As filed with the Securities and Exchange Commission on April 17,1996
Registration Nos. 33-5033
811-4642
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
---------------------
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [ ]
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 17 [X]
AND/OR
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 20 [X]
(CHECK APPROPRIATE BOX OR BOXES)
THE PHOENIX EDGE SERIES FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
---------------------
101 MUNSON STREET, GREENFIELD, MASSACHUSETTS 01301
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
C/O VARIABLE PRODUCTS OPERATIONS
PHOENIX HOME LIFE MUTUAL INS. COMPANY
(800) 447-4312
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
---------------------
COPIES TO:
PHILIP R. MCLOUGHLIN JAMES JORDEN, ESQ.
THE PHOENIX EDGE SERIES FUND JORDEN BURT BERENSON & JOHNSON LLP
C/O PHOENIX HOME LIFE MUTUAL 1025 THOMAS JEFFERSON STREET N.W.
INSURANCE COMPANY SUITE 400 EAST
ONE AMERICAN ROW WASHINGTON, D.C. 20007-0805
HARTFORD, CONNECTICUT 06115
RICHARD J. WIRTH, ESQ.
(NAME AND ADDRESS OF AGENT FOR SERVICE) C/O PHOENIX HOME LIFE MUTUAL
INSURANCE COMPANY
ONE AMERICAN ROW
HARTFORD, CT 06115
---------------------
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
[X] On May 1, 1996 pursuant to paragraph (b), or
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] On ( ) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] On ( ) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
-------------------
DECLARATION REQUIRED BY RULE 24F-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant has chosen to register an indefinite number or amount of securities
under the Securities Act of 1933. On February 27, 1996, the Registrant filed its
Rule 24f-2 Notice for the Registrant's most recent fiscal year.
----------------
- -------------------------------------------------------------------------------
<PAGE>
THE PHOENIX EDGE SERIES FUND
CROSS-REFERENCE SHEET
SHOWING LOCATION IN PROSPECTUS (PART A) AND
STATEMENT OF ADDITIONAL INFORMATION (PART B)
OF INFORMATION REQUIRED BY FORM N-1A
PURSUANT TO RULE 495(A)
<TABLE>
PART A
<CAPTION>
FORM N-1A ITEM PROSPECTUS CAPTION
<S> <C>
1. Cover Page............................... Cover Page
2. Synopsis................................. Introduction
3. Condensed Financial Information.......... Condensed Financial Information
4. General Description of Registrant........ Introduction; Investment Objectives and Policies; Other
Special Investment Methods; The Trust and Its Management
5. Management of the Fund................... The Trust and Its Management; Custodian, Transfer Agent,
and Dividend Paying Agent
6. Capital Stock and Other Securities....... The Trust and Its Management; Shares of Beneficial Interest;
Dividends and Distributions; Taxes
7. Purchase of Securities Being Offered..... Purchase of Shares; Net Asset Value; Redemption of Shares
8. Redemption or Repurchase................. Purchase of Shares; Net Asset Value; Redemption of Shares
9. Pending Legal Proceedings................ Not Applicable
PART B
FORM N-1A ITEM STATEMENT OF ADDITIONAL INFORMATION CAPTION
10. Cover Page............................... Cover Page
11. Table of Contents........................ Table of Contents
12. General Information and History.......... The Phoenix Edge Series Fund; Investing in the Trust
13. Investment Objectives and Policies....... Investment Policies; Investment Restrictions;
Portfolio Turnover
14. Management of the Fund................... Management of the Trust
15. Control Persons and Principal Holders
of Securities.......................... Management of the Trust
16. Investment Advisory and Other Services... Management of the Trust; The Investment Adviser
17. Brokerage Allocation and other Practices. Brokerage Allocation
18. Capital Stock and Other Securities....... Investing In the Trust; Redemption of Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered............... Determination of Net Asset Value; Investing in the Trust;
Redemption of Shares
20. Tax Status............................... Taxes
21. Underwriters............................. Not Applicable
22. Calculation of Yield Quotations of Money
Market Funds........................... Money Market Series
23. Financial Statements..................... Financial Statements
</TABLE>
<PAGE>
THE PHOENIX EDGE SERIES FUND
101 Munson Street
P.O. Box 942
Greenfield, Massachusetts 01302-0942
Telephone Number: (800) 447-4312
c/o Variable Products Operations
Phoenix Home Life Companies
PROSPECTUS
MAY 1, 1996
The Phoenix Edge Series Fund (formerly "The Big Edge Series Fund"), a
Massachusetts Business Trust (the "Trust"), is an open-end management investment
company which is intended to meet a wide range of investment objectives with its
eight separate Series: Money Market, Growth, Multi-Sector Fixed Income, Total
Return, International, Balanced, Real Estate Securities and Strategic Theme.
Generally, each Series is in effect a separate fund issuing its own shares.
The shares of the Trust are not offered to the public directly. You can
invest by buying a Variable Accumulation Annuity Contract from Phoenix Home Life
Mutual Insurance Company ("Phoenix Home Life"), or by buying a Variable
Universal Life Insurance Policy, also offered by Phoenix Home Life, or by buying
a Variable Accumulation Annuity Contract offered by PHL Variable Insurance
Company, and directing the allocation of your payment or payments to the
sub-account(s) corresponding to the Series you wish to invest in. The
sub-accounts will, in turn, invest in shares of the Trust. Not all Series may be
offered through a particular Contract or Policy. The Trust also offers its
shares through other Phoenix Home Life products.
The investment objectives of the Series are as follows:
Multi-Sector Fixed Income Series ("Multi-Sector Series"). The investment
objective of the Multi-Sector Series (formerly named the "Bond Series") is to
seek long-term total return by investing in a diversified portfolio of fixed
income securities market sectors encompassing high yield (high risk) and high
quality fixed income securities. THE RISKS OF INVESTING IN THESE SECURITIES ARE
OUTLINED IN SECTION "INVESTMENT OBJECTIVES AND POLICIES" OF THIS PROSPECTUS.
Money Market Series. The investment objective of the Money Market Series is
to provide maximum current income consistent with capital preservation and
liquidity. The Money Market Series invests exclusively in high quality money
market instruments. AN INVESTMENT IN THE MONEY MARKET SERIES IS NEITHER INSURED
NOR GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE
SERIES WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
Growth Series. The investment objective of the Growth Series is to achieve
intermediate and long-term growth of capital, with income as a secondary
consideration. The Growth Series invests principally in common stocks of
corporations believed by management to offer growth potential.
Total Return Series. The investment objective of the Total Return Series is
to realize as high a level of total rate of return over an extended period of
time as is considered consistent with prudent investment risk. The Total Return
Series invests in stocks, bonds and money market instruments in accordance with
the Investment Adviser's appraisal of investments most likely to achieve the
highest total rate of return.
Balanced Series. The investment objectives of the Balanced Series are
reasonable income, long-term capital growth and conservation of capital. It is
intended that this Series will invest in common stocks and fixed income
securities, with emphasis on income-producing securities which appear to have
some potential for capital enhancement.
International Series. The investment objective of the International Series is
to seek a high total return consistent with reasonable risk. The International
Series intends to invest primarily in an internationally diversified portfolio
of equity securities. It intends to reduce its risk by engaging in hedging
transactions involving options, futures contracts and foreign currency
transactions (see "Other Special Investment Methods"). The International
Portfolio provides a means for investors to invest a portion of their assets
outside the United States.
Real Estate Securities Series ("Real Estate Series"). The investment
objective of the Real Estate Series is to seek capital appreciation and income
with approximately equal emphasis. The Real Estate Series intends under normal
circumstances to invest in marketable securities of publicly traded real estate
investment trusts (REITs) and companies that operate, develop, manage and/or
invest in real estate located primarily in the United States.
Strategic Theme Series. The investment objective of the Strategic Theme
Series is to seek long-term appreciation of capital. This Series seeks to
identify securities benefiting from long-term trends present in the United
States and abroad. The Series intends to invest primarily in common stocks
believed by the Adviser to have substantial potential for capital growth. Since
many trends may be early in their development and no history of industry growth
patterns are available, securities owned may present a high degree of risk.
There can be no assurance that any Series will achieve its objectives. See
"Investment Objectives and Policies."
This Prospectus should be read and retained for future reference.
