As filed with the Securities and Exchange Commission on May 1, 1996.
Registration Nos. 33-9069
811-1442
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. 14 [x]
and/or
REGISTRATION STATEMENT
Under
THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 26
(Check Appropriate Box or Boxes) [x]
-------------
Phoenix Total Return Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
-------------
101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices) (Zip Code)
c/o Phoenix Equity Planning Corporation
(800) 243-1574
(Registrant's Telephone Number)
-------------
Philip R. McLoughlin
Vice Chairman and Chief Executive Officer
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)
[x] on May 1, 1995 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment. Declaration Pursuant to
Rule 24f-2
Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company
Act of 1940. Registrant filed with the Commission the notice required by Rule
24f-2 with respect to the fiscal year ended December 31, 1995 on February 27,
1996.
<PAGE>
PHOENIX TOTAL RETURN FUND, INC.
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; Fund Expenses
3. Condensed Financial Information Financial Highlights
4. Performance Information; Investment Objective and
General Description of Registrant Policies
5. Management of the Fund Management of the Fund; Distributor and Distribution Plan
6. Organization of the Fund; Dividends, Distributions and
Capital Stock and Other Securities Taxes; Net Asset Value
7. Purchase of Securities Being Offered Distributor and Distribution Plans; How to Buy Shares
8. Redemption or Repurchase How to Redeem Shares
9. Legal Proceedings Not Applicable
</TABLE>
PART B
Information Required in Statement of Additional Information
<TABLE>
<CAPTION>
Item
Number Statement of Additional Information Caption
----- ----------------------------------------- -----------------------------------------------------------
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History The Fund
13. Investment Objective and Policies; Investment
Investment Objective and Policies Restrictions
14. Management of the Fund Directors and Officers
15. Control Persons and Principal Holders
of Securities Directors and Officers
16. Investment Advisory and Other Services Services of the Adviser; Plans of Distribution
17. Brokerage Allocation Portfolio Transactions
18. Capital Stock and Other Securities The Fund
19. Purchase, Redemption and Pricing of How to Buy Shares; Redemption of Shares; Portfolio
Securities Being Offered Turnover Valuations
20. Tax Status Dividends, Distribution and Taxes
21. Underwriters Plans of Distribution
22. Calculations of Performance Data Not Applicable
23. Financial Statements Financial Statements
</TABLE>
PART C
The information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
PROSPECTUS
Phoenix
Total Return Fund, Inc.
Prospectus
----------------------------
May 1, 1996
----------------------------
PHOENIX
[Phoenix Duff & Phelps logo]
<PAGE>
PHOENIX TOTAL RETURN FUND, INC.
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
May 1, 1996
Phoenix Total Return Fund, Inc. (the "Fund") is a diversified, open-end
management investment company with an investment objective to provide the
highest total return consistent with reasonable risk. The Fund invests
principally in stocks, bonds and money market instruments and may adjust the
proportion of its assets invested in the different types of securities
whenever, in the opinion of the Fund's investment adviser, the adjustment
will contribute to the attainment of the Fund's investment objective. In
seeking to achieve its investment objective, the Fund may, to the extent
permitted by its fundamental policies, write (sell) covered call options,
purchase call and put options, engage in transactions in financial futures
contracts and related options, invest in repurchase agreements, lend
portfolio securities and engage in portfolio trading. There can be no
assurance that the Fund's objective will be achieved.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. No dealer, salesperson or
any other person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as
having been authorized by the Fund, Adviser or Distributor. This Prospectus
does not constitute an offer to sell or solicitation of an offer to buy any
of the securities offered hereby in any state in which or to any person to
whom, it is unlawful to make such offer. Neither the delivery of this
Prospectus nor any sale hereunder shall, under any circumstances, create any
implication that information herein is correct at any time subsequent to its
date. Investors should read and retain this Prospectus for future reference.
Additional information about the Fund is contained in the Statement of
Additional Information, dated May 1, 1996, which has been filed with the
Securities and Exchange Commission (the "Commission") and is available at no
charge by calling 1-800- 342-4361 or by writing to Phoenix Equity Planning
Corporation at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. The Statement of Additional Information is
incorporated herein by reference.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by any bank, credit union, or unaffiliated 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.
================================================================================
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/Exchanges: (800) 367-5877
Telecommunication Device (TTY): (800) 243-1926
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
INTRODUCTION 3
FUND EXPENSES 4
FINANCIAL HIGHLIGHTS 5
PERFORMANCE INFORMATION 6
INVESTMENT OBJECTIVE AND POLICIES 7
Investment Techniques and Related Risks 9
Investment Restrictions 10
PORTFOLIO TURNOVER 11
MANAGEMENT OF THE FUND 11
DISTRIBUTION PLANS 12
HOW TO BUY SHARES 13
INVESTOR ACCOUNTS AND SERVICES AVAILABLE 17
NET ASSET VALUE 20
HOW TO REDEEM SHARES 20
DIVIDENDS, DISTRIBUTIONS AND TAXES 21
ADDITIONAL INFORMATION 22
</TABLE>
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and operation of Phoenix
Total Return Fund, Inc. (the "Fund"). The Fund is a diversified open-end
management investment company established as a corporation under the laws of
The Commonwealth of Massachusetts on November 22, 1966. The Fund's investment
objective is the highest total return consistent with reasonable risk.
The Investment Adviser
Phoenix Investment Counsel, Inc. ("PIC" or the "Adviser") is the investment
adviser of the Fund and its staff selects and supervises the investments in
the Fund's portfolio. The Adviser is a subsidiary of Phoenix Duff & Phelps
Corporation and, prior to November 1, 1995, was an indirect subsidiary of
Phoenix Home Life Mutual Insurance Company. For managing, or directing the
investments of the Fund, the Adviser receives a fee, which is accrued daily
and payable monthly, at an annual rate of: 0.65% of the average daily net
asset values of the Fund up to $1 billion; 0.60% of such value between $1
billion and $2 billion; and 0.55% of such value in excess of $2 billion. See
"Management of the Fund."
Distributor and Distribution Plans
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
serves as National Distributor of the Fund's shares. See "Distribution Plans"
and the Statement of Additional Information. Equity Planning also acts as
financial agent of the Fund and as such receives a quarterly fee based on the
average of the aggregate daily net asset values of the Fund at an annual rate
of $300 per $1 million. Equity Planning also serves as the Fund's transfer
agent.
The Fund has adopted distribution plans pursuant to Rule 12b-1 under the
Investment Company Act of 1940 as amended (the "1940 Act"). Pursuant to the
distribution plan adopted for Class A Shares, the Fund may pay to the
Distributor amounts not exceeding 0.25% annually of the Fund's average daily
Class A Share net assets for distribution expenditures incurred in connection
with the sale and promotion of Class A Shares and for furnishing shareholder
services. Pursuant to the distribution plan adopted for Class B Shares, the
Fund is authorized to pay up to 1.00% annually of the Fund's average daily
Class B Share net assets for distribution expenditures incurred in connection
with the sales and promotion of Class B Shares and for furnishing shareholder
services. See "Distribution Plans."
Purchase of Shares
The Fund offers two classes of shares of common stock which may be purchased
at a price equal to their net asset value per share plus sales charges which,
at the election of the purchaser, may be imposed (i) at the time of purchase
(the "Class A Shares"), or (ii) on a contingent deferred basis (the "Class B
Shares"). Completed applications for the purchase of shares should be mailed
to the Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301.
Class A Shares are offered to the public at the next determined net asset
value after receipt of the order by State Street Bank and Trust Company plus
a maximum sales charge of 4.75% of the offering price (4.99% of the amount
invested) on single purchases of less than $50,000. The sales charge for
Class A Shares is reduced on a graduated scale on single purchases of $50,000
or more and subject to other conditions stated below. See "How to Buy
Shares," "How to Obtain Reduced Sales Charges on Class A Shares" and "Net
Asset Value."
Class B Shares are offered to the public at the next determined net asset
value after receipt of an order by State Street Bank and Trust Company with
no sales charge. Class B Shares are subject to a sales charge if they are
redeemed within five years of purchase. See "How to Buy Shares" and "Deferred
Sales Charge Alternative - Class B Shares."
Shares of each class represents an identical interest in the investment
portfolio of the Fund and generally have the same rights except that Class B
Shares bear the cost of higher distribution fees which cause the Class B
Shares to have a higher expense ratio and to receive lower dividends than
Class A Shares. See "How to Buy Shares."
Minimum Initial and Subsequent Investments
The minimum initial investment is $500 ($25 if using the bank draft
investing program designated "Investo-Matic"), and the minimum subsequent
investment is $25. Exceptions to the minimum and subsequent investment
amounts are available under certain circumstances. See "How to Buy Shares."
Redemption Price
Class A Shares may be redeemed at any time at the net asset value per share
next computed after receipt of a redemption request by Equity Planning, the
Fund's transfer agent. Class B shareholders redeeming shares within five
years of the date of purchase will normally be assessed a contingent deferred
sales charge. See "How to Redeem Shares."
Risk Factors
There can be no assurance that the Fund will achieve its investment
objectives. In addition, special risks may be presented by the particular
types of securities in which the Fund may invest. For example, investments in
below or lower- rated debt securities may have speculative characteristics,
including overall greater risk of non-payment of interest and principal and
potentially greater sensitivity to general economic condition and changes in
interest rates. In addition, investors should consider risks inherent in
foreign securities which involve special risks not typically associated with
investing in U.S. companies. See, "Investment Objective and Policies."
3
<PAGE>
FUND EXPENSES
The following table illustrates all expenses and fees that a shareholder of
the Fund will incur. The expenses and fees set forth in the table are for the
fiscal year ended December 31, 1995.
<TABLE>
<CAPTION>
Class A Class B
Shares Shares
------- -----------------------------
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.75% None
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Load (as a percentage of original None 5% during the first
purchase price or redemption proceed, as applicable) year, decreasing 1%
annually to 2% during
the fourth and fifth years;
dropping from 2% to 0%
after the fifth year
Redemption Fee None None
Exchange Fee None None
Annual Fund Operating Expenses
(as a percentage of average net assets
for the fiscal year ended December 31, 1995)
Management Fees 0.65% 0.65%
Rule 12b-1 Fees(a) 0.25% 1.00%
Other Operating Expenses 0.31% 0.31%
----- ---------------------------
Total Fund Operating Expenses 1.21% 1.96%
===== ===========================
</TABLE>
(a) "Rule 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").
<TABLE>
<CAPTION>
Cumulative Expenses Paid for the
Period
1 3 5
Example* Year Years Years 10 Years
- --------------------------------------------------------------- ----- ------ ------ ---------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a hypothetical
$1,000 investment assuming (1) a 5% annual return, and (2)
redemption at the end of each time period.
Class A Shares $59 $84 $111 $187
Class B Shares $70 $92 $126 $209
An investor would pay the following expenses on the same $1,000
investment assuming no redemption at the end of each time
period.
Class A Shares $59 $84 $111 $187
Class B Shares $20 $62 $106 $209
</TABLE>
*The purpose of the above table is to help the investor understand the
various costs and expenses that the investor will bear directly or
indirectly. The Example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown. See
"Management of the Fund," "Distribution Plans" and "How to Buy Shares."
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table sets forth certain financial information for each class
of shares for the Fund. The financial information has been audited by Price
Waterhouse LLP, independent accountants. Their opinion and the Fund's
Financial Statements and notes thereto are incorporated by reference in the
Statement of Additional Information. The Statement of Additional Information
and the Fund's most recent Annual Report (which contains a discussion of the
Fund's performance) are available at no charge upon request by calling (800)
243-4361.
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------------------------------------
Year Ended December 31,
1995 1994 1993 1992 1991 1990
------- ------- ----------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 14.82 $ 15.48 $ 14.89 $ 15.22 $ 13.43 $ 13.90
Income from investment
operations:
Net investment Income 0.45 0.34 0.06 (3) 0.24 0.36 0.60
Net realized and
unrealized gain
(loss) 2.22 (0.69) 1.49 1.32 3.45 0.02
----- ----- --------- ---- ---- ------
Total from investment
operations 2.67 (0.35) 1.55 1.56 3.81 0.62
----- ----- --------- ---- ---- ------
Less distributions:
Dividends from net
investment income (0.52) (0.31) (0.11) (0.25) (0.37) (0.49)
Dividends from net
realized gains (0.99) (0.001) (0.85) (1.64) (1.65) (0.60)
----- ----- --------- ---- ---- ------
Total distributions (1.51) (0.311) (0.96) (1.89) (2.02) (1.09)
----- ----- --------- ---- ---- ------
Change in net asset value 1.16 (0.66) 0.59 (0.33) 1.79 (0.47)
----- ----- --------- ---- ---- ------
Net asset value, end of
period $ 15.98 $ 14.82 $ 15.48 $ 14.89 $ 15.22 $ 13.43
===== ===== ========= ==== ==== ======
Total return (1) 18.23% -2.26% 10.49% 10.32% 28.62% 4.43%
Ratios/supplemental data:
Net assets, end of period
(thousands) $361,526 $335,177 $370,440 $58,006 $35,209 $28,413
Ratio to average net
assets of:
Operating expenses 1.21% 1.24% 1.29% 1.36% 1.58% 1.58%
Net investment income 2.67% 2.18% 1.26% 2.06% 2.51% 4.23%
Portfolio turnover 184% 225% 246% 322% 249% 279%
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------------------------------------------ -------------------------------
Year From
Ended Inception
December October 24, 1994
31, to
1989 1988 1987 1986 1995 December 31, 1994
--------- --------- --------- --------- --------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period $ 12.55 $ 12.58 $ 12.37 $11.11 $14.79 $ 14.98
Income from investment
operations:
Net investment Income 0.94 (2) 0.45 (2) 0.18 (2) 0.32 (2) 0.30(3) 0.07
Net realized and
unrealized gain
(loss) 1.34 (0.03) 1.27 1.37 2.22 (0.09)
-------- -------- -------- -------- -------- ----------------
Total from investment
operations 2.28 0.42 1.45 1.69 2.52 (0.02)
-------- -------- -------- -------- -------- ----------------
Less distributions:
Dividends from net
investment income (0.55) (0.45) (0.24) (0.43) (0.43) (0.17)
Dividends from net
realized gains (0.38) (0.00) (1.00) (0.00) (0.99) --
-------- -------- -------- -------- -------- ----------------
Total distributions (0.93) (0.45) (1.24) (0.43) (1.42) (0.17)
-------- -------- -------- -------- -------- ----------------
Change in net asset value 1.35 (0.03) 0.21 1.26 1.10 (0.19)
-------- -------- -------- -------- -------- ----------------
Net asset value, end of
period $ 13.90 $ 12.55 $ 12.58 $12.37 $15.89 $ 14.79
======== ======== ======== ======== ======== ================
Total return (1) 18.41% 3.35% 11.02% 15.19% 17.31% -0.12% (5)
Ratios/supplemental data:
Net assets, end of period
(thousands) $32,424 $34,926 $29,524 $5,245 $8,046 $ 1,328
Ratio to average net
assets of:
Operating expenses 1.45% 1.52% 1.54% 1.33% 1.97% 2.26% (4)
Net investment income 3.79% 3.72% 2.52% 2.15% 1.88% 1.74% (4)
Portfolio turnover 315% 317% 323% 378% 184% 225%
</TABLE>
(1) Maximum sales charges are not reflected in total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of
$0.016, $0.022, $0.030, and $0.137, respectively.
(3) Computed using average shares outstanding.
(4) Annualized.
(5) Not annualized.
5
<PAGE>
PERFORMANCE INFORMATION
The Fund may, from time to time, include its yield and total return in
advertisements, sales literature, or reports to current and prospective
shareholders. Both yield and total return figures are computed separately for
Class A and Class B Shares in accordance with formulas specified by the
Securities and Exchange Commission. Yield and total return are based on
historical earnings and are not intended to indicate future performance.
The yield of the 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 Class A and Class
B Shares will be expressed in terms of the average annual compounded rate of
return of a hypothetical investment in either Class A or Class B Shares over
a period of 1, 5, and 10 years (or up to the life of the class of shares of
the Fund). Standardized total return quotations reflect the deduction of a
proportional share of each Class's expenses (on an annual basis), deduction
of the maximum initial sales load in the case of Class A Shares and the
maximum contingent deferred sales charge applicable to a complete redemption
of the investment in the case of Class B Shares, and assume that all
dividends and distributions on Class A and Class B Shares are reinvested when
paid. It is expected that the performance of Class A Shares will be better
than that of Class B Shares as a result of lower distribution fees and
certain incrementally lower expenses paid by Class A Shares. The Fund also
may 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 Fund may from time to time publish
materials citing historical volatility for shares of the Fund.
The Fund may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc., and Morningstar,
Inc. Additionally, the 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 Poor's The Outlook,
and Personal Investor. The Fund may from time to time illustrate the benefits
of tax deferral by comparing taxable investments to investments made through
tax-deferred retirement plans. The total return may also be used to compare
the performance of the Fund with certain widely acknowledged outside
standards or indices for stock and bond market performance, such as the
Standard & Poor's 500 Stock Index (the "S&P 500"), Dow Jones Industrial
Average, Europe Australia Far East Index (EAFE), Consumer's Price Index,
Shearson Lehman Corporate Index and Shearson Lehman T-Bond Index. The S&P
500 is a commonly quoted market value- weighted and unmanaged index showing
the changes in the aggregate market value of 500 common stocks relative to
the base period 1941-43. The S&P 500 is composed almost entirely of common
stocks of companies listed on the New York Stock Exchange, although the
common stocks of a few companies listed on the American Stock Exchange or
traded over the counter are included. The 500 companies represented include
400 industrial, 60 transportation and 40 financial services concerns. The S&P
500 represents about 80% of the market value of all issues traded on the New
York Stock Exchange.
Advertisements, sales literature and communications may contain information
about the Fund or Adviser's current investment strategies and management
style. Current strategies and style may change to allow the Fund to respond
to a changing market and economic environment. From time to time the Fund may
discuss specific portfolio holdings or industries in such communications. To
illustrate components of overall performance, the Fund may separate its
cumulative and average annual returns into income results and capital gains
or losses; or cite separately as a return figure the equity or bond portion
of the Fund's portfolio; or compare the 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, First Boston High Yield Index
and Salomon Brothers Corporate and Government Bond Indices.
Performance information for the Fund reflects only the performance of a
hypothetical investment in Class A or Class B Shares of the Fund during the
particular time period on which the calculations are based. Performance
information should be considered in light of the Fund's investment objectives
and policies, characteristics and qualities of the portfolio, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future. For a description of
the methods used to determine total return for the Fund, see the Statement of
Additional Information.
The Fund's Annual Report, available upon request and without charge,
contains a discussion of the performance of the Fund and a comparison of that
performance to a securities market index.
6
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is the highest total return consistent with
reasonable risk. Total return consists of the sum of dividends, interest,
premiums and net realized and unrealized appreciation in the value of
portfolio stocks, options, futures contracts, and other securities, less any
expenses. Reasonable risk is risk which in the Adviser's judgment would not
present a greater than normal risk of loss in light of current and reasonably
anticipated future general market and economic conditions, trends in yields
and interest rates, and fiscal and monetary policies. The investment
objective is not deemed to be a fundamental policy and may be changed by the
Fund's Board of Directors; however, no material change will be made without
shareholder approval.
In seeking to achieve its investment objective the Fund will invest
principally in stocks, bonds and other debt securities, (i.e., those
securities or bonds evidencing the debt owed by a corporation, government or
municipality as discussed below) and money market instruments. The amount or
proportion of the Fund's assets which may be invested in each of the three
types of securities is not fixed and the Fund may adjust the mix of
investments whenever, in the opinion of its Adviser, such an adjustment will
enable the Fund to capitalize on perceived variations in return potential
produced by the interaction of changing financial market and economic
conditions.
There can be no assurance that the Fund will achieve its investment
objective.
The Fund will seek current income and capital appreciation over an extended
period of time by investing in stocks. The Fund may invest in common stocks
and other equity-type securities such as preferred stocks, securities
convertible into common stock and securities with warrants to purchase common
stock attached. Investments in stocks will consist largely of common stocks
of generally accepted investment quality. Such stocks will be selected by the
Adviser for current income considerations and/or for the promise they offer
of capital appreciation.
The Fund will seek current income and capital appreciation on an annual
basis by investing in bonds and other debt securities with maturities
generally exceeding one year. The Fund may invest in:
(a) publicly offered straight debt securities having a rating within the
four highest grades as determined by Moody's Investors Service, Inc.
("Moody's") (Aaa, Aa, A or Baa) or by Standard & Poor's Corporation
("Standard & Poor's") (AAA, AA, A or BBB) or, if unrated, those publicly
offered straight debt securities which are judged by the Fund to be of
equivalent quality to securities so rated;
(b) obligations issued, sponsored, assumed or guaranteed as to principal and
interest by the U.S. Government or its agencies or instrumentalities;
and
(c) publicly offered debt securities issued or guaranteed by a national or
state bank or bank holding company (as defined in the Federal Bank
Holding Company Act, as amended) having a rating within the three
highest grades as determined by Moody's (Aaa, Aa or A) or by Standard &
Poor's (AAA, AA, or A), and certificates of deposit of banks issuing or
guaranteeing securities having such ratings.
The Fund may take a modest position in lower or non-rated fixed income
securities, provided that the Fund will not invest more than 5% of its net
assets, determined at the time of investment, in high yield, high risk fixed
income securities (commonly referred to as junk bonds).
Investment in fixed-income securities involves market and credit risks. The
price of fixed-income securities will generally move in inverse proportion to
interest rates. Securities rated Baa by Moody's and BBB by Standard & Poor's
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. 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
the issuer's ability to make payments of income and principal and increase
the expenses of the Fund seeking recovery from the issuer. 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. The Fund does not have a policy to dispose of a bond
if its rating drops below investment grade. The Statement of Additional
Information contains a description of Moody's and Standard & Poor's rating
categories.
The Fund will seek current income by investing in money market instruments
(which generally mature in one year or less). Investments in money market
instruments may also be made for the purpose of preserving capital or for
liquidity purposes, in which event investment decisions may be based on
considerations other than the highest available yield. The Fund may invest
in:
(a) obligations issued or guaranteed by the U.S. Government or its agencies,
authorities or instrumentalities;
(b) obligations issued by U.S. 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 U.S. banks or
savings and loan associations which at the date of the investment have
capital, surplus and undivided profits in excess of $100,000,000 as of
the date of their most recently published financial statements; and
obligations of other
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U.S. 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 the investment is rated P-1 by
Moody's or A-1 by Standard & Poor's or, if not rated, is issued by a
company which at the date of the investment has an outstanding debt
issue rated Aa or higher by Moody's or AA or higher by Standard &
Poor's;
(d) other corporate obligations maturing in one year or less which at the
date of the investment are rated Aa or higher by Moody's or AA or higher
by Standard & Poor's; and
(e) repurchase agreements with respect to any of the foregoing obligations
with commercial banks, brokers and dealers considered by the Fund to be
creditworthy.
The Fund will not invest in time deposits if as a result of such investment
as much as 15% of the Fund's net assets would be invested in time deposits,
repurchase agreements which are not terminable within seven days and
securities subject to legal or contractual restrictions on resale or for
which there is no established market (so-called "illiquid" securities).
The Fund may invest up to 25% of its total net assets in the securities of
foreign issuers. The Fund may invest in a broad range of foreign securities
including equity, debt and convertible securities and foreign government
securities. In connection with investments in foreign securities, the Fund
may enter into forward foreign currency exchange contracts for the purpose of
protecting against losses resulting from fluctuations in exchange rates
between the U.S. dollar and a particular foreign currency denominating a
security which the Fund holds or intends to acquire. The Fund will not
speculate in forward foreign currency exchange contracts.
Investing in the securities of foreign companies involves special risks and
considerations not typically associated with investing in U.S. companies.
These include less liquidity and more volatility in foreign markets,
generally higher commission rates on foreign portfolio transactions, the
possibility of confiscatory taxation, 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.
Changes in foreign exchange rates will affect the value of those securities
which are denominated or quoted in currencies other than the U.S. dollar.
Many of the foreign securities held by the Fund will not be registered with
the Securities and Exchange Commission and many of the issuers of foreign
securities will not be subject to the Commission's reporting requirements.
Accordingly, there may be less publicly available information about the
securities and about the foreign company or government issuing them than is
available about a domestic company or government entity. Moreover, individual
foreign economies may compare favorably or unfavorably with the United States
economy with respect to such factors as rate of growth, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payment
positions.
The Fund will calculate its net asset value and complete orders to purchase,
exchange or redeem shares only on a Monday-Friday basis (excluding holidays
on which the New York Stock Exchange is closed). Foreign securities in which
the Fund may invest may be primarily listed on foreign stock exchanges which
may trade on other days (such as Saturdays). As a result, the net asset value
of the Fund's portfolio may be potentially affected by such trading on days
when a shareholder has no access to the Fund.
The Fund may invest to a significant extent in securities of the U.S.
Government and its agencies and instrumentalities at a time when adverse
market conditions warrant the adoption of a temporary defensive position or
at a time when the yield differential between U.S. Government securities and
other investments is such that the U.S. Government securities will yield a
higher total return than other investments.
Securities issued or guaranteed as to principal and interest by the U.S.
Government include a variety of Treasury securities, which differ only in
their interest rates, maturities, and times of issuance. Treasury bills have
a maturity of one year or less. Treasury notes have maturities of one to
seven years, and Treasury bonds generally have maturity of greater than five
years.
Agencies of the U.S. 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 U.S.
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. Treasury, 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.
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
Veterans 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 generally
offer yields
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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.
INVESTMENT TECHNIQUES
AND RELATED RISKS
In addition to the investment policies described above, the Fund may utilize
the following investment practices or techniques directly in securities.
Writing (Selling) 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.
The Fund may write exchange-traded call options with respect to 100% of
its portfolio. Call options may be written on portfolio securities and on
securities indices. Call options on portfolio securities will be covered
since the Fund will own the underlying securities at all times during the
option period. 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.
The 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 the 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 Fund may invest up to 5% of its total assets in exchange-traded call
and put options on securities and securities indices. The Fund will invest in
call and put options whenever, in the opinion of its Adviser, such
investments will contribute to the enhancement of total return to the Fund's
shareholders. The Fund may sell a call option or a put option which it has
previously purchased prior to the purchase (in the case of a call) or the
sale (in the case of a put) of the underlying security. 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 the Fund may lose
the premium it paid plus transaction costs.
Financial Futures and Related Options Financial futures contracts consist
of interest rate futures contracts and securities index futures contracts. An
interest rate futures contract obligates the seller of the contract to
deliver, and the purchaser to take delivery of, the interest rate securities
called for in the contract at a specified future time and at a specified
price. A 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.
The Fund may purchase and sell financial futures contracts which are
traded on a recognized exchange or board of trade and may purchase
exchange-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.
The Fund will engage in transactions in financial futures contracts and
related options only for hedging purposes and not for speculation. In
addition, the Fund will not purchase or sell any financial futures contract
or related option if,
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immediately thereafter, the sum of the cash or U.S. Treasury bills committed
with respect to the Fund's existing futures and related options positions and
the premiums paid for related options would exceed 5% 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, an amount of cash, U.S. Government
securities or other appropriate high-grade debt obligations equal to the
market value of the futures contract minus the Fund's initial margin deposit
with respect thereto will be deposited in a segregated account with the
Fund's custodian bank to collateralize fully the position and thereby ensure
that it is not leveraged. The extent to which the Fund may enter into
financial futures contracts and related options may also be limited by
requirements of the Internal Revenue Code for qualification as a regulated
investment company.
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. 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 the Fund will lose the premium it paid. Also, there may be
circumstances when the purchase of an option on a financial futures contract
could result in a loss to the Fund while the purchase or sale of the contract
would not have resulted in a loss.
