's governing documents (domestic securities and foreign securities
are sometimes collectively referred to herein as "Securities"). Each Fund agrees
to deliver to the Custodian all securities and cash of such Fund, and all
payments of income, payments of principal or capital distributions received by
it with respect to all securities owned by such Fund from time to time, and the
cash consideration received by it for such new or treasury shares each class of
capital stock or beneficial interest, as applicable, of such Fund, ("Shares") as
may be issued or sold from time to time. The Custodian shall not be responsible
for any property of a Fund held or received by such Fund and not delivered to
the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Fund from time to time employ
one or more sub-custodians, located in the United States but only in accordance
with an applicable vote by the Board of the Fund, and provided that the
Custodian shall have no more or less responsibility or liability to the Fund on
account of any actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian. The Fund shall approve in writing the
terms of any subcustodian agreement with a United States subcustodian. The
Custodian may employ as sub-custodian for each Fund's foreign securities the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
<PAGE>
2. Duties of the Custodian with Respect to Property of each Fund Held By the
Custodian in the United States
--------------------------------------------------------------------------
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Fund all non-cash property, to be held by it in the
United States including all domestic securities owned by such Fund, other
than (a) securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury (each, a "U.S.
Securities System") and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper System of
the Custodian (the "Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Fund held by the Custodian or in a U.S. Securities
System account of the Custodian or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account") only upon receipt of
Proper Instructions from such Fund, which may be continuing instructions
when deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of such Fund and receipt
of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by such Fund;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of such Fund;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
such Fund or into the name of any nominee or nominees of the Custodian
or into the name or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
2
<PAGE>
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of such Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by such
Fund, but only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and such Fund, which may be in the
form of cash or obligations issued by the United States government,
its agencies or instrumentalities, except that in connection with any
loans for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S. Department of
the Treasury, the Custodian will not be held liable or responsible for
the delivery of securities owned by such Fund prior to the receipt of
such collateral;
11) For delivery as security in connection with any borrowings by such
Fund requiring a pledge of assets by such Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
such Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by such Fund ;
3
<PAGE>
13) For delivery in accordance with the provisions of any agreement among
such Fund, the Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding
account deposits in connection with transactions by such Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for such Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of such Fund ("Prospectus"), in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions from such Fund, a certified copy of a
resolution of the Board or of the Executive Committee of such Fund
signed by an officer of such Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of such Fund to be
delivered, setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such securities shall
be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of each Fund
or in the name of any nominee of each Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to each Fund, unless
a Fund has authorized in writing the appointment of a nominee to be used in
common with other registered investment companies having the same
investment adviser as such Fund, or in the name or nominee name of any
agent appointed pursuant to Section 2.9 or in the name or nominee name of
any sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian under the terms of this Contract shall be in "street name"
or other good delivery form. If, however, a Fund directs the Custodian to
maintain securities in "street name", the Custodian shall utilize
commercially reasonable means to timely collect income due such Fund on
such securities and to timely notify each Fund of relevant corporate
actions including, without limitation, pendency of calls, maturities,
tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Fund , subject
only to draft or order by the Custodian acting pursuant to the terms of
this Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of such
Fund, other than cash maintained by such Fund in a bank account established
and used
4
<PAGE>
in accordance with Rule 17f-3 under the Investment Company Act of 1940.
Funds held by the Custodian for each Fund may be deposited by it to its
credit as Custodian in the Banking Department of the Custodian or in such
other banks or trust companies as it may in its discretion deem necessary
or desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company Act
of 1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Fund be approved by vote of a majority of the Board of such
Fund. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between a Fund and the
Custodian, the Custodian shall, upon the receipt of Proper Instructions
from such Fund, make federal funds available to such Fund as of specified
times agreed upon from time to time by such Fund and the Custodian in the
amount of checks received in payment for Shares of such Fund which are
deposited into such Fund's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to Securities held hereunder to which each Fund shall be
entitled either by law or pursuant to custom in the securities business,
and shall collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and shall credit
such income, as collected, to such Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach and
present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when
due on securities held hereunder. Unless otherwise agreed to by the
parties, income due each Fund on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection therewith,
other than to provide each Fund with such information or data as may be
necessary to assist each Fund in arranging for the timely delivery to the
Custodian of the income to which each Fund is properly entitled.
2.7 Payment of Fund Moneys. Upon receipt of Proper Instructions from a Fund,
which may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out moneys of each Fund in the following
cases only:
1) Upon the purchase of Securities, options, futures contracts or options
on futures contracts for the account of such Fund but only (a) against
the delivery of such securities or evidence of title to such options,
futures contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment
5
<PAGE>
Company Act of 1940, as amended, to act as a custodian and has been
designated by the Custodian as its agent for this purpose) registered
in the name of such Fund or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for transfer; (b)
in the case of a purchase effected through a U.S. Securities System,
in accordance with the conditions set forth in Section 2.10 hereof;
(c) in the case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.11; (d) in the
case of repurchase agreements entered into between such Fund and the
Custodian, or another bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities either in certificate
form or through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against delivery of
the receipt evidencing purchase by such Fund of securities owned by
the Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from such Fund or (e) for
transfer to a time deposit account of such Fund in any bank, whether
domestic or foreign; such transfer may be effected prior to receipt of
a confirmation from a broker and/or the applicable bank pursuant to
Proper Instructions from such Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of Securities
owned by such Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by such Fund as set
forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by such Fund,
including but not limited to the following payments for the account of
such Fund: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of such Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends on Shares of such Fund declared
pursuant to the governing documents of such Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions from such Fund, a certified copy of a resolution
of the Board or of the Executive Committee of such Fund signed by an
officer of such Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
6
<PAGE>
purpose to be a proper purpose, and naming the person or persons to
whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of Securities for the account of such Fund is
made by the Custodian in advance of receipt of the securities purchased in
the absence of specific Proper Instructions from such Fund to so pay in
advance, the Custodian shall be absolutely liable to such Fund for such
securities to the same extent as if the securities had been received by the
Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times, subject to
the applicable Fund's prior approval, in its discretion appoint (and may at
any time remove) any other bank or trust company which is itself qualified
under the Investment Company Act of 1940, as amended, to act as a
custodian, as its agent to carry out such of the provisions of this Article
2 as the Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Exchange Act, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as "U.S.
Securities System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep securities of each Fund in a U.S. Securities
System provided that such securities are represented in an account
("Account") of the Custodian in the U.S. Securities System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of each Fund
which are maintained in a U.S. Securities System shall identify by
book-entry those securities belonging to each Fund;
3) The Custodian shall pay for securities purchased for the account of
each Fund upon (i) receipt of advice from the U.S. Securities System
that such securities have been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of each Fund. The Custodian shall
transfer securities sold for the account of each Fund upon (i) receipt
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<PAGE>
of advice from the U.S. Securities System that payment for such
securities has been transferred to the Account, and (ii) the making of
an entry on the records of the Custodian to reflect such transfer and
payment for the account of each Fund. Copies of all advices from the
U.S. Securities System of transfers of securities for the account of
each Fund shall identify each Fund, be maintained for each Fund by the
Custodian and be provided to each Fund at its request. Upon request,
the Custodian shall furnish each Fund confirmation of each transfer to
or from the account of each Fund in the form of a written advice or
notice and shall furnish to each Fund copies of daily transaction
sheets reflecting each day's transactions in the U.S. Securities
System for the account of each Fund.
4) The Custodian shall provide each Fund with any report obtained by the
Custodian on the U.S. Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the U.S. Securities System;
5) The Custodian shall have received from each Fund the initial
certificate required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to each Fund for the benefit of such Fund
for any loss or damage to such Fund resulting from use of the U.S.
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the U.S.
Securities System; at the election of the affected Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect
to any claim against the U.S. Securities System or any other person
which the Custodian may have as a consequence of any such loss or
damage if and to the extent that such Fund has not been made whole for
any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by each Fund in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions from each Fund ;
2) The Custodian may keep securities of each Fund in the Direct Paper
System only if such securities are represented in an account of the
Custodian in the Direct Paper System which shall not include any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
8
<PAGE>
3) The records of the Custodian with respect to securities of each Fund
which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to each Fund;
4) The Custodian shall pay for securities purchased for the account of
each Fund upon the making of an entry on the records of the Custodian
to reflect such payment and transfer of securities to the account of
each Fund. The Custodian shall transfer securities sold for the
account of each Fund upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for the
account of each Fund;
5) The Custodian shall furnish each Fund confirmation of each transfer to
or from the account of each Fund, in the form of a written advice or
notice, of Direct Paper on the next business day following such
transfer and shall furnish to each Fund copies of daily transaction
sheets reflecting each day's transactions in the Direct Paper System
for the account of each Fund;
6) The Custodian shall provide each Fund with any report on its system of
internal accounting control as each Fund may reasonably request from
time to time.
2.12 Pledged Account. The Custodian shall upon receipt of Proper
Instructions from a Fund establish and maintain a pledged account or
accounts for and on behalf of such Fund, into which account or accounts
may be transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to Section 2.10
hereof, (i) in accordance with the provisions of any agreement among
such Fund , the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by such Fund, (ii) for
purposes of segregating cash or government securities in connection
with options purchased, sold or written by such Fund or commodity
futures contracts or options thereon purchased or sold by such Fund,
(iii) for the purposes of compliance by such Fund with the procedures
required by Investment Company Act Release No. 10666, and subsequent
release or releases of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in
the case of clause (iv), upon receipt of, in addition to Proper
Instructions from such Fund , a certified copy of a resolution of the
Board or of the Executive Committee of such Fund signed by an
9
<PAGE>
officer of such Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of each Fund held by it and in connection with
transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
such Fund or a nominee of such Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the applicable Fund such proxies, all proxy soliciting materials and all
notices relating to such securities.
2.15 Communications Relating to Fund Securities. Subject to the provisions of
Section 2.3, the Custodian shall transmit promptly to each Fund all written
information (including, without limitation, pendency of calls and
maturities of domestic securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by such
Fund and the maturity of futures contracts purchased or sold by such Fund)
received by the Custodian from issuers of the securities being held for
such Fund. With respect to tender or exchange offers, the Custodian shall
transmit promptly to each Fund all written information received by the
Custodian from issuers of the securities whose tender or exchange is sought
and from the party (or his agents) making the tender or exchange offer. If
a Fund desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, such Fund shall notify the
Custodian at least three business days prior to the date on which the
Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of each Fund Held Outside
of the United States
--------------------------------------------------------------------------
3.1 Appointment of Foreign Sub-Custodians. Each Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for such Fund's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated
on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper
Instructions", as defined in Section 5 of this Contract, together with a
certified resolution of such Fund's Board, the Custodian and such Fund may
agree to amend Schedule A hereto from time to time to designate additional
foreign banking institutions and foreign securities depositories to act as
sub-custodian. Upon receipt of Proper Instructions, a Fund may instruct the
Custodian to cease the employment of any one or more such sub-custodians
for maintaining custody of such Fund's assets.
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<PAGE>
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or each Fund may determine to be reasonably
necessary to effect such Fund's foreign securities transactions. The
Custodian shall identify on its books as belonging to each Fund, the
foreign securities of each Fund held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and each Fund, assets of each Fund shall be
maintained in a clearing agency which acts as a securities depository or in
a book-entry system for the central handling of securities located outside
of the United States (each a "Foreign Securities System") only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof (Foreign Securities Systems and
U.S. Securities Systems are collectively referred to herein as the
"Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.6
hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including each Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash
property of each Fund which are maintained in such account shall identify
by book-entry those securities and other non-cash property belonging to
each Fund and (ii) the Custodian shall require that securities and other
non-cash property so held by the foreign sub-custodian be held separately
from any assets of the foreign sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a foreign
banking institution shall provide that: (a) the assets of each Fund will
not be subject to any right, charge, security interest, lien or claim of
any kind in favor of the foreign banking institution or its creditors or
agents, except a claim of payment for their safe custody or administration;
(b) beneficial ownership for the assets of each Fund will be freely
transferable without the payment of money or value other than for custody
or administration; (c) adequate records will be maintained identifying the
assets as belonging to each Fund; (d) officers of or auditors employed by,
or other representatives of the Custodian, including to the extent
permitted under applicable law the independent public accountants for each
Fund, will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Custodian;
and (e) assets of each Fund held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or its agents. Agreements
with
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<PAGE>
foreign banking institutions shall contain those provisions required by
subparagraph (c) of Section 17f-5 under the Investment Company Act of 1940.
3.6 Access of Independent Accountants of each Fund. Upon request of each Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of each Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to each Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets of each Fund held by foreign sub-custodians, including but not
limited to an identification of entities having possession of such Fund's
securities and other assets and advices or notifications of any transfers
of securities to or from each custodial account maintained by a foreign
banking institution for the Custodian on behalf of such Fund indicating, as
to securities acquired for such Fund, the identity of the entity having
physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provisions of Sections 2.2 and
2.7 of this Contract shall apply, mutatis mutandis to the foreign
securities of each Fund held outside the United States by foreign
sub-custodians. (b) Notwithstanding any provision of this Contract to the
contrary, settlement and payment for securities received for the account of
each Fund and delivery of securities maintained for the account of each
Fund may be effected in accordance with the customary established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with
the expectation of receiving later payment for such securities from such
purchaser or dealer. (c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's nominee to the
same extent as set forth in Section 2.3 of this Contract, and each Fund
agrees to hold any such nominee harmless from any liability as a holder of
record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and each Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of a Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that such Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
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<PAGE>
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by Section 3.13 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this Section
3.10, in delegating custody duties to State Street London Ltd., the
Custodian shall not be relieved of any responsibility to each Fund for any
loss due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other losses under
circumstances where the Custodian and State Street London Ltd. have
exercised reasonable care.