2-1
<PAGE>
This Prospectus gives you the facts about the Trust and each of its Series
that you should know before directing investment in the Trust, and it should be
read and kept for future reference. A Statement of Additional Information dated
May 1, 1996, which contains further information about the Trust, has been filed
with the Securities and Exchange Commission and is incorporated by reference in
this Prospectus. A free copy of the Statement of Additional Information may be
obtained by calling Variable Products Operations of Phoenix Home Life Companies
at (800) 447-4312, or by writing to Variable Products Operations at 101 Munson
Street, PO Box 942, Greenfield, Massachusetts 01302-0942.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
2-2
<PAGE>
THE PHOENIX EDGE SERIES FUND
TABLE OF CONTENTS
PAGE
Fund Expenses......................................... 2-4
Financial Highlights.................................. 2-5
Introduction.......................................... 2-9
Investment Objectives and Policies.................... 2-10
Multi-Sector Series................................ 2-10
Money Market Series................................ 2-11
Growth Series...................................... 2-12
Total Return Series................................ 2-12
International Series............................... 2-12
Balanced Series.................................... 2-14
Real Estate Series................................. 2-14
Strategic Theme Series............................. 2-16
Other Special Investment Methods ..................... 2-16
Convertible Securities............................. 2-16
Repurchase Agreements.............................. 2-17
Options............................................ 2-17
Financial Futures and Related Options.............. 2-17
Foreign Securities................................. 2-17
Leverage........................................... 2-18
Private Placements & Rule 144A Securities.......... 2-18
Mortgage-backed Securities......................... 2-19
Lending of Portfolio Securities.................... 2-19
Investment Restrictions............................... 2-19
Portfolio Turnover.................................... 2-20
The Trust and Its Management ......................... 2-20
PAGE
Investment Advisers................................ 2-20
Portfolio Managers................................. 2-20
Balanced Series.................................. 2-20
Total Return Series.............................. 2-21
Multi-Sector Series.............................. 2-21
Growth Series.................................... 2-21
International Series............................. 2-21
Money Market Series.............................. 2-21
Real Estate Series............................... 2-21
Strategic Theme Series........................... 2-21
Advisory Fees...................................... 2-21
Financial Agent.................................... 2-22
Expenses........................................... 2-22
Portfolio Transactions and Brokerage .............. 2-22
Performance History................................ 2-22
Shares of Beneficial Interest......................... 2-23
Purchase of Shares.................................... 2-23
Net Asset Value....................................... 2-24
Redemption of Shares.................................. 2-24
Dividends and Distributions........................... 2-24
Taxes................................................. 2-25
Custodian, Transfer Agent, and
Dividend Paying Agent.............................. 2-25
Other Information..................................... 2-25
Appendix.............................................. 2-25
No dealer, salesman or other person has been authorized to give any information
or to make any representations, other than those contained in this Prospectus,
and if given or made, such other information or representations must not be
relied upon as having been authorized by the Trust, the Investment Advisers, or
the Distributor. This Prospectus does not constitute an offering in any state in
which such offering may not lawfully be made.
2-3
<PAGE>
FUND EXPENSES
The following table illustrates all expenses and fees that a shareholder in
each Series of the Fund will incur. Expenses borne by these separate accounts
and by the owners of the contracts and policies are not reflected in the Table.
Please refer to the applicable Variable Contract prospectus for such charges.
The expenses and fees set forth in the table are for the fiscal year ended
December 31, 1995.
SHAREHOLDER TRANSACTION EXPENSES
ALL SERIES
----------
Sales Load Imposed on Purchases...................................... None
Sales Load Imposed on Reinvested Dividends........................... None
Deferred Sales Load.................................................. None
Redemption Fees...................................................... None
Exchange Fees........................................................ None
<TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets for the year ending Dec. 31, 1995)
<CAPTION>
GROWTH MULTI- TOTAL MONEY INTERNATIONAL BALANCED REAL ESTATE STRATEGIC THEME***
------ SECTOR RETURN MARKET ------------- -------- ----------- -----------------
------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees
Investment Advisory Fees*.... .65% .50% .59% .40% .75% .55% .75% .75%
12b-1 Fees..................... None None None None None None None None
Other Operating Expenses
(After Reimbursement)**...... .10% .15% .08% .13% .32% .10% .25%+ .25%++
---- ---- ---- ---- ---- ---- ----- ------
Total Fund Operating Expenses .75% .65% .67% .53% 1.07% .65% 1.00% 1.00%
</TABLE>
EXAMPLE
The following example illustrates the expenses that you would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period. As noted above, the
Fund charges no redemption fees of any kind.
<TABLE>
<CAPTION>
GROWTH MULTI-SECTOR TOTAL RETURN MONEY MARKET INTERNATIONAL BALANCED REAL ESTATE STRATEGIC THEME
------ ------------ ------------ ------------ ------------- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year................ $ 8 $ 7 $ 7 $ 5 $ 11 $ 7 $10 $10
3 Years............... $24 $21 $21 $17 $ 34 $21 $32 $32
5 Years............... $42 $36 $37 $30 $ 59 $36 $55 N/A
10 Years.............. $93 $81 $83 $66 $131 $81 $122 N/A
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
OR PERFORMANCE. ACTUAL EXPENSES OR PERFORMANCE MAY BE GREATER OR LESS THAN THOSE
SHOWN. THE PURPOSE OF THE TABLE IS TO ASSIST THE INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT AN INVESTOR WILL BEAR DIRECTLY OR INDIRECTLY AT
THE FUND LEVEL. SEE "THE TRUST AND ITS MANAGEMENT."
* Advisory fees (management fees) will vary with the asset size of the Fund
(see "Advisory Fee").
** Phoenix Investment Counsel, Inc. ("PIC") has agreed to reimburse the
Series (except the International) for the amount, if any, by which each
Series' operating expenses other than the management fee for any fiscal
year exceed .15% of the average net assets of the Series. PIC has
agreed to reimburse the International Series for the amount, if any, by
which the Series' operating expenses other than the management fee for
any fiscal year exceed .40% of the average net assets for the Series.
If these reimbursements had not been in place for the fiscal year ended
December 31, 1995, total operating expenses for the Multi-Sector Series
would have been approximately .73% of the average net assets of such
Series.
*** This Series was not available until January 29, 1996. Accordingly,
annualized expenses have been projected for the fiscal period ending
December 31, 1996.
+ Phoenix Realty Securities, Inc. and/or Phoenix Home Life and/or PHL
Variable have agreed to reimburse the Real Estate Series' operating
expenses for the amount, if any, by which such Series' operating
expenses other than the management fees for any fiscal year exceed .25%
of the average net assets for such Series. If this reimbursement had
not been in place for the fiscal year ended December 31, 1995, total
operating expenses for the Real Estate Series would have been
approximately 1.98% of average net asset of such Series.
++ Phoenix Investment Counsel, Inc. and/or Phoenix Home Life and/or PHL
Variable have agreed to reimburse the Strategic Theme Series' operating
expenses for the amount, if any, by which such Series' operating
expenses other than the management fees for any fiscal year exceed .25%
of the average net assets for such Series. Without reimbursement, the total
operating expenses are estimated to be approximately 1.33% of the average
net assets of such Series for the fiscal year ending December 31, 1996.
2-4
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
The following tables set forth certain financial information for the
respective fiscal years of the Trust. The annual information has been extracted
from the Trust's audited financial statements for the respective periods. The
financial information has been audited by Price Waterhouse LLP, independent
accountants, whose unqualified report thereon is included in the Annual Report
to Shareholders dated December 31, 1995, which is included in the Statement of
Additional Information. The Statement of Additional Information and the Trust's
most recent Annual Report (which contains a discussion of the Fund's
performance) are available at no charge upon request.
<TABLE>
MONEY MARKET SERIES
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
Beginning of period... $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 9.47
Income from investment
operations
Net investment income. 0.56 0.38(1) 0.28(1) 0.35 0.58 0.79 0.88 0.72 0.63 0.57
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total from investment
operations.............. 0.56 0.38 0.28 0.35 0.58 0.79 0.88 0.72 0.63 0.57
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Less distributions:
Dividends from net
investment income....... (0.56) (0.38) (0.28) (0.35) (0.58) (0.79) (0.88) (0.72) (0.63) (0.04)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions.... (0.56) (0.38) (0.28) (0.35) (0.58) (0.79) (0.88) (0.72) (0.63) (0.04)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Change in net asset value -- -- -- -- -- -- -- -- -- 0.53
------ ------ ------ ------ ------ ------ ------ ------ ------ -----
Net asset value, end of
period.................. $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 10.00
======== ======== ======== ======== ======== ======== ======= ======== ======== ========
Total Return(2)......... 5.55% 3.77% 2.80% 3.50% 5.80% 7.90% 8.80% 7.20% 6.30% 6.02%
Ratios/supplemental data:
Net assets, end of period
(thousands)............. $102,943 $ 94,586 $ 72,946 $ 69,962 $ 51,692 $ 38,709 $ 28,808 $ 22,294 $ 10,749 $ 3,628
Ratio to average net
assets of:
Operating expenses.... 0.53%(3) 0.55% 0.55% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%
Net investment income. 5.57% 3.85% 2.84% 3.49% 5.76% 7.87% 8.96% 7.24% 6.30% 6.27%
(1) Includes reimbursement of operating expenses by investment adviser of $.003
and $0.01 per share, respectively.
(2) Total return information does not reflect expenses that apply to the
separate accounts or related contracts; inclusion of these charges would
reduce total return for all periods shown.