Repurchase Agreements The Fund may invest up to 10% of its total assets in
repurchase agreements having maturities of no more than seven days, either
for temporary defensive purposes due to adverse market conditions or to
generate income from its excess cash balances. A repurchase agreement is an
agreement under which the Fund acquires a money market instrument (generally
a security issued by the U.S. Government or an agency thereof, a bankers'
acceptance or a certificate of deposit) from a commercial bank, broker or
dealer, subject to resale to the seller at an agreed upon price and date
(normally the next business day). The resale price reflects an agreed upon
interest rate effective for the period the instrument is held by the Fund and
is unrelated to the interest rate on the underlying instrument. That
instrument must have a total value, including accrued interest, in excess of
the value of the repurchase agreement and will be held by the Fund's
custodian bank until repurchased.
The use of repurchase agreements involves certain risks such as default by
or the insolvency of the other party to the repurchase agreement. Repurchase
agreements will be entered into only with commercial banks, brokers and
dealers considered by the Fund to be creditworthy.
Lending Portfolio Securities In order to increase the return on its
investments, the Fund may lend its portfolio securities to broker-dealers and
other financial institutions in amounts up to 25% of the market or other fair
value of its total assets. Loans of portfolio securities will always be fully
collateralized and will be made only to borrowers considered by the Adviser
to be creditworthy. Lending portfolio securities involves risk of delay in
the recovery of the loaned securities and in some cases the loss of rights in
the collateral should the borrower fail financially.
Trading Operations The timing and amounts of purchases and sales of
individual securities and types of securities (stocks, bonds and money market
instruments) is of particular significance in the case of a fund seeking the
highest total return consistent with reasonable risk. Consequently, in
seeking to achieve its investment objective, the Fund intends to engage in
portfolio trading. It will buy and sell portfolio securities in anticipation
of, or in response to, changing financial market and economic conditions and
trends and to take advantage of yield disparities. The Adviser will engage in
trading whenever it believes that the trade, net of transaction costs, will
provide the Fund with additional income or improve the capital appreciation
potential of the Fund's portfolio. Whether trading will enable the Fund to
achieve its goals will depend on the Adviser's ability to anticipate market
developments, including interest rate trends, obtain and properly evaluate
relevant information, and effect purchase and sale transactions on a
favorable basis. Trading may result in frequent changes in the Fund's
portfolio and a high rate of portfolio turnover.
INVESTMENT RESTRICTIONS
The investment restrictions to which the Fund is subject are fundamental
policies which may not be changed without shareholder approval. Among the
more significant restrictions, the Fund may not (i) concentrate its assets in
the securities of issuers which conduct their principal business activities
in the same industry; (ii) invest more than 5% of its total assets in
securities issued or guaranteed by any one issuer (except the U.S.
Government) or purchase more than 10% of the outstanding voting securities or
more than 10% of the securities of any class of any one issuer; (iii) invest
in the aggregate more than 5% of its total assets in the securities of any
issuers which have (with predecessors) a record of less than three years of
continuous operations; (iv) invest in real estate, real estate limited
partnerships, commodities or commodities contracts, except that the Fund may
(a) purchase or sell readily marketable securities which are secured by
interests in real estate or issued by companies which deal in real estate,
including real estate investment and mortgage investment trusts, and (b)
engage in financial futures contracts and related options transactions as
described above; (v) borrow in excess of 5% of the market or other fair value
of its total assets or pledge its assets to an extent greater than 5% of the
market or other fair value of its total assets (any borrowings to be from
banks and undertaken only as a temporary measure for extraordinary or
emergency purposes); (vi) issue senior securities (vii) purchase an illiquid
security such as a restricted security or a security for which market
quotations are not readily available or a repurchase agreement having a
maturity longer than seven days if as a result of such purchase more than 15%
of the Fund's net assets would be invested in
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<PAGE>
such securities; and (viii) purchase securities of other investment
companies, except that the Fund may make such a purchase (a) in the open
market involving no commission or profit to a sponsor or dealer (other than
the customary broker's commission), provided that immediately thereafter (i)
not more than 10% of the Fund's total assets would be invested in such
securities, (ii) not more than 5% of the Fund's total assets would be
invested in the securities of any one investment company and (iii) not more
than 3% of the voting stock of any one investment company would be owned by
the Fund, or (b) as part of a merger, consolidation, or acquisition of
assets.
A detailed description of the Fund's investment restrictions is contained in
the Statement of Additional Information.
PORTFOLIO TURNOVER
A change in securities held by the Fund is known as "portfolio turnover" and
may involve the payment by the Fund of dealer mark-up or underwriting
commissions and other transaction costs on the sale of securities, as well as
on the reinvestment of the proceeds in other securities. Portfolio turnover
rate for a fiscal year is the percentage determined by dividing the lesser of
the cost of purchases or proceeds from sales of portfolio securities by the
average of the value of portfolio securities during such year, all excluding
securities whose maturities at acquisition were one year or less. The Fund's
portfolio turnover rate will not be a limiting factor when the Adviser deems
it desirable to sell or purchase securities. The Fund's portfolio turnover
rate may be higher than some other investment companies having similar
objectives if the Fund finds it necessary to significantly change its
portfolio to adopt a temporary defensive position. A high turnover rate may
involve greater expenses to the Fund and could involve realization of capital
gains that would be taxable to the shareholders.
MANAGEMENT OF THE FUND
The Fund is a mutual fund, technically known as an open-end diversified
management investment company. The Directors of the Fund (Directors) are
responsible for the overall supervision of the Fund and perform the various
duties imposed on Directors by the 1940 Act and the Massachusetts General
Corporation Law.
The Adviser
The Fund's investment adviser is Phoenix Investment Counsel, Inc. (the
"Adviser"), which is located at 56 Prospect Street, Hartford, Connecticut
06115. The Adviser is a subsidiary of Phoenix Duff & Phelps Corporation of
Chicago, Illinois. Prior to November 1, 1995, the Adviser was an indirect,
wholly-owned subsidiaries of Phoenix Home Life Mutual Insurance Company
("Phoenix") of Hartford, Connecticut. Phoenix is a majority shareholder of
Phoenix Duff & Phelps Corporation. Phoenix 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 06102. Phoenix
Duff & 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
serves as investment adviser or manager for Phoenix Series Fund, Phoenix
Multi-Portfolio Fund (all Portfolios other than the Real Estate Securities
Portfolio), the Phoenix Edge Series Fund (all Series except the Real Estate
Securities Series) and Phoenix Strategic Equity Series Fund (all Funds other
than the Phoenix Equity Opportunities Fund), and as sub-adviser to the Chubb
America Fund, Inc., SunAmerica Series Trust, JNL Series Trust and American
Skandia Trust. The Adviser was originally organized in 1932 as John P. Chase,
Inc. As of December 31, 1995, The Adviser has approximately $18.48 billion in
assets under management.
The Adviser continuously furnishes an investment program for the Fund and
manages the investment and reinvestment of the Fund's assets subject at all
times to the supervision of the Directors. The Adviser, at its expense,
furnishes to the Fund adequate office space and facilities and certain
administrative services, including the services of any member of its staff
who serves as an officer of the Fund.
As compensation for its services, the Adviser receives a fee, which is
accrued daily against the value of the Fund's net assets and payable monthly
by the Fund. The monthly fee is computed at an annual rate of 0.65% of the
average of the daily net asset values of the Fund up to $1 billion; 0.60% of
such value between $1 billion and $2 billion; and 0.55% of such value in
excess of $2 billion. The ratio of management fees to average net assets for
the fiscal year ended December 31, 1995 was 0.65%.
The Portfolio Manager
Mr. C. Edwin Riley, Jr. is portfolio manager of the Fund, and as such, is
primarily responsible for the day-to-day management of the Fund's portfolio.
Mr. Riley is also the portfolio manager of the Balanced Series of the Phoenix
Series Fund and the Total Return Series of The Phoenix Edge Series Fund. From
1988 to 1995, Mr. Riley served as Senior Vice President, Director of Equity
Management for Nationsbank Investment Management.
The Financial Agent
Equity Planning acts as financial agent of the Fund and, as such, performs
administrative, bookkeeping and pricing functions for the Fund. As
compensation, Equity Planning receives a quarterly fee based on the average
of the aggregate daily net asset values of the Fund at an annual rate of $300
per $1 million. For its services during the fiscal year ended December 31,
1995, Equity Planning received $109,460, or 0.03% of average net assets.
The Custodian and Transfer Agent
The custodian of the assets of the Fund is State Street Bank and Trust
Company, P.O. Box 351, Boston, Massachusetts, 02101 (the "Custodian"). The
Fund has authorized the Custodian to appoint one or more subcustodians for
the assets of the Fund held outside the United States. Pursuant to a Transfer
Agent and Service Agreement with the Phoenix Funds, Equity Planning acts as
Transfer Agent for the Fund
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<PAGE>
(the "Transfer Agent") for which it was paid $14.95 plus out-of-pocket
expenses for each designated shareholder account. The Transfer Agent is
authorized to engage sub-agents to perform certain shareholder servicing
functions from time to time for which such agents shall be paid a fee by
Equity Planning.
Brokerage Commissions
Although the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. prohibit its members from seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such Rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Fund. The Adviser may also
select an affiliated broker-dealer to execute transactions for the Fund,
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 Fund's
shares, are located at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. Philip R. McLoughlin is a Director and President of
the Fund and a director and officer of Equity Planning. Martin J. Gavin, an
officer of the Fund, is a director and an officer of Equity Planning. Michael
E. Haylon, an officer of the Fund, is a director of Equity Planning. G.
Jeffrey Bohne, James M. Dolan, William R. Moyer, William J. Newman, Leonard
J. Saltiel, and Nancy G. Curtiss are officers of the Fund and officers of
Equity Planning.
Equity Planning and the Fund have entered into distribution agreements under
which Equity Planning has agreed to use its best efforts to find purchasers
for Fund shares and the Fund has granted to Equity Planning the exclusive
right to purchase from the Fund and resell, as principal, shares needed to
fill unconditional orders for Fund shares. Equity Planning may sell Fund
shares through its registered representatives or through securities dealers
with whom it has sales agreements. Equity Planning may also sell Fund shares
pursuant to sales agreements entered into with banks or bank affiliated
securities brokers who, acting as agent for their customers, place orders for
Fund shares with Equity Planning. Although the Glass-Steagall Act prohibits
banks and bank affiliates from engaging in the business of underwriting,
distributing or selling securities (including mutual fund shares), banking
regulators have not indicated that such institutions are prohibited from
purchasing mutual fund shares upon the order and for the account of their
customers. If, because of changes in law or regulations, or because of new
interpretations of existing law, it is determined that agency transactions of
banks or bank affiliated securities brokers are not permitted under the
Glass-Steagall Act, the Directors will consider what action if any, is
appropriate. It is not anticipated that termination of sales agreements with
banks or bank affiliated securities brokers would result in a loss to their
customers or a change in the net asset value per share of the Fund.
The sale of Fund shares through a securities broker affiliated with a
particular bank is not expected to preclude the Fund from borrowing from such
bank or from availing itself of custodial or transfer agency services offered
by such bank.
The Directors adopted separate distribution plans for Class A and Class B
shares (the "Plans") pursuant to Rule 12b-1 under the Investment Company Act
of 1940. The Class A Plan, which was approved by shareholders on July 2,
1986, provides that the Fund may pay to Equity Planning (i) amounts not
exceeding 0.25% annually of its average daily net asset value for each year
elapsed after the inception of the Plan and (ii) amounts not exceeding 0.25%
of the amount of any investment in Fund shares equal to $1,000,000 or more
made in a lump sum or pursuant to an authorized letter of intent. Under a
separate plan adopted by the Directors (including a majority of the
Independent Directors) on November 17, 1993, and ratified by the Adviser, as
initial sole shareholder of Class B shares of the Fund, the Fund is
authorized to pay up to 1.00% annually of the average daily net assets of the
Fund representing Class B Shares.
Although under no contractual obligation to do so, the Fund intends to make
such payments to Equity Planning (i) as commissions for shares sold, all or
any part of which commissions may be paid by Equity Planning to others (who
may be other dealers or registered representatives of Equity Planning), and
(ii) to enable Equity Planning to pay to such others maintenance or other
fees in respect of shares sold by them and remaining outstanding on the
Fund's books during the period in respect of which the fee is paid (the
"Service Fee"); and (iii) to enable Equity Planning to pay to bank affiliated
securities brokers maintenance or other fees in respect of shares of the Fund
purchased by their customers and remaining outstanding on the Fund's books
during the period in respect of which the fee is paid. The portion of the
above fees paid by the Fund to Equity Planning as "Service Fees" shall not
exceed 0.25% annually of the average daily net assets of the class to which
such fee relates. Payments, less the portion thereof paid by Equity Planning
to others, may be used by Equity Planning for its expenses of distribution of
Fund shares. If expenses of distribution exceed payments and any sales
charges retained by Equity Planning, the Fund is not required to reimburse
Equity Planning for excess expenses; if payments and any sales charges
retained by Equity Planning exceed expenses of distribution, Equity Planning
may realize a profit.
In order to receive payments under the Plans, participants must meet such
qualifications as are to be established in the sole discretion of the
Underwriter, such as services to the Fund's shareholders; or services
providing the Fund with more efficient methods of offering shares to groups
of clients, members or prospects of a participant; or services permitting
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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 December 31, 1995, the Fund paid $899,895 under
the Class A Plan and $49,080 under the Class B Plan. The fees were used to
compensate unaffiliated broker-dealers for servicing shareholder's accounts,
compensating sales personnel and reimbursing the Underwriter for commission
expenses and expenses related to preparation of the marketing material. On a
quarterly basis, the Fund's Directors review a report on expenditures under
each Plan and the purposes for which expenditures were made. The Directors
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 Fund's
Directors and by a majority of the Directors 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
Directors"). Each Plan provides that it may not be amended to increase
materially the costs which the Fund may bear without approval of the
applicable class of shareholders of the Fund and that other material
amendments must be approved by a majority of the Plan Directors 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 Directors who are not "interested persons" shall be committed
to the discretion of the Directors who are not "interested persons". Each
Plan may be terminated at any time by vote of a majority of the Plan
Directors or a majority of the applicable class of outstanding shares of the
Fund. If the Plans are terminated in accordance with their terms, the
obligations of the Fund to make payments to the Underwriter pursuant to the
Plan, including payments for expenses carried over from previous years will
cease.
The Directors have concluded that there is a reasonable likelihood that the
Plans will benefit the Fund and all classes of shareholders.
The National Association of Securities Dealers ("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
The minimum initial investment is $500 and the minimum subsequent investment
is $25. Both the minimum initial and subsequent investment amounts are $25
for investments pursuant to the "Investo-Matic" plan, a bank draft investing
program administered by Equity Planning, or pursuant to the Systematic
Exchange privilege (see the Statement of Additional Information). 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.
Each class of shares represents an interest in the same portfolio of
investments of the Fund, has the same rights, and is identical to the other
in all respects, except that Class B Shares bear the expenses of the deferred
sales arrangement and any expenses (including the higher distribution
services fee and any incremental transfer agency costs) resulting from such
sales arrangement. Each class has exclusive voting rights with respect to
provisions of the Rule 12b-1 distribution plan pursuant to which its
distribution services fee is paid, and each class has different exchange
privileges. Only the Class B Shares are subject to a conversion feature. The
net income attributable to Class B Shares and the dividends payable on Class
B Shares will be reduced by the amount of the higher distribution services
fee and incremental expenses associated with such distribution services fee;
likewise, the net asset value of the Class B Shares will be reduced by such
amount to the extent the Fund has undistributed net income.
Subsequent investments for the purchase of full and fractional shares in
amounts of $25 or more may be made through an investment dealer or by sending
a check to Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box
8301, Boston, MA 02266-8301. Share certificates representing any number of
full shares will be issued only on request, and subject to certain
conditions. A fee may be incurred by the shareholder for a lost or stolen
share certificate. Sales personnel of broker-dealers distributing the Fund's
shares may receive differing compensation for selling Class A or Class B
Shares.
The Fund offers combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange
privileges. Certain privileges may not be available in connection with Class
B Shares. Shares of the Fund or shares of any other Phoenix Fund (except
Phoenix Multi-Sector Short Term Bond Fund Class A shares held less than 6
months and Phoenix Money Market Fund Series Class A shares), may be exchanged
for shares of the same class on the basis of the relative net asset values
per share at the time of the exchange. Exchanges are subject to the minimum
initial investment requirement of the designated Phoenix Fund, except if made
in connection with the Systematic Exchange privilege. Shareholders may
exchange shares held in book-entry form for an equivalent number (value) of
the same class of shares of any other Phoenix Fund. On Class B Share
exchanges, the contingent deferred sales charge schedule of the original
shares purchased is not taken and continues to apply.
Alternative Sales Arrangements
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Fund, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the
Fund, the accumulated continuing distribution services fee and contingent
deferred sales charges on Class B Shares prior to conversion would be less
than the initial sales charge and accumulated distribution services fee
13
<PAGE>
on Class A Shares purchased at the same time, and to what extent such
differential would be offset by the higher yield of Class A Shares. In this
regard, Class A Shares will be more beneficial to the investor who qualifies
for certain reduced initial sales charges. For this reason, the Underwriter
intends to limit sales of Class B Shares sold to any shareholder to a maximum
total value of $250,000. Class B Shares sold to unallocated qualified
employer sponsored plans may be limited to a total value of $1,000,000.
Class B Shares sold to allocated qualified employer sponsored plans,
including 401(k) plans, will be limited to a maximum total value of $250,000
for each participant. The Underwriter reserves the right to decline the sale
of Class B Shares to allocated qualified employer sponsored plans not
utilizing an approved participant tracking system. In addition, Class B
Shares will not be sold to any qualified employee benefit plan, endowment
fund or foundation if, on the date of the initial investment, the plan, fund
or foundation has assets of $10,000,000 or more or at least 100 participant
employees. Class B Shares will also not be sold to investors who have reached
the age of 85 because of such persons' expected distribution requirements.
Class A Shares are subject to a lower distribution services fee and,
accordingly, pay correspondingly higher dividends per share. However, because
initial sales charges are deducted at the time of purchase, such investors
would not have all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced initial
sales charges who expect to maintain their investment for an extended period
of time might consider purchasing Class A Shares because the accumulated
continuing distribution charges on Class B Shares may exceed the initial
sales charge on Class A Shares during the life of the investment. Again,
however, such investors must weigh this consideration against the fact that,
because of such initial sales charge, not all their funds will be invested
initially. However, other investors might determine that it would be more
advantageous to purchase Class B Shares to have all their funds invested
initially, although remaining subject to higher continuing distribution
charges and, for a five-year period, being subject to a contingent deferred
sales charge.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A Shares is the net asset value plus a
sales charge, as set forth below. Offering prices become effective at the
close of the general trading session of the New York Stock Exchange. Orders
received by dealers prior to such time are confirmed at the offering price
effective at that time, provided the order is received by the Distributor
prior to its close of business.
The sales charge varies with the size of the purchase and reduced charges
apply to the aggregate of purchases of the Fund made at one time by "any
person," which term includes an individual, an individual and his/her spouse
and their children under the age of 21, or a trustee or other fiduciary
purchasing shares for a single trust, estate or fiduciary account although
more than one beneficiary is involved.
Class A Shares of the Fund are offered to the public at the net asset
value next computed after the purchase order is received by Equity Planning
plus a maximum sales charge of 4.75% of the offering price (4.99% of the
amount invested) on single purchases of less than $50,000. The sales charge
is reduced on a graduated scale on single purchases on $50,000 or more as
shown below.
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Discount
Amount of as Percentage as Percentage or Agency Fee
Transaction of Offering of Amount as Percentage of
at Offering Price Price Invested Offering Price*
- --------------------- ------------- ------------- ------------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but
under $100,000 4.50% 4.71% 4.00%
$100,000 but
under $250,000 3.50% 3.63% 3.00%
$250,000 but
under $500,000 3.00% 3.09% 2.75%
$500,000 but
under $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None None**
</TABLE>
* Equity Planning will sponsor sales contests, training and educational
meetings and provide to all qualifying dealers, from its own profits and
resources, additional compensation in the form of trips, merchandise or
expense reimbursement. Brokers or dealers other than Equity Planning may also
make customary additional charges for their services in effecting purchases,
if they notify the Fund of their intention to do so.
**In connection with Class A Share purchases (or subsequent purchases in any
amount) by an account held in the name of a qualified employee benefit plan
with at least 100 eligible employees. Equity Planning may pay broker/dealers,
from its own resources, an amount equal to 1% on the first $3 million of
purchases, 0.50% on the next $3 million, plus 0.25% on the amount in excess
of $6 million.
In connection with Class A Share purchases of $1,000,000 or more (or
subsequent purchases in any amount), excluding purchases by qualified
employee benefit plans as described above, Equity Planning may pay
broker-dealers, from its own profits and resources, a percentage of the net
asset value of any shares sold as set forth below:
Purchase Amount Payment to Broker-Dealer
- -------------------------- ---------------------------
$1,000,000 to $3,000,000 1%
$3,000,001 to $6,000,000 0.50 of 1%
$6,000,001 or more 0.25 of 1%
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 a pro rata
portion of any such amounts paid with respect to the investment.
How To Obtain Reduced Sales Charges--Class A Shares
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
14
<PAGE>
Qualified Purchasers
No sales charge will be imposed on sales of shares to (1) any Phoenix Fund
trustee, director or officer; (2) any director or officer, or to any
full-time employee or sales representative (who has acted as such for at
least 90 days) of the Adviser or of Equity Planning; (3) registered
representatives and employees of securities dealers with whom Equity Planning
has sales agreements; (4) any qualified retirement plan exclusively for
persons described above; (5) any officer, director or employee of a corporate
affiliate of the Adviser or Equity Planning; (6) any spouse, child, parent,
grandparent, brother or sister of any person named in (1), (2), (3) or (5)
above; (7) employee benefit plans for employees of the Adviser, Equity
Planning and/or their corporate affiliates; (8) any employee or agent who
retires from the Adviser, Equity Planning and/or their corporate affiliate;
(9) any account held in the name of a qualified employee benefit plan,
endowment fund or foundation if, on the date of the initial investment, the
plan, fund or foundation has assets of $10,000,000 or more or at least 100
eligible employees; (10) any person with a direct rollover transfer of shares
from an established Phoenix Fund qualified plan; (11) any Phoenix Home Life
separate account which funds group annuity contracts offered to qualified
employee benefit plans; (12) any state, county, city, instrumentality,
department, authority or agency prohibited by law from paying a sales charge;
(13) any fully matriculated student in a U.S. service academy; (14) any
unallocated accounts held by a third party administrator, registered
investment adviser, trust company, or bank trust department which exercises
discretionary authority and holds the account in a fiduciary, agency,
custodial or similar capacity if in the aggregate such accounts held by such
entity equal or exceed $1,000,000; (15) any person who is investing
redemption proceeds from investment companies other than the Phoenix Funds
if, in connection with the purchase or redemption of the redeemed shares, the
investor paid a sales charge provided such investor supplies verification
that the redemption occurred within 90 days of the Phoenix Fund purchase and
that a sales charge was paid; or (16) any accounts established by financial
institutions, broker/ dealers or registered investment advisers that charge
an account management fee or transaction fee, provided such entity has
entered into an agreement with the Distributor for this program; 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.
Shares issued pursuant to the automatic reinvestment of income dividends
or capital gains distributions are not subject to any sales charges. The Fund
receives the entire net asset value of its Class A Shares sold to investors.
The Distributor's commission is the sales charge shown above less any
applicable discount or commission "re-allowed" to selected dealers and
agents. The Distributor will reallow discounts to selected dealers and agents
in the amounts indicated in the table above. In this regard, the Distributor
may elect to reallow the entire sales charge to selected dealers and agents
for all sales with respect to which orders are placed with the Distributor. A
selected dealer who receives reallowance in excess of 90% of such a sales
charge may be deemed to be an "underwriter" under the Securities Act of 1933.
Combination Purchase Privilege
Purchases, either singly or in any combination, of shares of the Fund or
shares of any other Phoenix Fund, (including Class B Shares) if made at a
single time by a single purchaser, will be combined for the purpose of
determining whether the total dollar amount of such purchases entitles the
purchaser to a reduced sales charge on any such purchases of Class A Shares.
Each purchase of Class A Shares will then be made at the public offering
price, as described in the then current Prospectus relating to such shares,
which at the time of such purchase is applicable to a single transaction of
the total dollar amount of all such purchases. The term "single purchaser"
includes an individual, or an individual, his spouse and their children under
the age of majority purchasing for his or their own account (including an IRA
account) including his or their own trust, commonly known as a living trust;
a trustee or other fiduciary purchasing for a single trust, estate or single
fiduciary account, although more than one beneficiary is involved; multiple
trusts or 403(b) plans for the same employer; multiple accounts (up to 200)
under a qualified employee benefit plan or administered by a third party
administrator; or trust companies, bank trust departments, registered
investment advisers, and similar entities placing orders or providing
administrative services with respect to funds over which they exercise
discretionary investment authority and which are held in a fiduciary, agency,
custodial or similar capacity, provided all shares are held of record in the
name, or nominee name, of the entity placing the order.
Letter of Intent
Class A Shares or shares of any other Phoenix Fund (including Class B Shares
and excluding Money Market Fund Series Class A Shares) may be purchased by a
"single purchaser" (as defined above) within a period of thirteen months
pursuant to a Letter of Intent, in the form provided by Equity Planning,
stating the investor's intention to invest in such shares during such period
an amount which, together with the value (at their maximum offering prices on
the date of the Letter) of the Class A Shares of the Fund or Class A or Class
B Shares of any other Phoenix Fund then owned by such investor, equals a
specified dollar amount. Each purchase of shares made pursuant to a Letter of
Intent will be made at the public offering price, as described in the then
current Prospectus relating to such shares, which at the time of purchase is
applicable to a single transaction of the total dollar amount specified in
the Letter of Intent.
An investor's Letter of Intent is not a binding commitment of the investor
to purchase or a binding obligation of the Fund or Equity Planning to sell a
specified dollar amount of shares qualifying for a reduced sales charge.
Accordingly, out of his initial purchase (and subsequent purchases if
necessary), 5% of the dollar amount of purchases required to complete his
investment is held in escrow in the form of shares (valued at
15
<PAGE>
the purchase price thereof) registered in the investor's name until he
completes his investment, at which time escrowed shares are deposited to his
account. If the investor does not complete his investment and does not within
20 days after written request by Equity Planning or his dealer pay the
difference between the sales charge on the dollar amount specified in his
Letter and the sales charge on the dollar amount of actual purchases, the
difference will be realized through the redemption of an appropriate number
of the escrowed shares and any remaining escrowed shares will be deposited to
his account.
Right of Accumulation
"Single purchasers" (as defined above) may also qualify for reduced sales
charges based on the combined value of purchases of either class of shares of
the Fund, or any other Phoenix Fund, made over time. Reduced sales charges
are offered to investors whose shares, in the aggregate, are valued (i.e.,
the dollar amount of such purchases plus the then current value (at the
public offering price as described in the then current prospectus relating to
such shares) of shares of all Phoenix Funds owned) in excess of the threshold
amounts described in the section entitled "Initial Sales Charge
Alternative--Class A Shares." To use this option, the investor must supply
sufficient information as to account registrations and account numbers to
permit verification that one or more of his purchases qualifies for a reduced
sales charge.
Associations
A group or association may be treated as a "single purchaser" and qualify
for reduced initial sales charges under the Combination Privilege and Right
of Accumulation if the group or association (1) has been in existence for at
least six months; (2) has a legitimate purpose other than to purchase mutual
fund shares at a reduced sales charge; (3) gives its endorsements or
authorization to the investment program to facilitate solicitation of the
membership by the investment dealer, thus effecting economies of sales
effort; and (4) is not a group whose sole organizational nexus is that the
members are credit card holders of a company, policyholders of an insurance
company, customers of a bank or a broker-dealer or clients of an investment
adviser.