3.11 Reimbursement for Advances. If, pursuant to Proper Instructions, a Fund
requires the Custodian to advance cash or securities for any purpose for
the benefit of a Fund including the purchase or sale of foreign exchange or
of contracts for foreign exchange, or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of
this Contract, except such as may arise from events or circumstances for
which the Custodian or a sub-custodian are liable pursuant to Sections 3.9
and 3.10 above, or from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Fund shall be security therefor and
should such Fund fail to repay the Custodian promptly, the Custodian shall
upon prior written notice be entitled to utilize available cash and to
dispose of such Fund's assets to the extent necessary to obtain
reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to each
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian and such other information needed
to permit the Fund to comply with Section 17f-5 under the 1940 Act. Such
information shall be similar in kind and scope to that furnished to each
Fund in connection with the initial approval of this Contract. In addition,
the Custodian will promptly inform each Fund in the event that the
Custodian learns of a material adverse change in the financial condition of
a foreign sub-custodian or any material loss of the assets of each Fund or
in the case of any foreign sub-custodian not the subject of an exemptive
order from the Securities and Exchange Commission is notified by such
foreign sub-custodian that there appears to be a substantial likelihood
that its shareholders' equity
13
<PAGE>
will decline below $200 million (U.S. dollars or the equivalent thereof) or
that its shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract,
the provisions hereof shall not apply where the custody of a Fund's assets
are maintained in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment Company Act of 1940
meeting the qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a sub-custodian shall be governed by
Article 1 of this Contract. (b) Cash held for each Fund in the United
Kingdom shall be maintained in an interest bearing account established for
each Fund with the Custodian's London branch, which account shall be
subject to the direction of the Custodian, State Street London Ltd. or
both.
3.14 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on any Fund or the Custodian as
custodian of such Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the responsibility
of each Fund to notify the Custodian of the obligations imposed on each
Fund or the Custodian as custodian of each Fund by the tax law of
jurisdictions other than those mentioned in the above sentence, including
responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist each Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions for which each Fund
has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of each Fund
-----------------------------------------------------------------------
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of each Fund and deposit into the account of each Fund such
payments as are received for Shares of each Fund issued or sold from time to
time by each Fund. The Custodian will provide timely notification to each Fund
and the Transfer Agent of any receipt by it of payments for Shares of such Fund.
From such funds as may be available for the purpose but subject to the
limitations of each Fund's governing documents and any applicable votes of the
Board of each Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of each Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of each Fund, the Custodian shall honor checks drawn on
the
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<PAGE>
Custodian by a holder of Shares, which checks have been furnished by such
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between each Fund and the Custodian.
5. Proper Instructions
-------------------
Proper Instructions as used throughout this Contract means a writing signed
or initialed by one or more person or persons as the Board of each Fund shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. Each Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of each Fund
accompanied by a detailed description of procedures approved by the Board,
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board and the
Custodian are satisfied that such procedures afford adequate safeguards for such
Fund's assets. For purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any three-party agreement
which requires a segregated asset account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
-------------------------------------------
The Custodian may in its discretion, without express authority from each
Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the applicable Fund;
1) surrender securities in temporary form for securities in definitive
form;
2) endorse for collection, in the name of each Fund, checks, drafts and
other negotiable instruments; and
3) in general, attend to all ministerial details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings
with the securities and property of each Fund except as otherwise
directed by the Board of each Fund.
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7. Evidence of Authority
---------------------
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by or on behalf
of each Fund. The Custodian may receive and accept a certified copy of a vote of
the Board of each Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board pursuant to the governing documents of each Fund as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income
---------------------------------------------------------------------------
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of each Fund to keep the books of
account of each Fund and/or compute the net asset value per share of the
outstanding shares of each Fund or, if directed in writing to do so by each Fund
, shall itself keep such books of account and/or compute such net asset value
per share. If so directed, the Custodian shall also calculate daily the net
income of each Fund as described in each Fund's currently effective Prospectus
and shall advise each Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of each Fund to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of each Fund shall be made at the time or times
described from time to time in each Fund's currently effective Prospectus.
9. Records
-------
The Custodian shall with respect to each Fund create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of each Fund under the Investment Company
Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of each Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the applicable
Fund and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the request of any Fund, supply such Fund with a tabulation
of securities owned by such Fund and held by the Custodian and shall, when
requested to do so by a Fund and for such compensation as shall be agreed upon
between such Fund and the Custodian, include certificate numbers in such
tabulations.
10. Opinion of Fund's Independent Accountant
----------------------------------------
The Custodian shall take all reasonable action, as each Fund may from time
to time request, to obtain from year to year favorable opinions from each Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of each Fund's Form N-1A,
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<PAGE>
and Form N-SAR or other annual reports to the Securities and Exchange Commission
and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
--------------------------------------------------
The Custodian shall provide each Fund, at such times as each Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports, shall be
of sufficient scope and in sufficient detail, as may reasonably be required by
each Fund to provide reasonable assurance that any material inadequacies would
be disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
12. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, determine in accordance with the fee
schedule attached hereto as Schedule B, as amended from time to time as agreed
by each Fund and the Custodian.
13. Responsibility of Custodian
---------------------------
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to any Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for a Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to any Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
17
<PAGE>
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts provided Custodian has maintained an adequate
disaster recovery plan; (ii) errors by a Fund or its investment advisor in their
instructions to the Custodian provided such instructions have been in accordance
with this Contract; (iii) the insolvency of or acts or omissions by a Securities
System; (iv) any delay or failure of any broker, agent or intermediary, central
bank or other commercially prevalent payment or clearing system to deliver to
the Custodian's sub-custodian or agent securities purchased or in the remittance
or payment made in connection with securities sold; (v) any delay or failure of
any company, corporation, or other body in charge or registering or transferring
securities in the name of the Custodian, a Fund, the Custodian's sub-custodians,
nominees or agents or any consequential losses arising out of such delay or
failure to transfer such securities including non-receipt of bonus, dividends
and rights and other accretions or benefits; (vi) delays or inability to perform
its duties due to any disorder in market infrastructure with respect to any
particular security or Securities System; and (vii) any provision of any present
or future law or regulation or order of the United States of America, or any
state thereof, or any other country, or political subdivision thereof or of any
court of competent jurisdiction.
Except as expressly provided in Section 3.9, the Custodian shall be liable
for the acts or omissions of a foreign banking institution appointed pursuant to
the provisions of Article 3 to the same extent as set forth in Article 1 hereof
with respect to sub-custodians located in the United States.
If a Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the reasonable opinion of the Custodian, result in the Custodian or its nominee
assigned to a Fund being liable for the payment of money or incurring liability
of some other form, such Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If a Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlements)
or in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of such Fund shall be security
therefor and should such Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of such
Fund's assets to the extent necessary to obtain reimbursement.
18
<PAGE>
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. Effective Period, Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to each Fund act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of each Fund has approved the initial use of
a particular Securities System by each Fund, as required by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall not with
respect to a Fund act under Section 2.11 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary that the Board
has approved the initial use of the Direct Paper System by each Fund; provided
further, however, that a Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of its governing documents, and further provided, that a Fund may at any time by
action of its Board (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, each Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination as provided
herein.
15. Successor Custodian
-------------------
If a successor custodian for a Fund shall be appointed by the Board of such
Fund, the Custodian shall, upon termination, and upon receipt of a certified
copy of such vote, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of such
Fund then held by it hereunder and shall transfer to an account of the successor
custodian all of the securities of such Fund held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of the
applicable Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board shall have been delivered to the Custodian
on or before the date when such
19
<PAGE>
termination shall become effective, then the Custodian shall have the right to
deliver to a bank or trust company, which is a "bank" as defined in the
Investment Company Act of 1940, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other properties held by
the Custodian on behalf of such Fund and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract on behalf
of such Fund and to transfer to an account of such successor custodian all of
the securities of such Fund held in any Securities System. Thereafter, such bank
or trust company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of a Fund to procure the certified copy of the vote referred to above or
of the Board to appoint a successor custodian, the Custodian shall be entitled
to fair compensation for its services during such period as the Custodian
retains possession of such securities, funds and other properties and the
provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the Custodian and each
Fund, may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the governing documents of any Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
17. Additional Funds
----------------
In the event that any mutual funds in addition to the Funds are hereafter
established which desire to have the Custodian render services as custodian
under the terms hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such fund shall become a
Fund hereunder, subject to the delivery by the new Fund of resolutions
authorizing the appointment of the Custodian and such other supporting or
related documentation as the Custodian may request. All references to the "Fund"
are to each of the Funds listed on Appendix 1 individually, as if this Contract
were between each such individual Fund and the Custodian.
18. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
20
<PAGE>
19. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between each of the Funds and the Custodian relating to the custody of
such Fund's assets.
20. Shareholder Communications
--------------------------
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs each Fund to indicate whether such Fund authorizes
the Custodian to provide such Fund's name, address, and share position to
requesting companies whose stock each Fund owns. If a Fund tells the Custodian
"no", the Custodian will not provide this information to requesting companies.
If a Fund tells the Custodian "yes" or do not check either "yes" or "no" below,
the Custodian is required by the rule to treat such Fund as consenting to
disclosure of this information for all securities owned by such Fund or any
funds or accounts established by each Fund. For each Fund's protection, the Rule
prohibits the requesting company from using such Fund's name and address for any
purpose other than corporate communications. Please indicate below whether each
Fund consents or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the name,
address, and share positions of each Fund listed on
Appendix 1.
NO [X] The Custodian is not authorized to release the
name, address, and share positions of each Fund listed
on Appendix 1.
21. Limitation of Liability.
------------------------
The execution of this Contract has been authorized by each Fund's Board.
This Contract is executed on behalf of each Fund or, in the case of a Fund
organized as a business trust, the trustees of such Fund as trustees and not
individually and the obligations of each Fund under this Contract are not
binding upon any of such Fund's trustees, officers or shareholders individually
but are binding only upon the assets and property of such Fund. A Certificate of
Trust in respect of each Fund organized as a business trust is on file with the
Secretary of the Commonwealth of Massachusetts.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of May, 1997.
EACH OF THE FUNDS LISTED ON APPENDIX 1
By: /s/ Michael E. Haylon
--------------------------
Michael E. Haylon
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
--------------------------
Executive Vice President
Ronald E. Logue
<PAGE>
APPENDIX 1
Fund Names
(as of May 1, 1997)
Phoenix California Tax Exempt Bonds, Inc.
The Phoenix Edge Series Fund
Real Estate Securities Series
Phoenix Income and Growth Fund
Phoenix Multi-Portfolio Fund
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix Endowment Equity Portfolio
Phoenix Real Estate Securities Portfolio
Phoenix Mid Cap Portfolio
Phoenix Tax-Exempt Bond Portfolio
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Series Fund
Phoenix Aggressive Growth Fund Series
Phoenix Balanced Fund Series
Phoenix Convertible Fund Series
Phoenix Growth Fund Series
Phoenix High Yield Fund Series
Phoenix Money Market Series
Phoenix U.S. Government Securities Fund Series
Phoenix Strategic Allocation Fund, Inc.
Phoenix Strategic Equity Series Fund
Phoenix Equity Opportunities Fund
Phoenix Micro Cap Fund
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
Phoenix Duff & Phelps Institutional Mutual Funds
Enhanced Reserves Portfolio
Real Estate Equity Securities Portfolio
<PAGE>
Schedule A
----------
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of each Fund for use as
sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
- ----------------------------
Fund's Authorized Officer
Date:
-------------------------
<PAGE>
[LOGO]State Street
SCHEDULE B
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
Effective June 1, 1996
Phoenix Duff and Phelps Funds
- --------------------------------------------------------------------------------
I. Administration
Domestic Custody - Maintain custody of fund assets. Settle portfolio
purchases and sales. Report buy and sell fails. Determine and collect
portfolio income. Make cash disbursements and report cash transactions.
Monitor corporate actions. Report portfolio positions. The custody fee
shown below is an annual charge, billed and payable monthly, based on
average monthly net assets.
Average Monthly Net Assets Annual Fees in Basis Points
-------------------------- ---------------------------
First $3 Billion .5
Next $2 Billion .375
Thereafter .25
II. Domestic Portfolio Trades - For each line item processed
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $ 6.00
New York Physical Settlements $25.00
Physical Maturities-delivery and collection fee $33.00
All other trades $16.00
III. International Custody - Maintain custody of funds assets. Settle portfolio
purchases and sales. Report buy and sell fails. Determine and collect
portfolio income. Make cash disbursements and report cash transactions in
local and base currency. Report foreign taxes. File foreign tax reclaims.
Monitor corporate actions. Report portfolio positions.