(3) For the year ended December 31, 1995, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
</TABLE>
GROWTH SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
Beginning of period........ $ 15.69 $ 16.59 $ 15.01 $ 14.43 $ 11.72 $ 11.62 $ 8.83 $ 8.81 $ 9.84 $ 8.19
Income from investment
operations
Net investment income...... 0.20 0.23(1)(3) 0.16(3) 0.22(3) 0.39(3) 0.35 0.27 0.32 0.19 0.25
Net realized and unrealized
gain......................... 4.60 0.02 2.77 1.25 4.64 0.10 2.88 0.02 0.45 1.40
Total from investment
operations................... 4.80 0.25 2.93 1.47 5.03 0.45 3.15 0.34 0.64 1.65
Less distributions:
Dividends from net
investment income........... (0.17) (0.23) (0.15) (0.23) (0.37) (0.35) (0.27) (0.32) (0.21) --
Dividends from net realized
gains....................... (2.19) (0.92) (1.20) (0.66) (1.95) -- (0.09) -- (1.46) --
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total distributions... (2.36) (1.15) (1.35) (0.89) (2.32) (0.35) (0.36) (0.32) (1.67) --
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Change in net asset value... 2.44 (0.90) 1.58 0.58 2.71 0.10 2.79 0.02 (1.03) (1.65)
----- ----- ----- ----- ----- ----- ----- ---- ----- ------
Net asset value,
end of period............. $ 18.13 $ 15.69 $ 16.59 $ 15.01 $ 14.43 $ 11.72 $ 11.62 $ 8.83 $ 8.81 $ 9.84
======== ======== ======== ======== ======== ======== ======== ======= ======= =======
Total Return(2)............. 30.85% 1.48% 19.69% 10.29% 43.83% 3.98% 36.06% 3.83% 7.05% 20.15%
Ratios/supplemental data:
Net assets, end of period
(thousands)................. $985,389 $616,221 $446,368 $245,565 $102,259 $ 40,061 $ 29,931 $18,051 $18,860 $13,124
Ratio to average net assets of:
Operating expenses........ 0.75%(4) 0.80% 0.79% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%
Net investment income..... 1.12% 1.38% 0.97% 1.66% 2.14% 3.19% 2.51% 3.64% 2.34% 2.47%
Portfolio turnover rate..... 173% 185% 185% 214% 237% 272% 285% 326% 251% 294%
(1) Includes reimbursement of operating expenses by investment adviser of
$.003 per share.
(2) Total return information does not reflect expenses that apply to the
separate accounts or related contracts; inclusion of these charges would
reduce total return for all periods shown.
(3) Computed using average shares outstanding.
(4) For the year ended December 31, 1995, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
</TABLE>
2-5
<PAGE>
MULTI-SECTOR FIXED INCOME SERIES
(formerly known as the Bond Series)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
Beginning of period............ $ 8.98 $10.27 $ 9.58 $ 9.33 $ 8.48 $ 8.85 $ 9.11 $ 9.08 $ 10.07 $ 8.43
Income from investment operations
Net investment income (3)...... 0.83(1) 0.72(1) 0.66(1) 0.66 0.74 0.80 0.99 0.92 1.06 1.04
Net realized and unrealized
gain (loss)...................... 1.22 (1.28) 0.84 0.25 0.85 (0.37) (0.25) (0.01) (0.93) 0.60
---- ------ ---- ---- ---- ------ ------ ----- ----
Total from investment
operations....................... 2.05 (0.56) 1.50 0.91 1.59 0.43 0.74 0.91 0.13 1.64
---- ------ ---- ---- ---- ---- ---- ---- ---- ----
Less distributions:
Dividends from net investment
income........................... (0.81) (0.73) (0.66) (0.66) (0.74) (0.80) (1.00) (0.88) (1.12) --
Dividends from net realized
gains............................ -- -- (0.15) -- -- -- -- -- -- --
--- --- ------ --- --- --- --- --- --- ---
Total distributions........ (0.81) (0.73) (0.81) (0.66) (0.74) (0.80) (1.00) (0.88) (1.12) --
------ ------ ------ ------ ------ ------ ------ ------ ------ ---
Change in net asset value........ 1.24 (1.29) 0.69 0.25 0.85 (0.37) (0.26) 0.03 (0.99) 1.64
---- ------ ---- ---- ---- ------ ------ ---- ------ ----
Net asset value, end of period...$ 10.22 $ 8.98 $ 10.27 $ 9.58 $ 9.33 $ 8.48 $ 8.85 $ 9.11 $ 9.08 $ 10.07
======== ======= ======== ======= ======= ======= ======= ======= ======= =======
Total Return(2).................. 23.54% (5.47)% 15.90% 10.03% 19.41% 5.14% 8.30% 10.36% 1.12% 19.45%
Ratios/supplemental data:
Net assets, end of period
(thousands)..................... $109,046 $74,686 $ 79,393 $43,090 $21,957 $13,558 $13,947 $11,081 $ 8,389 $ 7,285
Ratio to average net assets of:
Operating expenses............ 0.65%(4) 0.66% 0.65% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%
Net investment income......... 8.55% 7.62% 6.71% 7.47% 8.65% 9.26% 10.99% 10.37% 10.90% 9.75%
Portfolio turnover rate......... 147% 181% 169% 166% 269% 318% 340% 262% 67% 110%
(1) Includes reimbursement of operating expenses by investment adviser of
$.007, $.006 and $0.005 per share, respectively.
(2) Total return information does not reflect expenses that apply to the
separate accounts or related contracts; inclusion of these charges would
reduce total return for all periods shown.
(3) Computed using average shares outstanding.
(4) For the year ended December 31, 1995, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
</TABLE>
TOTAL RETURN SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
Beginning of period.......... $ 12.68 $ 13.71 $ 12.86 $ 12.97 $ 11.07 $ 11.05 $ 9.68 $ 9.87 $ 9.85 $ 8.52
Income from investment
operations
Net investment income........ 0.45 0.36(1)(3) 0.23(3) 0.37(3) 0.42(3) 0.58 0.51 0.46 0.34 0.36
Net realized and unrealized
gain (loss).................... 1.84 (0.56) 1.17 0.99 2.76 0.02 1.38 (0.24) 0.91 0.97
---- ------ ---- ---- ---- ---- ---- ------ ---- ----
Total from investment
operations..................... 2.29 (0.20) 1.40 1.36 3.18 0.60 1.89 0.22 1.25 1.33
---- ------ ---- ---- ---- ---- ---- ---- ---- ----
Less distributions:
Dividends from net
investment income.............. (0.45) (0.37) (0.23) (0.37) (0.42) (0.58) (0.52) (0.41) (0.40) --
Dividends from net realized
gains.......................... (0.89) (0.46) (0.32) (1.10) (0.86) 0.00 0.00 -- (0.83) --
------ ------ ------ ------ ------ ---- ---- --- ------ ----
Total distributions...... (1.34) (0.83) (0.55) (1.47) (1.28) (0.58) (0.52) (0.41) (1.23) --
------ ------ ------ ------ ------ ------ ------ ------ ------ ----
Change in net asset value...... 0.95 (1.03) 0.85 (0.11) 1.90 0.02 1.37 (0.19) 0.02 1.33
---- ------ ---- ------ ---- ---- ---- ------ ---- ----
Net asset value, end of period. $ 13.63 $ 12.68 $ 13.71 $ 12.86 $ 12.97 $ 11.07 $ 11.05 $ 9.68 $ 9.87 $ 9.85
======== ======== ======== ======== ======== ======== ======== ======= ======= =======
Total Return(2)................ 18.22% (1.45)% 11.02% 10.67% 29.44% 5.62% 19.88% 2.33% 12.58% 15.61%
Ratios/supplemental data:
Net assets, end of period
(thousands).................... $353,838 $289,083 $256,011 $163,628 $ 98,415 $ 62,839 $ 57,901 $59,109 $68,099 $24,879
Ratio to average net assets of:
Operating expenses.......... 0.67%(4) 0.74% 0.74% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%
Net investment income....... 3.28% 2.71% 1.82% 2.90% 3.48% 5.39% 4.73% 4.62% 3.67% 3.38%
Portfolio turnover rate........ 170% 220% 269% 326% 255% 302% 302% 314% 359% 311%
(1) Includes reimbursement of operating expenses by investment adviser of
$0.001 per share.
(2) Total return information does not reflect expenses that apply to the
separate accounts or related contracts; inclusion of these charges
would reduce total return for all periods shown.
(3) Computed using average shares outstanding.