Deferred Sales Charge Alternative--Class B Shares
Investors choosing the deferred sales charge alternative purchase Class B
Shares at net asset value per share without the imposition of a sales charge
at the time of purchase. The Class B Shares are sold without an initial sales
charge but are subject to a sales charge if redeemed within five years of
purchase.
Proceeds from the contingent deferred sales charge are paid to the
Distributor and are used in whole or in part by the Distributor to defray its
expenses related to providing distribution-related services to the fund in
connection with the sale of the Class B Shares, such as the payment of
compensation to selected dealers and agents. The combination of the
contingent deferred sales charge and the distribution fee facilitates the
ability of the Fund to sell the Class B Shares without a sales charge being
deducted at the time of purchase.
Contingent Deferred Sales Charge
Class B Shares which are redeemed within five years of purchase will be
subject to a contingent deferred sales charge at the rates set forth below
charged as a percentage of the dollar amount subject thereto. The charge will
be assessed on an amount equal to the lesser of the current market value or
the cost of the shares being redeemed. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial purchase price. In
addition, no charge will be assessed on shares derived from reinvestment of
dividends or capital gains distributions.
The Distributor intends to pay investment dealers a sales commission of 4%
of the sale price of Class B Shares sold by such dealers, subject to future
amendment or termination. The Distributor will retain all or a portion of the
continuing distribution fee assessed to Class B shareholders and will receive
the entire amount of the contingent deferred sales charge paid by
shareholders on the redemption of shares to finance the 4% commission plus
interest and related marketing expenses.
The amount of the contingent deferred sales charge, if any, will vary
depending on the number of years from the time of payment for the purchase of
Class B Shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment for
the purchases of shares, all payments during a month will be aggregated and
deemed to have been made on the last day of the previous month.
Contingent Deferred
Sales Charge as
a Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
- ---------------------- ---------------------
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 2%
Sixth 0%
In determining whether a contingent deferred sales charge is applicable to
a redemption, the calculation will be determined in the manner that minimizes
the rate being charged. Therefore, Class A Shares will be redeemed first,
Class B Shares held for over 5 years or acquired pursuant to reinvestment of
dividends or distributions are redeemed next and any Class B Shares held
longest during the five-year period, are redeemed next unless the shareholder
directs otherwise. The charge will not be applied to dollar amounts
representing an increase in the net asset value since the time of purchase.
To provide an example, assume in 1990, an investor purchased 100 Class B
Shares. In 1993, the investor purchased another 100 Class B Shares at $12 per
share. In 1995, the investor purchased 100 Class A Shares. Assume that in
1996, the investor owns 225 Class B Shares (15 Class B Shares resulting from
dividend reinvestment and distributions upon the Class B Shares purchased in
1990 and 10 Class B
16
<PAGE>
Shares resulting from dividend reinvestment and distributions upon the Class
B Shares purchased in 1993) as well as 100 Class A Shares. If the investor
wished to then redeem 300 shares and had not specified a preference in
redeeming shares: first, 100 Class A Shares would be redeemed without charge.
Second, 115 Class B Shares purchased in 1990 (including 15 shares issued as a
result of dividend reinvestment and distributions) would be redeemed next
without charge. Finally, 85 Class B Shares purchased in 1993 would be
redeemed resulting in a deferred sales charge of $27 [75 shares (85 shares
minus 10 shares resulting from dividend reinvestment) x $12 (original price
of current NAV if less than original) x 3% (applicable rate in the third year
after purchase)].
The contingent deferred sales charge is waived on redemptions of shares
(a) if redemption is made within one year of death (i) of the sole
shareholder on an individual account, (ii) of a joint tenant where the
surviving joint tenant is the deceased's spouse, or (iii) of the beneficiary
of a Uniform Gifts to Minors Act (UGMA), Uniform Transfers to Minors Act
(UTMA) or other custodial account; (b) if redemption is made within one year
of disability, as defined in Section 72(m)(7) of the Code; (c) in connection
with mandatory distributions upon reaching age 70-1/2 under any retirement
plan qualified under Sections 401, 408 or 403(b) of the Code or any
redemption resulting from the tax-free return of an excess contribution to an
IRA; (d) in connection with redemptions by 401(k) plans using an approved
participant tracking system for participant hardships, death, disability or
normal retirement, and loans which are subsequently repaid; (e) in connection
with the exercise of certain exchange privileges among Class B Shares of the
Fund and Class B Shares of other Phoenix Funds; (f) in connection with any
direct rollover transfer of shares from an established Phoenix Fund qualified
plan into a Phoenix Fund IRA by participants terminating from the qualifying
plan; and (g) in accordance with the terms specified under the Systematic
Withdrawal Program. If, upon the occurrence of a death as outlined above, the
account is transferred to an account registered in the name of the deceased's
estate, the contingent deferred sales charge will be waived on any redemption
from the estate account occurring within one year of the death. If the Class
B Shares are not redeemed within one year of the death, they will remain
Class B Shares and be subject to the applicable contingent deferred sales
charge when redeemed.
Class B Shares of the Fund will automatically convert to Class A Shares
without a sales charge at the relative net asset values of each class after
eight years from the acquisition of the Class B Shares, and as a result, will
thereafter be subject to the lower distribution fee under the Class A Plan.
Such conversion will be on the basis of the relative net asset value of the
two classes without the imposition of any sales load, fee or other charge.
The purpose of the conversion feature is to relieve the holders of Class B
Shares that have been outstanding for a period of time sufficient for Equity
Planning to have been compensated for distribution-related expenses.
For purposes of conversion to Class A Shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares
in a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) are converted to Class A Shares, an
equal pro rata portion of the Class B Shares in the sub-account will also be
converted to Class A Shares.
The conversion of Class B Shares to Class A Shares is subject to the
continuing availability of an opinion of counsel or a ruling of the Internal
Revenue Service ("IRS") to the effect that (i) the assessment of the higher
distribution fees and transfer agency costs with respect to Class B Shares
does not result in any dividends or distributions constituting "preferential
dividends" under the Code, and (ii) that the conversion of shares does not
constitute a taxable event under federal income tax law. The Fund has not
sought opinions of counsel as to these matters but has or shall apply to the
IRS for such a ruling. While a ruling similar to the one sought by the Fund
as to preferential dividends has been issued previously by the IRS with
respect to Phoenix Multi-Sector Fixed Income Fund, Inc., complete assurance
cannot be given when or whether the Fund will receive a favorable ruling.
While an adverse determination by the IRS is not expected, the Fund may be
required to reassess the alternative purchase arrangement structure if the
IRS does not rule favorably. In addition, were the IRS not to rule favorably,
the Fund might make additional distributions if doing so would assist in
complying with the Fund's general practice of distributing sufficient income
to reduce or eliminate U.S. federal taxes. The conversion of Class B Shares
to Class A Shares may be suspended if such an opinion or ruling is no longer
available. In that event, no further conversions of Class B Shares would
occur, and shares might continue to be subject to the higher distribution fee
for an indefinite period which may extend beyond the period ending six years
after the end of the month in which affected Class B Shares were purchased.
INVESTOR ACCOUNTS AND SERVICES AVAILABLE
An account will be opened for the investor after the investor makes an
initial investment. Shares purchased will be held in the shareholder's
account by the Transfer Agent which will forward a statement each time there
is a change in the number of shares in the account. At any time, a
shareholder may request that a certificate be issued, subject to certain
conditions, representing any number of full shares held in his or her
account.
The Fund mails periodic reports to its shareholders. In order to reduce
the volume of mail, 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.
Shareholder inquiries should be directed to the Fund at (800) 243-1574.
Bank Draft Investing Program (Investo-Matic Plan)
By completing the Investo-Matic Section of the New Account Application, a
shareholder may authorize the bank named in the form to draw $25 or more from
his personal
17
<PAGE>
checking account on or about the 15th day of the month, to be used to
purchase additional shares for his account. The amount the shareholder
designates will be made available, in form payable to the order of the
Transfer Agent by the bank on the date the bank draws on his account and will
be used to purchase shares at the applicable offering price. The shareholder
or his or her registered representative may, by telephone or written notice,
cancel or change the dollar amount being invested pursuant to the
Investo-Matic Plan unless the shareholder has notified the Fund or Transfer
Agent that his or her registered representative shall not have this
authority.
Distribution Option
The 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 the option of the shareholder, in cash. By exercising the distribution
option, a shareholder 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 a shareholder elects to receive
dividends and/or distributions in cash and the check cannot be delivered or
remains uncashed by the shareholder 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 for the shareholder's account at the then current net asset value.
Shareholders who 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), 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 at net asset value. Shareholders 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. Dividends and capital gain
distributions received in shares are taxable to the shareholder and credited
to the shareholder's account in full and fractional shares computed at the
closing net asset value on the next business day after the record date. A
distribution option may be changed at any time by notifying Customer Service
by telephone at (800) 243-1574 or by sending a letter signed by the
registered owner(s) of the account. Requests for directing distributions to
an alternate payee must be made in writing with a signature guarantee of the
registered owner(s). To be effective with respect to a particular dividend or
distribution, notification of the new distribution option must be received by
the Transfer Agent at least three days prior to the record date of such
dividend or distribution. If all shares in the shareholder's account are
repurchased or redeemed or transferred between the record date and the
payment date of a dividend or distribution, he/she will receive cash for the
dividend or distribution regardless of the distribution option selected.
Systematic Withdrawal Program
The Systematic Withdrawal Program allows shareholders to periodically redeem
a portion of their account on a predetermined monthly or quarterly,
semiannual or annual basis. A sufficient number of full and fractional shares
shall therefore be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the
month at the closing net asset value on the date of redemption. The
Systematic Withdrawal Program also provides for redemptions to be tendered on
or about the 10th, 15th or 25th of the month with proceeds to be directed
through Automated Clearing House (ACH) to the shareholder's 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. See
"Redemption of Small Accounts".
Class A shareholders participating in the Systematic Withdrawal Program
must own shares of the Fund worth $5,000 or more, as determined by the
then-current net asset value per share. The purchase of shares while
participating in the withdrawal program will ordinarily be disadvantageous to
the Class A Shares investor since a sales charge will be paid by the investor
on the purchase of Class A Shares at the same time as other shares are being
redeemed. For this reason, investors in Class A Shares may not participate in
an automatic investment program while participating in the Systematic
Withdrawal Program.
To participate in the Systematic Withdrawal Program, Class B shareholders
must initially own shares of the Fund worth $5,000 or more and elect to have
all dividends reinvested in additional Class B Shares of the Fund. 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 shall be subject to any applicable contingent
deferred sales charge. 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 Fund 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.
Exchange Privileges
Shareholders may exchange Class A or Class B Shares held in book entry form
for shares of the same class of other Phoenix Funds (except Phoenix
Multi-Sector Short-Term Bond Fund Class A Shares held less than 6 months and
Class A Shares of the Phoenix Money Market Series), provided that the
following conditions are met: (1) the shares that will be
18
<PAGE>
acquired in the exchange (the "Acquired Shares") are available for sale in
the shareholder's state of residence; (2) the Acquired Shares are of the same
class as the shares to be surrendered (the "Exchanged Shares"); (3) the
Acquired Shares will be registered to the same shareholder account as the
Exchanged Shares; (4) the account value of the fund whose shares are to be
acquired must equal or exceed the minimum initial investment amount required
by that Fund after the exchange is implemented; and (5) if a shareholder has
elected not to utilize the Telephone Exchange Privilege (see below), a
properly executed exchange request must be received by State Street Bank and
Trust Company. Exchange privileges are not available for certain shareholders
holding Class A Shares of Phoenix Money Market Fund Series and Class A Shares
of Phoenix Multi-Sector Short Term Bond Fund held less than 6 months.
Subject to the above requirements for an exchange, a shareholder or
his/her registered representative may, by telephone or written notice, elect
to have Class A or Class B shares of the Fund exchanged for the same class of
shares of another Phoenix Fund automatically on a monthly, quarterly,
semi-annual, or annual basis or may cancel the privilege ("Systematic
Exchange").
Shareholders who maintain an account balance in the Fund of at least
$5,000, or $2,000 for tax qualified retirement benefit plans (calculated on
the basis of the net asset value of the shares held in a single account), may
direct that shares of the Fund be automatically exchanged at predetermined
intervals for shares of the same class of another Phoenix Fund. If the
shareholder is participating in the Self Security program offered by Phoenix
Home Life, it is not necessary to maintain the above account balances in
order to use the systematic Exchange privilege.
Such exchanges will be executed upon the close of business on the 10th of
a month and if the 10th falls on a holiday or weekend, then at the close of
business on the next succeeding business day. The minimum initial and
subsequent amount that may be exchanged under the Systematic Exchange is $25.
Systematic Exchange forms are available from Equity Planning.
Exchanges will be based upon each Fund's net asset value per share next
computed following receipt of a properly executed exchange request, without a
sales charge. On Class B Share exchanges, the contingent deferred sales
charge schedule of the original shares purchased continues to apply.
The exchange of shares from one Fund to another is treated as a sale of
the Exchanged Shares and a purchase of the Acquired Shares for Federal income
tax purposes. The shareholder may, therefore, realize a taxable gain or loss.
See "Dividends, Distributions and Taxes" for information concerning the
Federal income tax treatment of a disposition of shares.
It is the policy of the Adviser to discourage and prevent frequent trading
by shareholders among the Fund and other Phoenix Funds in response to market
fluctuations. The Fund reserves the right to refuse exchange purchases by any
person or broker/dealer if, in the Fund's or Adviser's opinion, the exchange
would adversely affect the Fund's ability to invest according to its
investment objective and policies, or otherwise adversely affect the Fund and
its shareholders. The Fund reserves the right to terminate or modify its
exchange privileges at any time upon giving prominent notice to shareholders
at least 60 days in advance.
Each Phoenix Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the current prospectus of
the fund into which the exchange is to be made before any exchange requests
are made.
Telephone Exchanges
Telephone Exchange privileges are only available in states where the shares
to be acquired may be legally sold. Unless a shareholder elects in writing
not to participate in the Telephone Exchange Privilege, shares for which
certificates have not been issued may be exchanged by calling (800) 367-5877
provided that the exchange is made between accounts with identical
registrations. Under the Telephone Exchange Privilege, telephone exchange
orders may also be entered on behalf of the shareholder by his or her
registered representative.
The Fund and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. In addition to requiring
identical registrations on both accounts, the Transfer Agent will require
address verification and will record telephone instructions on tape. All
exchanges will be confirmed in writing to the shareholder. To the extent that
procedures reasonably designed to prevent unauthorized telephone exchanges
are not followed, the Fund and/or the Transfer Agent may be liable for
following telephone instructions for exchange transactions that prove to be
fraudulent. Broker/dealers other than Equity Planning have agreed to bear the
risk of any loss resulting from any unauthorized telephone exchange
instruction from the firm or its registered representatives. However, the
shareholder would bear the risk of loss resulting from instructions entered
by an unauthorized third party that the Fund and/or the Transfer Agent
reasonably believe to be genuine. The Telephone Exchange Privilege may be
modified or terminated at any time on 60 days' notice to shareholders. In
addition, during times of drastic economic or market changes, the Telephone
Exchange Privilege may be difficult to exercise or may be suspended
temporarily. In such event an exchange may be effected by following the
procedure outlined for tendering shares represented by certificate(s).
If a shareholder elects not to use the Telephone Exchange Privilege or if
the shares being exchanged are represented by a certificate or certificates,
in order to exchange shares the shareholder must submit a written request to
Phoenix Funds c/o State Street Bank and Trust Company, P.O. Box 8301, Boston,
MA 02266-8301. If the shares are being exchanged between accounts that are
not registered identically, the signature on such request must be guaranteed
by an eligible guarantor institution as defined by the Fund's transfer agent
in
19
<PAGE>
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. Any outstanding certificate or certificates for the
tendered shares must be duly endorsed and submitted.
Purchase and withdrawal plans and reinvestment and exchange privileges are
described more fully in the Statement of Additional Information. For further
information, call Equity Planning at (800) 243-1574.
NET ASSET VALUE
Net asset value per share of the Fund is determined as of the close of
regular trading of the New York Stock Exchange (the "Exchange") on each day
that the Exchange is open.
The net asset value per share is determined by dividing the value of the
Fund's securities, plus any cash and other assets (including, dividends and
interest accrued but not collected) less all liabilities by the number of
shares of the Fund outstanding. The total liability allocated to a class,
plus that class's distribution fee and any other expenses specifically
allocated to that class, are deducted from the proportionate interest of such
class in the Fund's assets and the resulting amount of each class is divided
by the number of shares of that class outstanding to produce the net asset
value per share.
In determining the value of the Fund's assets, investments listed or traded
on a national securities exchange are valued at the last sale price or, if
there has been no recent sale, at the last bid price; investments traded in
the over-the-counter market are valued at the last bid price; and short-term
obligations maturing in less than sixty days are valued at amortized cost,
which approximates market. If at any time the Fund has other investments,
such investments would be valued at the fair value thereof as determined in
good faith by the Directors.
HOW TO REDEEM SHARES
Shareholders have the right to have the Fund buy back shares at the net
asset value next determined after receipt of a redemption request 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 (see "Net Asset
Value"). In the case of Class B Share redemptions, investors will be subject
to the applicable deferred sales charge, if any, for such shares (see
"Deferred Sales Charge Alternative--Class B Shares", above). To redeem, any
outstanding share certificates in proper form for transfer must be received
by Phoenix Funds c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8801. To be in proper form to redeem shares, the signature
of the shareholder(s) on the certificate or stock power must be signed
exactly as registered, including any fiduciary title, on a written
instruction letter, certificate, or accompanying stock power, such signatures
being guaranteed by an eligible guarantor institution as determined in
accordance with standards and procedures established by the Transfer Agent
(please contact the Fund at (800) 243-1574 with any questions regarding
eligible guarantors).
If no certificate has been issued, the Transfer Agent requires a written
request with signature guarantee. The Transfer Agent may waive the signature
guarantee requirement in the case of shares registered in the names of
individuals singly, jointly, or as custodian under the Uniform Gifts to
Minors Act, the proceeds do not exceed $50,000, and the proceeds are payable
to the registered owner(s) at the address of record. Such requests must be
signed by each person in whose name the account is registered. In addition, a
shareholder may sell shares back to the Fund through securities dealers who
may charge customary commissions for their services. The redemption price in
such case will be the price as of the close of the regular trading session of
the Exchange on that day, provided the order is received by the dealer prior
thereto, and is transmitted to the Underwriter prior to the close of its
business. No charge is made by the Fund on redemptions, but shares tendered
through investment dealers may be subject to a service charge by such
dealers. Payment for shares redeemed is made within seven days; provided,
however, that redemption proceeds will not be disbursed until each check used
for purchases of shares has been cleared for payment by the investor's bank,
which may take up to 15 days after receipt of the check.
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 Fund at (800) 243-1574. Redemption requests
will not be honored until all required documents in proper form have been
received.
Telephone Redemptions
Unless a shareholder elects in writing not to participate in the Telephone
Redemption Privilege, shares for which certificates have not been issued may
be redeemed by telephoning (800) 367-5877 and telephone redemptions will also
be accepted on behalf of the shareholder from his or her registered
representative.
The Fund and Transfer Agent will employ reasonable procedures to confirm
that telephone instructions are genuine. Address and bank account information
will be verified, telephone redemption instructions will be recorded on tape,
and all redemptions will be confirmed in writing to the shareholder. If there
has been an address change within the past 60 days, a telephone redemption
will not be authorized. Equity Planning and the Fund will employ reasonable
procedures to confirm that telephone instructions are genuine. To the extent
that procedures reasonably designed to prevent unauthorized telephone
redemptions are not followed, Equity Planning and the Fund may be liable for
following telephone instructions for redemption transactions that prove to be
fraudulent. Broker/dealers other than Equity Planning have
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<PAGE>
agreed to bear the risk of any loss resulting from any unauthorized telephone
redemption instruction from the firm or its registered representatives.
However, the shareholder would bear the risk of loss resulting from
instructions entered by an unauthorized third party that Equity Planning
and/or the Fund reasonably believe to be genuine. The Telephone Redemption
Privilege may be modified or terminated at any time without prior notice to
shareholders. In addition, during times of drastic economic or market
changes, the Telephone Redemption Privilege may be difficult to exercise and
a shareholder should submit a written redemption request, as described above.
If the amount of the redemption is over $500, the proceeds will be wired
to the designated U.S. commercial bank account. If the amount of the
redemption is less than $500, the proceeds will be sent by check to the
address of record on the shareholder's account.
Telephone redemption requests must be received by Equity Planning the
close of trading on the New York Stock Exchange on any day when the Transfer
Agent is open for business. Requests made after that time or on a day when
the Transfer Agent is not open for business cannot be accepted by the
Transfer Agent. The proceeds of a telephone redemption will normally be sent
on the first business day following receipt of the redemption request.
However, with respect to the telephone redemption of shares purchased by
check, such requests will only be effected after the Fund has assured itself
that good payment has been collected for the purchase of shares, which may
take up to 15 days. This expedited redemption privilege is not available to
HR-10, IRA and 403(b)(7) Plans.
Redemption in Kind
To the extent consistent with state and Federal law, the Fund may make
payment of the redemption price either in cash or in kind. However, the Fund
has elected to pay in cash all requests for redemption by any shareholder of
record, limited in respect to each shareholder during any 90 day period to
the lesser of $250,000 or 1% of the net asset value of the Fund 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
Fund. A shareholder receiving such securities would incur brokerage costs
when he sold the securities. A complete description of redemption and
repurchase procedures is contained in the Statement of Additional
Information.
Redemption of Small Accounts
Due to the relatively high cost of maintaining small accounts, the Fund
reserves the right to redeem, at net asset value, the shares of any
shareholder whose account has a value, due to redemptions, of less than $200.
Before the Fund redeems these shares, the shareholder will be given notice
that the value of the shares in the account is less than the minimum amount
and will be allowed 30 days to make an additional investment in an amount
which will increase the value of the account to at least $200.
A shareholder should contact his/her broker/dealer if he/she wishes to
transfer shares from an existing broker/dealer street name account to a
street name account with another broker/ dealer. The Fund has no specific
procedures governing such account transfers.
Reinvestment Privilege
Shareholders have a one time privilege of using redemption proceeds to
purchase Class A Shares of any Phoenix Fund with no sales charge (at the 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 for reinvestment must be received
by the Distributor 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
this reinvestment privilege.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
It is the policy of the Fund to distribute substantially all of its net
investment income at least annually and to distribute net realized capital
gains, if any, annually. Both dividends and distributions will be payable in
shares of the Fund at net asset value or, at the option of the shareholder,
in cash.
It is also the policy of the Fund to qualify as a "regulated investment
company" by complying with provisions of the Internal Revenue Code of 1986,
as amended (the "Code") relieving investment companies which distribute
substantially all of their net income (both net investment income and net
realized capital gains) from Federal income tax on the amounts distributed.
The Directors believe that the Fund so complied for its last taxable year.
Distributions of net investment income and net realized short-term capital
gains (whether received in shares or in cash) are treated by the shareholder
as ordinary income for Federal income tax purposes. Distributions which are
designated by the Fund as long-term gains (whether received in shares or in
cash) are treated by the shareholder as long-term capital gains for Federal
income tax purposes regardless of the length of time the shareholder may have
owned shares of the Fund. Shareholders who are not subject to tax on their
income will not be required to pay tax on amounts distributed to them. After
the close of the calendar year the Fund will advise shareholders what portion
of any payments received was ordinary income and what portion was long-term
capital gains.
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<PAGE>
The Federal income tax laws impose a four percent nondeductible excise tax
on each regulated investment company with respect to the amount, if any, by
which such company does not meet distribution requirements specified in the
Federal income tax laws. The Fund intends to comply with the distribution
requirements and thus does not expect to incur the four percent nondeductible
excise tax.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS regulations, the Fund may be required to withhold 31% of all
reportable payments including any taxable dividends, capital gain
distributions or share redemption proceeds, for any account which does not
have a taxpayer identification number or social security number and certain
required certifications.
The Fund reserves the right to refuse to open an account for any person
failing to provide a taxpayer identification number along with the required
certifications.
The Fund sends to all shareholder, within 31 days after the end of the
calendar year, information which is required by the Internal Revenue Service
for preparing federal income tax returns. Investors are urged to consult
their attorney or tax advisor regarding specific questions as to Federal,
foreign, state or local taxes.
ADDITIONAL INFORMATION
Organization of the Fund
At the June 24, 1994 special meeting of shareholders, the Fund's
shareholders voted to increase the amount of shares of authorized Common
Stock, $1 par value, from 15,000,000 to 50,000,000. On September 30, 1994 the
Fund's shareholders voted to redesignate the Common Stock as Class A Common
Stock, authorize the Board of Directors to designate additional classes and
series of Common Stock, and authorize an additional 50,000,000 shares of
Common Stock, designated as Class B Common Stock. The Directors have
designated the authorized capital stock of the Fund as 50,000,000 shares of
Class A Common Stock, $1 par value and 50,000,000 shares of Class B Common
Stock, $1 par value. Shareholders of the Fund are entitled to one full vote
for each full share owned and a fractional vote for any fractional share.
Shares will participate equally in dividends and distributions declared by
the Fund and in the Fund's net assets on liquidation, except that Class B
Shares, which will bear higher distribution fees and certain incrementally
higher expenses associated with the deferred sales arrangement, will pay
correspondingly lower dividends per share than Class A Shares. Shares are
fully paid and non-assessable when issued and are transferable and
redeemable. Shares have no preemptive or conversion rights (other than as
described herein).
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.
22
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THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
BACKUP WITHHOLDING INFORMATION
Step 1. Please make sure that the social security number or taxpayer
identification number (TIN) which appears on the Application complies
with the following guidelines:
<TABLE>
<CAPTION>
Account Type Give Social Security Number or Tax Identification Number of:
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Individual Individual
- -----------------------------------------------------------------------------------------------------------
Joint (or Joint Tenant) Owner who will be paying tax
- -----------------------------------------------------------------------------------------------------------
Uniform Gifts to Minors Minor
- -----------------------------------------------------------------------------------------------------------
Legal Guardian Ward, Minor or Incompetent
- -----------------------------------------------------------------------------------------------------------
Sole Proprietor Owner of Business (also provide owner's name)
- -----------------------------------------------------------------------------------------------------------
Trust, Estate, Pension Plan Trust Trust, Estate, Pension Plan Trust (not personal TIN of fiduciary)
- -----------------------------------------------------------------------------------------------------------
Corporation, Partnership,
Other Organization Corporation, Partnership, Other Organization
- -----------------------------------------------------------------------------------------------------------
Broker/Nominee Broker/Nominee
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Step 2. If you do not have a TIN, you must obtain Form SS-5 (Application for
Social Security Number) or Form SS-4 (Application for Employer
Identification Number) from your local Social Security or IRS office
and apply for one. Write "Applied For" in the space on the
application.
Step 3. If you are one of the entities listed below, you are exempt from
backup withholding.
(bullet) A corporation
(bullet) Financial institution
(bullet) Section 501(a) exempt organization (IRA, Corporate
Retirement Plan, 403(b), Keogh)
(bullet) United States or any agency or instrumentality thereof
(bullet) A State, the District of Columbia, a possession of the
United States, or any subdivision or instrumentality thereof
(bullet) International organization or any agency or instrumentality
thereof
(bullet) Registered dealer in securities or commodities registered in
the U.S. or a possession of the U.S.
(bullet) Real estate investment trust
(bullet) Common trust fund operated by a bank under section 584(a)
(bullet) An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1)
(bullet) Regulated Investment Company
If you are in doubt as to whether you are exempt, please contact the Internal
Revenue Service.
Step 4. IRS Penalties--If you do not supply us with your TIN, you will be
subject to an IRS $50 penalty unless your failure is due to
reasonable cause and not willful neglect. If you fail to report
interest, dividend or patronage dividend income on your federal
income tax return, you will be treated as negligent and subject to an
IRS 5% penalty tax on any resulting underpayment of tax unless there
is clear and convincing evidence to the contrary. If you falsify
information on this form or make any other false statement resulting
in no backup withholding on an account which should be subject to a
backup withholding, you may be subject to an IRS $500 penalty and
certain criminal penalties including fines and imprisonment.