<PAGE>
[LOGO]State Street
A. Country Grouping
- ---------------------
Group A Group B Group C Group D Group E
- ------- ------- ------- ------- -------
Austria Australia Denmark Indonesia Argentina
Canada Belgium Finland Malaysia Bangladesh
Euroclear Hong Kong France Mexico Brazil
Germany Netherlands Ireland Portugal Chile
Japan New Zealand Italy South Korea China
Singapore Luxembourg Spain Columbia
Switzerland Norway Sri Lanka Cyprus
Philippines Sweden Greece
Thailand Taiwan Hungary
United Kingdom India
Israel
Pakistan
Peru
Turkey
Uruguay
Venezuela
B. Transaction Charges
- ------------------------
Group A Group B Group C Group D Group E
- ------- ------- ------- ------- -------
$26 $30 $45 $60 $75
C. Holding Charges in Basis Points (Annual Fee)
- -------------------------------------------------
Assets Group A Group B Group C Group D Group E
- ------ ------- ------- ------- ------- -------
First $100 MM 5.0 8.0 13.0 15.0 25.0
Next $100 MM 4.0 6.0 10.0 13.0 25.0
Excess 3.0 5.0 8.0 13.0 25.0
IV. Options
Option charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised charge, per issue, per broker $15.00
<PAGE>
[LOGO]State Street
V. Lending of Securities
Deliver loaned securities versus cash collateral $20.00
Deliver loaned securities versus securities collateral $30.00
Receive/deliver additional cash collateral $ 6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt of loaned securities $15.00
Deliver securities collateral versus receipt of
loaned securities $25.00
Loan administration -- mark-to-market per day, per loan $ 3.00
VI. Interest Rate Futures
Transactions -- no security movement $ 8.00
VII. Coupon Bonds
Monitoring for calls and processing coupons --
for each coupon issue held -- monthly charge $ 5.00
VIII. Holdings Charge
For each issue maintained -- monthly charge $ 5.00
IX. Principal Reduction Payments Per Paydown $10.00
<PAGE>
[LOGO]State Street
X. Special Services
Fees for activities of a non-recurring nature such as fund
consolidations or reorganizations, extraordinary security shipments
and the preparation of special reports will be subject to negotiation.
Fees for tax accounting/recordkeeping for options, financial futures,
and other special items will be negotiated separately.
Account Position Appraisal
--------------------------
Special appraisal by industry classification:
Monthly fee - per portfolio $50.00
XI. Out-of-Pocket Expenses
----------------------
A billing for the recovery of applicable out-of-pocket expenses will
be made as of the end of each month. Out-of-pocket expenses include,
but are not limited to the following:
Telephone
Wire Charges ($4.70 per wire in and $4.55 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer -- $8.00 Each
Transfer Fees
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 - $4.25
GNMA Transfer - $15 each
PTC Deposit/Withdrawal for same day turnarounds - $50.00
XII. Payment
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's
offices.
<PAGE>
[LOGO]State Street
PHOENIX DUFF AND PHELPS FUNDS STATE STREET BANK & TRUST CO.
By /s/ Nancy G. Curtiss By /s/ Charles R. Whittemore, Jr.
------------------------------ ------------------------------
Title Treasurer Title Vice President
------------------------------ ------------------------------
Date June 13, 1997 Date June 11, 1996
------------------------------ ------------------------------
Exhibit 9.2
Amended and Restated
Financial Agent Agreement
<PAGE>
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
THIS AGREEMENT made and concluded as of this 19th day of November, 1997 by
and between Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Financial Agent") and each of the undersigned mutual funds
(hereinafter collectively and singularly referred to as the "Trust").
WITNESSETH THAT:
1. Financial Agent shall keep the books of the Trust and compute the daily
net asset value of shares of the Trust in accordance with instructions received
from time to time from the Board of Trustees of the Trust; which instructions
shall be certified to Financial Agent by the Trust's Secretary. Financial Agent
shall report such net asset value so determined to the Trust and shall perform
such other services as may be requested from time to time by the Trust as are
reasonably incidental to Financial Agent's duties hereunder.
2. Financial Agent shall be obligated to maintain, for the periods and in
the places required by Rule 31a-2 under the Investment Company Act of 1940, as
amended, those books and records maintained by Financial Agent. Such books and
records are the property of the Trust and shall be surrendered promptly to the
Trust upon its request. Furthermore, such books and records shall be open to
inspection and audit at reasonable times by officers and auditors of the Trust.
3. As compensation for its services hereunder during any fiscal year of the
Trust, Financial Agent shall receive, within eight days after the end of each
month, a fee as specified in Schedule A.
4. Financial Agent shall not be liable for anything done or omitted by it
in the exercise of due care in discharging its duties specifically described
hereunder and shall be answerable and accountable only for its own acts and
omissions and not for those of any agent employed by it nor for those of any
bank, trust company, broker, depository, correspondent or other person.
Financial Agent shall be protected in acting upon any instruction, notice,
request, consent, certificate, resolution, or other instrument or paper believed
by Financial Agent to be genuine, and to have been properly executed, and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be
<PAGE>
ascertained by Financial Agent hereunder a certificate signed by the Secretary
of the Trust. Financial Agent shall be entitled, with respect to questions of
law relating to its duties hereunder, to advice of counsel
5. Subject to prior approval of the Board of Trustees of the Trust,
Financial Agent may appoint one or more sub-financial agents to perform any of
the functions and services which are to be provided under the terms of this
Agreement upon such terms and conditions as may be mutually agreed upon by the
Trust, Financial Agent and such sub-financial agent.
6. This Agreement shall continue in effect only so long as (a) such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or by a vote of a majority of the outstanding voting securities of
the Trust, and (b) the terms and any renewal of (which may be counsel for the
Trust) and, with respect to anything done or omitted by it in good faith
hereunder in conformity with the advice of or based upon an opinion of counsel,
to be held harmless by the Trust from all claims of loss or damage. Nothing
herein shall protect Financial Agent against any liability to the Trust or to
its respective shareholders to which Financial Agent would otherwise be subject
by reason of its willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties hereunder. Except as provided in this paragraph,
Financial Agent shall not be entitled to any indemnification by the Trust.such
Agreement have been approved by the vote of a majority of the trustees of the
Trust who are not parties to this Agreement or interested persons, as that term
is defined in the Investment Company Act of 1940, as amended, of any such party,
cast in person at a meeting called for the purpose of voting on such approval. A
"majority of the outstanding voting securities of the Trust" shall have, for all
purposes of this Agreement, the meaning provided therefor in said Investment
Company Act.
7. Either party may terminate the within Agreement by tendering written
notice to the other, whereupon Financial Agent will be relieved of the duties
described herein. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in said Investment Company Act.
8. Additional funds may become party to this Agreement by notifying the
Financial Agent in writing, and if the Financial agent agrees in writing to
provide its services, such fund shall become a Trust subject to the terms of the
Agreement. Such notification shall include a revised Schedule A reflecting the
new fund(s) as added to the appropriate fund classification(s).
<PAGE>
9. This Agreement shall be construed and the rights and obligations of the
parties hereunder enforced in accordance with the laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first written above.
PHOENIX CALIFORNIA TAX EXEMPT
BONDS, INC.
PHOENIX EQUITY SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX INVESTMENT TRUST 97
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED
INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT
TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION
FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPOR-
TUNITIES FUND
By: /s/ Michael E. Haylon
-----------------------------
Michael E. Haylon
Executive Vice President
PHOENIX EQUITY PLANNING
CORPORATION
By: /s/ Philip R. McLoughlin
-----------------------------
Philip R. McLoughlin
President
<PAGE>
SCHEDULE A
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS FINANCIAL AGENT
Annual Financial Agent Fees shall be based on the following formula:
(1) An incremental schedule applies as follows:
Up to $100 million: 5 basis points on average daily net assets
$100 million to $300 million: 4 basis points on average daily net assets
$300 million through $500 million: 3 basis points on average daily net assets
Greater than $500 million: 1.5 basis points on average daily net assets
A minimum fee will apply as follows:
Money Market $35,000
Equity $50,000
Balanced $60,000
Fixed Income $70,000
International $70,000
REIT $70,000
(2) An additional charge of $12,000 applies for each additional class of
shares above one, over and above the minimum asset-based fee previously noted.
The following tables indicates the classification and effective date for
each of the applicable fund/series/portfolio:
Classification Series Name
-------------- -----------
Money Market Phoenix Money Market Fund Series
Equity Phoenix Aggressive Growth Fund Series
Phoenix Core Equity Fund
Phoenix Equity Opportunities Fund
Phoenix Growth and Income Fund
Phoenix Growth Fund Series
Phoenix Micro Cap Fund
Phoenix Mid Cap Portfolio
Phoenix Small Cap Fund
Phoenix Small Cap Value Fund
Phoenix Strategic Theme Fund
Phoenix Value Equity Fund
<PAGE>
Classification Series Name
-------------- -----------
Balanced Phoenix Balanced Fund Series
Phoenix Convertible Fund Series
Phoenix Income and Growth Fund
Phoenix Strategic Allocation Fund, Inc.
Fixed Income Phoenix California Tax Exempt Bonds, Inc.
Phoenix Strategic Income Fund
Phoenix Emerging Markets Bond Portfolio
Phoenix High Yield Fund Series
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Tax-Exempt Bond Portfolio
Phoenix U.S. Government Securities Fund Series
International Phoenix International Portfolio
Phoenix Worldwide Opportunities Fund
REIT Phoenix Real Estate Securities Portfolio
Exhibit 9.3
Sub-Transfer Agent Agreement
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
PHOENIX EQUITY PLANNING CORPORATION
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
1. Terms of Appointment; Duties of the Bank and 1-4
Transfer Agent
2. Fees and Expenses 4
3. Bank as Trustee or Custodian of Retirement Plans 4-5
4. Wire Transfer Operating Guidelines 5-7
5. Data Access and Proprietary Information 7-8
6. Indemnification 8-9
7. Standard of Care 10
8. Covenants of the Transfer Agent and the Bank 10
9. Representations and Warranties of the Bank 11
10. Representations and Warranties of the Transfer Agent 11
11. Termination of Agreement 12
12. Assignment 12
13. Amendment 12
14. Massachusetts Law to Apply 13
15. Force Majeure 13
16. Consequential Damages 13
17. Limitation of Shareholder Liability 13
18. Merger of Agreement 13
19. Counterparts 13
<PAGE>
AGREEMENT effective as of the 1st day of June, 1994, by and between
PHOENIX EQUITY PLANNING CORPORATION, a Connecticut corporation, having its
principal office and place of business at 100 Bright Meadow Boulevard, Enfield,
Connecticut, 06083, (the "Transfer Agent"), and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company having its principal office and place of
business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank");
WHEREAS, the Transfer Agent has been appointed by each of the investment
companies (including each series thereof) listed on Schedule A (the "Fund(s)"),
each an open-end diversified management investment company registered under the
Investment Company Act of 1940 as amended, as transfer agent, dividend
disbursing agent and shareholder servicing agent in connection with certain
activities, and the Transfer Agent has accepted each such appointment;
WHEREAS, the Transfer Agent has entered into a Transfer Agency and Service
Agreement with each of the Funds (including each series thereof) listed on
Schedule A pursuant to which the Transfer Agent is responsible for certain
transfer agency and dividend disbursing functions for each Fund's shares
("Shares") and each Fund's shareholders ("Shareholders") and the Transfer Agent
is authorized to subcontract for the performance of its obligations and duties
thereunder in whole or in part with the Bank;
WHEREAS, the Transfer Agent desires to appoint the Bank as sub-transfer
agent, and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenant herein contained,
the parties hereto agree as follows:
1. Duties of the Bank and the Transfer Agent
1.1 Subject to the terms and conditions set forth in this Agreement, the
Bank shall act as the Transfer Agent's non-exclusive sub-transfer agent for
Shares in connection with any accumulation plan, open-account, dividend
reinvestment plan, retirement plan or similar plan provided to Shareholders and
set out in each Fund's currently effective prospectus and statement of
additional information ("Prospectus"), including without limitation any
periodic investment plan or periodic withdrawal program. As used herein the
term "Shares" means the authorized and issued shares of common stock, or shares
of beneficial interest, as the case may be, for each Fund listed in Schedule A.
In accordance with procedures established from time to time by agreement
between the Transfer Agent and the Bank, the Bank and Transfer Agent shall
provide the services listed in this Section 1.
(a) According to the service responsibility schedule attached hereto
for Shareholder accounts and record-keeping the Bank or the
Transfer Agent shall:
(i) receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the custodian of each Fund authorized pursuant
to the articles of incorporation or organization of each
Fund (the "Custodian");
(ii) pursuant to purchase orders, issue the appropriate number
of Shares and hold such Shares in the appropriate
Shareholder account;
(iii) receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation
thereof to the Custodian;
(iv) in respect to the transactions in items (i), (ii), and
(iii) above, the Bank shall execute transactions directly
with broker-dealers authorized by each Fund;
(v) at the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any
redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the
redeeming Shareholders;
(vi) effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vii) prepare and transmit payments for dividends and
distributions declared by each Fund;
<PAGE>
(viii) issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon
receipt by the Bank of indemnification satisfactory to the
Bank and protecting the Bank and each Fund, and the Bank
at its option, may issue replacement certificates in place
of mutilated stock certificates upon presentation thereof
and without such indemnity;
(ix) maintain records of account for and advise the Transfer
Agent and its Shareholders as to the foregoing;
(x) record the issuance of Shares of each Fund and maintain
pursuant to Rule 17Ad-10 (e) of the Securities Exchange
Act of 1934 as amended (the "Exchange Act") a record of
the total number of Shares of each Fund that are
authorized, based upon data provided to it by each Fund or
the Transfer Agent and issued and outstanding, the Bank
shall also provide each Fund on a regular basis with the
total number of Shares which are authorized and issued and
outstanding and shall have no obligation, when recording
the issuance of Shares, to monitor the issuance of such
Shares or to take cognizance of any laws relating to the
issues or sale of such Shares, which functions shall be
the sole responsibility of each Fund or the Transfer
Agent.
1.2 (a) For reports, the Bank shall:
(i) maintain all Shareholder accounts, prepare meeting, proxy,
and mailing lists, withhold taxes on U.S. resident and
non-resident alien accounts, prepare and file U.S.
Treasury reports required with respect to dividends and
distributions by federal authorities for all Shareholders,
prepare confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder account
information.