(4) For the year ended December 31, 1995, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
</TABLE>
2-6
<PAGE>
INTERNATIONAL SERIES
<TABLE>
<CAPTION>
FROM
YEAR ENDED DECEMBER 31, INCEPTION
5/1/90 TO
1995 1994 1993 1992 1991 12/31/92
---- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
Beginning of period...............................$ 11.85 $ 12.21 $ 8.82 $ 10.17 $ 9.07 $ 10.00
Income from investment operations
Net investment income(4).......................... 0.12 0.08 0.07(2) 0.09 0.24(2) 0.07(2)
Net realized and unrealized gain (loss)........... 1.02 (0.07) 3.32 (1.40) 1.53 (0.88)
---- ------ ---- ------ ---- ------
Total from investment operations............... 1.14 0.01 3.39 (1.31) 1.77 (0.81)
---- ------ ---- ------ ---- ------
Less distributions:
Dividends from net investment income.............. (0.04) (0.03) -- (0.04) (0.24) (0.07)
Dividends from net realized gain.................. (0.25) (0.34) -- -- (0.41) --
Distributions from paid in capital................ -- -- -- -- (0.02) (0.05)
---- ---- ---- ----- ------ ------
Total distributions............................ (0.29) (0.37) -- (0.04) (0.67) (0.12)
------ ------ ---- ------ ------ ------
Change in net asset value............................ 0.85 (0.36) 3.39 (1.35) 1.10 (0.93)
---- ------ ---- ------ ---- ------
Net asset value, end of period....................... $ 12.70 $ 11.85 $ 12.21 $ 8.82 $ 10.17 $ 9.07
======= ======= ======== ======= ======== =======
Total Return(3)...................................... 9.59% 0.03% 38.44% (12.89%) 19.78% (8.10%)
Ratios/supplemental data:
Net assets, end of period (thousands)................$134,455 $134,627 $ 61,242 $13,772 $ 6,119 $ 2,010
Ratio to average net assets of:
Operating expenses................................ 1.07% 1.10% 1.15% 1.50% 1.50% 1.50%(1)
Net investment income............................. 0.95% 0.64% 0.49% 1.13% 2.44% 1.82%(1)
Portfolio turnover rate.............................. 249% 172% 193% 74% 104% 48%(1)
(1) Annualized
(2) Includes reimbursement of operating expenses by investment adviser of $0.05,
$0.02 and $0.07, respectively.
(3) Total return information does not reflect expenses that apply to the
separate accounts or related contracts; inclusion of these charges would
reduce total return for all periods shown.
(4) Computed using average shares outstanding.
</TABLE>
BALANCED SERIES
<TABLE>
<CAPTION>
FROM
INCEPTION
5/1/92 TO
YEAR ENDED DECEMBER 31, 12/31/92
1995 1994 1993
---- ---- ----
<S> <C> <C> <C> <C>
Net asset value,
Beginning of period............................................... $ 10.53 $ 11.31 $ 10.77 $ 10.00
Income from investment operations
Net investment income (4)......................................... 0.40 0.38(2) 0.32(2) 0.19
Net realized and unrealized gain (loss)........................... 2.02 (0.70) 0.60 0.77
---- ------ ---- ----
Total from investment operations............................... 2.42 (0.32) 0.92 0.96
---- ------ ---- ----
Less distributions:
Dividends from net investment income.............................. (0.40) (0.36) (0.32) (0.19)
Dividends from net realized gains................................. (0.25) (0.10) (0.06) --
------ ------ ------ ----
Total distributions............................................ (0.65) (0.46) (0.38) (0.19)
------ ------ ------ ------
Change in net asset value............................................ 1.77 (0.78) 0.54 0.77
---- ------ ---- ----
Net asset value, end of period....................................... $ 12.30 $ 10.53 $ 11.31 $ 10.77
========= ======== ======== ========
Total Return(3)...................................................... 23.28% (2.80)% 8.57% 9.72%
Ratios/supplemental data:
Net assets, end of period (thousands)................................ $ 193,302 $161,105 $158,144 $ 54,467
Ratio to average net assets of:
Operating expenses................................................ 0.65%(5) 0.69% 0.70% 0.50%(1)
Net investment income............................................. 3.44% 3.44% 3.16% 3.59%(1)
Portfolio turnover rate.............................................. 223% 171% 161% 110%(1)
</TABLE>
(1) Annualized
(2) Includes reimbursement of operating expenses by investment adviser of
$0.001 and $0.001 per share, respectively.
(3) Total return information does not reflect expenses that apply to the
separate accounts or related contracts; inclusion of these charges would
reduce total return for all periods shown.
(4) Computed using average shares outstanding.
(5) For the year ended December 31, 1995, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
2-7
<PAGE>
REAL ESTATE SERIES
FROM
INCEPTION
5/1/95 TO
12/31/95
---------
Net asset value,
Beginning of period............................................. $ 10.00
Income from investment operations
Net investment income........................................... 0.33(2)
Net realized and unrealized gain................................ 1.42
----
Total from investment operations............................. 1.75
----
Less distributions:
Dividends from net investment income............................ (0.33)
Dividends from net realized gains............................... (0.06)
Tax return of capital........................................... (0.03)
------
Total distributions.......................................... (0.42)
Change in net asset value.......................................... 1.33
Net asset value, end of period..................................... $ 11.33
=========
Total Return(4).................................................... 17.79%(3)
Ratios/supplemental data:
Net assets, end of period (thousands).............................. $ 8,473
Ratio to average net assets of:
Operating expenses.............................................. 1.00%(1)
Net investment income........................................... 4.80%(1)
Portfolio turnover rate............................................ 10(3)
(1) Annualized
(2) Includes reimbursement of operating expenses by investment adviser of
$0.07 per share.
(3) Not Annualized.
(4) Total return information does not reflect expenses that apply to the
separate accounts or related contracts; inclusion of these charges would
reduce total return for the period shown.
STRATEGIC THEME SERIES
The Strategic Theme Series Sub-account commenced operations as of January 29,
1996; therefore, data for this Sub-account is not yet available.
2-8
<PAGE>
Introduction
- --------------------------------------------------------------------------------
This Prospectus describes the shares offered by and the operations of The
Phoenix Edge Series Fund (the "Trust"). The Trust is an open-end management
investment company established as a business trust under the laws of
Massachusetts by an Agreement and Declaration of Trust dated February 18, 1986
(the "Declaration of Trust"). The Declaration of Trust, as amended authorizes
the assets and shares of the Trust to be divided into series (the "Series").
Each Series has a different investment objective, as described on the cover
page of this Prospectus, and is designed to meet different investment needs. In
many respects, each Series operates as if it were a separate mutual fund.
Shares of the Trust are sold to the Phoenix Home Life Variable Accumulation
Account (the "VA Account") to fund the benefits under Variable Accumulation
Annuity Contracts ("Contracts") issued by Phoenix Home Life Mutual Insurance
Company ("Phoenix Home Life"); to the Phoenix Home Life Variable Universal Life
Account (the "VUL Account") to fund the benefits under Variable Universal Life
Insurance Policies ("Policies") also issued by Phoenix Home Life; and to the PHL
Variable Accumulation Account ("PHL VA Account") to fund the benefits under
Variable Accumulation Annuity Contracts ("Contracts") issued by PHL Variable
Insurance Company ("PHL Variable"). The VA Account, PHL VA Account, and VUL
Account (the "Accounts") invest in shares of the Trust in accordance with
allocation instructions received from Contractowners and Policyowners. Such
allocation rights are further described in the accompanying Prospectus for the
Contracts or Policies. Phoenix Home Life redeems shares to the extent necessary
to provide benefits under the Contracts and Policies. Phoenix Home Life may
establish other separate accounts which may purchase shares in the Trust.
When making allocations from time to time, a Contractowner or Policyowner
should understand that investment return will affect benefits and the value of
the Contract or Policy. The accompanying Prospectus for the VA Account, PHL VA
Account, or VUL Account contains a description of the relationship between
increases or decreases in the net asset value of Trust shares and any
distributions on such shares, and the benefits provided under the Contract or
Policy.
The Trustees have authority to issue an unlimited number of shares of
beneficial interest of each Series. An interest in the Trust is limited to the
assets of the Series in which shares are held, and shareholders are entitled to
a pro rata share of all dividends and distributions arising from the net income
and capital gains on the investments of such Series.
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY ("PHOENIX HOME LIFE") AND PHL
VARIABLE INSURANCE COMPANY ("PHL VARIABLE")
Shares of the Trust are currently sold to the Accounts as the investment base
for Variable Accumulation Annuity Contracts and Variable Universal Life
Insurance Policies issued by Phoenix Home Life and PHL Variable. Phoenix Home
Life is a mutual life insurance company whose Executive Office is at One
American Row, Hartford, Connecticut 06102-5056 and its main administrative
office is at 100 Bright Meadow Boulevard, Enfield, Connecticut 06083-1900. Its
New York principal office is at 99 Troy Road, East Greenbush, New York 12061.
Phoenix Home Life is the nation's 13th largest mutual life insurance company and
has total assets of approximately $13.2 billion. Phoenix Home Life sells
insurance policies and annuity contracts through its own field force of full
time agents and through brokers. Its operations are conducted in all 50 states,
the District of Columbia, Canada and Puerto Rico.