- ----------
This Prospectus sets forth concisely the information about the Phoenix Total
Return Fund, Inc. (the "Fund") which you should know before investing. Please
read it carefully and retain it for future reference.
The Fund has filed with the Securities and Exchange Commission a Statement of
Additional Information about the Fund, dated May 1, 1996. The Statement
contains more detailed information about the Fund and is incorporated into
this Prospectus by reference. You may obtain a free copy of the Statement by
writing the Fund at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200.
Financial information relating to the Fund is contained in the Annual Report
to Shareholders for the year ended December 31, 1995 and is incorporated into
the Statement of Additional Information by reference.
[Recycle logo] Printed on recycled paper using soybean ink
24
<PAGE>
Phoenix Total Return Fund, Inc.
P.O. Box 2200
Enfield, CT 06083-2200
[Phoenix Duff & Phelps logo]
Bulk Rate Mail
U.S. Postage
PAID
Springfield, MA
Permit No. 444
PDP 453 (5/96)
<PAGE>
PHOENIX TOTAL RETURN FUND, INC.
101 Munson Street
Greenfield, Massachusetts 01301
Statement of Additional Information
May 1, 1996
This Statement of Additional Information is not the prospectus, but
expands upon and supplements the information contained in the current
Prospectus of Phoenix Total Return Fund, Inc. (the "Fund"), dated May 1,
1996, and should be read in conjunction with it. The Fund's Prospectus may be
obtained by calling Phoenix Equity Planning Corporation ("Equity Planning")
at (800) 243-4361 or by writing to Equity Planning at 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200.
----------
TABLE OF CONTENTS*
THE FUND 2
INVESTMENT OBJECTIVE AND POLICIES (7) 2
INVESTMENT RESTRICTIONS (10) 9
PERFORMANCE INFORMATION (6) 10
PORTFOLIO TRANSACTIONS AND BROKERAGE 11
SERVICES OF THE ADVISER (11) 12
NET ASSET VALUE 13
PLANS OF DISTRIBUTION (12) 13
HOW TO BUY SHARES (13) 15
EXCHANGE PRIVILEGE 17
REDEMPTION OF SHARES (20) 17
DIVIDENDS, DISTRIBUTIONS AND TAXES 18
DIRECTORS AND OFFICERS 19
OTHER INFORMATION 26
APPENDIX 27
*Numbers in parentheses are cross-references to related sections of the
Prospectus.
----------
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders/Exchanges: (800) 367-5877
Telecommunications Device (TTY): (800) 243-1926
PDP 458(5/96)
1
<PAGE>
THE FUND
Phoenix Total Return Fund, Inc. was organized as a corporation under the
laws of The Commonwealth of Massachusetts on November 22, 1966. Originally a
closed-end dual purpose investment company known as Income and Capital
Shares, Inc., its authorized capital stock consisted of two classes of
shares, Cumulative Income Shares, $1 par value, and Capital Shares, $1 par
value.
In accordance with the provisions of the Fund's Restated Articles of
Organization, all outstanding Cumulative Income Shares were called for
retirement on March 31, 1982 at a cash call price consisting of $10 per share
plus accrued and unpaid dividends.
At a meeting of the Capital Shareholders held on March 31, 1982 the
holders of a majority of the outstanding Capital Shares approved a proposal
to change the subclassification of the Fund from a closed-end dual purpose
investment company to an open-end investment company with a single class of
redeemable shares and also approved a proposal to amend the Fund's Restated
Articles of Organization to change the name of the Fund from Income and
Capital Shares, Inc. to P-C Capital Fund, Inc. Both the change in the
subclassification of the Fund and the name change became effective March 31,
1982.
At the July 2, 1986 adjourned session of the May 22, 1986 special meeting
of the Fund's shareholders, the holders of a majority of the outstanding
shares approved amendments to the Fund's Restated Articles of Organization
(i) to change the name of the Fund to Phoenix Total Return Fund, Inc. and
(ii) to change the total number of shares which the Fund is authorized to
issue (a) by eliminating the authorized number of Cumulative Income Shares,
$1 par value, and (b) by increasing the authorized number of Capital Shares,
$1 par value, from 3,521,000 to 5,000,000 and reclassifying such Capital
Shares as Common Stock, $1 par value. The name change became effective July
9, 1986 and the change in authorized shares became effective July 22, 1986.
At the August 20, 1987 adjourned session of the August 13, 1987 special
meeting of the Fund's shareholders, shareholders voted to amend the Fund's
Restated Articles of Organization to increase the authorized number of shares
of Common Stock, $l par value, from 5,000,000 to 15,000,000. The amendment
became effective September 15, 1987.
At a special meeting of the Fund's shareholders held on June 24, 1994, the
holders of the requisite percentages of outstanding shares approved further
amendment to the Fund's Restated Articles of Organization to increase the
number of authorized shares of the Fund's Common Stock, $1 par value, from
15,000,000 to 50,000,000. On September 30, 1994, the holders of the requisite
percentages of outstanding shares approved further amendment to the Fund's
Restated Articles of Organization to (i) to redesignate the Common Stock as
Class A Common Stock, $1 par value; (ii) to authorize the Directors to
designate additional classes of Common Stock; and (iii) to authorize an
additional 50,000,000 shares of undesignated Common Stock, $1 par value.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's Prospectus describes the investment objective of the Fund and
summarizes the investment policies and techniques the Fund will employ in
seeking to achieve its objective. The following discussion supplements the
description of the Fund's investment policies and techniques in the
Prospectus.
Writing and Purchasing Options
Call options written by the Fund normally will have expiration dates between
three and nine months from the date written. During the option period the
Fund may be assigned an exercise notice by the broker-dealer through which
the call option was sold, requiring the Fund to deliver the underlying
security (or cash in the case of securities index calls) against payment of
the exercise price. This obligation is terminated upon the expiration of the
option period or at such earlier time as 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.
The exercise price of a call option written by the 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.
2
<PAGE>
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. The 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 the Fund, to prevent an
underlying security from being called, or to enable the Fund to write another
call option with either a different exercise price or expiration date or
both. The Fund may realize a net gain or loss from a closing purchase
transaction, depending upon whether the amount of the premium received on the
call option is more or less than the cost of effecting the closing purchase
transaction. If a call option written by the Fund expires unexercised, the
Fund will realize a gain in the amount of the premium on the option less the
commission paid.
The option activities of the Fund may increase its portfolio turnover rate
and the amount of brokerage commissions paid. The 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
The Fund may write call options only if they are covered and remain covered
so long as the Fund is obligated as a writer. If the Fund writes a call
option on an individual security, the Fund will own the underlying security
at all times during the option period. The 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 the 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 the Fund, the Fund will be required to deposit qualified
securities. A "qualified security" is a security against which the Fund has
not written a call option and which has not been hedged by the Fund by the
sale of a financial futures contract. If at the close of business on any day
the market value of the qualified securities falls below 100% of the current
index value times the multiplier times the number of contracts, the Fund will
deposit an amount of cash or liquid assets equal in value to the difference.
In addition, when the Fund writes a call on an index which is "in-the-money"
at the time the call is written, the 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 the 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.
The Fund may invest up to 5% of its total assets in exchange-traded call
and put options. The Fund may sell a call option or a put option which it has
previously purchased prior to the purchase (in the case of a call) or the
sale (in the case of a put) of the underlying security. 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 the Fund's qualifying as a regulated investment company
under the Internal Revenue Code, other restrictions on the Fund's ability to
enter into option transactions may apply from time to time. See "Taxes."
3
<PAGE>
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 the Fund may
lose the premium it paid plus transaction costs. If the Fund does not
exercise the option and is unable to close out the position prior to
expiration of the option, it will lose its entire investment.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. Although the 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 the Fund, if it so desires, can close out its
position by effecting a closing transaction. If the writer of a covered call
option is unable to effect a closing purchase transaction, it cannot sell the
underlying security until the option expires or the option is exercised.
Accordingly, a covered call writer may not be able to sell the underlying
security at a time when it might otherwise be advantageous to do so.
Possible reasons for the absence of a liquid secondary market on an
exchange include 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 the Fund.
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 the Fund will realize a gain or loss on the purchase or sale of an
option on an index depends upon movements in the level of prices in the
market generally or in an industry or market segment rather than upon
movements in the price of an individual security. Accordingly, successful use
by the 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, the Fund would not be
able to close out options which it had written or purchased and, if
restrictions on exercise were imposed, might be unable to exercise an option
it purchased, which would result in substantial losses to the Fund. However,
it is the Fund's policy to write or purchase options only on indices which
include a sufficient number of securities so that the likelihood of a trading
halt in the index is minimized.
Because the exercise of an index option is settled in cash, an index call
writer cannot determine the amount of its settlement obligation in advance
and, unlike call writing on portfolio securities, cannot provide in advance
for its potential settlement obligation by holding the underlying securities.
Consequently, the Fund will write call options on indices only subject to the
limitations described above.
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Price movements in securities in the Fund's portfolio will not correlate
perfectly with movements in the level of the index and, therefore, the 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 the Fund's portfolio securities. It is also possible that the
index may rise when the value of the Fund's portfolio securities does not. If
this occurred, the Fund would experience a loss on the call which would not
be offset by an increase in the value of its portfolio and might also
experience a loss in the market value of portfolio securities.
Unless the Fund has other liquid assets which are sufficient to satisfy
the exercise of a call on an index, the Fund will be required to liquidate
portfolio securities in order to satisfy the exercise. Because an exercise
must be settled within hours after receiving the notice of exercise, if the
Fund fails to anticipate an exercise, it may have to borrow from a bank (in
an amount not exceeding 5% of the Fund's total assets) pending settlement of
the sale of securities in its portfolio and pay interest on such borrowing.
When the Fund has written a call on an index, there is also a risk that
the market may decline between the time the Fund has the call exercised
against it, at a price which is fixed as of the closing level of the index on
the date of exercise, and the time the Fund is able to sell securities in its
portfolio. As with options on portfolio securities, the Fund will not learn
that a call has been exercised until the day following the exercise date but,
unlike a call on a portfolio security where the Fund would be able to deliver
the underlying security in settlement, the Fund may have to sell part of its
portfolio securities in order to make settlement in cash, and the price of
such securities might decline before they could be sold.
If the Fund exercises a put option on an index which it has purchased
before final determination of the closing index value for that day, it runs
the risk that the level of the underlying index may change before closing. If
this change causes the exercised option to fall "out-of-the-money" the Fund
will be required to pay the difference between the closing index value and
the exercise price of the option (multiplied by the applicable multiplier) to
the assigned writer. Although the Fund may be able to minimize this risk by
withholding exercise instructions until just before the daily cutoff time or
by selling rather than exercising an option when the index level is close to
the exercise price, it may not be possible to eliminate this risk entirely
because the cutoff times for index options may be earlier than those fixed
for other types of options and may occur before definitive closing index
values are announced.
Financial Futures Contracts and Related Options
The 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 the Fund's portfolio may be protected
against to a considerable extent by gains realized on futures contracts
sales. Similarly, it is possible to protect against an increase in the market
price of securities which the Fund may wish to purchase in the future by
purchasing futures contracts.
The 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 the Fund purchases or sells a security,
no security is delivered or received by the Fund upon the purchase or sale of
a financial futures contract. Initially, the Fund will be required to deposit
in a segregated account with
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<PAGE>
its custodian bank an amount of cash or U.S. Treasury bills. This amount is
known as initial margin and is in the nature of a performance bond or good
faith deposit on the contract. The current initial margin deposit required
per contract is approximately 5% of the contract amount. Brokers may
establish deposit requirements higher than this minimum. Subsequent payments
of cash or U.S. Treasury bills, 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.
The Fund will pay commissions on financial futures contract 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
The 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. The 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 the 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 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, an amount of cash, U.S. Government securities or other appropriate
high-grade debt obligations equal to the market value of the futures contract
minus the Fund's initial margin deposit with respect thereto will be
deposited in a segregated account with the Fund's custodian bank to
collateralize fully the position and thereby ensure that it is not leveraged.
The extent to which the Fund may enter into financial futures contracts
and related options also may be limited by the requirements of the Internal
Revenue Code for qualification as a regulated investment company. See
"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.
The Fund will enter into an option 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 the Fund would continue to be required to
make daily margin payments. In this situation, if the Fund has insufficient
cash to meet daily margin requirements it may have to sell portfolio
securities at a time when it may be disadvantageous to do so. In addition,
the Fund may be required to take or make delivery of the securities
underlying the futures contracts it holds. The inability to close out futures
positions also could have an adverse impact on the Fund's ability to hedge
its portfolio effectively.
6
<PAGE>
There are several risks in connection with the use of futures contracts as
a hedging device. While hedging can provide protection against an adverse
movement in market prices, it can also preclude a hedger's opportunity to
benefit from a favorable market movement. In addition, investing in futures
contracts and options on futures contracts will cause the Fund to incur
additional brokerage commissions and may cause an increase in the Fund's
portfolio turnover rate.
The successful use of futures contracts and related options also depends
on the ability of the Adviser to forecast correctly the direction and extent
of market movements within a given time frame. To the extent market prices
remain stable during the period a futures contract or option is held by the
Fund or such prices move in a direction opposite to that anticipated, the
Fund may realize a loss on the hedging transaction which is not offset by an
increase in the value of its portfolio securities. As a result, the Fund's
total return for the period may be less than if it had not engaged in the
hedging transaction.
Utilization of futures contracts by the Fund involves the risk of
imperfect correlation in movements in the price of futures contracts and
movements in the price of the securities which are being hedged. If the price
of the futures contract moves more or less than the price of the securities
being hedged, the Fund will experience a gain or loss which will not be
completely offset by movements in the price of the securities. It is possible
that, where the Fund has sold futures contracts to hedge its portfolio
against decline in the market, the market may advance and the value of
securities held in the Fund's portfolio may decline. If this occurred, the
Fund would lose money on the futures contract and would also experience a
decline in value in its portfolio securities. Where futures are purchased to
hedge against a possible increase in the prices of securities before the Fund
is able to invest its cash (or cash equivalents) in securities (or options)
in an orderly fashion, it is possible that the market may decline; if the
Fund then determines not to invest in securities (or options) at that time
because of concern as to possible further market decline or for other
reasons, the Fund will realize a loss on the futures that would not be offset
by a reduction in the price of the securities purchased.
The market prices of futures contracts may be affected if participants in
the futures market elect to close out their contracts through offsetting
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 due to the resultant reduction in the
liquidity of the futures market. In addition, due to the fact that, from the
point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the cash market, increased
participation by speculators in the futures market could cause temporary
price distortions. Due to the possibility of price distortions in the futures
market and because of the imperfect correlation between movements in the
prices of securities and movements in the prices of futures contracts, a
correct forecast of market trends may still not result in a successful
hedging transaction.
Compared to the purchase or sale of futures contracts, the purchase of put
or call options on futures contracts involves less potential risk for the
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 the 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.
Repurchase Agreements
Repurchase agreements are described in the Fund's Prospectus. Repurchase
agreements will be entered into only with commercial banks, brokers and
dealers considered by the Fund to be creditworthy. The Directors of the Fund
will monitor the Fund's repurchase agreement transactions periodically and
with the Adviser will consider standards which the Adviser will use in
reviewing the creditworthiness of any party to a repurchase agreement with
the Fund. No more than an aggregate of 10% of the Fund's total assets, at the
time of investment, will be invested in repurchase agreements having
maturities longer than seven days and other investments subject to legal or
contractual restrictions on resale, or for which there are not readily
available market quotations.
7
<PAGE>
The use of repurchase agreements involves certain risks. For example, if
the seller under a repurchase agreement defaults on its obligation to
repurchase the underlying instrument at a time when the value of the
instrument has declined, the Fund may incur a loss upon its disposition. If
the seller becomes insolvent and subject to liquidation or reorganization
under bankruptcy or other laws, a bankruptcy court may determine that the
underlying instrument is collateral for a loan by the Fund and therefore is
subject to sale by the trustee in bankruptcy. Finally, it is possible that
the Fund may not be able to substantiate its interest in the underlying
instrument. While the Fund's Directors acknowledge these risks, it is
expected that they can be controlled through careful monitoring procedures.
Lending Portfolio Securities
The Fund may lend portfolio securities to broker-dealers and other financial
institutions in amounts up to 25% of the market or other fair value of its
total assets, provided that such loans are callable at any time by the Fund
and are at all times secured by collateral held by the Fund at least equal to
the market value, determined daily, of the loaned securities. The Fund will
continue to receive any income on the loaned securities, and at the same time
will earn interest on cash collateral (which will be invested in short-term
debt obligations) or a securities lending fee in the case of collateral in
the form of U.S. Government securities. A loan may be terminated at any time
by either the Fund or the borrower. Upon termination of a loan, the borrower
will be required to return the securities to the Fund, and any gain or loss
in the market price during the period of the loan would accrue to the Fund.
If the borrower fails to maintain the requisite amount of collateral, the
loan will automatically terminate, and the Fund may use the collateral to
replace the loaned securities while holding the borrower liable for any
excess of the replacement cost over the amount of the collateral.
When voting or consent rights which accompany loaned securities pass to
the borrower, the Fund will follow the policy of calling the loan, in whole
or in part as may be appropriate, to permit the exercise of such rights if
the matters involved would have a material effect on the Fund's investment in
the securities which are the subject of the loan. The Fund may pay reasonable
finders, administrative and custodial fees in connection with loans of its
portfolio securities.
As with any extension of credit, there are risks of delay in recovery of
the loaned securities and in some cases loss of rights in the collateral
should the borrower of the securities fail financially. However, loans of
portfolio securities will only be made to firms considered by the Fund to be
creditworthy and when the consideration to be earned justifies the attendant
risks.
Foreign Securities
The 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 less than 25% of the total net asset value of the Fund. Investments
in foreign securities, particularly those of non-governmental issuers,
involve considerations which are not ordinarily associated with investing in
domestic issues. These considerations include changes in currency rates,
currency exchange control regulations, the possibility of expropriation, the
unavailability of financial information, the difficulty of interpreting
financial information prepared under foreign securities markets, the impact
of political, social or diplomatic developments, difficulties in invoking
legal process abroad and the difficulty of assessing economic trends in
foreign countries.
The Fund may use a foreign custodian in connection with its purchases of
foreign securities and may maintain cash and cash equivalents in the care of
a foreign custodian. The amount of cash or cash equivalents maintained in the
care of eligible foreign custodians will be limited to an amount reasonably
necessary to effect the Fund's foreign securities transactions. The use of a
foreign custodian invokes considerations which are not ordinarily associated
with domestic custodians. These considerations include the possibility of
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.
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INVESTMENT RESTRICTIONS
The following information supplements the information included in the
Prospectus with respect to the investment restrictions to which the Fund is
subject. The investment restrictions described below are fundamental policies
and may not be changed without the approval of the lesser of (i) a majority
of the Fund's outstanding shares and (ii) 67% of the shares represented at a
meeting of Fund shareholders at which the holders of 50% or more of the
Fund's outstanding shares are represented. The Fund may not:
(1) Make short sales of securities, unless at the time of sale the Fund
owns an equal amount of such securities.
(2) Purchase securities on margin, except that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases
and sales of securities. The deposit or payment by the Fund of initial
or maintenance margin in connection with financial futures contracts
or related options transactions is not considered the purchase of a
security on margin.
(3) Write, purchase or sell puts, calls or combinations thereof, except
that the Fund may (a) write exchange-traded covered call options on
portfolio securities and enter into closing purchase transactions with
respect to such options, (b) purchase exchange-traded call options and
put options, provided that the premiums on all outstanding call and
put options would not exceed 5% of its total assets, and enter into
closing sale transactions with respect to such options, and (c) engage
in financial futures contracts and related options transactions,
provided that the sum of the initial margin deposits on the Fund's
existing futures and related options positions and the premiums paid
for related options would not exceed 5% of its total assets.
(4) Borrow in excess of 5% of the market or other fair value of its total
assets, or pledge its assets to an extent greater than 5% of the
market or other fair value of its total assets. Any such borrowings
shall be from banks and shall be undertaken only as a temporary
measure for extraordinary or emergency purposes. Deposits in escrow in
connection with the writing of covered call options or in connection
with the purchase or sale of financial futures contracts and related
options are not deemed to be a pledge or other encumbrance.
(5) Underwrite the securities of other issuers, except to the extent that
in connection with the disposition of portfolio securities the Fund
may be deemed to be an underwriter.
(6) Concentrate its assets in the securities of issuers all of which
conduct their principal business activities in the same industry. This
restriction does not apply to obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
(7) Make any investment in real estate, real estate limited partnerships,
commodities or commodities contracts, except that the Fund may (a)
purchase or sell readily marketable securities which are secured by
interests in real estate, or issued by companies which deal in real
estate including real estate investment and mortgage investment
trusts, and (b) engage in financial futures contracts and related
options transactions, provided that the sum of the initial margin
deposits on the Fund's futures and related options positions and the
premiums paid for related options would not exceed 5% of the Fund's
total assets.
(8) Make loans, except that the Fund may (a) invest up to 10% of its total
assets in repurchase agreements of a type regarded as "liquid" which
are fully collateralized as to principal and interest and which are
entered into only with commercial banks, brokers and dealers
considered by the Fund to be creditworthy and (b) loan its portfolio
securities in amounts up to one-third of the market or other fair
value of its total assets.
(9) Purchase securities of other investment companies, except that the
Fund may make such a purchase (a) in the open market involving no
commission or profit to a sponsor or dealer (other than the customary
broker's commission), provided that immediately thereafter (i) not
more than 10% of the Fund's total assets would be invested in such
securities and (ii) not more than 3% of the voting stock of another
investment company would be owned by the Fund, or (b) as part of a
merger, consolidation, or acquisition of assets.
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<PAGE>
(10) Invest more than 5% of its total assets in the securities of any one
issuer (except the U.S. Government) or purchase more than 10% of the
outstanding voting securities or more than 10% of the securities of
any class of any one issuer.
(11) Invest in securities of any issuer if any officer or director of the
Fund or of the Fund's investment adviser owns more than 1/2 of 1% of
the outstanding securities of such issuer and such officers and
directors own in the aggregate more than 5% of the securities of such
issuer.
(12) Invest in the aggregate more than 5% of its total assets in the
securities of any issuers which have (with predecessors) a record of
less than three years of continuous operations.
(13) Invest in warrants or rights except where acquired in units or
attached to other securities.
(14) Purchase an illiquid security such as a restricted security
(including repurchase agreements of a type regarded as "illiquid") or
a security for which market value quotations are not readily
available if as a result of such purchase more than 15% of the Fund's
net assets would be invested in such securities.
(15) Invest in interests in oil, gas, or other mineral exploration or
development programs.
(16) Issue senior securities.
If a percentage restriction on investment or utilization of assets as set
forth is adhered to at the time an investment is made, a later change in the
percentage resulting from a change in the values or costs of the Fund's
assets will not be considered violative of the restriction.
PERFORMANCE INFORMATION
Performance information for the 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 "average annual total return" and "total return".
The average annual total return for Class A and Class B Shares is computed
in accordance with a standardized method prescribed by rules of the
Securities and Exchange Commission. The average annual total return for a
specific period is found by first taking a hypothetical $1,000 investment
("initial investment") in the Fund's shares on the first day of the period,
adjusting to deduct the maximum sales charge, and computing the "redeemable
value" of that investment at the end of the period. The redeemable value is
then divided by the initial investment, and this quotient is taken to the Nth
root (N representing the number of years in the period) and 1 is subtracted
from the result, which is then expressed as a percentage. The calculation
assumes that all income and capital gains dividends paid by the Fund have
been reinvested at net asset value on the reinvestment dates during the
period.
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 shares of the Fund, through December 31, 1995.
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1995
Periods ended From Inception
1 Year 5 Years 10 Years 10/24/94 to 12/31/95
------ ------- -------- --------------------
Class A 12.61% 11.51% 10.92% --
Class B 12.31% -- -- 10.95%
Performance information reflects only the performance of a hypothetical
investment in the Class A or Class B shares of the Fund 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 portfolio, and the market conditions
during the given time period, and should not be considered as a
representation of what may be achieved in the future.
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PORTFOLIO TRANSACTIONS AND BROKERAGE
In effecting portfolio transactions for the Fund, the Adviser adheres to
the Fund'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 Fund 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 that
transaction 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. As provided in Section 28(e) of
the Securities Exchange Act of 1934, "brokerage and research services"
include advice as to the value of securities, the advisability of investing
in, purchasing or selling securities, the availability of securities or
purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, 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
Fund or 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
Fund and may benefit both the Fund and other accounts of the Adviser.
Conversely, brokerage and research services provided by brokers to other
accounts of the Adviser may benefit the Fund. Where transactions are made in
the over-the-counter market, the Adviser will cause the Fund to deal with the
primary market makers, unless more favorable prices are otherwise obtainable.
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 Fund (involving both price paid or received and any 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,
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
Fund.
The Directors of the Fund, including a majority of disinterested
Directors, have adopted procedures which allow the Adviser to allocate a
portion of the Fund's portfolio brokerage transactions to brokers affiliated
with the Fund or Adviser, including, without limitation, Duff & Phelps
Securities Co. In order for affiliated brokers to effect any portfolio
transactions for the Fund, the commissions, fees, or other remuneration paid
to other nonaffiliated brokers in connection with comparable transactions
involving similar securities being purchased or sold on a securities exchange
during a comparable period of time.
The policy of the Fund with respect to brokerage is and will be reviewed
by the Board of Directors of the Fund from time to time. Because of the
possibility of further regulatory developments affecting the securities
exchanges and brokerage practices generally, the foregoing practices may be
changed, modified or eliminated.
For the fiscal years ended December 31, 1993, 1994, and 1995 brokerage
commissions paid by the Fund on portfolio transactions totalled $277,283,
$889,406 and $854,032 respectively. None of such commissions was paid to a
broker who was an affiliated person of the Fund or an affiliated person of
such a person or, to the knowledge of the Fund, to a broker an affiliated
person of which was an affiliated person of the Fund or the Adviser. Total
brokerage commissions paid during the fiscal year ended December 31, 1995
included brokerage commissions of $845,459 on portfolio transactions
aggregating $671,071,297 executed by brokers who provided research and other
statistical and factual information.
Investment decisions for the Fund are made independently from those of the
other investment companies advised by the Adviser. It may frequently happen
that the same security is held in the portfolio of more than one fund.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is suited
for the investment objectives of more than one fund. When two or more funds
advised by the Adviser are simultaneously engaged in the purchase or sale of
the same security, the transactions are allocated among the funds in a manner
equitable to each fund. It is recognized that in some cases this system could
have a detrimental effect on the price or volume of the security as far as
the Fund
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<PAGE>
is concerned. In other cases, however, it is believed that the ability of the
Fund to participate in volume transactions will produce better executions for
the Fund. It is the opinion of the Board of Directors of the Fund that the
desirability of utilizing the Adviser as investment adviser to the Fund
outweighs the disadvantages that may be said to exist from simultaneous
transactions.
SERVICES OF THE ADVISER
The offices of the Adviser, Phoenix Investment Counsel, Inc., are located
at 56 Prospect Street, Hartford, Connecticut 06115-0480. The Adviser was
organized in 1932 as John P. Chase, Inc. and has been engaged in the
management of the Fund since 1967. In addition to the Fund, the Adviser also
serves as investment adviser to Phoenix Series Fund, The Phoenix Edge Series
Fund, Phoenix Strategic Equity Series Fund and the Phoenix Multi-Portfolio
Fund, and as sub-adviser to the Chubb America Fund, Inc., SunAmerica Series
Trust, JNL Series Trust and American Skandia Trust, among other investment
adviser clients.