(b) For blue sky reporting the Bank shall provide a system that will
enable each Fund or the Transfer Agent to monitor the total
number of Shares sold in each State, and each Fund or the
Transfer Agency shall:
(i) identify to the Bank in writing those transactions and
assets to be treated as exempt from blue sky reporting for
each State; and
(ii) verify the establishment of transactions for each State on
the system prior to activity for each State, the
responsibility of the Bank for each Fund's blue sky State
registration status is solely limited to the initial
establishment of transactions subject to blue sky
compliance by the Fund or the Transfer Agent and the
reporting of such transactions to the Fund as provided
above.
1.3 Per the attached service responsibility schedule procedures as to who
shall provide certain of the services in Section 1 may be established from time
to time by agreement between the Transfer Agent and the Bank. The Bank may at
times perform only a portion of these services and the Transfer Agent may
perform these services on each Fund's behalf.
1.4 The Bank shall provide additional services on behalf of the Transfer
Agent (i.e., escheat services) as may be agreed upon in writing between the Bank
and the Transfer Agent.
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement, the
Transfer Agent agrees to pay the Bank an annual maintenance fee for each
Shareholder account as set out in the initial fee schedule attached hereto. Such
fees and out-of-pocket expenses and advances identified under Section 2.2 below
may be changed from time to time subject to mutual written agreement between the
Transfer Agent and the Bank. For purposes hereof the term account should refer
to any Shareholder account designated as such on the DST mutual fund system (or
any replacement system) provided further that so called omnibus accounts shall
be considered to be a single account.
2.2 In addition to the fees paid under Section 2.1 above, the Transfer
Agent agrees to reimburse the Bank for out-of-pocket expenses, including but not
limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by the Bank at the request or with the consent of the
Transfer Agent, will be reimbursed by the Transfer Agent.
<PAGE>
2.3 The Transfer Agent agrees to pay all fees and reimbursable expenses
within five days following the receipt of the respective billing notice. Postage
for mailing of dividends, proxies, Fund reports and other mailings to all
accounts shall be advanced to the Bank by the Transfer Agent at least seven (7)
days prior to the mailing date of such materials.
3. Bank as Trustee or Custodian of Retirement Plans
As agreed upon in writing between the parties, the Bank and Transfer Agent
agree that the Bank may serve as the named custodian or trustee of individual
retirement accounts established under section 408 of the Internal Revenue Code
(the "Code"), tax-sheltered plans established under section 403 (b) of the Code,
qualified plans under section 401(a) of the Code, or money purchase plans,
pension plans or profit sharing plans with a cash deferred arrangement under
section 401(k) of the Code (collectively "Retirement Plans").
3.1 The Bank shall provide certain recordkeeping services as more fully
described in the TRAC-2000 Procedures manual provided to the Fund for
Shareholders who become plan participants of Retirement Plans using TRAC-2000
System.
3.2 The Bank shall:
(a) have no investment responsibility for the selection of
investments, no liability for any investments made for Retirement
Plans other than to maintain custody and provide recordkeeping of
the investments subject to the terms of the Agreement; and
(b) not serve as "Plan Administrator" (as defined in the Employee
Retirement Income Securities Act of 1974, as amended) of any
Retirement Plan, or in any other administrative capacity or other
capacity except as trustee or custodian thereof, the Bank shall
not keep records of Retirement Plan accounts except as provided
herein.
3.3 The Transfer Agent agrees that in any communications from the Transfer
Agent or the Funds to any prospective or actual Shareholder, neither the Funds
nor the Transfer Agent shall state or represent that the Bank has any investment
discretion or other power concerning investments of any Retirement Plan or the
Bank shall serve as plan administrator or have any administrative or other
responsibility for the administration or operation of any Retirement Plan. The
Funds, the Funds' designee, or the Transfer Agent as may be required to comply
with the Code and all other applicable federal and state laws shall:
(a) serve as third party administrators of all Retirement Plans; and
(b) provide all Retirement Plan prototype document design, tax form
preparation (excluding services performed by the Bank under
section 1.2 of this Agreement), discrimination testing and
consulting about Retirement Plan qualification and maintenance.
4. Wire Transfer Operating Guidelines/Articles 4A of the Uniform Commercial Code
4.1 The Bank is authorized to promptly debit the appropriate Transfer Agent
account(s) upon the receipt of a payment order in compliance with the selected
security procedure (the "Security Procedure") chosen for funds transfer and in
the amount of money that the Bank has been instructed to transfer. The Bank
shall execute payment orders in compliance with the Security Procedure and with
the Transfer Agent instructions on the execution date provided that such payment
order is received by the customary deadline for processing such a request,
unless the payment order specifies a later time. All payment orders and
communications received after this time-frame will be deemed to have been
received the next business day.
4.2 The Transfer Agent acknowledges that the Security Procedure it has
designated on the Transfer Agent Selection Form was selected by the Transfer
Agent from Security Procedures offered by the Bank. The Transfer Agent shall
restrict access to confidential information relating to the Security Procedure
to authorized persons as communicated to the Bank in writing. The Transfer Agent
must notify the Bank immediately if it has reason to believe unauthorized
persons may have obtained access to such information or of any change in the
Transfer Agent's authorized personnel. The Bank shall verify the authenticity of
all such instructions according to the Security Procedure.
<PAGE>
4.3 The Bank shall process all payment orders on the basis of the account
number contained in the payment order. In the event of a discrepancy between any
name indicated on the payment order and the account number, the account number
shall take precedence and govern.
4.4 When the Transfer Agent initiates or receives Automated Clearing House
("ACH") credit and debit entries pursuant to these guidelines and the rules of
the National Automated Clearing House Association and the New England Clearing
House Association, the Bank will act as an Originating Depository Financial
Institution and/or receiving depository Financial Institution, as the case may
be, with respect to such entries. Credits given by the Bank with respect to an
ACH credit entry are provisional until the Bank receives final settlement for
such entry from the Federal Reserve Bank. If the Bank does not receive such
final settlement, the Transfer Agent agrees that the Bank shall receive a refund
of the amount credited to the Transfer Agent in connection with such entry, and
the party making payment to the Transfer Agent via such entry shall not be
deemed to have paid the amount of the entry.
4.5 The Bank reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of the Bank's receipt of such payment
order; (b) if initiating such payment order would cause the Bank, in the Bank's
sole judgement, to exceed any volume, aggregate dollar, network, time, credit or
similar limits upon wire transfers which are applicable to the Bank; or (c) if
the Bank, in good faith, is unable to satisfy itself that the transaction has
been properly authorized.
4.6 The Bank shall use reasonable efforts to act on all authorized requests
to cancel or amend payment orders received in compliance with the Security
Procedure provided that such requests are received in a timely manner affording
the Bank reasonable opportunity to act. However, the Bank assumes liability if
the request for amendment or cancellation cannot be satisfied.
4.7 The Bank shall assume no responsibility for failure to detect any
erroneous payment order provided that the Bank complies with the payment order
instructions as received and the Bank complies with the Security Procedure. The
Security Procedure is established for the purpose of authenticating payment
orders only and not for the detection of errors in payment orders.
4.8 The Bank shall assume no responsibility for lost interest with respect
to the refundable amount of any unauthorized payment order unless the Bank is
notified of the unauthorized payment order within (30) days or notification by
the Bank of the acceptance of such payment order. In no event (including failure
to execute a payment order) shall the Bank be liable for special, indirect or
consequential damages, even if advised of the possibility of such damages.
4.9 Confirmation of Bank's execution of payment orders shall ordinarily be
provided within 24 hours notice of which may be delivered through the Bank's
proprietary information systems, or by facsimile or call-back. Client must
report any objections to the execution of an order within 30 days.
5. Data Access and Proprietary Information
5.1 The Transfer Agent acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and other
information furnished to the Transfer Agent by the Bank are provided solely in
connection with the services rendered under this Agreement and constitute
copyrighted trade secrets or proprietary information of substantial value to the
Bank. Such databases, programs, formats, designs, techniques and other
information are collectively referred to below as "Proprietary Information". The
Transfer Agent agrees that it shall treat all Proprietary Information as
proprietary to the Bank and further agrees that it shall not divulge any
Proprietary Information to any person or organization except as expressly
permitted hereunder. The Transfer Agent agrees for itself and its employees and
agents:
(a) to use such programs and databases (i) solely on the Transfer
Agent's computers, or (ii) solely from equipment at the locations
agreed to between the Transfer Agent and the Bank and (iii) in
accordance with the Bank's applicable user documentation;
<PAGE>
(b) to refrain from copying or duplicating in any way (other than in
the normal course of performing processing on the Transfer Agents
computers) any part of any Proprietary Information;
(c) to refrain from obtaining unauthorized access to any programs,
data or other information not owned by the Transfer Agent, and if
such access if accidently obtained, to respect and safeguard the
same Proprietary Information;
(d) to refrain from causing or allowing information transmitted from
the Bank's computer to the Transfer Agent's terminal to be
retransmitted to any other computer terminal or other device
except as expressly permitted by the Bank, such permission not to
be unreasonably withheld;
(e) that the Transfer Agent shall have access only to those
authorized transactions as agreed to between the Transfer Agent
and the Bank; and
(f) to honor reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law and under applicable statutes.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section 5 shall
survive any earlier termination of this Agreement.
6. Indemnification
6.1 The Bank shall not be responsible for, and the Transfer Agent shall
indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payment, expenses and liability arising
out of or attributable to:
(a) all actions of the Bank or its agent or subcontractors required
to be taken pursuant to this Agreement, provided that such
actions are taken in good faith and without negligence or willful
misconduct;
(b) the Transfer Agents' lack of good faith, negligence or willful
misconduct;
(c) the reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services
which (i) are received by the Bank or its agents or
subcontractors from the Transfer Agent or its duly authorized
representative, and (ii) have been prepared, maintained or
performed by the Transfer Agent including but not limited to any
previous transfer agent or registrar excluding the Bank;
(d) the reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Transfer
Agent;
(e) the offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws
or regulations of any state that such Shares be registered in
such state or in violation of any stop order or other
determination or ruling by any federal agency or any state with
respect to the offer or sale of such Shares in such state.
6.2 At any time the Bank may apply to any officer of the Transfer Agent for
instructions, and may consult with legal counsel acceptable to the Transfer
Agent with respect to any matter arising in connection with the services to be
performed by the Bank under this Agreement, and the Bank and its agents or
subcontractors shall not be liable and shall be indemnified by the Transfer
Agent for any action taken or omitted by it in reliance upon such instructions
or upon the opinion of such counsel.
The Bank, its agents and subcontractors shall be protected and indemnified
in acting upon any paper or document furnished by or on behalf of the Transfer
Agent, reasonably believed to be genuine and to have been signed by the proper
person or persons, or upon any instruction, information, data, records or
documents provided the Bank or its agents or subcontractors by machine readable
input, telex, tape, CRT data entry or other similar means authorized by the
Transfer Agent, and shall not be held to have notice of any change of authority
of any person, until receipt of written notice thereof from the Transfer Agent.
The Bank, its agents and subcontractors shall also be protected and indemnified
in recognizing stock certificates which are reasonably believed to bear the
proper manual or facsimile signatures of the officers of the Fund, and the
proper countersignature of any former transfer agent or former registrar, or of
a co-transfer agent or co-registrar.
<PAGE>
6.3 In order that the indemnification provisions contained in this Section
6 shall apply, upon the assertion of a claim for which the Transfer Agent may be
required to indemnify the Bank, the Bank shall promptly notify the Transfer
Agent of such assertion, and shall keep the Transfer Agent advised with respect
to all developments concerning such claim. The Transfer Agent shall have the
option to participate with the Bank in the defense of such claim or to defend
against said claim in its own name or in the name of the Bank.
The Bank shall in no case confess any claim or make any compromise in any
case in which the Transfer Agent may be required to indemnify the Bank except
with the Transfer Agent's prior written consent.
6.4 The indemnity provisions of Section 6 shall survive any earlier
termination of this Agreement.
7. Standard of Care
The Bank shall at all times act in good faith and agrees to use its best
efforts to insure the accuracy of all services performed under this Agreement,
but assumes no responsibility and shall not be liable for loss or damage due to
errors unless said errors are caused by its negligence, bad faith, or willful
misconduct or that of its employees.
8. Covenants of the Transfer Agent and the Bank
8.1 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Transfer Agent for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
8.2 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of each Fund or the Transfer Agent and will be
preserved, maintained and made available in accordance with such section and
rules, for monitoring by the Transfer Agent, and will be surrendered promptly to
the Transfer Agent on and in accordance with its request. The Bank shall furnish
adequate resources and office space in order to allow the Transfer Agent or any
governmental authority to inspect all books, procedures, information and records
required hereby.
8.3 The Bank and the Transfer Agent agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.4 In case of any requests or demands for the inspection of the
Shareholder records of the Transfer Agent, the Bank will endeavor to notify the
Transfer Agent and to secure instructions from an authorized officer of the
Transfer Agent as to such inspection. The Bank reserves the right, however, to
exhibit the Shareholder records to any person, whenever it is advised by counsel
that it may be held liable for the failure to exhibit the Shareholder records to
such person.
9. Representations and Warranties of the Bank
The Bank represents and warrants to the Transfer Agent that:
(a) it is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts;
(b) it is duly qualified to carry on its business in the Commonwealth of
Massachusetts;
(c) it is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement;
(d) all requisite corporation proceedings have been taken to authorize it
to enter into and perform this Agreement;
(e) it has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement;
<PAGE>
(f) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act.