PHL Variable is a wholly-owned indirect subsidiary of Phoenix Home Life. Its
Executive Office is at One American Row, Hartford, Connecticut 06102-5056 and
its main administrative office is at 100 Bright Meadow Boulevard, Enfield,
Connecticut 06083-1900. PHL Variable is a Connecticut stock company. On December
31, 1995, it had admitted assets of $34.6 million.
The interests and rights of a Contractowner or Policyowner in the shares is
subject to the terms of the Contract or Policy and is described in the
accompanying Prospectus for that particular product. The rights of the Accounts
as shareholders should be distinguished from the rights of Contractowners and
Policyowners, described in the accompanying Prospectus and in the Contract or
Policy for that particular product. As long as shares of the Trust are sold only
to the Accounts, the terms "shareholder" or "shareholders" in this Prospectus
refer to the Accounts.
THE INVESTMENT ADVISERS
The investment adviser of the Money Market, Multi-Sector, Balanced, Total
Return, Growth, International and Strategic Theme Series is Phoenix Investment
Counsel ("PIC" or "Adviser"). PIC is an indirect, less than wholly owned
subsidiary of Phoenix Home Life. For its services, PIC is paid an investment
advisory fee based on the assets of each Series of the Fund as follows:
PHOENIX INVESTMENT COUNSEL, INC.
--------------------------------
RATE FOR RATE FOR
FIRST RATE FOR NEXT EXCESS OVER
SERIES $250,000,000 $250,000,000 $500,000,000
------ ------------ ------------ ------------
Money Market... .40% .35% .30%
Multi-Sector... .50% .45% .40%
Balanced....... .55% .50% .45%
Total Return... .60% .55% .50%
Growth......... .70% .65% .60%
International.. .75% .70% .65%
Strategic Theme .75% .70% .65%
The total advisory fee of 0.75% of the aggregate net assets of the
International and Strategic Theme Series is greater than that paid by most
mutual funds; however, the Board of Trustees of the Trust has determined that it
is similar to fees charged by other mutual funds whose investment objectives are
similar to those of the International and Strategic Theme Series. Each Series
(except the International, Real Estate and Strategic Theme Series) pays a
portion or all of its other operating expenses, up to .15% of its average net
assets. The International and Strategic Theme Series pay other operating
expenses up to .40% and .25% of their average net assets, respectively.
The investment adviser for the Real Estate Series is Phoenix Realty
Securities, Inc. ("PRS" or "Adviser"). PRS is a wholly-owned
2-9
<PAGE>
indirect subsidiary of Phoenix Home Life. For its services, PRS is paid an
investment advisory fee based on the assets of the Series of the Fund as
follows:
PHOENIX REALTY SECURITIES, INC.
-------------------------------
RATE FOR
RATE FOR FIRST RATE FOR NEXT EXCESS OVER
SERIES $1,000,000,000 $1,000,000,000 $2,000,000,000
------ -------------- -------------- --------------
Real Estate. .75% .70% .65%
The Real Estate Series pays a portion or all of its other expenses up to .25%
of its total net assets. Pursuant to a Sub-Advisory Agreement with the Fund, PRS
delegates certain investment decisions and research functions to ABKB/LaSalle
Securities Limited Partnership ("ABKB") for which ABKB is paid a fee by PRS. In
accordance with the Sub-Advisory Agreement between the Trust and ABKB, ABKB is
paid a monthly fee at the annual rate of 0.45% of the average aggregate daily
net asset values of the Series up to $1 billion; 0.35% of such value between $1
billion and $2 billion; and 0.30% of such value in excess of $2 billion. The
sub-advisory agreement relating to the Real Estate Series provides, among other
things, that ABKB shall effectuate the purchase and sale of securities for the
Series and provide related advisory services.
OFFERING PRICES
Shares in each of the Series of the Trust are offered to the Accounts
continuously at the net asset value determined at the close of business
beginning on the day the application is accepted. For information on pricing for
initial and subsequent purchase payments under Contracts or Policies, see the
accompanying prospectus.
Investment Objectives and Policies
- -----------------------------------------------------------------------------
To the extent that shares are sold to the Accounts in order to fund the
benefits under the Contracts or Policies, the structure of the Trust permits
Contractowners and Policyowners, within the limitations described in the
Contracts or Policies, to allocate their investments in response to or in
anticipation of changes in market or economic conditions.
Each Series has a different investment objective and is designed to meet
different investment needs. The differences in objectives and policies among
the eight Series can be expected to affect the investment return of each Series
and the degree of market and financial risk to which each Series is subject.
The investment objective of each Series is deemed to be a fundamental policy
which may not be changed without the approval of a vote of a majority of the
outstanding shares of that Series. Since certain risks are inherent in the
ownership of any security, there can be no assurance that any Series will
achieve its investment objective. The investment policies of each Series will
also affect the rate of portfolio turnover. A high rate of portfolio turnover
generally involves correspondingly greater transaction costs, which must be
borne directly by each Series. The portfolio turnover rate for each Series,
except the Money Market Series (which does not normally pay brokerage
commissions), is included under "Selected Per Share Data and Ratios." The rate
for each such Series has been, and is expected to, exceed 100%; accordingly,
the Series will pay more in brokerage commissions than would be the case if
they had lower portfolio turnover rates. It is expected that the portfolio
turnover rates for the common stock and fixed income portions of the Balanced
Series will not generally exceed 250% and 100%, respectively. (See "Portfolio
Transactions and Brokerage.")
MULTI-SECTOR FIXED INCOME SERIES
The Multi-Sector Series' investment objective is to seek long-term total
return by investing in a diversified portfolio of high yield (high risk) and
high quality fixed income securities. Distributions of income are reinvested to
purchase additional shares. The Series will seek to achieve its objective by
investing under normal conditions, at least 80% of the value of the total assets
of the Series in the following sectors of the fixed income securities markets:
high yield (high risk) fixed income securities, (sometimes referred to as "junk
bonds"), high quality fixed income securities, fixed income securities including
preferred stocks, convertible securities, debt obligations, foreign debt
obligations, certificates of deposit, commercial paper, bankers' acceptances,
and government obligations issued or guaranteed by federal, state or municipal
governments or their agencies or instrumentalities. The Series' remaining assets
may be invested in common stock and other equity securities when such
investments are consistent with its primary investment objective or are acquired
as part of a unit consisting of a combination of fixed income securities and
equity securities (see "Other Special Investment Methods").
Higher yields are available ordinarily from securities in the lower rated
categories of recognized rating agencies (Ba to Ca by Moody's Investors Service,
Inc. ("Moody's") or BB to CC by Standard & Poor's Corporation ("S&P")) and from
unrated securities of comparable quality (commonly referred to as "junk bonds").
However, the Multi-Sector Series will not invest in securities in the two lowest
rating categories (Ca and C for Moody's and CC and C for Standard & Poor's)
unless management believes that the financial condition of the issuer, or the
protections afforded to the particular securities, is stronger than would
otherwise be indicated by the low ratings. When the investment objective of this
Series can be met by investing in securities in higher rating categories, such
investments will be made. Moreover, the Series may retain securities whose
ratings have changed. The Appendix contains a more detailed description of such
ratings. At Dec. 31, 1995, 44.2% of the Series' assets was invested in so-called
"investment grade" securities. The average percentage of assets the Series had
invested in each rating category for the fiscal year ended December 31, 1995 is
as follows:
Aaa.............. 23.4%
Aa............... 7.6%
A................ 4.0%
Baa.............. 9.2%
Ba............... 13.1%
B................ 12.2%
Caa.............. 1.7%
*Not-Rated....... 20.9%
* Comparable to rated A 0.1%; Aa 1.2%; B 4.5%; Baa 10.9%; Ba 4.2%
2-10
<PAGE>
When a more conservative investment strategy is necessary for temporary
defensive purposes, the Series may retain cash or invest part or all of its
assets in cash equivalents or in other fixed income securities deemed by
management to be consistent with a temporary defensive posture.
Risk Factors. While the Multi-Sector Series' management will seek to minimize
risk through diversification and continual evaluation of current developments in
interest rates and economic conditions, the market prices of lower rated
securities generally fluctuate more than those of higher rated securities, and
using credit ratings helps to evaluate the safety of principal and interest but
does not assess market risk. Economic downturns and interest rate increases may
cause a higher incidence of lower-rated securities' defaults. Such fluctuations
in the market value of portfolio securities subsequent to their acquisition by
the Multi-Sector Series will not normally affect cash income from such
securities but will be reflected in the Series' net asset value. Additionally,
with lower rated securities there is a greater possibility that an adverse
change in the financial condition of the issuer, particularly a highly leveraged
issuer, may affect its ability to make payments of income and principal. Also,
because the Series intends to invest primarily in securities in the lower rating
categories, the achievement of its goals will be more dependent on management's
credit analysis ability than would be the case if the Series were investing in
securities in the higher rated categories. Lower-rated securities may be thinly
traded and therefore harder to value and more susceptible to adverse publicity
concerning the issuer. In addition, legislation may be enacted in the future
that could depress the price of lower-rated securities.