All of the outstanding stock of the Adviser is owned by Phoenix Equity
Planning Corporation ("Equity Planning"), an indirect subsidiary of Phoenix
Duff & Phelps Corporation of Chicago, Illinois. Prior to November 1, 1995 PIC
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 in the business of writing ordinary and group life and
health insurance and annuities. It was founded in 1851 and at December 31,
1995 had total assets of approximately $12 billion and net insurance in force
of approximately $123 billion. Equity Planning, a mutual fund distributor,
acts as the Distributor of the Fund's shares and as Financial Agent for the
Fund.
Philip R. McLoughlin, a director and officer of the Fund, is also a
director of the Adviser. Martin J. Gavin and Michael E. Haylon, officers of
the Fund, are directors and officers of the Adviser. G. Jeffrey Bohne, James
M. Dolan, William R. Moyer, William J. Newman and C. Edwin Riley, Jr.,
officers of the Fund, are officers of the Adviser.
The contract between the Fund and the Adviser provides that the Adviser
shall furnish the Fund investment advice, certain administrative services,
office space and facilities, and shall pay the compensation of all officers
and employees of the Fund. All expenses (other than those specifically
referred to as being borne by the Adviser) incurred in the operation of the
Fund, including, among others, taxes, brokerage fees and commissions, fees of
Directors who are not full time employees of the Adviser or any of its
affiliates, charges of custodians, transfer and dividend disbursing agents
and registrars, bookkeeping, auditing and legal expenses, expenses of
insurance premiums for fidelity and other coverage and extraordinary expenses
and expenses of a non-recurring nature which may include, but not be limited
to, the reasonable and proportionate cost of any reorganization or
acquisition of assets and the cost of legal proceedings to which the Fund is
a party, will be borne by the Fund.
The contract between the Fund and the Adviser provides that, as
compensation for its services to the Fund, the Adviser is entitled to a fee,
payable within five days after the end of each fiscal month, at the annual
rate of 0.65% of the average of the aggregate daily net asset values of the
Fund up to $1 billion; 0.60% of such value between $1 billion and $2 billion;
and 0.55% of such value in excess of $2 billion. It also provides that the
Fund will reimburse the Adviser on a cost basis in the event the Adviser
provides any services (excluding printing) involved in maintaining
registrations of the Fund and of its shares with the Securities and Exchange
Commission or involved in the preparation of shareholder reports. The Adviser
has agreed to reimburse the Fund for the amount, if any, of the expenses of
the Fund (including the Adviser's compensation but excluding interest,
brokerage cost, taxes and extraordinary expenses) for any fiscal year which
exceeds the level of expenses which the Fund is permitted to bear under the
most restrictive expense limitation imposed (and not waived) on the Fund by
any state in which shares of the Fund are then qualified for sale. Currently,
the most restrictive state expense limitation provisions limit such expenses
of the Fund to 2-1/2% of the first $30 million of average net assets, 2% of
the next $70 million of such net assets and 1-1/2% of such net assets in
excess of $100 million. For the fiscal years ended December 31, 1993, 1994
and 1995 the Adviser received fees totalling, $510,775, $2,276,834, and
$2,371,629 respectively and it was not necessary that the Adviser reimburse
ordinary operating expenses of the Fund.
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<PAGE>
The contract between the Fund and the Adviser continues from year to year
so long as (1) such continuance is specifically approved at least annually by
the Board of Directors of the Fund or by a vote of a majority of the
outstanding shares of the Fund and (2) such continuance or any renewal and
the terms of such contract have been approved by the vote of a majority of
Directors of the Fund who are not interested persons, as that term is defined
in the Investment Company Act of 1940, of the Fund or the Adviser, cast in
person at a meeting called for the purpose of voting on such approval. It may
be terminated without penalty at any time on sixty days' written notice,
either by the Board of Directors of the Fund, by a vote of a majority of the
outstanding shares of the Fund or by the Adviser, and automatically
terminates upon its assignment (within the meaning of said Investment Company
Act).
NET ASSET VALUE
As described under the caption "Net Asset Value" in the Prospectus,
current value for the Fund's investments is determined as follows:
investments listed or traded on a national securities exchange are valued at
the last sale price or, if there has been no recent sale, at the last bid
price; investments traded in the over-the-counter market are valued at the
last bid price; and short-term obligations maturing in less than sixty days
are valued at amortized cost, which the Board has determined approximates
market. If at any time the Fund has other investments, such investments would
be valued at the fair value thereof as determined in good faith by the
Directors.
PLANS OF DISTRIBUTION
Equity Planning, a registered broker-dealer which is an indirect
subsidiary of Phoenix Home Life Mutual Insurance Company, serves as exclusive
distributor of the Fund's shares.
The Fund and Equity Planning have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Fund shares and the Fund has granted to Equity Planning the
exclusive right to purchase from the Fund and resell, as principal, shares
needed to fill unconditional orders for Fund shares. Equity Planning may sell
Fund shares through its registered representatives or through securities
dealers with whom it has sales agreements. Equity Planning may also sell Fund
shares pursuant to sales agreements entered into with bank affiliated
securities brokers who, acting as agent for their customers, place orders for
Fund shares with Equity Planning. Although the Glass-Steagall Act prohibits
banks and bank affiliates from engaging in the business of underwriting,
distributing or selling securities (including mutual fund shares), banking
regulators have not indicated that such institutions are prohibited from
purchasing mutual fund shares upon the order and for the account of their
customers. If, because of changes in law or regulations, or because of new
interpretations of existing law, it is determined that agency transactions of
banks or bank affiliated securities brokers are not permitted under the
Glass-Steagall Act, the Directors will consider what action, if any, is
appropriate. It is not anticipated that termination of sales agreements with
banks or bank affiliated securities brokers would result in a loss to their
customers or a change in the net asset value per share of the Fund.
For its services under the Class A and Class B share distribution
agreements, Equity Planning receives sales charges on transactions in Fund
shares (see "Purchase of Shares" in the Prospectus) and retains such charges
less the portion thereof allowed to its registered representatives and to
securities dealers and securities brokers with whom it has sales agreements.
In addition, Equity Planning may receive payments from the Fund pursuant to
the Distribution Plan described below. For the fiscal year ended December 31,
1994 and 1995 Equity Planning's gross commissions on sales of Fund shares
totalled $665,725 and $468,755 respectively. Of this amount, $591,073 and
$409,264, respectively were paid to dealers with whom Equity Planning had
sales agreements.
Equity Planning also acts as Financial Agent of the Fund and as such
performs bookkeeping and pricing services and certain other administrative
functions for the Fund. As compensation for its services during any fiscal
year of the Fund, the Financial Agent is entitled to a quarterly fee based on
the average of the aggregate daily net asset values of the Fund at an annual
rate
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<PAGE>
of $300 per $1 million, which is expected to approximate the cost to Equity
Planning of providing such services. For services to the Fund during the
fiscal years ended December 31, 1993, 1994 and 1995, the Financial Agent
received fees of $40,862, $105,085 and $109,460 respectively.
Equity Planning also acts as Transfer Agent of the Fund. As compensation,
Equity Planning receives a fee equivalent to $14.95 for each designated
shareholder account. Transfer Agent fees are also utilized to offset costs
and fees paid to subtransfer agents employed by Equity Planning. State Street
Bank and Trust Company serves as a subtransfer agent pursuant to a
Subtransfer Agency Agreement effective June 1, 1994.
Philip R. McLoughlin, a director and officer of the Fund, is a director
and officer of Equity Planning; Martin J. Gavin, an officer of the Fund, is a
director and an officer of Equity Planning. Michael E. Haylon, an officer of
the Fund, is a director of Equity Planning. G. Jeffrey Bohne, Nancy G.
Curtiss, James M. Dolan, William R. Moyer, William J. Newman and Leonard J.
Saltiel are officers of the Fund and officers of Equity Planning.
Distribution Plans
To permit the use of Fund assets to encourage activities primarily intended
to result in the sale of Fund shares, the Fund has adopted Distribution Plans
(the "Plans") pursuant to Rule 12b-1 under the Investment Company Act of
1940. The Class A and Class B Plans have been approved by the Board of
Directors of the Fund, including a majority of the Directors who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the Plan or any agreement related thereto (the "Rule 12b-1
Directors"), and by the shareholders of the Fund.
The Class A Plan provides that the Fund may pay to its Distributor (i)
amounts not exceeding 0.25% annually of its average daily net asset value for
each year elapsed after the inception of the Plan and (ii) amounts not
exceeding 0.25% of the amount of any investment in Fund shares equal to
$1,000,000 or more made in a lump sum or pursuant to an authorized letter of
intent. However, the Fund presently intends to limit payments under the Plan
for any fiscal year to 0.25% of the Fund's average net assets for such fiscal
year. The Class B Plan authorizes the payment by the Fund to the National
Distributor of accounts not exceeding 1.00% annually of the Fund's average
daily net assets for each year elapsed after the inception of the Plan.
Although under no contractual obligation to do so, the Fund intends to make
such payments to the Distributor (i) as commissions for shares sold, all or
any part of which commissions may be paid by the Distributor to others (who
may be other dealers or registered representatives of the Distributor), (ii)
to enable the Distributor to pay to such others maintenance or other fees in
respect of shares sold by them and remaining outstanding on the Fund's books
during the period in respect of which the fee is paid and (iii) to enable the
Distributor to pay to bank-affiliated securities brokers maintenance or other
fees with respect to Fund shares purchased by their customers and remaining
outstanding on the Fund's books during the period with respect to which the
fee is paid; provided however, that payments under (ii) and (iii) are subject
to limits of 0.25% and 1.00% annually of the average daily net assets of the
Class A or Class B shares respectively to which the payments relate.
Payments, less the portion thereof paid by the Distributor to others, may be
used by the Distributor for its expenses of distribution of Fund shares. If
expenses of distribution exceed payments and any sales charges retained by
the Distributor, the Fund is not required to reimburse the Distributor for
excess expenses; if payments and any sales charges retained by the
Distributor exceed expenses of distribution, the Distributor may realize a
profit.
Each Plan requires that at least quarterly the Directors of the Fund
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 Fund will be required to commit the selection and nomination of
candidates for Directors who are not interested persons of the Fund to the
discretion of other Directors 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 Directors of the Fund and (b) the Rule 12b-1 Directors, cast in person at
a meeting called for the purpose of voting on the Plan and any agreements
related to each Plan. For the fiscal year ended December 31, 1995, the Fund
paid Rule 12b-1 Fees in the amount of $948,975 of which Equity Planning
received $235,553 and unaffiliated broker/dealers received $713,422. Of this
amount: (1) $862,467 represented compensation
14
<PAGE>
to dealers; (2) $70,616 represented compensation to sales and shareholder
services personnel and (3) $15,892 was utilized for compensation for
marketing material. No interested person of the Fund and no Director who is
not an interested person of the Fund, as that term is defined in the
Investment Company Act of 1940, had any direct or indirect financial interest
in the operation of the Plan.
HOW TO BUY SHARES
The Prospectus includes information as to the offering price of Class A
and Class B Fund shares, the sales charge included in the offering price, and
the minimum initial and subsequent investments which may be made in Fund
shares. Sales of shares are made through registered representatives of the
Distributor, Equity Planning, or through securities brokers or dealers with
whom Equity Planning has sales agreements. Dealers purchase shares at a
discount from the applicable offering price. Dealers receiving such discounts
may be deemed "underwriters" within the meaning of that term under the
Securities Act of 1933. Sales of shares are also made to customers of banks
or bank-affiliated securities brokers with whom Equity Planning has sales
agreements. Customers purchase shares at the applicable offering price.
Alternative Purchase Arrangements
The Fund is authorized to offer two classes of shares. Shares may be
purchased from investment dealers at a price equal to their net asset value
per share, plus a sales charge which, at the election of the purchaser, may
be imposed either (i) at the time of the purchase (the "initial sales charge
alternative"), or (ii) on a contingent deferred basis (the "deferred sales
charge alternative").
Class A Shares
An investor who pays an initial sales charge or purchases at net asset value
acquires Class A shares. Class A shares are subject to an ongoing
distribution fee at an annual rate of up to 0.25% of the Fund's aggregate
average daily net assets attributable to Class A shares. Certain purchases of
Class A shares qualify for reduced initial sales charges.
Class B Shares
An investor who elects the deferred sales charge alternative acquires Class
B shares. Class B shares do not incur a sales charge when they are purchased,
but are subject to a sales charge if they are redeemed within six years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions.
Class B shares are subject to an ongoing distribution fee at an annual
rate of up to 1.00% of the Fund's aggregate average daily net assets
attributable to Class B shares. Class B shares permit the investor's payment
to be invested in full from the time the investment is made. The higher
ongoing distribution fee paid by Class B shares will cause such shares to
have a higher expense ratio and to pay lower dividends 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. The purpose of the conversion feature is to
eliminate the higher distribution fee after the National Distributor has been
compensated for distribution expenses related to the Class B shares. See
"Conversion Feature" below.
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is more beneficial given such factors as the
amount of the purchase, the length of time the investor expects to hold the
shares, and whether the investor wishes to receive distributions in cash or
to reinvest them in additional shares. Investors should consider whether,
during the anticipated term of their investment in the Fund, the accumulated
continuing distribution fees and contingent deferred sale charges on Class B
shares prior to conversion would be less than the initial sales charge and
accumulated distribution fees on Class A shares purchased at the same time,
and the extent to which such differential would be offset by the lower
expenses attributable to Class A shares.
Class A shares are subject to a lower distribution fee and, accordingly,
pay correspondingly higher dividends. However, because initial sales charges
are deducted at the time of purchase, Class A investors do not have all their
funds invested initially and initially
15
<PAGE>
own fewer shares. Investors not qualifying for reduced initial sales charges
who expect to maintain their investment for an extended period of time should
consider purchasing Class A shares because the accumulated continuing
distribution charges on Class B shares may exceed the initial sales charge on
Class A shares during the term of the investment. However, such investors
must weigh this consideration against the fact that, because of the initial
Class A sales charges, not all of their funds will be invested initially.
The distribution expenses incurred by the Distributor in connection with
the sale of the shares will be paid, in the case of Class A shares, from the
proceeds of the initial sales charge and the ongoing distribution fees and,
in the case of Class B shares, from the proceeds of the ongoing distribution
fees and the contingent deferred sales charge imposed upon redemptions within
six years of purchase. Sales personnel of broker-dealers distributing shares
may receive differing compensation for selling Class A or Class B shares. The
purpose and function of the contingent deferred sales charge and ongoing
distribution fees with respect to the Class B shares are the same as those of
the initial sale charge and ongoing distribution fees with respect to the
Class A shares.
Dividends paid with respect to Class A and Class B shares will be
calculated in the same manner, at the same time and on the same day, except
that the higher distribution fees and any incremental transfer agency costs
relating to Class B shares will be borne exclusively by that Class and will
result in a lower dividend.
The Directors of the Fund have determined that no conflict of interest
will exist between the Class A and Class B shares. The Directors shall,
pursuant to their fiduciary duties under the Investment Company Act of 1940
and state law, monitor the question of Class A and Class B shares and seek to
ensure that no such conflict arises.
Conversion Feature
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
purchased. 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 fees. Such conversion will be on the basis of the relative net
asset value of the two classes without the imposition of any sales load, fee
or other charge. The purpose of the conversion feature is to eliminate the
higher distribution fee after the National Distributor has been compensated
for distribution expenses related to the Class B shares.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B shares
will be considered to be held in a separate sub-account. Each time any Class
B shares in the shareholder's account (other than those in the sub-account)
convert to Class A, an equal pro rata portion of the Class B shares in the
sub-account will also convert to Class A.
The conversion of Class B shares to Class A shares is subject to the
continuing availability of an opinion of counsel or a ruling of the Internal
Revenue Service to the effect that (i) the assessment of the higher
distribution fees and transfer agency costs with respect to Class B shares
does not result in any dividends or distributions constituting "preferential
dividends" under the Internal Revenue Code of 1986, as amended (the "Code"),
and (ii) that the conversion of shares does not constitute a taxable event
under federal income tax law. The Fund has not sought opinions of counsel as
to these matters but has instead applied to the Internal Revenue Service (the
"IRS") for, but has not yet received, such a ruling. While rulings similar to
the one sought by the Fund as to preferential dividends have been issued
previously by the IRS, complete assurance cannot be given that the Fund will
receive a favorable ruling. While an adverse determination by the IRS is not
expected, the Fund may be required to reassess the alternative purchase
arrangement structure if the IRS does not rule favorably. In addition, were
the IRS not to rule favorably, the Fund might make additional distributions
if doing so would assist in complying with the Fund's general practice of
distributing sufficient income to reduce or eliminate U.S. federal taxes. The
conversion of Class B shares to Class A shares may be suspended if such an
opinion or ruling is no longer available. In that event, no further
conversions of Class B shares would occur, and shares might continue to be
subject to the higher distribution fee for an indefinite period which may
extend beyond the period ending eight years after the end of the month in
which the shares were purchased.
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<PAGE>
Invest by Phone
This expedited investment service allows a shareholder to purchase shares
for his account by requesting a transfer of funds from the balance of his
bank account. Once a request is phoned in, State Street 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 State Street 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 State Street's acceptance of
the authorization form (usually two weeks) the shareholder may call toll free
800-367-5877 prior to 3:00 p.m. (New York time) to place his purchase
request. Instructions as to the account number and amount to be invested must
be communicated to State Street. State Street will then contact the
shareholder's bank via ACH with appropriate instructions. The purchase is
normally credited to the shareholder's account the day following receipt of
the verbal instructions. The Fund may delay the mailing of a check for
redemption proceeds of Fund shares purchased with a check or via
Invest-by-Phone service until the Fund has assured itself that good payment
has been collected for the purchase of the shares, which may take up to 15
days.
The Fund and State Street 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.
EXCHANGE PRIVILEGE
Shares of the Fund may be exchanged for shares of the same class of shares
of any other Phoenix Fund except shares of Phoenix Multi-Sector Short Term
Bond Fund or Phoenix Money Market Series Class A Shares held less than 6
months on the basis of the relative net asset values per share at the time of
the exchange. Subject to the above requirements for an exchange, a
shareholder may elect to have shares of the Fund exchanged for shares of any
other Phoenix Fund automatically on a monthly, quarterly, semi-annual, or
annual basis ("Systematic Exchange").
REDEMPTION OF SHARES
By Mail. Non-certificated shares registered on the books of the Fund may
be redeemed by submitting a written request for redemption to Equity
Planning, 100 Bright Meadow Blvd., P.O. Box 2200, Enfield, Connecticut
06083-2200. The redemption request must contain the shareholder(s)' account
name(s) and number(s), the number of shares to be redeemed and the
signature(s) of the registered shareholder(s). If the shares are registered
in the names of individuals, singly, jointly or as custodian under the
Uniform Gifts to Minors Act, and the proceeds of the redemption do not exceed
$50,000 and are to be paid to the registered owner(s) at the address of
record, the signature(s) on the redemption request need not be guaranteed.
Otherwise, the signature(s) must be guaranteed by an eligible guarantor
institution as defined by the Fund's transfer agent in accordance with its
signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker/dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations. Shares represented by certificates in the possession of the
shareholder may be redeemed by submitting a written request for the
redemption to Equity Planning, 100 Bright Meadow Blvd., P.O. Box 2200,
Enfield, Connecticut 06083-2200, together with the certificates, duly
endorsed by all persons in whose names the shares are registered, with
signatures guaranteed, if required, in the manner described above. Signatures
must also be guaranteed on any change of address request submitted in
conjunction with a redemption request.
The redemption price is the net asset value next determined following the
receipt of a duly executed request for redemption of shares, together with
any outstanding certificate or certificates for such shares, duly endorsed,
with signatures guaranteed in the manner described above. Class B shares are
subject to a contingent deferred sales charge upon a redemption of shares
within six years of the date of purchase.
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<PAGE>
Additional documentation may be required where shares are held by a
corporation, partnership, trustee or executor. Therefore, it is suggested
that shareholders holding shares registered in other than individual names
contact Equity Planning prior to redemption to ensure that all necessary
documents accompany the redemption request.
By Telephone. Unless a shareholder elects in writing not to participate in
the Telephone Redemption Privilege, shares for which certificates have not
been issued may be redeemed by calling (800) 367-5877 and telephone
redemptions will also be accepted on behalf of the shareholder from his or
her registered representative as described in the Prospectus. Address and
bank account information will be verified, telephone redemption instructions
will be recorded on tape, and all redemptions will be confirmed in writing to
the shareholder. If there has been an address change within the past 60 days,
a telephone redemption will not be authorized. Equity Planning and the Fund
will employ reasonable procedures to confirm that telephone instructions are
genuine. To the extent that procedures reasonably designed to prevent
unauthorized telephone redemptions are not followed, Equity Planning and/or
the Fund may be liable for following telephone instructions for redemption
transactions that prove to be fraudulent. Broker/dealers other than Equity
Planning have agreed to bear the risk of any loss resulting from any
unauthorized telephone redemption instruction from the firm or its registered
representatives. However, the shareholder would bear the risk of loss
resulting from instructions entered by an unauthorized third party that
Equity Planning and/or the Fund reasonably believe to be genuine.
The redemption price is the net asset value next determined following the
receipt of the telephone redemption request. If the proceeds of the
redemption are less than $500, the redemption will normally be paid on the
first business day following receipt of the request and sent by mail to the
address of record on the shareholder's account. If the proceeds of the
redemption are $500 or more, the redemption will be wired to the designated
U.S. commercial bank account. (The Telephone Redemption Privilege is not
available to HR-10, IRA or 403(b)(7) Plans.) Telephone redemption requests
must be received by State Street Bank and Trust Company by the close of
trading on the New York Stock Exchange on a day when State Street Bank and
Trust Company is open for business. Requests made after that time or on a day
when State Street Bank and Trust Company is not open for business cannot be
accepted.
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of the Fund to comply with provisions of the Internal
Revenue Code relieving investment companies which distribute substantially
all of their net income (both net investment income and net realized capital
gains) from Federal income tax on the amounts distributed.
To qualify for treatment as a "regulated investment company" for tax
purposes, the Fund must derive less than 30% of its gross income in each
taxable year from gains (without deduction for losses) from the sale or other
disposition of securities held for less than three months. This requirement
may affect decisions by the Fund regarding the purchase or sale of
securities. In particular, this requirement may affect decisions to purchase
or sell options, futures contracts and options on futures contracts.
Income dividends and short-term capital gain distributions, whether
received in shares or in cash, are treated by shareholders as ordinary income
for Federal income tax purposes.
Distributions which are designated by the Fund 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 the distributee has been a
shareholder). 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.
Any taxable distribution which is declared in December payable to
shareholders of record on any date in December and paid before the next
February l will be taxable to shareholders in the year declared.
The Fund 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 Fund with a correct taxpayer
identification number ("TIN");
18
<PAGE>
(ii) the Fund is notified by the Internal Revenue Service that the
shareholder furnished an incorrect TIN; or (iii) the Fund 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 with respect to accounts where the
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 in the case of certain exempt entities nor in the case of
those shareholders who comply with the procedures as set forth by the
Internal Revenue Service. If incorrect information is provided by the
shareholder and the Internal Revenue Service consequently assesses the Fund a
penalty, this penalty will be passed on to the shareholder.
Dividends paid from net investment income and net realized short-term
capital gains to a shareholder who is a non-resident 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 information included in the Prospectus with respect to Dividends,
Distributions and Taxes, in conjunction with the foregoing, is a general and
abbreviated summary of applicable provisions of the Internal Revenue 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 the Fund. Shareholders are
urged to consult counsel or other competent tax advisers regarding specific
questions as to Federal, state or local taxes.
DIRECTORS AND OFFICERS
The following table sets forth information concerning the directors and
executive officers of the Fund, including their principal occupations during
the past five years. Unless otherwise noted, the address of each director and
executive officer is 56 Prospect Street, Hartford, Connecticut 06115-0480. On
July 27, 1995 the shareholders elected to fix the number of directors at
eleven and to elect such number of directors. On November 15, 1995 the
directors voted to increase the number of directors from eleven to fourteen
and to appoint Messrs. Francis E. Jeffries, Everett L. Morris and Calvin J.
Pedersen to fill the vacancy caused by the increase. The directors and
executive officers are listed below.
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------- -------------- ---------------------------------------------------------------
<S> <C> <C>
C. Duane Blinn (68) Director Partner in the law firm of Day, Berry & Howard.
Day, Berry & Howard Director/Trustee, Phoenix Funds (1980-present). Trustee,
CityPlace Phoenix Duff & Phelps Institutional Mutual Funds
Hartford, CT 06103 (1996-present). Director/Trustee, the National Affiliated
Companies (until 1993).
Robert Chesek (61) Director Trustee/Director, Phoenix Funds (1981-present) and Chairman
49 Old Post Road (1989-1994). Trustee, Phoenix Duff & Phelps Institutional
Wethersfield, CT 06109 Mutual Funds (1996-present). Director/Trustee, the National
Affiliated Investment Companies (until 1993). Vice President,
Common Stock, Phoenix Home Life Mutual Insurance Company
(1980-1994).
19
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------- -------------- ---------------------------------------------------------------
E. Virgil Conway (66) Director Trustee/Director, Consolidated Edison Company of New York, Inc.
9 Rittenhouse Road (1970-present), Pace University (1978-present), Atlantic Mutual
Bronxville, NY 10708 Insurance Company (1974-present), HRE Properties
(1989-present), Greater New York Councils, Boy Scouts of
America (1985-present), Union Pacific Corp. (1978-present),
Blackrock Fund for Fannie Mae Mortgage Securities (Advisory
Director) (1989-present), Centennial Insurance Company, Josiah
Macy, Jr., Foundation, and The Harlem Youth Development
Foundation. Advisory Director, Fund Directors (1993-present).
Chairman, Metropolitan Transportation Authority
(1992-present). Chairman, Audit Committee of the City of New
York (1981-present). Trustee, Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director/Trustee,
the National Affiliated Investment Companies (1967-1993).
Director/Trustee, Phoenix Funds (1993-present). Director,
Accuhealth (1994-present), Trism, Inc. (1994-present). Realty
Foundation of New York (1972-present). Chairman, New York
Housing Partnership Development Corp. (1981-present).
Harry Dalzell-Payne (66) Director Director/Trustee, Phoenix Funds (1983-present). Trustee,
330 East 39th Street Phoenix Duff & Phelps Institutional Mutual Funds
Apartment 29G (1996-present). Director, Farragut Mortgage Co., Inc.
New York, NY 10016 (1991-1994). Director/Trustee, the National Affiliated
Investment Companies (1983-1993). Formerly a Major General of
the British Army.
*Francis E. Jeffries (65) Director Director and Chairman of the Board, Phoenix Duff & Phelps
Phoenix Duff & Phelps Corp. Corporation. Trustee, Phoenix Duff & Phelps Mutual Funds.
55 East Monroe Street Director, Duff & Phelps Utilities Income Fund, Duff & Phelps
Suite 3800 Utilities Tax-Free Income, Inc., Duff & Phelps Utility and
Chicago, IL 60603 Corporate Bond Trust, Inc. and The Empire District Electric
Company. Director (1989-1995), Chief Executive Officer
(1989-1995) and President (1989-1993), Duff & Phelps
Corporation. Director/Trustee, Phoenix Funds (1995-present).
Trustee, Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present).
Leroy Keith, Jr. (57) Director Chairman and Chief Executive Officer, Carson Products Company
Chairman and Chief (1995-present). Director/Trustee, Phoenix Funds (1980-present).
Executive Officer Trustee, Phoenix Duff & Phelps Institutional Mutual Funds
Carson Products Company (1996- present). Director Equifax Corp. (1991-present), and
64 Ross Road Keystone International Fund, Inc. (1989-present). Trustee,
Savannah, GA 31405 Keystone Liquid Trust, Keystone Tax Exempt Trust, Keystone Tax
Free Fund, Master Reserves Tax Free Trust, and Master Reserves
Trust. Director/Trustee, the National Affiliated Investment
Companies (until 1993). Director, Blue Cross/Blue Shield
(1989-1993) and First Union Bank of Georgia (1989-1993).
President, Morehouse College (1987-1994). Chairman and Chief
Executive Officer, Keith Ventures (1994-1995).