10. Representations and Warranties of the Transfer Agent
The Transfer Agent represents and warrants to the Bank that:
(a) it is a Connecticut corporation duly organized and existing and in
good standing under the laws of Connecticut;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(c) all corporate proceedings required by said articles of incorporation
and by-law have been taken to authorize it to enter into and perform
this Agreement;
(d) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act.
11. Termination of Agreement
11.1 This Agreement shall continue for a period of three years (the
"Initial Term") and be renewed or terminated as stated below.
11.2 This Agreement shall terminate upon the termination of the Transfer
Agency Agreement between the Funds and the Transfer Agent.
11.3 This Agreement may be terminated or renewed after the Initial Term by
either party upon ninety (90) days written notice to the other.
11.4 Should either party exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the party exercising its right to terminate. Additionally, the party receiving
the notice to terminate reserves the right to charge the terminating party for
any other reasonable expenses associated with such termination.
12. Assignment
12.1 Except as provided in Section 12.3 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
12.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
12.3 The Bank may, without further consent on the part of the Transfer
Agent, subcontract for the performance hereof with (a) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as
a transfer agent pursuant to Section 17A (c)(2) of the Exchange Act ("Section
17A (c)(2); (b) National Financial Data Services, Inc., a subsidiary of BFDS
duly registered as a transfer agent pursuant to Section 17A (c)(2) or (c) a BFDS
affiliate; provided, however, that the Bank shall be as fully responsible to the
Transfer Agent for the acts and omissions of any subcontractor as it is for its
own acts and omissions.
13. Amendment
This Agreement may be amended or modified by a written agreement executed
by both parties.
14. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
15. Force Majeure
In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
<PAGE>
16. Consequential Damages
Neither party to this agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
17. Limitations of Shareholder Liability
The Bank hereby expressly acknowledges that recourse against the Funds
shall be subject to those limitations provided by governing law and the
Declaration of Trust of the Funds, as applicable, and agrees that obligations
assumed by the Funds pursuant to the Transfer Agency Agreement shall be limited
in all cases to the Funds and their respective assets. The Bank shall not seek
satisfaction from the Shareholders or any Shareholders of the Funds, nor shall
the Bank seek satisfaction of any obligations from the Trustees/Directors or any
individual Trustee/Director of the Funds.
18. Merger of Agreement
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter hereof
whether oral or written.
19. Counterparts
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the 21st day of July 1994.
PHOENIX EQUITY PLANNING CORPORATION
BY: /s/ William R. Moyer
---------------------------------------
William R. Moyer
Senior Vice President, Finance
ATTEST:
/s/Patricia O. McGlaughlin
- -----------------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/Donald E. Logue
---------------------------
Executive Vice President
ATTEST:
/s/S. Cesso
- -------------------------------
<PAGE>
STATE STREET BANK & TRUST COMPANY
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS PLAN
TRANSFER AND DIVIDEND DISBURSEMENT AGENT
THE PHOENIX FUNDS
PHOENIX SERIES FUNDS
PHOENIX HIGH YIELD FUND SERIES--A & B SHARES
*NATIONAL BOND FUND MERGED WITH A SHARES
PHOENIX U.S. GOVERNMENT SECURITIES FUND SERIES--A & B SHARES
*NATIONAL FEDERAL SECURITIES TRUST MERGED WITH A SHARES
PHOENIX BALANCED FUND SERIES--A & B SHARES
PHOENIX CONVERTIBLE FUND SERIES--A & B SHARES
PHOENIX GROWTH FUND SERIES--A & B SHARES
PHOENIX MONEY MARKET FUND SERIES--A & B SHARES
PHOENIX MULTI PORTFOLIO FUNDS
PHOENIX TAX EXEMPT BOND PORTFOLIO--A & B SHARES
*NATIONAL SECURITIES TAX EXEMPT BONDS MERGED WITH A SHARES
PHOENIX CAPITAL APPRECIATION PORTFOLIO--A & B SHARES
PHOENIX INTERNATIONAL PORTFOLIO--A & B SHARES
PHOENIX ENDOWMENT EQUITY PORTFOLIO
PHOENIX ENDOWMENT FIXED-INCOME PORTFOLIO
OTHER PHOENIX FUNDS
PHOENIX TOTAL RETURN FUND, INC.--A & B SHARES
*NATIONAL TOTAL RETURN MERGED WITH A SHARES
PHOENIX MULTI-SECTOR FIXED INCOME FD, INC.--A & B SHARES
*PHOENIX HIGH QUALITY MERGED WITH A SHARES
PHOENIX EQUITY OPPORTUNITIES FUND--A & B SHARES
*A SHARES FORMERLY NATIONAL STOCK FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND--A & B SHARES
PHOENIX INCOME AND GROWTH FUND--A & B SHARES
PHOENIX CALIFORNIA TAX EXEMPT BOND FUND--A & B SHARES
PHOENIX ASSET RESERVE--A & B SHARES
<PAGE>
STATE STREET BANK & TRUST COMPANY
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS PLAN
TRANSFER AND DIVIDEND DISBURSEMENT AGENT
THE PHOENIX FUNDS
State Street shall charge PEPCO an annual fee based on a per shareholder
account per fund class for the next three (3) years equal to the following:
PHOENIX FEE SCHEDULE
Annual Per Account Fee
1994 $6.75
1995-1996* 1-600,000 ACCTS $7.00
600,000-1,000,000 ACCTS $6.75
OVER 1,000,000 ACCTS $6.60
Monthly Minimum/Fund Applied to Acct. Fee $1,500.00
Annual Closed Account Fee $1.20
Checkwriting Fees:
Per Check Cleared $1.00
Privilege Set-Up $5.00
Annual 12(B)1 Fee (Billed Quarterly) $1.00
Annual Investor Processing Fee
(Per Investor) $1.80
Other Fees: (1994-1996)
Management $27.00-$37.00 Per Hr. Per FTE
Fund Administrator $29.00 Per Hr. Per FTE
All Transfer Agent Functions $22.50 Per Hr. Per FTE
Liaisons Over 4,000/mth $26.00 Per Item
[bullet] This schedule is based on 700K accounts, 26 funds, and 4,000 liaison
items.
[bullet] If the account base decreases significantly, the per account fee will
be reviewed by both parties.
[bullet] If 12(B)1 product is discontinued the annual per account fee will be
increased by $1.00 [bullet]
[bullet] Additional Fund Administrators will be added as new funds are opened
(ratio 1:8) and charged as detailed above.
[bullet] This schedule does not include fees for Image terminals, conversions,
acquisitions, customer service, audio response, 401 recordkeeping, new product
lines, and out-of-pockets.
In witness whereof, Phoenix Equity Planning Corporation and State Street
Bank and Trust Company have agreed upon this fee schedule and have caused this
fee schedule to be executed in their names and on their behalf through their
duly authorized officers for the next three years.
PHOENIX EQUITY PLANNING CORPORATION STATE STREET BANK & TRUST CO.
By /s/Edward P. Hourihan By /s/ Mark Toomey
------------------------ --------------------------
Title Vice President Title Vice President
Date 7/15/94 Date 7/12/74
*The fee for this period shall be adjusted by the parties to reflect then
prevailing levels of service furnished by State Street.
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
SERVICE RESPONSIBILITY SCHEDULE
<TABLE>
<CAPTION>
FUNCTIONAL PEPCO BFDS
RESPONSIBILITIES (Transfer Agent) (Sub Transfer Agent)
<S> <C> <C>
A. Transmission Processing:
Remittance Cash Processing X
New Account Setup
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Quality Assurance X
Transfers
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Dealer X
[bullet] Quality Assurance X
Redemptions
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Quality Assurance X
Wire Order
[bullet] Set-Up X
[bullet] Settlement X
[bullet] Quality Assurance X
[bullet] Monitoring of Outstanding Trades X
Maintenance
[bullet] Registration X
[bullet] Rep/Dealer File X *X
[bullet] Sub Files X
[bullet] Quality Assurance X
[bullet] ACH Prenote Reject X
[bullet] All Account Options X
Adjustments (through 12/94)
[bullet] Account Corrections *X
[bullet] LOI Processing *X
[bullet] Year-End Accounts Adjustments *X
[bullet] Sharelot Adjustments *X
[bullet] Bounced Checks *X
[bullet] ACH Cancellations *X
[bullet] Quality Assurance *X
B. Customer Service:
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Telephones X
[bullet] Customer Inquiry X
[bullet] Transaction Line
[bullet] Timer Exchanges *X
[bullet] Liaison Support (Through 12/4) *X
Correspondence X
[bullet] Shareholder/Dealer Letters X
[bullet] Transfer of Assets Letters/Followup X
[bullet] Notice of Levy X
Dealer Services
[bullet] FundsServ/Networking Implementation X
[bullet] Dealer Security Access X
[bullet] Enhancements-Communications/Testing X
???ent Services
[bullet] Product Development/Implementation X
[bullet] Mailings X
[bullet] Year End Reporting X
C. Support:
Image/AWD
[bullet] Scanning X X
[bullet] Work Distribution X
[bullet] Retrieval X
[bullet] Technical Support X
Microfilm/Research Prior Agent X *X
[bullet] Media Production
[bullet] Design/Printing X
[bullet] Marketing Materials X
[bullet] Forms Development X
Corporate Actions
[bullet] Report Generation X
[bullet] Proxy Solicitation X
[bullet] Periodic Financial Activities (DIVs, PACs,
SWPs, etc.) X
Compliance/Regulatory
[bullet] Escheatment X
[bullet] Tax Filings X
[bullet] Lost Shareholder Recovery X
[bullet] BNotice/CNotice Reporting *X
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[bullet] Lost Certificate Processing/SIC *X
[bullet] Reporting
Recon/Control
[bullet] Cash Settlement X
[bullet] Account Reconcilement X
[bullet] Commission Payment X
[bullet] Automated Trade Settlement X
[bullet] Balance Credit Review X
[bullet] Reclaims *X
[bullet] Dividend Processing X
Financial Reporting
[bullet] Billing to the Fund X
Will be internalized to PEPCO
</TABLE>
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 85 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated December 12, 1997, relating to the financial
statements and financial highlights appearing in the October 31, 1997 Annual
Report to Shareholders of the Phoenix Series Fund, which is also incorporated by
reference into the Registration Statement. We also consent to the reference to
us under the heading "Financial Highlights" in the Prospectus and under the
heading "Other Information - Independent Accountants" in the Statement of
Additional Information.
/s/ PRICE WATERHOUSE
Boston, Massachusetts
December 29, 1997
Exhibit 15.1
Class A
Amended and Restated Distribution Plan
<PAGE>
PHOENIX SERIES FUND
(the "Fund")
CLASS A SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
This Plan shall apply only to the following Series of the Fund: Phoenix
Aggressive Growth Fund Series, Phoenix Balanced Fund Series, Phoenix Convertible
Fund Series, Phoenix Growth Fund Series, Phoenix High Yield Fund Series and
Phoenix U.S. Government Securities Fund Series.
1. Introduction
------------
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of each class of shares of the Fund for sale to the
permissible purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class A shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class A shareholders.
2. Rule 12b-1 Fees
---------------
The Fund shall pay the Distributor, at the end of each month, an amount on
an annual basis equal to 0.25% of the average daily value of the net assets of
the Fund's Class A shares, as compensation for providing personal service to
shareholders, including assistance in connection with inquiries relating to
shareholder accounts, and for maintaining shareholder accounts (the "Service
Fee").
Amounts paid or payable by the Fund under this Plan or any agreement with
any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
<PAGE>
3. Reports
-------
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
4. Required Approval
-----------------
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class A shares (as
such phrase is defined in the Act).
5. Term
----
This Plan shall remain in effect for one year from the date of its adoption
and may be continued thereafter if specifically approved at least annually by a
vote of at least a majority of the Trustees of the Fund as well as a majority of
the Disinterested Trustees. This Plan may be amended at any time, provided that
(a) the Plan may not be amended to increase materially the amount of the
distribution expenses provided in Paragraph 2 hereof (including the Service Fee)
without the approval of at least a majority of the outstanding voting securities
(as defined in the Act) of the Class A shares of the Fund and (b) all material
amendments to this Plan must be approved by a majority vote of the Trustees of
the Fund and of the Disinterested Trustees cast in person at a meeting called
for the purpose of such vote.
6. Selection of Disinterested Trustees
------------------------------------
While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
------------------
Any related agreement shall be in writing and shall provide that (a) such
agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class A shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
-----------
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class A shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
<PAGE>
9. Records
-------
The Fund shall preserve copies of this Plan and any related agreements and
all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
------------
The Fund's Declaration of Trust dated April 7, 1958, a copy of which,
together with the amendments thereto ("Declaration"), is on file in the office
of the Secretary of the Commonwealth of Massachusetts, refers to the Trustees
under the Declaration of Trust collectively as Trustees, but not as individuals
or personally, and no Trustee, shareholder, officer, employee or agent of the
Fund may be held to any personal liability, nor may any resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Fund but the Fund property only shall be
liable.
[Adopted at a duly held meeting of the Board of Trustees on August 27, 1997.]
Exhibit 15.2
Class B
Amended and Restated Distribution Plan
<PAGE>
PHOENIX SERIES FUND
(the "Fund")
CLASS B SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
------------
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of each class of shares of the Fund for sale to the
permissible purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class B shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class B shareholders.