The Multi-Sector Series may invest in debt obligations that do not make any
interest payments for a specified period of time prior to maturity or until
maturity ("deferred coupon" or "zero coupon" obligations). The value of these
obligations may fluctuate more in response to interest rate changes than would
the value of debt obligations that make current interest payments. In addition,
because the Series will accrue income on these securities prior to the receipt
of each payment, it may have to dispose of portfolio securities to distribute
income to the Accounts for tax purposes. (See the Statement of Additional
Information.)
MONEY MARKET SERIES
The investment objective of the Money Market Series is to provide maximum
current income consistent with capital preservation and liquidity. The Series
seeks to achieve its objective by investing in a managed portfolio of the
following high quality money market instruments:
(a) obligations issued or guaranteed as to principal and interest by the
United States 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 such banks or
savings and loan associations, which at the date of investment have
capital, surplus, and undivided profits in excess of $100,000,000 as of
the date of their most recently published financial statements; and
obligations of other banks or savings and loan associations if such
obligations are insured by the Federal Deposit Insurance Corporation or
the Federal Savings and Loan Insurance Corporation;
(c) commercial paper which at the date of investment is issued or
guaranteed by a company whose commercial paper is rated A-1 by Standard
& Poor's Corporation or P-1 by Moody's Investors Service, Inc., or F-1
by Fitch's Investors Service or, if not rated, is issued or guaranteed
by a company which at the date of the investment has an outstanding
debt issue rated AA or higher by Standard & Poor's or Aa or higher by
Moody's;
(d) other corporate obligations maturing in one year or less which at the
date of investment are rated AA or higher by Standard & Poor's or Aa or
higher by Moody's; and
(e) repurchase agreements with recognized securities dealers and member
banks of the Federal Reserve System with respect to any of the
foregoing obligations.
All of the Money Market Series investments will mature in 397 days or less.
In addition, the average maturity of the Series' portfolio securities based on
their dollar value will not exceed 90 days. By limiting the maturity of its
investments, the Money Market Series seeks to lessen the changes in the value of
its assets caused by market factors.
Generally, investments will be limited to securities rated in the two highest
short-term rating categories by at least two nationally recognized statistical
rating organizations, or by one such organization if only one has rated the
security, and comparable unrated securities. In addition, no more than 5% of the
Series' total assets will be invested in securities of any one issuer or in
securities not rated in the highest short-term rating category. Moreover, no
more than the greater of 1% of the Series' total assets or $1 million will be
invested in the securities of any one issuer that are not in the highest
short-term rating category.
This Series, consistent with its investment objective, will attempt to
maximize yield through portfolio trading. This may involve selling portfolio
instruments and purchasing different instruments to take advantage of
disparities of yields in different segments of the high grade money market or
among particular instruments within the same segment of the market. It is
expected that the Series' portfolio transactions will be generally with issuers
or dealers acting as principal. Accordingly, this Series will normally not pay
any brokerage commissions.
The value of the securities in the Money Market Series' portfolio can be
expected to vary inversely to changes in prevailing interest rates, with the
amount of such variation depending primarily on the period of time remaining to
maturity of the security. Long-term obligations may fluctuate more in value than
short-term obligations. If interest rates increase after a security is
purchased, the security, if sold, could be sold for a loss. On the other hand,
if interest rates decline after a purchase, the security, if sold, could be sold
at a
2-11
<PAGE>
profit. If, however, the security is held to maturity, no gain or loss will
be realized as a result of interest rate fluctuations, although the day-to-day
valuation of the portfolio could fluctuate. Substantial withdrawals of the
amounts held in the Money Market Series could require it to sell portfolio
securities at a time when a sale might not be favorable. The value of a
portfolio security may also be affected by other factors, including factors
bearing on the creditworthiness of its issuer.
GROWTH SERIES
The investment objective of the Growth Series (formerly designated the "Stock
Series") is to achieve intermediate and long-term growth of capital, with income
as a secondary consideration. The Series seeks to achieve its investment
objective by investing principally in common stocks of corporations believed by
management to offer growth potential over both the intermediate and the long
term. In pursuing capital growth, emphasis is placed on the selection of
securities of well-established corporations with aggressive and experienced
managements. This Series may invest not more than 20% of the market value of its
total assets in convertible securities, that is, debt securities and preferred
stocks which are convertible into, or carry the right to purchase, common stock
or other equity securities. It is not intended at this time that this Series
will invest in warrants.
Although the Growth Series will not make a practice of short-term trading,
purchases and sales of securities will be made, whenever necessary to achieve
the investment objective of the Series without regard to the resulting brokerage
costs.
The Trust management intends to diversify investments of the Series among a
number of corporations without concentration in any particular industry. When,
in the opinion of the Trust management, a temporary defensive position is
warranted, the Series may maintain part or all of its assets in cash or
short-term investments such as United States Treasury bills and commercial
paper; it may also invest in preferred stocks, nonconvertible bonds, notes,
government securities or other fixed-income securities for temporary defensive
purposes.
TOTAL RETURN SERIES
The investment objective of the Total Return Series (formerly designated the
"Total-Vest Series") is to realize as high a level of total rate of return over
an extended period of time as is considered consistent with prudent investment
risk. The Series seeks to achieve its investment objective by investing in three
market segments: stocks, bonds, and money market instruments. In addition to
trading techniques described fully in the Statement of Additional Information,
the Series has retained the flexibility to write (sell) covered call options, to
purchase call and put options and to enter into financial futures contracts.
The Total Return Series will adjust the mix of investments among the three
market segments to capitalize on perceived variations in return potential
produced by the interaction of changing financial markets and economic
conditions. It is expected that such adjustments will normally be made in a
gradual manner over a period of time. THERE ARE NO MINIMUM OR MAXIMUM
PERCENTAGES AS TO THE AMOUNT OF THE SERIES' ASSETS WHICH MAY BE INVESTED IN EACH
OF THE MARKET SEGMENTS. MAJOR CHANGES IN INVESTMENT MIX MAY OCCUR SEVERAL TIMES
A YEAR OR OVER SEVERAL YEARS, DEPENDING UPON MARKET AND ECONOMIC CONDITIONS AND
EXCEPT FOR RESTRICTIONS NOTED HEREIN AND UNDER "INVESTMENT RESTRICTIONS," THE
INVESTMENT ADVISER HAS COMPLETE FLEXIBILITY IN DETERMINING THE AMOUNT AND NATURE
OF COMMON STOCK, DEBT OR MONEY MARKET INSTRUMENTS IN WHICH THE SERIES MAY
INVEST.
Investments in one of the three market segments will be made with a specific
purpose in mind. Investments in the stock segment will be for the purpose of
attempting to achieve a superior total rate of return over an extended period of
time from both capital appreciation and current income. Investments in the bond
segment will be for the purpose of attempting to achieve as high a total rate of
return on an annual basis as is considered consistent with the preservation of
capital values and may include investments of up to 5% of the Series' total
assets in high risk fixed income securities (commonly referred to as "junk
bonds"). Investments in the money market segment will be for the purpose of
attempting to achieve high current income, the preservation of capital, and
liquidity. The types of securities in each of these three market segments that
the Total Return Series will invest in are listed in the Statement of Additional
Information.
Cash may be held to provide for expenses and anticipated redemption payments
and so that orderly redemption payments may be carried out in accordance with
the Total Return Series' investment policies.
See Multi-Sector Series and Money Market Series for a description of risks
generally associated with investing in the Total Return Series.
INTERNATIONAL SERIES
The International Series seeks as its investment objective a high total
return consistent with reasonable risk. It intends to achieve its objective by
investing primarily in an internationally diversified portfolio of equity
securities. It intends to reduce its risk by engaging in hedging transactions
involving options, futures contracts and foreign currency transactions (see
"Other Special Investment Methods"). Investments may be made for capital growth
or for income or any combination thereof for the purpose of achieving a high
overall return. There can be no assurance that the International Series will
achieve its objective.
There is no limitation on the percentage or amount of the International
Series assets which may be invested for capital growth or income, and therefore
at any particular time the investment emphasis may be placed solely or primarily
on growth of capital or on income. In determining whether the International
Series will be invested for capital growth or income, the Adviser will analyze
the international equity and fixed income markets and seek to assess the degree
of risk and level of return that can be expected from each market. The
International Series will invest primarily in non-United States issuers, and
under normal circumstances, more than 80% of the International Series' total
assets will be invested in non-United States issuers located in not less than
three foreign countries.
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In pursuing its objective, the International Series will invest primarily in
common stocks of established non-United States companies believed to have
potential for capital growth, income or both. However, there is no requirement
that the International Series invest exclusively in common stocks or other
equity securities. The International Series may invest in other types of
securities including, but not limited to, convertible securities, preferred
stocks, bonds, notes and other debt securities of companies (including
Euro-currency instruments and securities) or obligations of domestic or foreign
governments and their political subdivisions, and in foreign currency
transactions. The Series may invest up to 10% of its total assets in bonds
(sometimes referred to as "junk bonds") considered to be less than investment
grade (but which are not in default at the time of investment), which may
subject the Series to risks attendant to such bonds (see "Risk Factors" below).