20
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------- -------------- ---------------------------------------------------------------
*Philip R. McLoughlin (49) Director and Director, Vice Chairman and Chief Executive Officer, Phoenix
President Duff & Phelps Corporation (1995-present). Director
(1994-present) and Executive Vice President, Investments,
Phoenix Home Life Mutual Insurance Company (1987-present).
Director, Vice Chairman and Chief Executive Officer, Phoenix
Duff & Phelps Corporation (1995-present). Director/Trustee and
President, Phoenix Funds (1989-present). Trustee and President,
Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Phoenix Investment Counsel, Inc.
(1983-present). Director (1984-present) and President
(1990-present), Phoenix Equity Planning Corporation. Director,
Phoenix Re Corporation (Delaware) (1985-present), and World
Trust Fund (1991-present). Director/Trustee, the National
Affiliated Investment Companies (until 1993). Director,
Chairman and Chief Executive Officer, National Securities &
Research Corporation (1993-present) and Phoenix Securities
Group, Inc., (1993-1995). Director (1992-present) and
President, (1992-1994) W.S. Griffith & Co., Inc. Townsend
Financial Advisers, Inc.
Everett L. Morris (67) Director Vice President, W.H. Reaves and Company (1993-present).
164 Laird Road Director/ Trustee Phoenix Funds (1995-present). Trustee,
Colts Neck, NJ 07722 Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free
Income, Inc., Duff & Phelps Utility and Corporate Bond Trust,
Inc., Public Service Enterprise Group Incorporated and
President and Chief Operating Officer of Enterprise Diversified
Holdings Incorporated (1992-1993). Senior Executive Vice
President and Chief Financial Officer, Public Service Electric
and Gas Company (1991-1992). Director, First Fidelity Bank,
N.A. (until 1991).
James M. Oates (49) Director Managing Director, The Wydown Group (1994-present). Director
Managing Director Phoenix Duff & Phelps Corporation (1995-present).
The Wydown Group Director/Trustee, Phoenix Funds (1987-present). Trustee,
50 Congress Street Phoenix Duff & Phelps Institutional Mutual Funds
Suite 1000 (1996-present). Director, Govett Worldwide Opportunity Funds,
Boston, MA 02109 Inc., (1991-present). Director, Blue Cross & Blue Shield of New
Hampshire. Director, Investors Bank and Trust Corporation and
Investors Financial Services Corporation. Director, Stifel
Financial Corporation (1986-1995). Director/Trustee, the
National Affiliated Investment Companies (until 1993). Director
(1984-1994), President (1984-1994) and Chief Executive Officer
(1986-1994), Neworld Bank. Savings Bank Life Insurance Company
(1988-1994).
21
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------- -------------- ---------------------------------------------------------------
*Calvin J. Pedersen (54) Director Director and President, Phoenix Duff & Phelps Corporation
Phoenix Duff & Phelps Corp. (1995- present). Director (since 1992) and President (since
55 East Monroe Street July 1993), Duff & Phelps. Executive Vice President, Duff &
Suite 3800 Phelps (January 1992 to July 1993). President and Chief
Chicago, IL 60603 Executive Officer, Duff & Phelps Utilities Tax-Free Income,
Inc. and Duff & Phelps Utility and Corporate Bond Trust, Inc.
Chairman, Chief Executive Officer, and Trustee, Phoenix Duff &
Phelps Mutual Funds. Director/Trustee, Phoenix Funds (1995-
present). Trustee, Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present).
Philip R. Reynolds (68) Director Director/Trustee, Phoenix Funds (1984-present). Trustee,
43 Montclair Drive Phoenix Duff & Phelps Institutional Mutual Funds
West Hartford, CT 06107 (1996-present). Director, Vestaur Securities, Inc.
(1972-present). Trustee, and Treasurer, J. Walton Bissell
Foundation, Inc. and Treasurer, J. Walton Bissell Foundation,
Inc. (1988-present). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Herbert Roth, Jr. Director Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix Duff & Phelps Institutional Mutual Funds
P.O. Box 909 (1996-present). Director, Boston Edison Company (1978-present),
Sherborn, MA 01770 Phoenix Home Life Mutual Insurance Company (1972-present),
Landauer, Inc. (medical services) (1970-present), Tech
Ops./Sevcon, Inc. (electronic controllers) (1987-present), Key
Energy Group (oil rig service) (1988-1994), and Mark IV
Industries (diversified manufacturer) (1985-present).
Director/Trustee, the National Affiliated Investment Companies
(until 1993).
Richard E. Segerson (50) Director Director/Trustee, Phoenix Funds, (1993-present). Trustee,
102 Valley Road Phoenix Duff & Phelps Institutional Mutual Funds
New Canaan, CT 06840 (1996-present). Consultant, Tootal Group, (1989-1991) and Texas
Air Corporation (1987-1989). 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. (64) Director Trustee/Director, the Phoenix Funds (1995-present). Trustee,
Bresing Lierman Weicker Phoenix Duff & Phelps Institutional Mutual Funds
6931 Arlington Road (1996-present). Former Governor of the State of Connecticut
Suite 501 (1991-1995). Director, UST Inc. (1995-present). Director, HPSC,
Bethesda, MD 20814 Inc. (1995-present).
* Indicates that the Director is an "interested person" of the Fund within the meaning of the definition set
forth in Section 2(a) of the Investment Company Act of 1940.
22
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------- -------------- ---------------------------------------------------------------
Martin J. Gavin (45) Executive Vice Director and Executive Vice President, Finance and Operations,
President Phoenix Duff & Phelps Corporation (1995-present). Senior Vice
President, Investment Products, Phoenix Home Life Mutual
Insurance Company (1989-1995). Director and Executive Vice
President, Phoenix Equity Planning Corporation (1990-present).
Director (1994-present) and Executive Vice President
(1991-present), Phoenix Investment Counsel, Inc. Director and
Executive Vice President, Phoenix Securities Group, Inc.
(1993-1995) and National Securities & Research Corporation
(1993-present). Director (1993-present) and Executive Vice
President (1993-1994), W.S. Griffith & Co., Inc. and Townsend
Financial Advisers, Inc. Executive Vice President, the Phoenix
Funds (1993-present). Director and Vice President, PM Holdings,
Inc. (1994-present). Executive Vice President, National
Affiliated Investment Companies (until 1993).
Michael E. Haylon (38) Executive Vice Director and Executive Vice President, Investments, Phoenix
President Duff & Phelps Corporation (1995-present). Vice President,
Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Senior Vice President, Securities Investments,
Phoenix Home Life Mutual Insurance Company (1993-1995).
Executive Vice President, the Phoenix Funds (1995-present).
Director (1994-present) and President (1995-present), Phoenix
Investment Counsel, Inc. Director and Executive Vice President
(1994-present), National Securities & Research Corporation.
Various other positions with Phoenix Home Life Mutual Insurance
Company (1990-1993).
William J. Newman (57) Senior Vice Executive Vice President, Phoenix Investment Counsel, Inc.
President (1995-present). Vice President, Common Stock and Chief
Investment Strategist, Phoenix Home Life Mutual Insurance
Company (April 1995-November 1995). Senior Vice President,
National Securities & Research Corporation (1995-present), and
Phoenix Equity Planning Corporation (1995-present). Senior Vice
President, Phoenix Multi-Portfolio Fund and Phoenix Strategic
Equity Series Fund, Inc. (1995- present). Senior Vice
President, Phoenix Income and Growth Fund, Phoenix Series Fund,
Phoenix Total Return Fund, Inc. and Phoenix Worldwide
Opportunities Fund (1996-present). Senior Vice President,
Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Chief Investment Strategist, Kidder, Peabody
Co., Inc. (1993-1994) and Managing Director, Equities, Bankers
Trust (1991-1993).
23
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------- -------------- ---------------------------------------------------------------
C. Edwin Riley, Jr. (42) Vice Vice President, Phoenix Investment Counsel, Inc.
President (1995-present). Vice President, Phoenix Total Return Fund,
Inc., and The Phoenix Edge Series Fund (1995-present). Vice
President, Phoenix Series Fund (1996-present). Portfolio
Manager, Phoenix Home Life Mutual Insurance Company (August
1995-November 1995). Sr. Vice President and Director of Equity
Management for Nationsbank Investment Management (1988-1995).
James M. Dolan (40) Vice Vice President and Compliance Officer (1994-present), and
100 Bright Meadow Blvd. President Assistant Secretary (1981-present), Phoenix Equity Planning
P.O. Box 2200 Corporation. Vice President, Phoenix Funds, (1989-present).
Enfield, CT 06083-2200 Vice President, Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present). Vice President (1991-present), Assistant
Clerk and Assistant Secretary (1982-present), Phoenix Investment
Counsel, Inc. Vice President and Chief Compliance Officer
(1994-present), Phoenix Realty Advisors, Inc. and Chief
Compliance Officer (1995-present), Phoenix Realty Securities,
Inc. Vice President, the National Affiliated Investment Companies
(until 1993). Various other positions with Phoenix Equity Planning
Corporation (1978-1994).
William R. Moyer (51) Vice Senior Vice President, Finance (1990-present), and Treasurer
100 Bright Meadow Blvd. President (1994-present), Phoenix Equity Planning Corporation, and
P.O. Box 2200 Phoenix Investment Counsel, Inc. Senior Vice President and
Enfield, CT 06083-2200 Chief Financial Officer, Phoenix Duff & Phelps Corporation,
(1995-present). Vice President, Phoenix Funds (1990-present).
Vice President, Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present). Senior Vice President, Finance, Phoenix
Securities Group, Inc. (1993-1995). Senior Vice President,
Finance (1993-present), and Treasurer (1994-present). National
Securities & Research Corporation. Senior Vice President and
Chief Financial Officer (1993-present) and Treasurer
(1994-present), W.S. Griffith & Co., Inc. and Townsend
Financial Advisers, Inc. Vice President, Investment Products
Finance, Phoenix Home Life Mutual Insurance Company
(1990-1995). Vice President, the National Affiliated Investment
Companies (until 1993).
Leonard J. Saltiel (41) Vice Senior Vice President, Phoenix Equity Planning Corporation
President (1994-present). Vice President, Phoenix Funds (1994-present)
and National Securities & Research Corporation. Vice President,
Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Various positions with Home Life Insurance
Company and Phoenix Home Life Mutual Insurance Company
(1987-1994).
Philip Stekl Vice Research Analyst, Phoenix Home Life Mutual Insurance Company
President (1992-present). Director, Research, Travelers Corporation
(1987-1992).
24
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------- -------------- ---------------------------------------------------------------
G. Jeffrey Bohne (48) Secretary Vice President, Transfer Agent Operations, Phoenix Equity
101 Munson Street and Clerk Planning Corporation (1993-present). Secretary, the Phoenix
Greenfield, MA 01301 Funds (1993-present), and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Clerk, Phoenix Total Return Fund,
Inc. (1994-present). Vice President and General Manager,
Phoenix Home Life Mutual Insurance Co. (1993-1995). Vice
President, Home Life of New York Insurance Company (1984-1992).
Nancy G. Curtiss (43) Treasurer Treasurer, Phoenix Funds (1994-present). Vice President, Fund
Accounting, Phoenix Equity Planning Corporation (1994-present).
Second Vice President and Treasurer, Fund Accounting, Phoenix
Home Life Mutual Insurance Company (1995-present).Various
positions with Phoenix Home Life Insurance Company (1987-1994).
</TABLE>
For services rendered to the Fund during the fiscal year ended December
31, 1995, the Directors received an aggregate of $14,274 from the Fund as
Directors' fees. For his services on the Boards of the Phoenix Funds and the
mutual funds managed by National Securities & Research Corporation, an
affiliate of the Adviser, each Director who is not a full-time employee of
the Adviser or any of its affiliates currently receives a retainer at the
annual rate of $30,000 and $2,000 per joint meeting of the Boards. Each
Director who serves on the Audit Committee receives a retainer at the annual
rate of $2,000 and $2,000 per joint Audit Committee meeting attended. Each
Director who serves on the Nominating Committee receives a retainer at the
annual rate of $1,000 and $1,000 per joint Nominating Committee meeting
attended. Each Director who serves on the Executive Committee and who is not
an interested person of the Fund receives a retainer at the annual rate of
$1,000 and $1,000 per Executive Committee meeting attended. Director fee
costs are allocated equally to each of the Series and Funds within the
Phoenix Funds complex. The foregoing fees do not include reimbursement of
expenses incurred in connection with meeting attendance. Officers are
compensated for their services by the Adviser and receive no compensation
from the Fund.
For the Fund's last fiscal year ending December 31, 1995, the Directors
received the following compensation:
<TABLE>
<CAPTION>
Pension or Total
Retirement Estimated Compensation
Benefits Annual From Fund and
Aggregate Accrued as Part Benefits Fund Complex
Compensation of Fund Upon Paid to
Name From Fund Expenses Retirement Directors
- ------------------------- ---------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
C. Duane Blinn $1,900* $47,500
Robert Chesek $1,710 $42,750
E. Virgil Conway $2,140 $53,500
Harry Dalzell-Payne $1,780 $44,500
Leroy Keith, Jr. $1,700 None None $42,500
Philip R. McLoughlin $ 0 for any for any $ 0
James M. Oates $2,060 Director Director $51,500
Philip R. Reynolds $1,780 $44,500
Herbert Roth, Jr. $2,260* $56,500
Richard E. Segerson $2,060 $51,500
Lowell P. Weicker, Jr. $1,380 $34,500
</TABLE>
25
<PAGE>
*This compensation (and the earnings theron) was deferred pursuant to the
Directors Deferred Compensation Plan.
On December 31, 1995, the Directors and officers of the Fund beneficially
owned less than 1% of the outstanding shares of the Fund.
ADDITIONAL INFORMATION
The Fund's Prospectus and this Statement of Additional Information omit
certain information contained in the registration statement filed with the
Securities and Exchange Commission which may be obtained from the
Commission's principal office at 450 Fifth Street, N.W., Washington, DC
20549, upon payment of the fee prescribed by the Commission's rules and
regulations.
Financial Statements
Financial information relating to the Fund is contained in the Annual Report
to Shareholders for the year ended December 31, 1995 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 with principal offices at 160 Federal Street, Boston,
MA 02110, has been selected independent accountants for the Fund.
26
<PAGE>
APPENDIX
A-1 and P-1 Commercial Paper Ratings
The Money Market Series 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 medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment some time 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.
27
<PAGE>
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 & 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.
28
<PAGE>
PHOENIX TOTAL RETURN FUND, INC.
- -------------------------------------------------------------------------------
Investment Environment
By any measure, the financial markets' returns for 1995 were outstanding. The
combination of double-digit earnings per share growth and nearly a 200
basis-point decline in long-term interest rates proved to be a powerful
combination. Over the last twelve months, the Standard & Poor's 500 Composite
Index, a commonly used, unmanaged indicator of stock performance, returned
37.51% and the Lehman Brothers Aggregate Bond Index, an unmanaged gauge of
bond market performance, posted a total return of 18.48%.
Portfolio Review & Outlook
Phoenix Total Return Fund posted strong absolute gains over this reporting
period. For the 1995 calendar year, Class A shares returned 18.23% and Class
B shares returned 17.31%. In contrast, its peer group's average--the 145
flexible funds tracked by Lipper Analytical Services--earned 24.98%. As with
the broad market returns noted above, all of these figures assume
reinvestment of any distributions, but exclude the effect of sales charges.
Overall, the Fund's relative underperformance resulted from the portfolio's
conservative overweighting for most of the year in cash reserves. In
addition, the portfolio's focus on consumer cyclicals in lieu of technology
stocks caused the equity portion to lag the market throughout the summer and
early fall months.
In September, the bond position was increased to 40% and enhanced through
diversifying the dominate U.S. Treasury position into other fixed-income
sectors that offer greater total-return potential. In addition, the duration
of the bonds was extended to benefit from the expected strength in the bond
market. These actions proved beneficial to results during the fourth quarter.
At year end, the portfolio was positioned in anticipation of a stable bond
market and greater volatility in the stock market, as corporate earnings are
expected to show disappointments throughout 1996. As of December 31, 1995,
the portfolio's asset allocation mix was 53% stocks, 27% bonds and 20% cash
reserves.
1
<PAGE>
Phoenix Total Return Fund, Inc.
- -------------------------------------------------------------------------------
Phoenix Total Lipper Analytical
Return Fund-- S&P 500 Services Flexible
Class A Stock Index* Fund**
12/31/85 $ 9525 $10000 $10000
12/31/86 10976 11821 11511
12/31/87 12186 12433 12346
12/31/88 12594 14485 13310
12/31/89 14913 19038 15606
12/31/90 15573 18429 15643
12/31/91 20035 24059 19554
12/31/92 22102 25909 21112
12/31/93 24421 28500 23762
12/31/94 23870 28877 23208
12/31/95 28223 39708 29005
Average Annual Total Returns for Periods Ending 12/31/95
<TABLE>
<CAPTION>
From Inception
10/24/94 to
1 Year 5 Years 10 Years 12/31/95
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A with 4.75% sales charge 12.61% 11.51% 10.92% --
- --------------------------------------------------------------------------------------
Class A at net asset value 18.23% 12.60% 11.46% --
- --------------------------------------------------------------------------------------
Class B with CDSC 12.31% -- -- 10.95%
- --------------------------------------------------------------------------------------
Class B at net asset value 17.31% -- -- 14.24%
- --------------------------------------------------------------------------------------
S&P 500 Stock Index* 37.51% 16.59% 14.79% 28.32%
- --------------------------------------------------------------------------------------
Lipper Analytical Services Flexible Fund** 24.98% 13.15% 11.24% 24.16%
- --------------------------------------------------------------------------------------
</TABLE>
This chart assumes an initial gross investment of $10,000 made on 12/31/85
for Class A shares. The total return for Class A shares reflects the maximum
sales charge of 4.75% on the initial investment and assumes reinvestment of
dividends and capital gains. Class B share performance will be greater or
less than that shown based on differences in inception date, fees and sales
charges. The total return for Class B shares reflects the 5% contingent
deferred sales charge (CDSC), which is applicable on all shares redeemed
during the 1st year after purchase and 4% for all shares redeemed during the
2nd year after purchase (scaled down to 3%--3rd year; 2%--4th and 5th year
and 0% thereafter). Returns indicate past performance, which is not
predictive of future performance. Investment return and net asset value will
fluctuate, so that your shares, when redeemed, may be worth more or less than
the original cost.
*The S&P 500 Stock Index is an unmanaged but commonly used measure of common
stock total return performance. The S&P 500's performance does not reflect
sales charges.
**The Lipper Analytical Services Flexible Fund category is an average
composed of 145 funds; the 5 and 10 year returns are derived from compounding
the yearly returns. Performance is based on the reinvestment of all
distributions and does not reflect the effects of sales charges.
2
<PAGE>
Phoenix Total Return Fund, Inc.
- -------------------------------------------------------------------------------
INVESTMENTS AT DECEMBER 31, 1995
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ----- -----------
U.S. GOVERNMENT SECURITIES--12.3%
U.S. Treasury Notes--9.4%
U.S. Treasury Notes 7.25%, '96 AAA $ 8,400 $ 8,546,244
U.S. Treasury Notes 7.375%, '97 AAA 8,400 8,714,664
U.S. Treasury Notes 7.50%, '97 AAA 17,000 17,404,600
---------
34,665,508
---------
Agency Mortgage-Backed Securities --2.9%
GNMA 6.50%, '23-'24 AAA 10,825 10,747,498
---------
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $44,328,883) 45,413,006
---------
SHARES
------
COMMON STOCKS--49.4%
Advertising--2.3%
Interpublic Group Co., Inc. 87,600 3,799,650
Omnicom Group, Inc. 130,000 4,842,500
---------
8,642,150
---------
Aerospace & Defense--3.0%
Boeing Company 85,000 6,661,875
United Technologies Corp. 48,000 4,554,000
---------
11,215,875
---------
Airlines--0.6%
Delta Airlines, Inc. 30,000 2,216,250
---------
Banks--3.6%
Bank America Corp. 25,000 1,618,750
Bank of Boston Corp. 40,000 1,850,000
Bankers Trust New York Corp. 50,000 3,325,000
Barnett Banks, Inc. 30,000 1,770,000
Chase Manhattan Corp. 25,000 1,515,625
Citicorp 50,000 3,362,500
---------
13,441,875
---------
Chemical--1.9%
IMC Global, Inc. 50,000 2,043,750
Monsanto Co. 40,000 4,900,000
---------
6,943,750
---------
Computer Software & Services--3.3%
First Data Corp. 72,800 4,868,500
Informix Corp. (b) 115,000 3,450,000
Oracle Systems Corp. (b) 92,500 3,919,688
---------
12,238,188
---------
Cosmetics & Soaps--0.1%
Colgate Palmolive Co. 5,000 351,250
---------
Diversified Financial Services--2.3%
Donaldson Lufkin & Jenrette, Inc. 22,000 687,500
Morgan Stanley Group, Inc. 29,000 2,338,125
Paine Webber Group, Inc. 100,000 2,000,000
Travelers Group, Inc. 55,000 3,458,125
---------
8,483,750
---------
SHARES VALUE
------ -----------
Electrical Equipment--3.0%
Emerson Electric Co. 48,000 $ 3,924,000
General Electric Co. 50,000 3,600,000
Honeywell, Inc. 75,000 3,646,875
---------
11,170,875
---------
Electronics--1.9%
Altera Corp. (b) 30,000 1,492,500
Applied Materials, Inc. (b) 10,000 393,750
Integrated Device Technology, Inc. (b) 130,000 1,673,750
LSI Logic Corp. (b) 40,000 1,310,000
Oak Technology, Inc. (b) 20,000 845,000
S3, Inc. (b) 30,000 528,750
Texas Instruments, Inc. 15,000 776,250
---------
7,020,000
---------
Engineering & Construction--1.2%
Fluor Corp. 65,000 4,290,000
---------
Entertainment, Leisure & Gaming--1.8%
Gaylord Entertainment Co. 97,250 2,698,687
Walt Disney Co. 65,000 3,835,000
---------
6,533,687
---------
Food--0.5%
Nabisco Holdings Corp. 60,000 1,957,500
---------
Healthcare--Diversified--0.8%
American Home Products Corp. 29,000 2,813,000
---------
Healthcare--Drugs--4.6%
Amgen, Inc. (b) 60,000 3,562,500
Ergo Science Corp. (b) 35,000 498,750
Genzyme Corp. (b) 25,000 1,559,375
Merck & Co., Inc. 75,000 4,931,250
Schering-Plough Corp. 70,000 3,832,500
Watson Pharmaceuticals, Inc. (b) 50,000 2,450,000
---------
16,834,375
---------
Hospital Management & Services--0.5%
Manor Care, Inc. 50,000 1,750,000
---------
Insurance--2.3%
Allstate Corp. 101,000 4,153,625
American International Group, Inc. 20,000 1,850,000
Cigna Corp. 25,000 2,581,250
---------
8,584,875
---------
Medical Products & Supplies--1.9%
Cordis Corp. (b) 5,000 502,500
Empi, Inc. (b) 50,000 1,275,000
Johnson & Johnson 20,000 1,712,500
Medtronic, Inc. 60,000 3,352,500
---------
6,842,500
---------
Natural Gas--1.1%
Anadarko Petroleum Corp. 75,000 4,059,375
---------
See Notes to Financial Statements
3
<PAGE>
Phoenix Total Return Fund, Inc.
- -------------------------------------------------------------------------------
SHARES VALUE
------ -----------
Office & Business Equipment--2.3%
Digital Equipment Corp. (b) 80,000 $ 5,130,000
Hewlett Packard Co. 24,000 2,010,000
Silicon Graphics, Inc. (b) 48,000 1,320,000
---------
8,460,000
---------
Oil--1.2%
Mobil Corp. 40,000 4,480,000
---------
Oil Service & Equipment--3.1%
Halliburton Co. 85,000 4,303,125
Schlumberger Ltd. 60,000 4,155,000
Tidewater, Inc. 100,000 3,150,000
---------
11,608,125
---------
Publishing, Broadcasting, Printing & Cable--0.7%
Evergreen Media Corp. (b) 20,000 640,000
Lin Television Corp. (b) 70,000 2,082,500
---------
2,722,500
---------
Retail--0.3%
OfficeMax, Inc. (b) 40,000 895,000
---------
Telecommunications Equipment--2.4%
3Com Corp. (b) 32,000 1,492,000
Ascend Communications, Inc. (b) 12,000 973,500
Bay Networks, Inc. (b) 40,000 1,645,000
Cisco Systems, Inc. (b) 60,000 4,477,500
Gandalf Technologies, Inc. (b) 15,000 255,000
---------
8,843,000
---------
Tobacco--1.0%
Philip Morris Companies, Inc. 42,000 3,801,000
---------
Utility--Telephone--1.7%
AT&T Corp. 30,000 1,942,500
Bellsouth Corp. 100,000 4,350,000
---------
6,292,500
---------
TOTAL COMMON STOCKS
(Identified cost $162,334,695) 182,491,400
---------
FOREIGN COMMON STOCKS--3.8%
Chemical--1.9%
Potash Corp. of Saskatchewan, Inc. (Canada) 98,000 6,945,750
---------
Oil--0.8%
British Petroleum PLC ADR (United Kingdom) 30,000 3,063,750
---------
Telecommunications Equipment--1.1%
Ericsson L.M. Telephone Co. Class B ADR (Sweden) 209,000 4,075,500
---------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $11,647,518) 14,085,000
---------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ------ -----------
<S> <C> <C> <C>
MUNICIPAL BONDS--5.1%
California--2.0%
Kern County Pension Obligation 7.26%, '14 AAA $1,700 $ 1,777,435
Long Beach Pension Obligation 6.87%, '06 AAA 950 977,921
Los Angeles County Series B Rev. 5.25%, '23 AAA 250 243,645
N. California Power Agency Rev. Ser. A 5.50%, '24 AAA 1,715 1,716,612
San Bernardino County Obligation Revenue 6.87%, '08 AAA 455 468,140
San Bernardino County Obligation Revenue 6.94%, '09 AAA 1,240 1,279,854
Ventura County Pension 6.54%, '05 AAA 1,100 1,111,418
-----------
7,575,025
-----------
Florida--1.6%
Florida Board of Education Series E 5.25%, '23 AA 1,870 1,825,326
Florida State Turnpike Authority Sinker 5%, '19 AAA 150 144,595
Miami Beach Spec. Obligation Taxable 8.60%, '21 AAA 3,600 4,084,308
-----------
6,054,229
-----------
Georgia--0.1%
De Kalb County Water & Sewer Sinker 5.25%, '23 AA 215 211,354
-----------
Massachusetts--0.1%
Massachusetts Bay Transit Authority Series B 5.375%, '25 AAA 250 245,197
-----------
Michigan--0.1%
Michigan Public Power Agency Sinker 5.25%, '18 AAA 250 245,523
-----------
New York--0.2%
New York State Power Rev. Series CC 5.25%, '18 AA- 860 843,514
-----------
South Carolina--0.5%
South Carolina Public Service Rev. C 5.125%, '21 A+ 685 641,523
South Carolina Public Service
Series C 5%, '25 AAA 1,425 1,352,168
-----------
1,993,691
-----------
Utah--0.4%
Intermountain Power Series A 5%, '23 AA- 1,685 1,570,942
-----------
Washington--0.0%
Seattle Drain & Wastewater Sinker 5.25%, '25 AAA 150 145,617
-----------
Other Territories--0.1%
Puerto Rico Commonwealth Sinker 5.375%, '22 AAA 175 174,438
-----------
TOTAL MUNICIPAL BONDS
(Identified cost $18,298,466) 19,059,530
-----------
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Phoenix Total Return Fund, Inc.