2. Rule 12b-1 Fees
---------------
The Fund shall reimburse the Distributor, at the end of each month, up to a
maximum on an annual basis of .75% (.50% as to the Money Market Fund Series) of
the average daily value of the net assets of the Fund's Class B shares, subject
to any applicable restrictions imposed by rules of the National Association of
Securities Dealers, Inc., for distribution expenditures incurred by Distributor
subsequent to the effectiveness of this Plan, in connection with the sale and
promotion of the Class B shares of the Fund and the furnishing of services to
Class B shareholders of the Fund. Such expenditures shall consist of: (i)
commissions to sales personnel for selling Class B shares of the Fund (including
underwriting commissions and finance charges related to the payment of
commissions); (ii) compensation, sales incentives and payments to sales,
marketing and service personnel; (iii) payments to broker-dealers and other
financial institutions which have entered into selling agreements with the
Distributor for services rendered in connection with the sale and distribution
of Class B shares of the Fund; (iv) payment of expenses incurred in sales and
promotional activities, including advertising expenditures related to the Class
B shares of the Fund; (v) the costs of preparing and distributing promotional
materials; (vi) the cost of printing the Fund's Prospectus and Statement of
Additional Information for distribution to potential investors; and (vii) such
other similar services that the Trustees of the Fund determine are reasonably
calculated to result in the sale of Class B shares of the Fund. The Fund shall
also pay the Distributor, at the end of each month, an amount on an annual basis
equal to 0.25% of the average daily value of the net assets of the Fund's Class
B shares, as compensation for providing personal service to shareholders,
including assistance in connection with inquiries relating to shareholder
accounts, and for maintaining shareholder accounts (the "Service Fee").
<PAGE>
Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 Fee.
Amounts paid or payable by the Fund under this Plan or any agreement with
any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
3. Reports
-------
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
4. Required Approval
-----------------
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class B shares (as
such phrase is defined in the Act).
5. Term
-----
This Plan shall remain in effect for one year from the date of its adoption
and may be continued thereafter if specifically approved at least annually by a
vote of at least a majority of the Trustees of the Fund as well as a majority of
the Disinterested Trustees. This Plan may be amended at any time, provided that
(a) the Plan may not be amended to increase materially the amount of the
distribution expenses provided in Paragraph 2 hereof (including the Service Fee)
<PAGE>
without the approval of at least a majority of the outstanding voting securities
(as defined in the Act) of the Class B shares of the Fund and (b) all material
amendments to this Plan must be approved by a majority vote of the Trustees of
the Fund and of the Disinterested Trustees cast in person at a meeting called
for the purpose of such vote.
6. Selection of Disinterested Trustees
-----------------------------------
While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
------------------
Any related agreement shall be in writing and shall provide that (a) such
agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class B shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
-----------
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class B shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
-------
The Fund shall preserve copies of this Plan and any related agreements and
all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
------------
The Fund's Declaration of Trust dated April 7, 1958, a copy of which,
together with the amendments thereto ("Declaration"), is on file in the office
of the Secretary of the Commonwealth of Massachusetts, refers to the Trustees
under the Declaration of Trust collectively as Trustees, but not as individuals
or personally, and no Trustee, shareholder, officer, employee or agent of the
Fund may be held to any personal liability, nor may any resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Fund but the Fund property only shall be
liable.
[Adopted at a duly held meeting of the Board of Trustees on August 27, 1997.]
PHOENIX SERIES FUND
(the "Fund")
CLASS C SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of each class of shares of the Fund for sale to the
permissible purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class C shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class C shareholders.
2. Rule 12b-1 Fees
The Fund shall reimburse the Distributor, at the end of each month, up to a
maximum on an annual basis of .75% of the average daily value of the net assets
of the Fund's Class C shares, subject to any applicable restrictions imposed by
rules of the National Association of Securities Dealers, Inc., for distribution
expenditures incurred by Distributor subsequent to the effectiveness of this
Plan, in connection with the sale and promotion of the Class C shares of the
Fund and the furnishing of services to Class C shareholders of the Fund. Such
expenditures shall consist of: (i) commissions to sales personnel for selling
Class C shares of the Fund (including underwriting commissions and finance
charges related to the payment of commissions); (ii) compensation, sales
incentives and payments to sales, marketing and service personnel; (iii)
payments to broker-dealers and other financial institutions which have entered
into selling agreements with the Distributor for services rendered in connection
with the sale and distribution of Class C shares of the Fund; (iv) payment of
expenses incurred in sales and promotional activities, including advertising
expenditures related to the Class C shares of the Fund; (v) the costs of
preparing and distributing promotional materials; (vi) the cost of printing the
Fund's Prospectus and Statement of Additional Information for distribution to
potential investors; and (vii) such other similar services that the Trustees of
the Fund determine are reasonably calculated to result in the sale of Class C
shares of the Fund. The Fund shall also pay the Distributor, at the end of each
month, an amount on an annual basis equal to 0.25% of the average daily value of
the net assets of the Fund's Class C shares, as compensation for providing
personal service to
<PAGE>
shareholders, including assistance in connection with inquiries relating to
shareholder accounts, and for maintaining shareholder accounts (the "Service
Fee").
Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 Fee.
Amounts paid or payable by the Fund under this Plan or any agreement with
any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
3. Reports
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
4. Required Approval
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class C shares (as
such phrase is defined in the Act).
5. Term
This Plan shall remain in effect for one year from the date of its adoption
and may be continued thereafter if specifically approved at least annually by a
vote of at least a majority of the Trustees of the Fund as well as a majority of
the Disinterested Trustees. This Plan may be amended at any time, provided that
(a) the Plan may not be amended to increase materially the amount of the
distribution expenses provided in Paragraph 2 hereof (including the Service Fee)
without the approval of at least a majority of the outstanding voting securities
(as defined in the Act) of the Class C shares of the Fund and (b) all material
amendments to this Plan must be approved by a majority vote of the Trustees of
the Fund and of the Disinterested Trustees cast in person at a meeting called
for the purpose of such vote.
<PAGE>
6. Selection of Disinterested Trustees
While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
Any related agreement shall be in writing and shall provide that (a) such
agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class C shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class C shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
The Fund shall preserve copies of this Plan and any related agreements and
all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
The Fund's Declaration of Trust dated April 7, 1958, a copy of which,
together with the amendments thereto ("Declaration"), is on file in the office
of the Secretary of the Commonwealth of Massachusetts, refers to the Trustees
under the Declaration of Trust collectively as Trustees, but not as individuals
or personally, and no Trustee, shareholder, officer, employee or agent of the
Fund may be held to any personal liability, nor may any resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Fund but the Fund property only shall be
liable.
PHOENIX SERIES FUND
(the "Fund")
CLASS M SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
The Fund and Phoenix Equity Planning Corporation (the "Distributor"), a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Distributor will act as
principal underwriter of each class of shares of the Fund for sale to the
permissible purchasers. The Trustees of the Fund have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class M shares of the Fund and have determined that there is a reasonable
likelihood that the Plan will benefit the Fund and its Class M shareholders.
2. Rule 12b-1 Fees
The Fund shall reimburse the Distributor, at the end of each month, up to a
maximum on an annual basis of .25% of the average daily value of the net assets
of the Fund's Class M shares, subject to any applicable restrictions imposed by
rules of the National Association of Securities Dealers, Inc., for distribution
expenditures incurred by Distributor subsequent to the effectiveness of this
Plan, in connection with the sale and promotion of the Class M shares of the
Fund and the furnishing of services to Class M shareholders of the Fund. Such
expenditures shall consist of: (i) commissions to sales personnel for selling
Class M shares of the Fund (including underwriting commissions and finance
charges related to the payment of commissions); (ii) compensation, sales
incentives and payments to sales, marketing and service personnel; (iii)
payments to broker-dealers and other financial institutions which have entered
into selling agreements with the Distributor for services rendered in connection
with the sale and distribution of Class M shares of the Fund; (iv) payment of
expenses incurred in sales and promotional activities, including advertising
expenditures related to the Class M shares of the Fund; (v) the costs of
preparing and distributing promotional materials; (vi) the cost of printing the
Fund's Prospectus and Statement of Additional Information for distribution to
potential investors; and (vii) such other similar services that the Trustees of
the Fund determine are reasonably calculated to result in the sale of Class M
shares of the Fund. The Fund shall also pay the Distributor, at the end of each
month, an amount on an annual basis equal to 0.25% of the average daily value of
the net assets of the Fund's Class M shares, as compensation for providing
personal service to
<PAGE>
shareholders, including assistance in connection with inquiries relating to
shareholder accounts, and for maintaining shareholder accounts (the "Service
Fee").
Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 Fee.
Amounts paid or payable by the Fund under this Plan or any agreement with
any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Fund, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
3. Reports
At least quarterly in each year this Plan remains in effect, the Fund's
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Fund, shall prepare and
furnish to the Trustees of the Fund for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
4. Required Approval
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Fund's
Trustees as well as a vote of at least a majority of the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Fund until it has been approved
by a vote of at least a majority of the outstanding voting Class M shares (as
such phrase is defined in the Act).
5. Term
This Plan shall remain in effect for one year from the date of its adoption
and may be continued thereafter if specifically approved at least annually by a
vote of at least a majority of the Trustees of the Fund as well as a majority of
the Disinterested Trustees. This Plan may be amended at any time, provided that
(a) the Plan may not be amended to increase materially the amount of the
distribution expenses provided in Paragraph 2 hereof (including the Service Fee)
without the approval of at least a majority of the outstanding voting securities
(as defined in the Act) of the Class M shares of the Fund and (b) all material
amendments to this Plan must be approved by a majority vote of the Trustees of
the Fund and of the Disinterested Trustees cast in person at a meeting called
for the purpose of such vote.
<PAGE>
6. Selection of Disinterested Trustees
While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
Any related agreement shall be in writing and shall provide that (a) such
agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class M shares of the Fund on not more than 60 days' written notice to the other
party to the agreement and (b) such agreement shall terminate automatically in
the event of its assignment.
8. Termination
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class M shares of the Fund. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
The Fund shall preserve copies of this Plan and any related agreements and
all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Fund, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
The Fund's Declaration of Trust dated April 7, 1958, a copy of which,
together with the amendments thereto ("Declaration"), is on file in the office
of the Secretary of the Commonwealth of Massachusetts, refers to the Trustees
under the Declaration of Trust collectively as Trustees, but not as individuals
or personally, and no Trustee, shareholder, officer, employee or agent of the
Fund may be held to any personal liability, nor may any resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Fund but the Fund property only shall be
liable.
-5-
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended
("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
The portfolios of the Funds listed on Schedule A hereto shall offer up to
four classes of shares as indicated on Schedule A: Class A, Class B, Class C and
Class M ("Multi-Class Portfolios"). Shares of the Multi-Class Portfolios shall
represent an equal pro rata interest in the respective Multi-Class Portfolio
and, generally, shall have identical voting, dividend, liquidation, and other
rights, preferences, powers, restrictions, limitations, qualifications and terms
and conditions, except that: (a) each class shall have a different designation;
(b) each class shall bear any Class Expenses, as defined by Section 2(b), below;
(c) each class shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its distribution arrangement; and (d) each
class shall have separate voting rights on any matter submitted to shareholders
in which the interests of one class differ from the interests of any other
class. In addition, Class A, Class B, Class C and Class M shares shall have the
features described in Sections a, b, c and d, below.
a. Distribution Plans
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio, containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall reimburse Phoenix
Equity Planning Corporation (the "Distributor") for costs and expenses incurred
in connection with distribution and marketing of shares thereof, as provided in
the Class A Distribution Plan
<PAGE>
-2-
and any supplements thereto, subject to an annual limit of 0.25%, or in some
cases 0.30%, of the average daily net assets of a Multi-Class Portfolio's Class
A shares.
ii. Class B shares of each Multi-Class Portfolio shall reimburse the
Distributor for costs and expenses incurred in connection with distribution and
marketing of shares thereof, as provided in the Class B Distribution Plan and
any supplements thereto, subject to an annual limit of 1.00% of the average
daily net assets of a Multi-Class Portfolio's Class B shares.
iii. Class C shares of each Multi-Class Portfolio shall reimburse the
Distributor for costs and expenses incurred in connection with distribution and
marketing of shares thereof, as provided in the Class C Distribution Plan and
any supplements thereto, subject to an annual limit of 1.00%, or in some cases
0.50%, of the average daily net assets of a Multi-Class Portfolio's Class C
shares.
iv. Class M shares of each Multi-Class Portfolio shall reimburse the
Distributor for costs and expenses incurred in connection with distribution and
marketing of shares thereof, as provided in the Class M Distribution Plan and
any supplements thereto, subject to an annual limit of 0.50% of the average
daily net assets of a Multi-Class Portfolio's Class M shares.
b. Allocation of Income and Expenses
i. General.
The gross income, realized and unrealized capital gains and losses and
expenses (other than Class Expenses, as defined below) of each Multi-Class
Portfolio shall be allocated to each class on the basis of its net asset value
relative to the net asset value of the Multi-Class Portfolio. Expenses to be so
allocated include expenses of the Funds that are not attributable to a
particular Multi-Class Portfolio or class of a Multi-Class Portfolio but are
allocated to a Multi- Class Portfolio ("Fund Expenses") and expenses of a
particular Multi-Class Portfolio that are not attributable to a particular class
of that Multi-Class Portfolio ("Portfolio Expenses"). Fund Expenses include, but
are not limited to, trustees' fees, insurance costs and certain legal fees.