When the Adviser believes that the total return potential in debt securities
equals or exceeds the potential return on equity securities, the Series may
substantially increase its holdings in debt securities. The International Series
may establish and maintain part or all of its assets in reserves for temporary
defensive purposes or to enable it to take advantage of buying opportunities.
The International Series reserves may be invested in domestic as well as foreign
short-term money market instruments including, but not limited to, government
obligations, certificates of deposit, bankers' acceptances, time deposits,
commercial paper, short-term corporate debt securities and repurchase
agreements. The International Series may also engage in certain options
transactions, and enter into futures contracts and related options for hedging
purposes, invest in repurchase agreements and lend portfolio securities (see
"Other Special Investment Methods").
The International Series may also invest in the securities of other
investment companies subject to the limitations contained in the 1940 Act (see
"Investment Restrictions" in the Statement of Additional Information). In
certain countries, investments may only be made by investing in other investment
companies that, in turn, are authorized to invest in the securities that are
issued in such countries. The Fund's purchase of securities of such other
investment companies may result in the layering of expenses such that
shareholders indirectly bear a proportionate part of the expenses for such
investment companies including operating costs and investment advisory and
administrative fees.
The International Series makes investments in various countries. Under normal
circumstances, business activities in a number of different foreign countries
will be represented in the International Series' investments. The International
Series may, from time to time, have more than 25% of its assets invested in any
major industrial or developed country which in the view of the Adviser poses no
unique investment risk. The International Series may purchase securities of
companies, wherever organized, which have their principal activities and
interests outside the United States. Under exceptional economic or market
conditions abroad, the International Series may, for temporary defensive
purposes, invest all or a major portion of its assets in U.S. government
obligations or securities of companies incorporated in and having their
principal activities in the United States. The International Series may also
invest its reserves in domestic short-term money-market instruments as described
above.
In determining the appropriate distribution of investments among various
countries and geographic regions, the Adviser ordinarily will consider the
following factors: prospects for relative economic growth among foreign
countries; expected levels of inflation; relative price levels of the various
capital markets; government policies influencing business conditions; the
outlook for currency relationships and the range of individual investment
opportunities available to the international investor.
The International Series may make investments in developing countries, which
involve exposure to economic structures that are generally less diverse and
mature than in the United States, and to political systems which may be less
stable. A developing country can be considered to be a country which is in the
initial stages of its industrialization cycle. In the past, markets of
developing countries have been more volatile than the markets of developed
countries; however, such markets often have provided higher rates of return to
investors. The Adviser believes that these characteristics can be expected to
continue in the future.
Generally, the Series will not trade in securities for short-term profits
but, when circumstances warrant, securities may be sold without regard to the
length of time held.
Risk Factors. There are substantial and different risks involved which should
be carefully considered by any investor considering foreign investments. For
example, there is generally less publicly available information about foreign
companies than is available about companies in the United States. Foreign
companies are generally not subject to uniform audit and financial reporting
standards, practices and requirements comparable to those in the United States.
In addition, if it should become necessary, the Trust could encounter
difficulties involving legal processes abroad.
Foreign securities involve currency risks. The U.S. dollar value of a foreign
security tends to decrease when the value of the dollar rises against the
foreign currency in which the security is denominated and tends to increase when
the value of the dollar falls against such currency. Fluctuations in exchange
rates may also affect the earning power and asset value of the foreign entity
issuing the security. Dividend and interest payments may be repatriated based on
the exchange rate at the time of disbursement, and restrictions on capital flows
may be imposed. Losses and other expenses may be incurred in converting between
various currencies in connection with purchases and sales of foreign securities.
Foreign stock markets are generally not as developed or efficient as those in
the United States. In most foreign markets volume and liquidity are less than in
the United States and, at times, volatility of price can be greater than in the
United States. Fixed commissions on foreign stock exchanges are generally higher
than the negotiated commissions on United States exchanges. There is generally
less government supervision and regulation of foreign stock exchanges, brokers
and companies than in the United States.
There is also the possibility of adverse changes in investment or exchange
control regulations, expropriation or confiscatory taxation, limitations on the
removal of funds or other assets, political or social instability, or diplomatic
developments which could adversely affect investments, assets or securities
transactions of the International
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Series in some foreign countries. The International Series is not aware of any
investment or exchange control regulations which might substantially impair the
operations of the Series as described, although this could change at any time.
For many foreign securities, there are U.S. dollar-denominated American
Depository Receipts ("ADR's"), which are traded in the United States on
exchanges or over the counter and are sponsored and issued by domestic banks.
ADRs represent the right to receive securities of foreign issuers deposited in a
domestic bank or a correspondent bank. ADRs do not eliminate all the risk
inherent in investing in the securities of foreign issuers. However, by
investing in ADRs rather than directly in foreign issuers' stock, the
International Series can avoid currency risks during the settlement period for
either purchases or sales. In general, there is a large, liquid market in the
United States for many ADRs. The information available for ADRs is subject to
the accounting, auditing and financial reporting standards of the domestic
market or exchange on which they are traded, which standards are more uniform
and more exacting than those to which many foreign issuers may be subject. The
International Series may also invest in European Depository Receipts ("EDR's"),
which are receipts evidencing an arrangement with a European bank similar to
that for ADRs and are designed for use in the European securities markets. EDRs
are not necessarily denominated in the currency of the underlying security.
The dividends and interest payable on certain of the International Series'
foreign securities may be subject to foreign withholding taxes, thus reducing
the net amount available for distribution to the International Series'
shareholders. Investors should understand that the expense ratio of the
International Series can be expected to be higher than those of investment
companies investing in domestic securities since the costs of operation are
higher. There can be no assurance that the International Series' investment
policy will be successful or that its investment objective will be attained.
Since the International Series may invest up to 10% of its total assets in
bonds considered to be less than investment grade, it may be exposed to greater
risks than if it did not invest in such bonds. With lower rated bonds, there is
a greater possibility that an adverse change in the financial condition of the
issuer may affect its ability to pay principal and interest.
BALANCED SERIES
The Balanced Series seeks as its investment objectives reasonable income,
long-term capital growth and conservation of capital. The Balanced Series
intends to invest based on combined considerations of risk, income, capital
enhancement and protection of capital value.
The Balanced Series may invest in any type or class of security. Normally,
the Balanced Series will invest in common stocks and fixed income securities;
however, it may also invest in securities convertible into common stocks. At
least 25% of the value of its assets will be invested in fixed income senior
securities. The overall economic and financial outlook determines the allocation
of assets between fixed income and common stock investments. Fixed income
investments are typically made in high quality, lower risk securities. Common
stock investments are made in companies with intermediate and long term earnings
growth potential such as are invested in by the Growth Series. The Series
attempts to invest in common stocks belonging to fundamentally attractive
sectors and industries and strives to be overweighted in these areas relative to
their representation in broad market indices such as the Standard & Poor's 500.
The current outlook and the asset allocation are continuously reviewed.
The Series may also engage in certain options transactions and enter into
financial futures contracts and related options for hedging purposes and may
invest in deferred or zero coupon debt obligations. (See "Other Special
Investment Methods" and the Statement of Additional Information.)
In implementing the investment objectives of this Series, management will
select securities believed to have potential for the production of current
income, with emphasis on securities that also have potential for capital
enhancement. In an effort to protect its assets against major market declines,
or for other temporary defensive purposes, the Balanced Series may actively
pursue a policy of retaining cash or investing part or all of its assets in cash
equivalents, such as government securities and high grade commercial paper.
REAL ESTATE SERIES
The Real Estate Series seeks as its investment objective capital appreciation
and income with approximately equal emphasis. It intends under normal
circumstances to invest in marketable securities of publicly traded real estate
investment trusts ("REITs") and companies that are principally engaged in the
real estate industry. Under normal circumstances, the Series intends to invest
at least 75% of the value of its assets in these securities.
The Series investment objective is a fundamental policy which may not be
changed without shareholder approval. Policies and limitations are considered at
the time of purchase and the sale of instruments is not required in the event of
a change in circumstances. There can be no assurance that the Series will
achieve its objective.
REITs are pooled investment vehicles which invest primarily in income
producing real estate or real estate related loans or interests. Generally,
REITs can be classified as equity REITs, mortgage REITs, or hybrid REITs. Equity
REITs invest the majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. Hybrid REITs combine the
characteristics of both equity REITs and mortgage REITs. The Series intends to
emphasize investment in equity REITs.
In determining whether an issuer is "principally engaged" in the real estate
industry, PRS seeks companies which derive at least 50% of their gross revenues
or net profits from the ownership, development, construction, financing,
management or sale of commercial, industrial or residential real estate. The
equity securities of real estate companies considered for purchase by the Series
will consist of shares of beneficial interest, marketable common stock, rights
or warrants to purchase common stock, and securities with
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common stock characteristics such as preferred stock and debt security's
convertible into common stock.