- -------------------------------------------------------------------------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ------ -------------
NON-CONVERTIBLE BONDS--5.8%
Non-Agency Mortgage-Backed Securities--5.8%
CS First Boston Mtg. 95-AE1, B
7.182%, '27 AA- $1,775 $ 1,793,304
DLJ Mtg. 95-T10, A 144A 6.955%, '23
(e) Aa((d)) 6,000 5,868,750
Lehman Commercial Conduit 95-C2, B
7.18%, '05 (c) AA 1,850 1,932,094
Merrill Lynch Mortgage, Inc. 95-C2,
B 7.53%, '21 (c) Aa((d)) 994 1,024,878
Resolution Trust Corp. 93-C1, B
8.75%, '24 Aa((d)) 1,750 1,828,102
Resolution Trust Corp. 95-C2, B
6.80%, '27 Aaa((d)) 1,035 1,032,516
Resolution Trust Corp. 95-C1, A5
6.0205%, '27 (c) Aaa((d)) 2,045 2,035,722
Resolution Trust Corp. 95-C1, B
6.90%, '27 Aa((d)) 2,125 2,143,594
Resolution Trust Corp. 95-2, M1
7.15%, '29 Aa((d)) 1,793 1,806,594
SASC 1995-C4, B 7%, '26 AA 1,850 1,877,750
-------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $21,048,621) 21,343,304
-------------
FOREIGN NON-CONVERTIBLE BONDS--4.1%
Colombia--2.0%
Financiera Energ. Nacional EMTN
144A 9%, '99 (e) BBB- 3,600 3,775,500
Republic of Colombia Yankee 7.25%,
'04 BBB- 3,900 3,744,000
-------------
7,519,500
-------------
Poland--2.1%
Poland Global Reg. Par Euro 2.75%,
'24 (c) Baa((d)) 8,300 3,911,375
Poland PDI B 3.75%, '14 (c) Baa((d)) 5,800 3,755,500
-------------
7,666,875
-------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $14,806,675) 15,186,375
-------------
TOTAL LONG-TERM INVESTMENTS--80.5%
(Identified cost $272,464,858) 297,578,615
-------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ------ -------------
SHORT-TERM OBLIGATIONS--18.9%
Commercial Paper--14.0%
GTE North, Inc. 5.71%, 1-8-96 A-1+ $5,000 $ 4,994,449
Amoco Corp. 5.75%, 1-10-96 A-1+ 5,000 4,992,812
BellSouth Capital Funding Corp.
5.95%, 1-12-96 A-1+ 3,055 3,049,446
General Electric Capital Corp.
5.76%, 1-12-96 A-1+ 2,860 2,860,000
Pfizer, Inc. 5.70%, 1-12-96 A-1+ 3,500 3,493,904
General Electric Capital Corp.
5.75%, 1-18-96 A-1+ 6,304 6,304,000
Gannett, Inc. 5.75%, 1-19-96 A-1 3,695 3,684,377
TDK USA Corp. 5.65%, 1-22-96 A-1+ 3,640 3,628,003
Shell Oil Co. 5.60%, 1-24-96 A-1+ 4,365 4,349,383
Gannett, Inc. 5.80%, 1-25-96 A-1 3,200 3,187,627
Wisconsin Electric Power Co. 5.80%,
1-30-96 A-1+ 2,440 2,428,600
H.J. Heinz Co. 5.72%, 2-2-96 A-1 3,240 3,223,526
Ameritech Capital Funding Corp.
5.65%, 2-16-96 A-1+ 2,500 2,481,046
Warner-Lambert Co. 5.42%, 5-20-96 A-1+ 3,000 2,935,410
-------------
51,612,583
-------------
Federal Agency Securities--2.0%
Federal Home Loan Banks
6.10%, 1-2-96 4,545 4,544,230
Federal Farm Credit Bank
5.61%, 1-18-96 3,000 2,991,475
-------------
7,535,705
-------------
Federal Agency Securities--Variable--2.9% (c)
Federal National Mortgage
Assn. 5.15%, 2-16-96 2,000 2,000,000
Student Loan Marketing Assn.
5.25%, 1-11-96 8,500 8,500,000
-------------
10,500,000
-------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $69,651,127) 69,648,288
-------------
TOTAL INVESTMENTS--99.4%
(Identified cost $342,115,985) 367,226,903(a)
Cash and receivables, less liabilities--0.6% 2,344,614
-------------
NET ASSETS--100.0% $369,571,517
=============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $29,991,683 and gross
depreciation of $4,880,765 for income tax purposes. At December 31, 1995,
the aggregate cost of securities for federal income tax purposes was
$342,115,985.
(b) Non-income producing.
(c) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
(d) Moody's rating.
(e) 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 December 31,
1995, these securities amounted to a value of $9,644,250 or 2.61% of net
assets.
ADR--American Depository Receipt
See Notes to Financial Statements
5
<PAGE>
Phoenix Total Return Fund, Inc.
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
Assets
Investment securities at value
(Identified cost $342,115,985) $367,226,903
Cash 15,869
Receivables
Investment securities sold 1,647,125
Fund shares sold 127,422
Dividends and interest 1,978,877
-----------
Total assets 370,996,196
-----------
Liabilities
Payables
Investment securities purchased 830,125
Fund shares repurchased 116,482
Investment advisory fee 203,941
Transfer agent fee 123,276
Distribution fee 42,209
Financial agent fee 9,412
Directors fee 3,135
Accrued expenses 96,099
-----------
Total liabilities 1,424,679
-----------
Net Assets $369,571,517
===========
Net Assets Consist of:
Capital paid in on shares of common stock $342,581,785
Accumulated net realized gain 1,878,814
Net unrealized appreciation 25,110,918
-----------
Net Assets $369,571,517
===========
Class A
Shares of common stock, $1 par value,
50,000,000 shares authorized,
(Net Assets $361,525,611) 22,628,531
Net asset value per share $15.98
Offering price per share
$15.98/(1-4.75%) $16.78
Class B
Shares of common stock, $1 par value,
50,000,000 shares authorized,
(Net Assets $8,045,906) 506,242
Net asset value and offering price per
share $15.89
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
Investment income
Dividends $ 2,844,743
Interest 11,328,991
---------
Total investment income 14,173,734
---------
Expenses
Investment advisory fee 2,371,629
Distribution fee--Class A 899,895
Distribution fee--Class B 49,080
Financial agent fee 109,460
Transfer agent 709,373
Printing 123,679
Custodian 78,289
Professional 67,063
Registration 14,937
Directors 14,274
Miscellaneous 24,424
---------
Total expenses 4,462,103
---------
Net investment income 9,711,631
---------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 30,662,489
Net realized loss on foreign currency
transactions (5,102)
Net unrealized appreciation on investments 20,305,509
---------
Net gain on investments 50,962,896
---------
Net increase in net assets resulting from
operations $60,674,527
=========
See Notes to Financial Statements
6
<PAGE>
Phoenix Total Return Fund, Inc.
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
December 31, 1995 December 31, 1994
------------- ---------------
<S> <C> <C>
From Operations
Net investment income $ 9,711,631 $ 7,628,600
Net realized gain (loss) 30,657,387 (6,819,841)
Net unrealized appreciation (depreciation) 20,305,509 (9,156,278)
----------- -------------
Increase (decrease) in net assets resulting from
operations 60,674,527 (8,347,519)
----------- -------------
From Distributions to Shareholders
Net investment income--Class A (11,137,166) (6,940,527)
Net investment income--Class B (157,249) (11,271)
Net realized gains--Class A (21,046,512) (22,463)
Net realized gains--Class B (460,526) --
----------- -------------
Decrease in net assets from distributions to
shareholders (32,801,453) (6,974,261)
----------- -------------
From Share Transactions
Class A
Proceeds from sales of shares (2,327,216 and
2,828,232 shares, respectively) 36,428,108 43,064,141
Net asset value of shares issued from reinvestment
of distributions (1,767,069 and 379,765 shares,
respectively) 27,891,041 5,644,131
Cost of shares repurchased (4,076,035 and 4,522,562
shares, respectively) (65,751,129) (68,660,072)
----------- -------------
Total (1,431,980) (19,951,800)
----------- -------------
Class B
Proceeds from sales of shares (418,716 and 89,097
shares, respectively) 6,684,860 1,328,138
Net asset value of shares issued from reinvestment
of distributions (34,447 and 717 shares,
respectively) 539,518 10,580
Cost of shares repurchased (36,705 and 30 shares,
respectively) (599,012) (446)
----------- -------------
Total 6,625,366 1,338,272
----------- -------------
Increase (decrease) in net assets from share
transactions 5,193,386 (18,613,528)
----------- -------------
Net increase (decrease) in net assets 33,066,460 (33,935,308)
Net Assets
Beginning of period 336,505,057 370,440,365
----------- -------------
End of period (including undistributed net
investment income of $0 and $1,495,064,
respectively) $369,571,517 $336,505,057
=========== =============
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Phoenix Total Return Fund, Inc.
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------------- -----------------------------
Year
Year Ended December 31, Ended From Inception
December 31, 10/24/94 to
1995 1994 1993 1992 1991 1995 12/31/94
------- ------- ------- ------ ------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $14.82 $15.48 $14.89 $15.22 $13.43 $14.79 $14.98
Income from investment
operations
Net investment income 0.45 0.34 0.06((2)) 0.24 0.36 0.30((2)) 0.07
Net realized and
unrealized gain (loss) 2.22 (0.69) 1.49 1.32 3.45 2.22 (0.09)
----- ----- ----- ---- ---- --------- ------------
Total from investment
operations 2.67 (0.35) 1.55 1.56 3.81 2.52 (0.02)
----- ----- ----- ---- ---- --------- ------------
Less distributions
Dividends from net
investment income (0.52) (0.31) (0.11) (0.25) (0.37) (0.43) (0.17)
Dividends from net
realized gains (0.99) (0.001) (0.85) (1.64) (1.65) (0.99) --
----- ----- ----- ---- ---- --------- ------------
Total distributions (1.51) (0.311) (0.96) (1.89) (2.02) (1.42) (0.17)
----- ----- ----- ---- ---- --------- ------------
Change in net asset value 1.16 (0.66) 0.59 (0.33) 1.79 1.10 (0.19)
----- ----- ----- ---- ---- --------- ------------
Net asset value, end of
period $15.98 $14.82 $15.48 $14.89 $15.22 $15.89 $14.79
===== ===== ===== ==== ==== ========= ============
Total return( (1)) 18.23% -2.26% 10.49% 10.32% 28.62% 17.31% -0.12%((4))
Ratios/supplemental data:
Net assets, end of period
(thousands) $361,526 $335,177 $370,440 $58,006 $35,209 $8,046 $1,328
Ratio to average net
assets of:
Operating expenses 1.21% 1.24% 1.29% 1.36% 1.58% 1.97% 2.26%((3))
Net investment income 2.67% 2.18% 1.26% 2.06% 2.51% 1.88% 1.74%((3))
Portfolio turnover 184% 225% 246% 322% 249% 184% 225%
</TABLE>
((1)) Maximum sales load is not reflected in total return calculation.
((2)) Computed using average shares outstanding.
((3)) Annualized
((4)) Not annualized
See Notes to Financial Statements
8
<PAGE>
PHOENIX TOTAL RETURN FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Total Return Fund, Inc. ("the Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is to achieve the
highest total return consistent with reasonable risk by investing in stocks,
bonds and money market instruments. The Fund 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 the Fund 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 Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles. 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 listed or traded on a national securities exchange are
valued at the last sale price or, if there has been no recent sale, at the last
bid price. Securities traded in the over-the-counter market are valued at the
last bid price. Debt securities (other than short-term obligations) are valued
on the basis of broker quotations or valuations provided by a pricing service
when such prices are believed to reflect the fair value of such securities.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices and take into account appropriate factors such as
institution-size trading in similar groups of securities, yield, quality, coupon
rate, maturity, type of issue, trading characteristics and other market data.
Use of pricing services has been approved by the Directors. Short-term
investments having a remaining maturity of less than 60 days are valued at
amortized cost which approximates market. All other securities and assets are
valued at fair value as determined in good faith by or under the direction of
the Directors.
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 Fund is notified. Interest income is recorded on
the accrual basis. The Fund does not amortize premiums but does amortize
discounts using the effective interest method. Realized gains or losses are
determined on the identified cost basis.
C. Income taxes:
It is the policy of the Fund to comply with the requirements of the Internal
Revenue Code (the Code), applicable to regulated investment companies, and to
distribute substantially all of its taxable income to its shareholders. In
addition, the Fund intends to distribute an amount sufficient to avoid the
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 to shareholders are recorded 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 date of settlement. The gain or loss resulting from a change in currency
exchange rates between the trade and settlement dates of a portfolio
transaction, is treated as a gain or loss on foreign currency. Likewise, the
gain or loss resulting from a change in currency exchange rates between the
date income is accrued and paid, is treated as a gain or loss on foreign
currency. The Fund does not separate that portion of the results of
operations arising from changes in exchange rates and that portion arising
from changes in the market prices of securities.
9
<PAGE>
PHOENIX TOTAL RETURN FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 (Continued)
F. Security lending:
The Fund loans securities to qualified brokers through an agreement with
State Street Bank and Trust Company (State Street). Under the terms of the
agreement, the Fund receives collateral with a market value not less than
100% of the market value of loaned securities. 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 interest income by the Fund
net of fees charged by State Street 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 December 31, 1995, the Fund had loaned securities with a
market value of $540,039 and received collateral of $549,795.
NOTE 2. INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the Investment Adviser,
Phoenix Investment Counsel, Inc., an indirect, less than wholly-owned
subsidiary of Phoenix Home Life Mutual Insurance Company ("PHL"), is entitled
to a fee at an annual rate of 0.65% of the average daily net assets of the
Fund for the first $1 billion.
As Distributor of the Fund's shares, Phoenix Equity Planning Corp.
("PEPCO"), an indirect, less than wholly-owned subsidiary of PHL, has advised
the Fund that it retained net selling commissions of $51,647 for Class A
shares and deferred sales charges of $7,844 for Class B shares for the year
ended December 31, 1995. In addition, the Fund pays PEPCO a distribution fee
at an annual rate of 0.25% for Class A shares and 1.00% for Class B shares of
the average daily net assets of the Fund. The Distributor has advised the
Fund that of the total amount expensed for the year ended December 31, 1995,
$235,553 was retained by the Distributor and $713,422 was paid to
unaffiliated participants.
As Financial Agent of the Fund, PEPCO receives a fee at an annual rate of
0.03% of the average daily net assets of the Fund for bookkeeping,
administration and pricing services. PEPCO serves as the Fund's Transfer
Agent with State Street as sub-transfer agent. For the year ended December
31, 1995, transfer agent fees were $709,373 of which PEPCO retained $260,134
which is net of the fees paid to State Street.
At December 31, 1995, PHL and affiliates held 44 Class A shares and 7,440
Class B shares of the Fund with a combined value of $118,992.
NOTE 3. PURCHASES AND SALES OF SECURITIES
During the year ended December 31, 1995, purchases and sales of investments,
excluding short-term securities and U.S. Government securities, amounted to
$459,515,500 and $373,585,918, respectively. Purchases and sales of long-term
U.S. Government securities amounted to $79,342,613 and $105,210,948,
respectively.
NOTE 4. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded several
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Fund and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. During the year ended
December 31, 1995 the Fund reduced capital paid in on shares of common stock
by $15,267, increased undistributed net investment income by $87,720 and
decreased accumulated net realized gains by $72,453.
10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[Price Waterhouse LLP logo]
To the Board of Directors and Shareholders of
Phoenix Total Return Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the schedule 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 Phoenix Total Return Fund, Inc. (the "Fund") at December 31,
1995, the results of its operations, the changes in its net assets 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
December 31, 1995 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
February 12, 1996
11
<PAGE>
RESULTS OF SHAREHOLDER MEETING (Unaudited)
A special meeting in lieu of the Annual Meeting of shareholders of the
Phoenix Total Return Fund was held on July 27, 1995 to approve the following
matters:
1. Fix the number of directors at eleven and elect such number as detailed
below.
2. Ratify selection of Price Waterhouse LLP, independent accountants, as
auditors for the fiscal year ending December 31, 1995.
Subsequently, and in accordance with the provision in the Fund's By-laws, the
Directors voted to increase the number of Directors to fourteen and to
appoint three additional Directors to fill the vacancies caused by the
increase.
On the record date for this meeting, there were 22,735,209 shares outstanding
and 54.45% of the shares outstanding and entitled to vote were present by
proxy.
Number of votes: For Against Abstain
--------- ------ --------
1. Election of Directors
C. Duane Blinn 11,934,083 0 445,030
Robert Chesek 11,942,660 0 436,454
E. Virgil Conway 11,929,268 0 449,846
Harry Dalzell-Payne 11,935,194 0 443,920
Leroy Keith, Jr. 11,942,666 0 436,447
Philip R. McLoughlin 11,945,852 0 433,261
James M. Oates 11,947,774 0 431,340
Philip R. Reynolds 11,939,385 0 439,728
Herbert Roth, Jr. 11,937,476 0 441,637
Richard E. Segerson 11,948,592 0 430,522
Lowell P. Weicker, Jr. 11,851,328 0 527,786
2. Price Waterhouse LLP 11,790,387 107,711 481,015
12
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
PHOENIX TOTAL RETURN FUND, INC.
101 Munson Street
Greenfield, Massachusetts 01301
Directors
C. Duane Blinn
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Francis E. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Calvin J. Pedersen
Philip R. Reynolds
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
Officers
Philip R. McLoughlin, President
Martin J. Gavin, Executive Vice President
Michael E. Haylon, Executive Vice President
William J. Newman, Senior Vice President
James M. Dolan, Vice President
William R. Moyer, Vice President
C. Edwin Riley, Jr., Vice President
Leonard J. Saltiel, Vice President
Philip Stekl, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary and Clerk
Investment Adviser
Phoenix Investment Counsel, Inc.
56 Prospect St.
Hartford, CT 06115-0480
Principal Underwriter
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
Transfer Agent
Phoenix Equity Planning Corporation
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
Attention: Phoenix Funds
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Legal Counsel
Sullivan & Worcester
One Post Office Square
Boston, MA 02109
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
This report is not authorized for distribution to prospective investors in
the Phoenix Total Return Fund, Inc. unless preceded or accompanied by an
effective prospectus which includes information concerning the sales charge,
the Fund's record and other pertinent information.
<PAGE>
Phoenix Funds
Phoenix Total Return
Fund, Inc.
Annual Report
December 31, 1995
[photo of old money]
[Phoenix Duff & Phelps logo]
Phoenix Total Return Fund, Inc.
P.O. Box 2200
Enfield, CT 06083-2200
[Phoenix Duff & Phelps logo]
PDP 454 (2/96)
Bulk Rate Mail
U.S. Postage
PAID
Springfield, MA
Permit No. 444
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements: Condensed Financial Information is included in Part
A of this registration statement and Condensed Financial Information and
Financial Statements for the year ended December 31, 1995 are included in
Part B of this registration statement.
(b) Exhibits:
<TABLE>
<CAPTION>
<S> <C>
1.1 Articles of Organization. Filed as Exhibit 1 to Registrant's Registration Statement on Form N-8B-1 (File
No. 811-1442) and incorporated herein by reference thereto.
1.2 Amendment to Articles of Organization. Filed as Exhibit 1(b) to Amendment No. 1 to Registrant's
Registration Statement on Form N-8B-1 (File No. 811-1442) and incorporated herein by reference thereto.
1.3 Restated Articles of Organization. Filed as Exhibit 1(c) to Amendment No. 2 to Registrant's Registration
Statement on Form N-8B-1 (File No. 811-1442) and incorporated herein by reference thereto.
1.4 Amendment to Restated Articles of Organization. Filed as Exhibit 1.4 to Amendment No. 7 (filed on Form
N-1) to Registrant's Registration Statement on Form N-8B-1 (File No. 811-1442) and incorporated herein by
reference thereto.
1.5 Amendment to Restated Articles of Organization effective July 9, 1986. Filed as Exhibit 1.5 to Amendment
No. 10 (filed on Form N-1A) to Registrant's Registration Statement on Form N-8B-1 (File No. 811-1442) and
incorporated herein by reference thereto.
1.6 Amendment to Restated Articles of Organization effective July 22, 1986. Filed as Exhibit 1.6 to Amendment
No. 10 (filed on Form N-1A) to Registrant's Registration Statement on Form N-8B-1 (File No. 811-1442) and
incorporated herein by reference thereto.
1.7 Amendment to Restated Articles of Organization effective September 15, 1987. Filed as Exhibit 1.7 to
Post-Effective Amendment No. 2 (filed on Form N-1A) to Registrant's Registration Statement (File Nos.
33-9069, 811-1442) and incorporated herein by reference thereto.
1.8 Amendment to Restated Articles of Organization effective October 13, 1994. Filed as Exhibit 1.8 to
Post-Effective Amendment No. 12 on June 30, 1994 and incorporated herein by reference thereto.
2. By-Laws: Filed as Exhibit 2 to Amendment No. 10 (filed on Form N-1A) to Registrant's Registration
Statement on Form N-8B-1 (File No. 811-1442) and incorporated herein by reference thereto.
3. Not applicable.
4.2 Specimen certificate for Class A shares of the Phoenix Total Return Fund, Inc. Filed as Exhibit 4.2 to
Post-Effective Amendment No. 12 on June 30, 1994 and incorporated herein by reference thereto.
4.3 Specimen certificate for Class B shares of the Phoenix Total Return Fund, Inc. Filed as Exhibit No. 4.1a
to Amendment No. 8 to Registrant's Registration Statement on Form N-1A and incorporated herein by
reference thereto.
5.2 Management Agreement dated January 1, 1994 between Registrant and Phoenix Investment Counsel, Inc. Filed
as Exhibit 5.2 to Post-Effective Amendment No. 12 on June 30, 1994 and incorporated herein by reference
thereto.
6.1 Distribution Agreement between Registrant and Phoenix Equity Planning Corporation for Class A shares.
Filed as Exhibit 6.1 to Amendment No. 8 to Registrant's Registration Statement on Form N-1A and
incorporated herein by reference thereto.
6.1a Distribution Agreement between Registrant and Phoenix Equity Planning Corporation for Class B shares.
Filed as Exhibit 6.1a to Amendment No. 8 to Registrant's Registration Statement on Form N-1A and
incorporated herein by reference thereto.
6.2 Form of Sales Agreement between Phoenix Equity Planning Corporation and dealers. Filed as Exhibit 6.2 to
Amendment No. 8 to Registrant's Registration Statement on Form N-1A and incorporated herein by reference
thereto.
C-1
<PAGE>
7. Not applicable.
8. Custodian Contract between Registrant and State Street Bank and Trust Company. Filed as Exhibit 8 to
Amendment No. 10 (filed on Form N-1A) to Registrant's Registration Statement on Form N-8B-1 (File No.
811-1442) and incorporated herein by reference thereto.
9.1b Form of Financial Agent Agreement between Registrant and Phoenix Equity Planning Corporation. Filed as
Exhibit 9.1b to Post-Effective Amendment No. 12 on June 30, 1994 and incorporated herein by reference
thereto.
9.2b Form of Transfer Agency and Service Agreement between Registrant and Phoenix Equity Planning Corporation.
Filed as Exhibit 9.2b to Post-Effective Amendment No. 12 on June 30, 1994 and incorporated herein by
reference thereto.
10. Not applicable.
11. Consent of Independent Accountants, filed herewith.
12. Opinion and Consent of Counsel covering shares of the Fund filed herewith and incorporated by reference.
13. Not applicable under rules relating to the filing of exhibits in effect at date of original filing in
1966.
14. Prototype Individual Retirement Account. Filed as Exhibit 14 to Registrant's Registration Statement on
Form N-1A (File Nos. 33-9069, 811-1442) and incorporated herein by reference thereto.
15. Distribution Plan for Class A shares. Filed as Exhibit 15 to Amendment No. 8 to Registrant's Registration
Statement on Form N-1A and incorporated herein by reference thereto.
15.a Distribution Plan for Class B shares. Filed as Exhibit 15.a to Amendment No. 8 to Registrant's
Registration Statement on Form N-1A and incorporated herein by reference thereto.
16. Not applicable.
17. Financial Data Schedule filed herewith and reflected on EDGAR as Exhibit 27.
18. Rule 18f-3 Dual Distribution Plan effective March 15, 1996 filed herewith, and incorporated herein by
reference.
19. Powers of Attorney filed herewith and incorporated herein by reference
</TABLE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities
The following information is as of February 29, 1996.
Number of Shareholder
Title of Class Accounts
- ----------------------------- -----------------------------
Common Stock, $1 par value
Class A Shares 27,684
Common Stock, $1 par value
Class B Shares 191
Item 27. Indemnification
Under the Registrant's By-Laws any present or former director or officer of
the Registrant is indemnified to the fullest extent permitted by law against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him in connection with any
action, suit or proceeding to which he may be made a party by reason of being
or having been a director or officer of the Registrant, provided he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Registrant and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
The By-Laws do not authorize indemnification of any director or officer who
is liable to the Registrant or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
C-2
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Phoenix Investment Counsel, Inc., investment adviser to the Registrant, is a
registered investment adviser providing investment advice to the Fund and
seven other registered investment companies.
There is set forth below information as to any other business, profession,
vocation or employment of a substantial nature in which each director or
officer of the Registrant's investment adviser is or has been, at any time
during the fiscal years of the Registrant ended December 31, 1994 and
December 31, 1995, been engaged for his own account or in the capacity of
director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Positions with
Name Investment Adviser Business and Other Connections
- -------------------------- -------------------- -----------------------------------------------------
<S> <C> <C>
Martin J. Gavin Director and Director and Executive Vice President, Finance and
Executive Vice Operations, Phoenix Duff & Phelps Corporation.
President Senior Vice President, Investment Products, Phoenix
Home Life Mutual Insurance Company (until 1995).
Director and Executive Vice President, Phoenix
Equity Planning Corporation, Phoenix Securities
Group, Inc., and National Securities & Research
Corporation. Director, W.S. Griffith & Co., Inc. and
Townsend Financial Advisers, Inc. Director and Vice
President, PM Holdings, Inc. Executive Vice
President, the Phoenix Funds.
Michael E. Haylon Director and Senior Vice President, Securities Investments,
President Phoenix Home Life Mutual Insurance Company (until
1995). Vice President, the Phoenix Funds. Director
and Executive Vice President, National Securities &
Research Corporation.
Philip R. McLoughlin Director and Executive Vice President and Chief Investment
Chairman Officer, and Director Phoenix Home Life Mutual
Insurance Company. Director, Vice Chairman and Chief
Executive Officer, Phoenix Duff & Phelps
Corporation. Director/Trustee of the Phoenix Funds.
Director and President, Phoenix Equity Planning
Corporation, and Phoenix Securities Group, Inc.
Director, Chairman, and Chief Executive Officer,
National Securities & Research Corporation.
Director, Phoenix Re Corporation (Delaware), W.S.
Griffith & Co., Inc., Townsend Financial Advisers,
Inc., Phoenix Realty Group, Inc., Phoenix Realty
Advisors, Inc., Phoenix Realty Investors, Inc. and
Phoenix Realty Securities Inc. Director and Vice
President, PM Holdings, Inc., and World Trust Fund.
William J. Newman Executive Vice Senior Vice President, National Securities &
President Research Corporation. Senior Vice President, Phoenix
Equity Planning Corporation. Vice President, Phoenix
Strategic Equity Series Fund. Senior Vice President,
The Phoenix Edge Series Fund and Phoenix
Multi-Portfolio Fund. Vice President, Common Stock,
and Chief Investment Strategist, Phoenix Home Life
Mutual Insurance Company (until 1995). Chief
Investment Strategist, Kidder, Peabody Co., Inc.
(until 1994). Managing Director, Head of Equities,
Bankers Trust (until 1993).
Paul A. Atkins Senior Vice Vice President, Institutional Investment Sales,
President Phoenix Home Life Mutual Insurance Company (until
1995).