Portfolio Expenses include, but are not limited to, certain state registration
fees, custodial fees, advisory fees and other expenses relating to the
management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
Expenses attributable to a particular class ("Class Expenses") shall be
limited to: (1) transfer agency fees; (2) stationery, printing, postage, and
delivery expenses relating to preparing and distributing shareholder reports,
prospectuses, and proxy statements; (3) state Blue Sky registration fees; (4)
SEC registration fees; (5) expenses of administrative personnel and
<PAGE>
-3-
services to the extent related to another category of class-specific expenses;
(6) trustees' fees and expenses; (7) accounting expenses, auditors' fees,
litigation expenses, and legal fees and expenses; and (8) expenses incurred in
connection with shareholder meetings. Expenses described in subsection (a) (i)
and (ii) above of this paragraph must be allocated to the class for which they
are incurred. All other expenses described in this paragraph will be allocated
as Class Expenses, if a Fund's President and Treasurer have determined, subject
to Board approval or ratification, which of such categories of expenses will be
treated as Class Expenses, consistent with applicable legal principles under the
1940 Act and the Internal Revenue Code of 1986, as amended ("Code"). The
difference between the Class Expenses allocated to each share of a class during
a year and the Class Expenses allocated to each share of any other class during
such year shall at all times be less than .50% of the average daily net asset
value of the class of shares with the smallest average net asset value. The
afore-described description of Class Expenses and any amendment thereto shall be
subject to the continuing availability of an opinion of counsel or a ruling from
the Internal Revenue Service to the effect that any such allocation of expenses
or the assessment of higher distribution fees and transfer agency costs on any
class of shares does not result in any dividends or distributions constituting
"preferential dividends" under the Code.
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 1 8f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated as Class
Expenses and any subsequent changes thereto as set forth in this Plan shall be
reviewed by the Board of Trustees and approved by such Board and by a majority
of the Trustees who are not "interested persons" of the Fund, as defined in the
1940 Act ("Independent Trustees").
iii. Waivers or Reimbursements of Expenses.
Investment Advisor may waive or reimburse its management fee in whole
or in part provided that the fee is waived or reimbursed to all shares of the
Fund in proportion to the relative average daily net asset values.
Investment Advisor or a related entity who charges a fee for a Class
Expense may waive or reimburse that fee in whole or in part only if the revised
fee more accurately reflects the relative cost of providing to each Multi-Class
Portfolio the service for which the Class Expense is charged.
Distributor may waive or reimburse a Rule 12b- 1 Plan fee payment in
whole or in part.
<PAGE>
-4-
c. Exchange Privileges
Shareholders of a Multi-Class Portfolio may exchange shares of a particular
class for shares of the same class in another Multi-Class Portfolio, at the
relative net asset values of the respective shares to be exchanged and with no
sales charge, provided the shares to be acquired in the exchange are, as may be
necessary, qualified for sale in the shareholder's state of residence and
subject to the applicable requirements, if any, as to minimum amount. Each
Multi-Class Portfolio reserves the right to temporarily or permanently terminate
exchange privileges, impose conditions upon the exercision of exchange
privileges, or reject any specific order for any dealer, shareholder or person
whose transactions seem to follow a timing pattern, including those who request
more than one exchange out of a Multi-Class Portfolio within any thirty (30) day
period. Each Multi-Class Portfolio reserves the right to terminate or modify
these exchange privileges at any time upon giving prominent notice to
shareholders at least 60 days in advance.
d. Conversion Feature
Class B Shares of a Multi-Class Portfolio will automatically convert to
Class A Shares of that portfolio, without sales charge, at the relative net
asset values of each such classes, not later than eight years from the
acquisition of the Class B Shares. The conversion of Class B Shares to Class A
Shares is subject to the continuing availability of an opinion of counsel or a
ruling from the Internal Revenue Service to the effect that the conversion of
shares does not constitute a taxable event under federal income tax law.
3. Board Review
a. Approval of Amended and Restated Plan
The Board of Trustees, including a majority of the Independent Trustees, at
a meeting held on November 19, l997, approved the Amended and Restated Plan
based on a determination that the Plan, including the expense allocation, is in
the best interests of each class and Multi-Class Portfolio individually and of
the Funds. Their determination was based on their review of information
furnished to them which they deemed reasonably necessary and sufficient to
evaluate the Plan.
b. Approval of Amendments
The Plan may not be amended materially unless the Board of Trustees,
including a majority of the Independent Trustees, have found that the proposed
amendment, including any proposed related expense allocation, is in the best
interests of each class and Multi-Class Portfolio individually and of the Funds.
Such funding shall be based on information required by the Board and furnished
to them that the Board deems reasonably necessary to evaluate the proposed
amendment.
c. Periodic Review
The Board shall review reports of expense allocations and such other
information as they request at such times, or pursuant to such schedule, as they
may determine consistent with applicable legal requirements.
<PAGE>
-5-
4. Contracts
Any agreement related to the Multi-Class System shall require the parties
thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
The Amended and Restated Plan, having been reviewed and approved by the
Board of Trustees and the Independent Trustees, shall take effect as of the
first day of each Fund's current fiscal year.
6. Amendments
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3(b) of this
Plan.
<PAGE>
-6-
SCHEDULE A
----------
Class A Class B Class C Class M
------ ------ ------ ------
PHOENIX CALIFORNIA TAX -EXEMPT BONDS, INC. X X - -
PHOENIX EQUITY SERIES FUND:
PHOENIX CORE EQUITY FUND X X X X
PHOENIX GROWTH AND INCOME FUND X X X X
PHOENIX INCOME AND GROWTH FUND X X - -
PHOENIX INVESTMENT TRUST 97:
PHOENIX SMALL CAP VALUE FUND X X X X
PHOENIX VALUE EQUITY FUND X X X X
PHOENIX MULTI-PORTFOLIO FUND:
EMERGING MARKETS BOND PORTFOLIO X X X X
INTERNATIONAL PORTFOLIO X X - -
MID CAP PORTFOLIO X X - -
REAL ESTATE SECURITIES PORTFOLIO X X - -
STRATEGIC INCOME PORTFOLIO X X X X
TAX-EXEMPT BOND PORTFOLIO X X - -
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC. X X X X
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND X X X -
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES X X - -
BALANCED FUND SERIES X X - -
CONVERTIBLE FUND SERIES X X - -
GROWTH FUND SERIES X X - -
HIGH YIELD FUND SERIES X X X X
MONEY MARKET FUND SERIES X X X X
U.S. GOVERNMENT SECURITIES FUND SERIES X X - -
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND X X - -
MICRO CAP FUND X X - -
SMALL CAP FUND X X - -
STRATEGIC THEME FUND X X X X
PHOENIX STRATEGIC ALLOCATION FUND, INC. X X - -
PHOENIX WORLDWIDE OPPORTUNITIES FUND X X - -
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix Balanced Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 1,562,148
<INVESTMENTS-AT-VALUE> 1,686,902
<RECEIVABLES> 54,670
<ASSETS-OTHER> 1,512
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,743,084
<PAYABLE-FOR-SECURITIES> 5,642
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,842
<TOTAL-LIABILITIES> 10,484
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,355,490
<SHARES-COMMON-STOCK> 94,227
<SHARES-COMMON-PRIOR> 108,038
<ACCUMULATED-NII-CURRENT> 4,441
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 247,915
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 124,754
<NET-ASSETS> 1,732,600
<DIVIDEND-INCOME> 12,459
<INTEREST-INCOME> 52,853
<OTHER-INCOME> 0
<EXPENSES-NET> (17,864)
<NET-INVESTMENT-INCOME> 47,448
<REALIZED-GAINS-CURRENT> 250,161
<APPREC-INCREASE-CURRENT> 405
<NET-CHANGE-FROM-OPS> 298,014
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (48,279)
<DISTRIBUTIONS-OF-GAINS> (194,039)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,597
<NUMBER-OF-SHARES-REDEEMED> (32,162)
<SHARES-REINVESTED> 13,754
<NET-CHANGE-IN-ASSETS> (194,921)
<ACCUMULATED-NII-PRIOR> 4,826
<ACCUMULATED-GAINS-PRIOR> 194,853
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,490
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 17,864
<AVERAGE-NET-ASSETS> 1,797,953
<PER-SHARE-NAV-BEGIN> 17.56
<PER-SHARE-NII> 0.48
<PER-SHARE-GAIN-APPREC> 2.38
<PER-SHARE-DIVIDEND> (0.48)
<PER-SHARE-DISTRIBUTIONS> (1.87)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.07
<EXPENSE-RATIO> 0.98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix Balanced Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 1,562,148
<INVESTMENTS-AT-VALUE> 1,686,902
<RECEIVABLES> 54,670
<ASSETS-OTHER> 1,512
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,743,084
<PAYABLE-FOR-SECURITIES> 5,642
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,842
<TOTAL-LIABILITIES> 10,484
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,355,490
<SHARES-COMMON-STOCK> 1,675
<SHARES-COMMON-PRIOR> 1,495
<ACCUMULATED-NII-CURRENT> 4,441
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 247,915
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 124,754
<NET-ASSETS> 1,732,600
<DIVIDEND-INCOME> 12,459
<INTEREST-INCOME> 52,853
<OTHER-INCOME> 0
<EXPENSES-NET> (17,864)
<NET-INVESTMENT-INCOME> 47,448
<REALIZED-GAINS-CURRENT> 250,161
<APPREC-INCREASE-CURRENT> 405
<NET-CHANGE-FROM-OPS> 298,014
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (562)
<DISTRIBUTIONS-OF-GAINS> (2,800)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 320
<NUMBER-OF-SHARES-REDEEMED> (329)
<SHARES-REINVESTED> 189
<NET-CHANGE-IN-ASSETS> 4,007
<ACCUMULATED-NII-PRIOR> 4,826
<ACCUMULATED-GAINS-PRIOR> 194,853
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,490
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 17,864
<AVERAGE-NET-ASSETS> 1,797,953
<PER-SHARE-NAV-BEGIN> 17.54
<PER-SHARE-NII> 0.35
<PER-SHARE-GAIN-APPREC> 2.37
<PER-SHARE-DIVIDEND> (0.35)
<PER-SHARE-DISTRIBUTIONS> (1.87)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.04
<EXPENSE-RATIO> 1.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix Convertible Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 188,256
<INVESTMENTS-AT-VALUE> 199,937
<RECEIVABLES> 12,206
<ASSETS-OTHER> 4,215
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 216,358
<PAYABLE-FOR-SECURITIES> 2,342
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,783
<TOTAL-LIABILITIES> 7,125
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 171,078
<SHARES-COMMON-STOCK> 9,808
<SHARES-COMMON-PRIOR> 11,156
<ACCUMULATED-NII-CURRENT> 422
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 26,053
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,680
<NET-ASSETS> 209,233
<DIVIDEND-INCOME> 2,038
<INTEREST-INCOME> 6,818
<OTHER-INCOME> 0
<EXPENSES-NET> (2,402)
<NET-INVESTMENT-INCOME> 6,454
<REALIZED-GAINS-CURRENT> 26,030
<APPREC-INCREASE-CURRENT> 1,273
<NET-CHANGE-FROM-OPS> 33,757
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,482)
<DISTRIBUTIONS-OF-GAINS> (13,252)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 702
<NUMBER-OF-SHARES-REDEEMED> (2,904)
<SHARES-REINVESTED> 854
<NET-CHANGE-IN-ASSETS> (13,704)
<ACCUMULATED-NII-PRIOR> 658
<ACCUMULATED-GAINS-PRIOR> 13,641
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,362
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,402
<AVERAGE-NET-ASSETS> 202,379
<PER-SHARE-NAV-BEGIN> 19.26
<PER-SHARE-NII> 0.61
<PER-SHARE-GAIN-APPREC> 2.54
<PER-SHARE-DIVIDEND> (0.64)
<PER-SHARE-DISTRIBUTIONS> (1.26)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.51
<EXPENSE-RATIO> 1.12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix Convertible Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 188,256
<INVESTMENTS-AT-VALUE> 199,937
<RECEIVABLES> 12,206
<ASSETS-OTHER> 4,215
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 216,358
<PAYABLE-FOR-SECURITIES> 2,342
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,783
<TOTAL-LIABILITIES> 7,125
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 171,078
<SHARES-COMMON-STOCK> 395
<SHARES-COMMON-PRIOR> 310
<ACCUMULATED-NII-CURRENT> 422
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 26,053
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,680
<NET-ASSETS> 209,233
<DIVIDEND-INCOME> 2,038
<INTEREST-INCOME> 6,818
<OTHER-INCOME> 0
<EXPENSES-NET> (2,402)
<NET-INVESTMENT-INCOME> 6,454
<REALIZED-GAINS-CURRENT> 26,030
<APPREC-INCREASE-CURRENT> 1,273
<NET-CHANGE-FROM-OPS> 33,757
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (178)
<DISTRIBUTIONS-OF-GAINS> (398)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 132
<NUMBER-OF-SHARES-REDEEMED> (69)
<SHARES-REINVESTED> 22
<NET-CHANGE-IN-ASSETS> 2,116
<ACCUMULATED-NII-PRIOR> 658
<ACCUMULATED-GAINS-PRIOR> 13,641
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,362
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,402
<AVERAGE-NET-ASSETS> 202,379
<PER-SHARE-NAV-BEGIN> 19.20
<PER-SHARE-NII> 0.46
<PER-SHARE-GAIN-APPREC> 2.52
<PER-SHARE-DIVIDEND> (0.49)
<PER-SHARE-DISTRIBUTIONS> (1.26)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.43
<EXPENSE-RATIO> 1.87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix Growth Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 2,162,407