C-3
<PAGE>
Positions with
Name Investment Adviser Business and Other Connections
- -------------------------- -------------------- -----------------------------------------------------
William R. Moyer Senior Vice Senior Vice President and Chief Financial Officer,
President, Phoenix Duff & Phelps Corporation. Vice President,
Finance, and Investment Products Finance, Phoenix Home Life
Treasurer Mutual Insurance Company (until 1995). Senior Vice
President, Finance, and Treasurer, Phoenix Equity
Planning Corporation, and Phoenix Securities Group,
Inc. Senior Vice President, Finance, and Treasurer,
National Securities & Research Corporation. Senior
Vice President, Chief Financial Officer and
Treasurer, W.S. Griffith & Co., Inc. and Townsend
Financial Advisers, Inc. Vice President, the Phoenix
Funds.
David L. Albrycht Vice President Portfolio Manager, Phoenix Home Life Mutual
Insurance Company (until 1995). Vice President,
Phoenix Asset Reserve, Phoenix Multi-Portfolio Fund
and Phoenix Multi-Sector Fixed Income Fund, Inc.
Michael K. Arends Vice President Portfolio Manager, Phoenix Home Life Mutual
Insurance Company (until 1995). Vice President,
Phoenix Series Fund, Phoenix Strategic Equity Series
Fund and National Securities & Research Corporation.
Portfolio Manager, Kemper Investment Portfolio
Growth Fund (until 1994).
Curtiss O. Barrows Vice President Portfolio Manager, Public Bonds, Phoenix Home Life
Mutual Insurance Company (until 1995). Vice
President, Phoenix Series Fund, The Phoenix Edge
Series Fund, Phoenix Multi-Portfolio Fund and
National Securities & Research Corporation.
Sandra L. Becker Vice President Managing Director, Private Placements, Phoenix Home
Life Mutual Insurance Company (until 1995).
Kathleen A. Bloomquist Vice President Second Vice President, Institutional Client
Relations/Service, Phoenix Home Life Mutual
Insurance Company (until 1995). Vice President,
Worldwide Phoenix Limited (until 1995).
James C. Bly Vice President Regional Group Pension Manager, Phoenix Home Life
Mutual Insurance Company (until 1995).
Mary E. Canning Vice President Associate Portfolio Manager, Common Stock, Phoenix
Home Life Mutual Insurance Company (until 1995).
Vice President, Phoenix Series Fund and The Phoenix
Edge Series Fund.
Paul M. Chute Vice President Managing Director, Private Placements, Phoenix Home
Life Mutual Insurance Company (until 1995).
Nelson Correa Vice President Managing Director, Private Placements, Phoenix Home
Life Mutual Insurance Company (until 1995).
James M. Dolan Vice President, Vice President and Compliance Officer, Phoenix
Assistant Clerk Equity Planning Corporation. Vice President, the
and Assistant Phoenix Funds, and National Securities & Research
Secretary Corporation. Vice President and Chief Compliance
Officer, Phoenix Realty Advisors, Inc. and Chief
Compliance Officer, Phoenix Realty Securities, Inc.
C-4
<PAGE>
Positions with
Name Investment Adviser Business and Other Connections
- -------------------------- -------------------- -----------------------------------------------------
Jeanne H. Dorey Vice President Portfolio Manager, International, Phoenix Home Life
Mutual Insurance Company (until 1995). Vice
President, The Phoenix Edge Series Fund, Phoenix
Multi-Portfolio Fund, Phoenix Worldwide
Opportunities Fund and National Securities &
Research Corporation.
John M. Hamlin Vice President Portfolio Manager, Common Stock, Phoenix Home Life
Mutual Insurance Company (until 1995). Vice
President, Phoenix Income and Growth Fund and
Phoenix Series Fund.
Richard C. Harland Vice President Portfolio Manager, Phoenix Home Life Mutual
Insurance Company (until 1995). Managing Director,
J&W Seligman & Company (1990-1995).
Christopher J. Kelleher Vice President Portfolio Manager, Public Bonds, Phoenix Home Life
Mutual Insurance Company (until 1995). Vice
President, Phoenix Series Fund, The Phoenix Edge
Series Fund, and National Securities & Research
Corporation.
Peter S. Lannigan Vice President Director, Public Fixed Income, Phoenix Home Life
Mutual Insurance Company (until 1995). Vice
President, Phoenix Multi-Portfolio Fund. Associate
Director, Bond Rating Group, Standard & Poor's Corp.
(until 1993).
Thomas S. Melvin, Jr. Vice President Portfolio Manager, Common Stock, Phoenix Home Life
Mutual Insurance Company (until 1995). Vice
President, Phoenix Multi-Portfolio Fund, and
National Securities & Research Corporation.
Charles L. Olson Vice President Regional Marketing Manager, Phoenix Home Life Mutual
Insurance Company (until 1995).
C. Edwin Riley, Jr. Vice President Vice President, Phoenix Total Return Fund, Inc., and
The Phoenix Edge Series Fund. Portfolio Manager,
Phoenix Home Life Mutual Insurance Company (until
1995). Sr. Vice President and Director of Equity
Management for Nationsbank Investment Management
(1988-1995).
Amy L. Robinson Vice President Managing Director, Securities Administration,
Phoenix Home Life Mutual Insurance Company (until
1995). Vice President, The Phoenix Edge Series Fund,
Phoenix Series Fund and National Securities &
Research Corporation.
David M. Schans, C.L.U. Vice President Regional Group Pension Manager, Phoenix Home Life
Mutual Insurance Company (until 1995).
Holly S. Simeon Vice President Regional Vice President, Phoenix Home Life Mutual
Insurance Company (until 1995).
Dorothy J. Skaret Vice President Director, Public Fixed Income, Phoenix Home Life
Mutual Insurance Company (until 1995). Vice
President, Phoenix Series Fund, The Phoenix Edge
Series Fund, National Securities & Research
Corporation and Phoenix Realty Securities, Inc.
Rosemary T. Strekl Vice President Vice President, Private Placements, Phoenix Home
Life Mutual Insurance Company (until 1995).
C-5
<PAGE>
Positions with
Name Investment Adviser Business and Other Connections
- -------------------------- -------------------- -----------------------------------------------------
James D. Wehr Vice President Managing Director, Public Fixed Income, Phoenix Home
Life Mutual Insurance Company (until 1995). Vice
President, Phoenix Multi-Portfolio Fund, Phoenix
Series Fund, The Phoenix Edge Series Fund, Phoenix
California Tax Exempt Bonds, Inc., and National
Securities & Research Corporation.
John T. Wilson Vice President Portfolio Manager, Common Stock, Phoenix Home Life
Mutual Insurance Company (until 1995). Vice
President, Phoenix Multi-Portfolio Fund, The Phoenix
Edge Series Fund, Phoenix Worldwide Opportunities
Fund and National Securities & Research Corporation.
G. Jeffrey Bohne Clerk Vice President and General Manager, Phoenix Home
Life Mutual Insurance Company (until 1995). Vice
President, Transfer Agent Operations, Phoenix Equity
Planning Corporation. Secretary, the Phoenix Funds.
Clerk, Phoenix Total Return Fund, Inc.
Thomas N. Steenburg Secretary Vice President and Counsel, Phoenix Duff & Phelps
Corporation. Counsel, Phoenix Home Life Mutual
Insurance Company (until 1995). Secretary, National
Securities & Research Corporation, and Phoenix
Equity Planning Corporation.
</TABLE>
The respective principal addresses of the companies or other entities
named above are as follows:
American Phoenix Corporation 302 West Main Street
Avon, CT 06001
American Phoenix Investment Portfolios 13, rue Goethe
L-2014 Luxembourg
American Phoenix Life and Reassurance Company One American Row
Hartford, CT 06115
Kemper Financial Services 120 South LaSalle Street
Chicago, IL 60603
National Securities & Research Corporation One American Row
Hartford, CT 06115
PHL Variable Insurance Company One American Row
Hartford, CT 06115
Phoenix American Life Insurance Company One American Row
Hartford, CT 06115
Phoenix Duff & Phelps, Corporation 56 Prospect Street
Hartford, CT 06115
Phoenix Equity Planning Corporation 100 Bright Meadow Blvd.
P.O. Box 220
Enfield, CT 06083-2200
Phoenix Home Life Mutual Insurance Company One American Row
Hartford, CT 06115
Phoenix Investment Counsel, Inc. 56 Prospect Street
Hartford, CT 06115
Phoenix Realty Advisors, Inc One American Row
Hartford, CT 06115
C-6
<PAGE>
Phoenix Realty Group, Inc. One American Row
Hartford, CT 06115
Phoenix Realty Investors, Inc. One American Row
Hartford, CT 06115
Phoenix Realty Securities, Inc. One American Row
Hartford, CT 06115
Phoenix Re Corporation (Delaware) 80 Maiden Lane
New York, NY 10038
Phoenix Securities Group, Inc. One American Row
Hartford, CT 06115
PM Holdings, Inc. One American Row
Hartford, CT 06115
Phoenix Funds 101 Munson Street
Greenfield, MA 01301
Townsend Financial Advisers, Inc. 100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
238 Columbus Blvd., Inc. One American Row
Hartford, CT 06115
W.S. Griffith & Co., Inc. 100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
Worldwide Phoenix Limited 41 Cedar House
Hamilton HM 12, Bermuda
World Trust Fund KREDIETRUST
Societe Anonyme
11, rue Aldringen
L-2690 Luxembourg
R.C. Luxembourg B 10.750
Item 29. Principal Underwriters
(a) Phoenix Equity Planning Corporation acts as principal underwriter for
the Fund's shares. Phoenix Equity Planning Corporation currently acts as
principal underwriter for the Phoenix Funds and for the variable
contracts issued by the Phoenix Home Life Variable Accumulation Account
and Phoenix Home Life Variable Universal Life Account.
(b) Directors and executive officers of Phoenix Equity Planning
Corporation are as follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices with
Business Address with Underwriter Registrant
- ------------------------- -------------------------- ----------------------------
<S> <C> <C>
Martin J. Gavin Director and Executive
56 Prospect Street Executive Vice President Vice President
P.O. Box 150480
Hartford, CT 06115
Philip R. McLoughlin Director and President Director and
One American Row President
Hartford, CT 06115
Michael E. Haylon Director Executive
56 Prospect Street Vice President
P.O. Box 150480
Hartford, CT 06115
C-7
<PAGE>
Name and Principal Positions and Offices Positions and Offices with
Business Address with Underwriter Registrant
- ----------------------- ---------------------- --------------------------
William J. Newman Senior Vice President Senior Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115
Leonard J. Saltiel Senior Vice President Vice President
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
William R. Moyer Senior Vice President, Vice President
100 Bright Meadow Blvd. Finance, and Treasurer
P.O. Box 2200
Enfield, CT 06083-2200
G. Jeffrey Bohne Vice President, Secretary and Clerk
100 Bright Meadow Blvd. Transfer Agent Operations
P.O. Box 2200
Enfield, CT 06083-2200
Nancy G. Curtiss Vice President, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Maris Lambergs Vice President, None
100 Bright Meadow Blvd. National Sales Manager
P.O. Box 2200
Enfield, CT 06083-2200
James M. Dolan Vice President and Vice President
100 Bright Meadow Blvd. Compliance Officer;
P.O. Box 2200 Assistant Secretary
Enfield, CT 06083-2200
Elizabeth R. Sadowinski Vice President, Field and Assistant Secretary
100 Bright Meadow Blvd. Investor Service
P.O. Box 2200
Enfield, CT 06083-2200
Eugene A. Charon Controller None
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
Thomas N. Steenberg Secretary Assistant Clerk and
One American Row Assistant Secretary
Hartford, CT 06115
</TABLE>
(c) Equity Planning received the following commissions or other
compensation from the Registrant during the fiscal year ending December 31,
1995:
Net Compensation
Underwriting on
Name of Discounts Redemption
Principal and and Brokerage Other
Underwriter Commissions Repurchase Commissions Compensation
- --------------- ------------ ----------- ---------- -------------
Equity Planning $59,491 $0 $0 $0
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 Registrant's
Clerk; Registrant's Secretary; Registrant's investment adviser, Phoenix
Investment Counsel, Inc.; Registrant's financial agent and principal
underwriter, Phoenix Equity Planning Corporation; Registrant's dividend
disbursing agent, State Street Bank and Trust Company; and Registrant's
custodian, State Street Bank and Trust Company. The address of the Secretary
and Clerk is 100 Bright Meadow Boulevard, Enfield, Connecticut 06083-2200;
the
C-8
<PAGE>
address of the investment adviser is 56 Prospect Street, Hartford,
Connecticut 06115; the address of the transfer agent and the financial agent
is 100 Bright Meadow Boulevard, Enfield, Connecticut 06083-2200; the address
of the dividend disbursing agent is State Street Bank and Trust Company, P.0.
Box 8301, Boston, Massachusetts 02266-8301 Attention: Phoenix Funds; and the
address of the custodian is State Street Bank and Trust Company, P.0. Box
351, Boston, Massachusetts 02101.
Item 31. Management Services
The information required by this Item is included in the Statement of
Additional Information.
Item 32. Undertakings
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.
The Fund undertakes, if requested to do so by the holders of at least 10%
of the Fund's outstanding shares, to call a meeting of shareholders for the
purpose of voting upon the question of removal of a director or directors and
to assist to communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
C-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the 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 April, 1996.
PHOENIX TOTAL RETURN FUND, INC.
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 April, 1996.
Signature Title
--------- -----
------------------------------ Director
C. Duane Blinn*
------------------------------ Director
Robert Chesek*
------------------------------ Director
E. Virgil Conway*
------------------------------ Treasurer (principal
Nancy G. Curtiss* financial and
accounting officer)
------------------------------ Director
Harry Dalzell-Payne*
------------------------------ Director
Francis E. Jeffries*
------------------------------ Director
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin President and Director
------------------------------ (principal executive
Philip R. McLoughlin officer)
------------------------------ Director
Everett L. Morris*
------------------------------ Director
James M. Oates*
------------------------------ Director
Calvin J. Pedersen*
------------------------------ Director
Philip R. Reynolds*
------------------------------ Director
Herbert Roth, Jr.*
------------------------------ Director
Richard E. Segerson*
------------------------------ Director
Lowell P. Weicker, Jr.*
*By /s/ Philip R. McLoughlin
--------------------------
*Philip R. McLoughlin, Attorney-in-
fact pursuant to powers of
attorney filed herewith
S-1(c)
Exhibit 11
Consent of Independent Accountants
<PAGE>
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. 14 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 12, 1996, relating to the financial
statements and financial highlights appearing in the December 31, 1995 Annual
Report to Shareholders of the Phoenix Total Return Fund, Inc., which are 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 "Independent Accountants" in the Statement of Additional
Information.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
April 26, 1996
Exhibit 11(b)
Opinion of Counsel
<PAGE>
BINGHAM, DANA & GOULD LLP
150 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110-1726
April 30, 1996
Phoenix Total Return Fund, Inc.
101 Munson Street
Greenfield, MA 01301
Ladies and Gentlemen:
We have acted as special counsel for Phoenix Total Return Fund, Inc., a
Massachusetts corporation (the "Company"), for purposes of delivering, at the
Company's request, this opinion for use by the Company as an exhibit to
Post-Effective Amendment No. 14 (the "Amendment") to the Company's
Registration Statement on Form N-1A under the Securities Act of 1933, as
amended, with respect to the Company's shares of Class A and Class B Common
Stock, par value $1.00 per share. The Amendment is proposed to be filed with
the Securities and Exchange Commission on or about April 30, 1996 and also
serves as Amendment No. 26 to the Company's Registration Statement on Form
N-1A under the Investment Company Act of 1940, as amended.
In connection with this opinion, we have examined the following
documents:
(a) a certificate of the Secretary of State of the Commonwealth of
Massachusetts as to the legal existence and corporate good standing of the
Company;
(b) copies, certified by the Secretary of State of the Commonwealth
of Massachusetts, of the Company's Articles of Organization and all
amendments thereto on file in the office of the Secretary of State;
(c) a certificate executed by G. Jeffrey Bohne, Clerk of the Company,
certifying as to, and attaching true, correct and complete copies of, the
Company's Articles of Organization, with all amendments thereto (the
"Articles") and By-Laws, with all amendments thereto (the "By-
BOS-BUS:265686.1
<PAGE>
Phoenix Total Return Fund, Inc.
April 30, 1996
Page 2
Laws"), and certain votes adopted by the Board of Directors of the Company
authorizing issuance of the Company's Common Stock; and
(d) the Amendment (other than the documents incorporated by reference
therein).
In such examination, we have assumed the genuineness of all signatures,
the conformity to the originals of all of the documents reviewed by us as
copies, the authenticity and completeness of all original documents reviewed
by us in original or copy form and the legal competence of each individual
executing any document.
This opinion is based entirely on our review of the documents listed
above. We have made no other review or investigation of any kind whatsoever,
and we have assumed, without independent inquiry, the accuracy of the
certifications and other information set forth in such documents and their
attachments.
As to any opinion below relating to the existence or standing of the
Company in the Commonwealth of Massachusetts, our opinion relies entirely
upon and is limited by the certificate of the Secretary of State of such
Commonwealth dated April 29, 1996 and relating to the legal existence and
good standing of the Company as of that date.
This opinion is limited solely to the internal substantive laws of the
Commonwealth of Massachusetts as applied by courts in such Commonwealth,
except that we express no opinion as to Massachusetts securities laws that
may apply to the sale or issuance of shares of Common Stock of the Company.
No opinion is given herein as to the choice of law or internal substantive
rules of law which any tribunal may apply to the matters referred to herein.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Based upon and subject to the foregoing, please be advised that it is
our opinion that:
BOS-BUS:265686.1
<PAGE>
Phoenix Total Return Fund, Inc.
April 30, 1996
Page 3
1. The Company is a corporation having legal existence and is in
good standing with the Office of the Secretary of State of the Commonwealth
of Massachusetts.
2. The authorized capital stock of the Company consists of
50,000,000 shares of Class A Common Stock, par value $1.00 per share, and
50,000,000 shares of Class B Common Stock, par value $1.00 per share.
3. The Company's shares of Class A Common Stock and Class B Common
Stock, when issued and sold in accordance with the Amendment, the Articles
and the By-Laws for a per share consideration of at least $1.00, will be
legally issued, fully paid and non-assessable, provided that after giving
effect to such issuance the aggregate number of issued shares of Class A
Common Stock does not exceed 50,000,000 and the aggregate number of issued
shares of Class B Common Stock does not exceed 50,000,000.
We hereby consent to the filing of this opinion as an exhibit to the
Amendment. We assume no obligation to update this opinion to reflect any
changes in applicable law or any facts which may hereafter come to our
attention.
Very truly yours,
Bingham, Dana & Gould LLP
BINGHAM, DANA & GOULD LLP
BOS-BUS:265686.1
EXHIBIT 18
RULE 18f-3 DUAL DISTRIBUTION PLAN
<PAGE>
PHOENIX FUNDS
(the "Funds")
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 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 two
classes of shares, Class A and Class B ("Multi-Class Portfolios"). Shares of the
Multi-Class Portfolios shall represent an equal pro rata interest in the
respective 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 B, below; (c) each class shall have exclusive voting rights
on any matter submitted to shareholders that relates solely to its distribution
arrangement; and (d) each class shall have separate voting rights on any matter
submitted to shareholders in which the interests of one class differ from the
interests of any other class. In addition, Class A and Class B shares shall have
the features described in Sections a, b, c and d, below.
a. Distribution Plan
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 with
respect to Class B shares for each Multi-Class Portfolio, containing
substantially the following terms:
Class B shares of each Portfolio shall reimburse Phoenix Equity
Planning Corporation (the "Distributor") for costs and expenses incurred in
connection with distribution and marketing of shares of the Fund, as provided in
the Distribution Plan and any supplements thereto, subject to an annual limit of
1.00% of the average daily net assets of a Portfolio's Class B shares.
<PAGE>
- 2 -
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
Portfolio shall be allocated to each class on the basis of its net asset value
relative to the net asset value of the Portfolio. Expenses to be so allocated
include expenses of the Fund that are not attributable to a particular Portfolio
or class of a Portfolio but are allocated to a Portfolio ("Fund Expenses") and
expenses of a particular Portfolio that are not attributable to a particular
class of that 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 Portfolio's assets.
ii. Class Expenses.
Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (a) payments pursuant to the Distribution Plan for that
class; (b) transfer agent fees attributable to a specific class, (c) printing
and postage expenses related to preparing and distributing material such as
shareholder reports, prospectuses and proxy materials to current shareholders of
the class; (d) registration fees for shares of the class (other than those set
forth in Section b.i. above); (e) the expense of administrative personnel and
services as required to support the shareholders of a specific class; (f)
litigation or other legal expenses relating solely to one class of shares; and
(g) Trustees' fees incurred as a result of issues relating to a class of shares.
Expenses described in (a) of this paragraph must be allocated to the class for
which they are incurred. All other expenses described in this paragraph may be
allocated as Class Expenses, if the Fund's President and Treasurer have
determined, subject to Board approval or ratification, which of such categories
of expenses will be treated as Class Expenses, consistent with applicable legal
principles under the 1940 Act and the Internal Revenue Code of 1986, as amended
("Code").
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 18f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated
as Class Expenses and any subsequent changes thereto as set forth in this Plan
shall be reviewed by the Board of Trustees and approved by such Board and by a
majority of the Trustees who are not "interested persons" of the Fund, as
defined in the 1940 Act ("Independent Trustees")
<PAGE>
- 3 -
iii. Waivers or Reimbursements of Expenses
Expenses may be waived or reimbursed by the Funds' investment
adviser(s), their principal underwriters, or any other provider of services to a
Portfolio or Fund without the prior approval of the Board of Trustees.
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.
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 of 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 (i) the assessment
of the higher distribution fees and transfer agency costs with respect to Class
B Shares does not result in any dividends or distributions constituting
"preferential dividends" under the Internal Revenue Code of 1986, as amended,
and (ii) that the conversion of shares does not constitute a taxable event under
federal income tax law.
3. Board Review
a. Initial Approval
The Board of Trustees, including the Independent Trustees at a
meeting held on November 15, 1995, initially approved the Plan based on a
determination that the Plan, including the expense allocation, is in the best
interests of each class and Portfolio individually and of the Funds.
b. Approval of Amendments
The Plan may not be amended materially unless the Board of
Trustees, the Independent Trustees, have found that the proposed amendment,
including any proposed related expense allocation, is in the best interests of
each class and Portfolio individually and of the Fund.
<PAGE>
- 4 -
c. Periodic Review
The Board shall review reports of expense allocations and such
other information as they request at such times, or pursuant to such schedule,
as they may determine consistent with applicable legal requirements.
4. Contracts
Any agreement related to the Multi-Class System shall require the
parties thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
The Plan, having been reviewed and approved by the Board of Trustees
and the Independent Trustees, shall take effect as of March 15, 1996.
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.
funds\1912
<PAGE>
SCHEDULE A
PHOENIX ASSET RESERVE
PHOENIX CALIFORNIA TAX-EXEMPT BONDS, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND
STRATEGIC THEME FUND
SMALL CAP FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND:
CAPITAL APPRECIATION PORTFOLIO
DIVERSIFIED INCOME
INTERNATIONAL PORTFOLIO
REAL ESTATE SECURITIES PORTFOLIO
TAX-EXEMPT BOND PORTFOLIO
EMERGING MARKETS BOND PORTFOLIO
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX SERIES FUND:
BALANCED SERIES
CONVERTIBLE SERIES
GROWTH SERIES
HIGH YIELD FUND SERIES
MONEY MARKET FUND SERIES
U.S. GOVERNMENT SECURITIES FUND
U.S. STOCK FUND
PHOENIX TOTAL RETURN FUND, INC.
PHOENIX WORLDWIDE OPPORTUNITIES FUND
funds\1922
Exhibit 19
Powers of Attorney
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Total
Return Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and Thomas
N. Steenburg or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and hereby
ratify and confirm my signature as it may be signed by said attorneys and
agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said Phoenix Total Return Fund, Inc., provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/C. Duane Blinn, Director
---------------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Total
Return Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and Thomas
N. Steenburg or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and hereby
ratify and confirm my signature as it may be signed by said attorneys and
agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said Phoenix Total Return Fund, Inc., provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ Robert Chesek, Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Total
Return Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and Thomas
N. Steenburg or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and hereby
ratify and confirm my signature as it may be signed by said attorneys and
agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said Phoenix Total Return Fund, Inc., provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ E. Virgil Conway, Director
------------------------------
form\ptrf2.poa
<PAGE>
POWER OF ATTORNEY
I, the undersigned Treasurer and Principal Accounting Officer of
Phoenix Total Return Fund, Inc., hereby constitute and appoint Philip R.
McLoughlin and Thomas N. Steenburg or either of them as my true and lawful
attorneys and agents with full power to sign for me in the capacity indicated
below, any or all Registration Statements or amendments thereto filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and
hereby ratify and confirm my signature as it may be signed by said attorneys and
agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said Phoenix Total Return Fund, Inc., provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ Nancy G. Curtiss
Nancy G. Curtiss
Treasurer
Principal Financial and
Accounting Officer
form\ptrf2.poa
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Total
Return Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and Thomas
N. Steenburg or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and hereby
ratify and confirm my signature as it may be signed by said attorneys and
agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said Phoenix Total Return Fund, Inc., provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ Harry Dalzell-Payne, Director
form\ptrf2.poa
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Total
Return Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and Thomas
N. Steenburg or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and hereby
ratify and confirm my signature as it may be signed by said attorneys and
agents.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ Francis E. Jeffries, Director
--------------------------------
form\ptrf2.poa
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Total
Return Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and Thomas
N. Steenburg or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and hereby
ratify and confirm my signature as it may be signed by said attorneys and
agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said Phoenix Total Return Fund, Inc., provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ Leroy Keith, Jr., Director
-----------------------------
form\ptrf2.poa
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Total
Return Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and Thomas
N. Steenburg or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and hereby
ratify and confirm my signature as it may be signed by said attorneys and
agents.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ Everett L. Morris, Director
------------------------------
form\ptrf2.poa
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Total
Return Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and Thomas
N. Steenburg or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and hereby
ratify and confirm my signature as it may be signed by said attorneys and
agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said Phoenix Total Return Fund, Inc., provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/James M. Oates, Director
---------------------------
form\ptrf2.poa
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Total
Return Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and Thomas
N. Steenburg or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and hereby
ratify and confirm my signature as it may be signed by said attorneys and
agents.
WITNESS my hand and seal on the date set forth below.
March 12, 1996 /s/ Calvin J. Pedersen, Director
-------------------------------
form\ptrf2.poa
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Total
Return Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and Thomas
N. Steenburg or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and hereby
ratify and confirm my signature as it may be signed by said attorneys and
agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said Phoenix Total Return Fund, Inc., provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ P. R. Reynolds, Director
---------------------------
form\ptrf2.poa
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Total
Return Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and Thomas
N. Steenburg or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and hereby
ratify and confirm my signature as it may be signed by said attorneys and
agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said Phoenix Total Return Fund, Inc., provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ Herbert Roth, Jr., Director
------------------------------
form\ptrf2.poa
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Total
Return Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and Thomas
N. Steenburg or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and hereby
ratify and confirm my signature as it may be signed by said attorneys and
agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said Phoenix Total Return Fund, Inc., provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/Richard E. Segerson, Director
--------------------------------
form\ptrf2.poa
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of Phoenix Total
Return Fund, Inc., hereby constitute and appoint Philip R. McLoughlin and Thomas
N. Steenburg or either of them as my true and lawful attorneys and agents with
full power to sign for me in the capacity indicated below, any or all
Registration Statements or amendments thereto filed with the Securities and
Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940 relating to Phoenix Total Return Fund, Inc., and hereby
ratify and confirm my signature as it may be signed by said attorneys and
agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said Phoenix Total Return Fund, Inc., provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
February 21, 1996 /s/ Lowell P. Weicker, Jr., Director
-----------------------------------
form\ptrf2.poa
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> PHOENIX TOTAL RETURN FUND, INC.
<SERIES>
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<NAME> CLASS B
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