<INVESTMENTS-AT-VALUE> 2,534,454
<RECEIVABLES> 68,813
<ASSETS-OTHER> 13,312
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,616,579
<PAYABLE-FOR-SECURITIES> 10,954
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,314
<TOTAL-LIABILITIES> 30,268
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,716,018
<SHARES-COMMON-STOCK> 90,493
<SHARES-COMMON-PRIOR> 87,356
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 498,246
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 372,047
<NET-ASSETS> 2,586,311
<DIVIDEND-INCOME> 27,255
<INTEREST-INCOME> 13,432
<OTHER-INCOME> 0
<EXPENSES-NET> (27,859)
<NET-INVESTMENT-INCOME> 12,828
<REALIZED-GAINS-CURRENT> 499,287
<APPREC-INCREASE-CURRENT> 37,069
<NET-CHANGE-FROM-OPS> 549,184
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (17,473)
<DISTRIBUTIONS-OF-GAINS> (395,994)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,576
<NUMBER-OF-SHARES-REDEEMED> (23,677)
<SHARES-REINVESTED> 16,238
<NET-CHANGE-IN-ASSETS> 170,818
<ACCUMULATED-NII-PRIOR> 4,798
<ACCUMULATED-GAINS-PRIOR> 403,131
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 16,440
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 27,859
<AVERAGE-NET-ASSETS> 2,489,964
<PER-SHARE-NAV-BEGIN> 26.87
<PER-SHARE-NII> 0.14
<PER-SHARE-GAIN-APPREC> 5.62
<PER-SHARE-DIVIDEND> (0.21)
<PER-SHARE-DISTRIBUTIONS> (4.59)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 27.83
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix Growth Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 2,162,407
<INVESTMENTS-AT-VALUE> 2,534,454
<RECEIVABLES> 68,813
<ASSETS-OTHER> 13,312
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,616,579
<PAYABLE-FOR-SECURITIES> 10,954
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,314
<TOTAL-LIABILITIES> 30,268
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,716,018
<SHARES-COMMON-STOCK> 2,473
<SHARES-COMMON-PRIOR> 1,702
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 498,246
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 372,047
<NET-ASSETS> 2,586,311
<DIVIDEND-INCOME> 27,255
<INTEREST-INCOME> 13,432
<OTHER-INCOME> 0
<EXPENSES-NET> (27,859)
<NET-INVESTMENT-INCOME> 12,828
<REALIZED-GAINS-CURRENT> 499,287
<APPREC-INCREASE-CURRENT> 37,069
<NET-CHANGE-FROM-OPS> 549,184
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (64)
<DISTRIBUTIONS-OF-GAINS> (8,267)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 939
<NUMBER-OF-SHARES-REDEEMED> (494)
<SHARES-REINVESTED> 326
<NET-CHANGE-IN-ASSETS> 22,696
<ACCUMULATED-NII-PRIOR> 4,798
<ACCUMULATED-GAINS-PRIOR> 403,131
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 16,440
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 27,859
<AVERAGE-NET-ASSETS> 2,489,964
<PER-SHARE-NAV-BEGIN> 26.63
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 5.57
<PER-SHARE-DIVIDEND> (0.04)
<PER-SHARE-DISTRIBUTIONS> (4.59)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 27.51
<EXPENSE-RATIO> 1.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix High Yield Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 579,341
<INVESTMENTS-AT-VALUE> 585,559
<RECEIVABLES> 55,921
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 641,480
<PAYABLE-FOR-SECURITIES> 47,420
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,970
<TOTAL-LIABILITIES> 56,390
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 658,238
<SHARES-COMMON-STOCK> 58,643
<SHARES-COMMON-PRIOR> 58,078
<ACCUMULATED-NII-CURRENT> 1,921
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (81,287)
<ACCUM-APPREC-OR-DEPREC> 6,218
<NET-ASSETS> 585,090
<DIVIDEND-INCOME> 1,605
<INTEREST-INCOME> 54,792
<OTHER-INCOME> 0
<EXPENSES-NET> (6,609)
<NET-INVESTMENT-INCOME> 49,788
<REALIZED-GAINS-CURRENT> 43,737
<APPREC-INCREASE-CURRENT> (14,878)
<NET-CHANGE-FROM-OPS> 78,647
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (47,205)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19,096
<NUMBER-OF-SHARES-REDEEMED> (21,234)
<SHARES-REINVESTED> 2,704
<NET-CHANGE-IN-ASSETS> 31,641
<ACCUMULATED-NII-PRIOR> 2,038
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (81,117)
<GROSS-ADVISORY-FEES> 3,713
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,609
<AVERAGE-NET-ASSETS> 571,288
<PER-SHARE-NAV-BEGIN> 8.63
<PER-SHARE-NII> 0.80
<PER-SHARE-GAIN-APPREC> 0.46
<PER-SHARE-DIVIDEND> (0.80)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.09
<EXPENSE-RATIO> 1.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix High Yield Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 579,341
<INVESTMENTS-AT-VALUE> 585,559
<RECEIVABLES> 55,921
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 641,480
<PAYABLE-FOR-SECURITIES> 47,420
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,970
<TOTAL-LIABILITIES> 56,390
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 658,238
<SHARES-COMMON-STOCK> 5,754
<SHARES-COMMON-PRIOR> 2,964
<ACCUMULATED-NII-CURRENT> 1,921
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (81,287)
<ACCUM-APPREC-OR-DEPREC> 6,218
<NET-ASSETS> 585,090
<DIVIDEND-INCOME> 1,605
<INTEREST-INCOME> 54,792
<OTHER-INCOME> 0
<EXPENSES-NET> (6,609)
<NET-INVESTMENT-INCOME> 49,788
<REALIZED-GAINS-CURRENT> 43,737
<APPREC-INCREASE-CURRENT> (14,878)
<NET-CHANGE-FROM-OPS> 78,647
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,143)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,405
<NUMBER-OF-SHARES-REDEEMED> (1,758)
<SHARES-REINVESTED> 143
<NET-CHANGE-IN-ASSETS> 26,589
<ACCUMULATED-NII-PRIOR> 2,038
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (81,117)
<GROSS-ADVISORY-FEES> 3,713
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,609
<AVERAGE-NET-ASSETS> 571,288
<PER-SHARE-NAV-BEGIN> 8.63
<PER-SHARE-NII> 0.73
<PER-SHARE-GAIN-APPREC> 0.46
<PER-SHARE-DIVIDEND> (0.75)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.07
<EXPENSE-RATIO> 1.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix Money Market Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 198,504
<INVESTMENTS-AT-VALUE> 198,504
<RECEIVABLES> 8,019
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 206,523
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,815
<TOTAL-LIABILITIES> 2,815
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 203,708
<SHARES-COMMON-STOCK> 188,695
<SHARES-COMMON-PRIOR> 192,859
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 203,708
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,949
<OTHER-INCOME> 0
<EXPENSES-NET> (1,642)
<NET-INVESTMENT-INCOME> 9,307
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 9,307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8,890)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 732,055
<NUMBER-OF-SHARES-REDEEMED> (744,358)
<SHARES-REINVESTED> 8,139
<NET-CHANGE-IN-ASSETS> (4,164)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 788
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,642
<AVERAGE-NET-ASSETS> 197,026
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.048
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.048)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix Money Market Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 198,504
<INVESTMENTS-AT-VALUE> 198,504
<RECEIVABLES> 8,019
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 206,523
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,815
<TOTAL-LIABILITIES> 2,815
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 203,708
<SHARES-COMMON-STOCK> 15,013
<SHARES-COMMON-PRIOR> 10,223
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 203,708
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,949
<OTHER-INCOME> 0
<EXPENSES-NET> (1,642)
<NET-INVESTMENT-INCOME> 9,307
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 9,307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (417)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 35,540
<NUMBER-OF-SHARES-REDEEMED> (31,078)
<SHARES-REINVESTED> 329
<NET-CHANGE-IN-ASSETS> 4,790
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 788
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,642
<AVERAGE-NET-ASSETS> 197,026
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.040
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.040)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix Aggressive Growth Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 243,453
<INVESTMENTS-AT-VALUE> 258,447
<RECEIVABLES> 1,662
<ASSETS-OTHER> 20,093
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 280,202
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20,588
<TOTAL-LIABILITIES> 20,588
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 192,875
<SHARES-COMMON-STOCK> 14,304
<SHARES-COMMON-PRIOR> 13,864
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 51,745
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,994
<NET-ASSETS> 259,614
<DIVIDEND-INCOME> 856
<INTEREST-INCOME> 816
<OTHER-INCOME> 0
<EXPENSES-NET> (3,078)
<NET-INVESTMENT-INCOME> (1,406)
<REALIZED-GAINS-CURRENT> 54,156
<APPREC-INCREASE-CURRENT> (8,722)
<NET-CHANGE-FROM-OPS> 44,028
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (33,833)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,764
<NUMBER-OF-SHARES-REDEEMED> (6,476)
<SHARES-REINVESTED> 2,152
<NET-CHANGE-IN-ASSETS> 12,514
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 34,562
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,735
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,078
<AVERAGE-NET-ASSETS> 247,912
<PER-SHARE-NAV-BEGIN> 16.84
<PER-SHARE-NII> (0.08)
<PER-SHARE-GAIN-APPREC> 2.95
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.51)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.20
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix Aggressive Growth Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 243,453
<INVESTMENTS-AT-VALUE> 258,447
<RECEIVABLES> 1,662
<ASSETS-OTHER> 20,093
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 280,202
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20,588
<TOTAL-LIABILITIES> 20,588
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 192,875
<SHARES-COMMON-STOCK> 812
<SHARES-COMMON-PRIOR> 631
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 51,745
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,994
<NET-ASSETS> 259,614
<DIVIDEND-INCOME> 856
<INTEREST-INCOME> 816
<OTHER-INCOME> 0
<EXPENSES-NET> (3,078)
<NET-INVESTMENT-INCOME> (1,406)
<REALIZED-GAINS-CURRENT> 54,156
<APPREC-INCREASE-CURRENT> (8,722)
<NET-CHANGE-FROM-OPS> 44,028
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,734)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 787
<NUMBER-OF-SHARES-REDEEMED> (711)
<SHARES-REINVESTED> 105
<NET-CHANGE-IN-ASSETS> 3,145
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 34,562
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,735
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,078
<AVERAGE-NET-ASSETS> 247,912
<PER-SHARE-NAV-BEGIN> 16.57
<PER-SHARE-NII> (0.20)
<PER-SHARE-GAIN-APPREC> 2.90
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.51)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.76
<EXPENSE-RATIO> 1.96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix U.S. Government Securities Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 187,403
<INVESTMENTS-AT-VALUE> 190,041
<RECEIVABLES> 2,193
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 192,238
<PAYABLE-FOR-SECURITIES> 3,995
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 671
<TOTAL-LIABILITIES> 4,666
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 195,357
<SHARES-COMMON-STOCK> 18,874
<SHARES-COMMON-PRIOR> 22,018
<ACCUMULATED-NII-CURRENT> 695
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (11,118)
<ACCUM-APPREC-OR-DEPREC> 2,638
<NET-ASSETS> 187,572
<DIVIDEND-INCOME> 447
<INTEREST-INCOME> 12,554
<OTHER-INCOME> 0
<EXPENSES-NET> (1,961)
<NET-INVESTMENT-INCOME> 11,040
<REALIZED-GAINS-CURRENT> 517
<APPREC-INCREASE-CURRENT> 2,715
<NET-CHANGE-FROM-OPS> 14,272
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10,634)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,629
<NUMBER-OF-SHARES-REDEEMED> (6,412)
<SHARES-REINVESTED> 640
<NET-CHANGE-IN-ASSETS> (26,302)
<ACCUMULATED-NII-PRIOR> 264
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (11,119)
<GROSS-ADVISORY-FEES> 885
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,961
<AVERAGE-NET-ASSETS> 196,724
<PER-SHARE-NAV-BEGIN> 9.47
<PER-SHARE-NII> 0.55
<PER-SHARE-GAIN-APPREC> 0.17
<PER-SHARE-DIVIDEND> (0.53)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.66
<EXPENSE-RATIO> 0.98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000019469
<NAME> Phoenix U.S. Government Securities Fund Series
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 187,403
<INVESTMENTS-AT-VALUE> 190,041
<RECEIVABLES> 2,193
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 192,238
<PAYABLE-FOR-SECURITIES> 3,995
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 671
<TOTAL-LIABILITIES> 4,666
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 195,357
<SHARES-COMMON-STOCK> 554
<SHARES-COMMON-PRIOR> 516
<ACCUMULATED-NII-CURRENT> 695
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (11,118)
<ACCUM-APPREC-OR-DEPREC> 2,638
<NET-ASSETS> 187,572
<DIVIDEND-INCOME> 447
<INTEREST-INCOME> 12,554
<OTHER-INCOME> 0
<EXPENSES-NET> (1,961)
<NET-INVESTMENT-INCOME> 11,040
<REALIZED-GAINS-CURRENT> 517
<APPREC-INCREASE-CURRENT> 2,715
<NET-CHANGE-FROM-OPS> 14,272
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (260)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 165
<NUMBER-OF-SHARES-REDEEMED> (143)
<SHARES-REINVESTED> 16
<NET-CHANGE-IN-ASSETS> 446
<ACCUMULATED-NII-PRIOR> 264
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (11,119)
<GROSS-ADVISORY-FEES> 885
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,961
<AVERAGE-NET-ASSETS> 196,724
<PER-SHARE-NAV-BEGIN> 9.45
<PER-SHARE-NII> 0.47
<PER-SHARE-GAIN-APPREC> 0.17
<PER-SHARE-DIVIDEND> (0.49)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.60
<EXPENSE-RATIO> 1.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