The Real Estate Series may also invest up to 25% of its total assets in (a)
marketable debt securities of companies principally engaged in the real estate
industry; (b) mortgage-backed securities such as mortgage pass-through
certificates, real estate mortgage investment conduit ("REMIC") certificates and
collateralized mortgage obligations ("CMOs"); or (c) short-term investments
listed below.
The Real Estate Series invests in debt securities only if, at the date of
investment, they are rated within the four highest grades as determined by
Moody's (Aaa, Aa, A or Baa) or by S&P (AAA, AA, A or BBB) or, if not rated or
rated under a different system, are judged by PRS to be of equivalent quality to
debt securities so rated. Securities rated Baa or BBB are medium grade
investment obligations that may have speculative characteristics. Changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments in the case of such obligations
than is the case for higher grade securities. The Series may, but is not
obligated to, dispose of debt securities whose credit quality falls below
investment grade. Unrated debt securities may be less liquid than comparable
rated debt securities and may involve somewhat greater risk than unrated debt
securities.
For temporary defensive purposes (as when market conditions in real estate
securities are extremely adverse such that PRS believes there are extraordinary
risks associated with investment therein), the Series may invest up to 100% of
its total assets in short-term investments such as money market instruments
consisting of securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; repurchase agreements; certificates of deposit
and bankers' acceptances issued by banks or savings and loan associations having
net assets of at least $500 million as of the end of their most recent fiscal
year; high-grade commercial paper rated at time of purchase, in the top two
categories by a national rating agency or determined to be of comparable quality
by PRS or ABKB at the time of purchase; and other long and short-term
instruments which are rated A or higher by S&P or Moody's at the time of
purchase.
Risk Factors. The Real Estate Series is non-diversified under the federal
securities laws. As a non-diversified portfolio, there is no restriction under
the Investment Company Act of 1940 (the "1940 Act") on the percentage of assets
that may be invested at any time in the securities of any one issuer. To the
extent that the Real Estate Series is not fully diversified, it may be more
susceptible to adverse economic, political or regulatory developments affecting
a single issuer than would be the case if it were more broadly diversified. In
addition, investments by the Real Estate Series in securities of companies
providing mortgage servicing will be subject to the risks associated with
refinancings and their impact on servicing rights.
Although the Real Estate Series does not invest directly in real estate, it
does invest primarily in real estate securities and accordingly, the value of
shares of the Real Estate Series will fluctuate in response to changes in
economic conditions within the real estate industry. Risks associated with the
direct ownership of real estate and with the real estate industry in general
include, among other things, possible declines in the value of real estate;
risks related to general and local economic conditions; possible lack of
availability of mortgage funds; over-building; extended vacancies of properties;
increases in competition, property taxes and operating expenses; changes in
zoning laws; costs resulting from the clean-up of, and liability to third
parties for damages resulting from, environmental problems; casualty or
condemnation losses; uninsured damages from flood, earthquakes or other natural
disasters; limitations on and variations in rents; dependency on property
management skill; the appeal of properties to tenants; changes in interest
rates.
Investing in REIT's involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REIT's
may be affected by changes in the value of the underlying property owned by the
REIT's, while mortgage REIT's may be affected by the quality of any credit
extended. REIT's are dependent upon management skills, are not diversified, and
are subject to the risks of financing projects. The Portfolio may invest in new
or unseasoned REIT issuers and it may be difficult or impossible for PRS or ABKB
to ascertain the value of each of such REIT's underlying assets, management
capabilities and growth prospects. In addition, REIT's are subject to heavy cash
flow dependency, default by borrowers, self-liquidation, and the possibilities
of failing to qualify for the exemption from tax or distributed income under the
Internal Revenue Code of 1986, as amended (the "Code") and failing to maintain
their exemptions from the 1940 Act. REIT's whose underlying assets include
long-term health care properties, such as nursing, retirement and assisted
living homes may be impacted by federal regulations concerning the health care
industry. The Series will indirectly bear its proportionate share of any
expenses paid by the Series itself.
REIT's (especially mortgage REIT's) are subject to interest rate risks. When
interest rates decline, the value of a REIT's investment in fixed rate
obligations usually rises. Conversely, when interest rates rise, the value of a
REIT's investment in fixed rate obligations can be expected to decline. In
contrast as interest rates on adjustable rate mortgage loans are reset
periodically, yields on a REIT's investment in such loans will gradually align
themselves to reflect changes in market interest rates, causing the value of
such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
In addition, investing in REIT's involves risks similar to those associated
with investing in small capitalization companies. REIT's may have limited
financial resources, may trade less frequently and in a limited volume and may
be more subject to abrupt or erratic price movements than larger capitalization
stocks included in the S&P 500 Index.
The Series commenced operations on May 1, 1995 based upon an initial
capitalization of $5 million provided by Phoenix Home Life. The ability of the
Series to raise additional capital for investment purposes may directly effect
the spectrum of series holdings and performance. While many of the officers and
directors of PRS are experienced real estate professionals, based upon its
relatively recent formation and involvement with real estate securities, PRS
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does not have an operating history of investing in the types of real estate
securities expected to be held within the Real Estate Series. Even though PRS is
an affiliate of PIC, PRS has no prior experience as an investment adviser.
STRATEGIC THEME SERIES
The Strategic Theme Series seeks as its investment objective long term
appreciation of capital through investing in securities of companies that the
adviser believes are particularly well positioned to benefit from cultural,
demographic, regulatory, social or technological changes worldwide. Examples of
thematic investing would include investing in oil and gas exploration companies
during the energy shortage years of the late 1970's, owning companies which
benefited from lower inflation trends during the early 1980's, investing in
companies acquiring cellular franchises in the late 1980's, and technology
companies during the 1990's.
The Adviser will not concentrate its investments in specific industries in
amounts greater than 25% of the assets of the Series in any particular
"industry(ies)" or group(s) of "industries" without shareholder approval. In
determining when and whether to invest in particular industries, the Adviser
will establish strategic (major changes affecting markets for prolonged periods)
and tactical (focused, short-term) investment themes. Investment themes shall
generally reflect trends which appear likely to drive stocks with similar
technologies and products or which embody broad social, economic, political and
technological considerations; offer substantial appreciation potential; present
a visionary idea or creative solution; and exhibit some independence from
economic cycles. The Adviser may change investment themes once it has determined
that an investment theme has become saturated or fully exploited. The Adviser
may pursue one or more investment themes at any time.
The Adviser will seek to identify companies which, in addition to being
considered well positioned to benefit from investment themes identified, are
also believed to possess attributes such as, but not limited to, good financial
resources, satisfactory return on capital, enhanced industry position and
superior management skills.
The Theme Series may also invest in preferred stocks, investment grade bonds
(Moody's Investors Service, Inc. rating Baa or higher or Standard & Poor's
Ratings Group rating BBB or higher), convertible preferred stocks and
convertible debentures if in the judgment of the Adviser the investment would
further its investment objective. The Series may also engage in certain options
transactions and enter into financial futures contracts and related options for
hedging purposes. The Series may also invest up to 35% of its assets in the
securities of foreign issuers. See "Investment Techniques." Each security held
will be monitored to determine whether it is contributing to the basic objective
of long-term appreciation of capital.
For temporary defensive purposes (as when market conditions for growth stocks
are adverse), investments may be made in fixed income securities with or without
warrants or conversion features. In addition, for such temporary defensive
purposes, the Series may pursue a policy of retaining cash or investing part or
all of its assets in cash equivalents. When the Series' assets are held in cash
or cash equivalents, it is not investing in securities intended to meet the
Series' investment objective.
Risk Factors. To the extent that the Series invests in a single investment
theme, it may be more susceptible to adverse economic, political or regulatory
developments than would be the case if it invested in a broader spectrum of
themes. In addition, the Series' investments in common stocks of companies with
limited operating history may result in higher volatility in returns. Further,
the successful effectuation of the thematic investment strategy used by the
Adviser is dependent upon the Adviser's ability to anticipate emerging market
trends, exploit such investment opportunities and to thereafter divest of such
securities upon saturation. No assurances can be given that the investment
strategies utilized will positively correlate with any or all such marketplace
trends or that other, possibly more profitable investment trends could be
overlooked.
The Series commenced operations on January 29, 1996 based upon an initial
capitalization of $5 million provided by Phoenix Home Life. The ability of the
Series to raise additional capital for investment purposes may directly affect
the spectrum of portfolio holdings and performance.
Additional discussion regarding risks involved in investing in the Series are
described in the "Other Special Investment Methods" section below.
Other Special Investment Methods
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CONVERTIBLE SECURITIES
Each Series may invest in convertible securities. A convertible security is a
bond, debenture, note, preferred stock or other security that may be converted
into or exchanged for a prescribed amount of common stock of the same or a
different issuer within a particular period of time at a specified price or
formula. A convertible security entitles the holder to receive interest
generally paid or accrued on debt or the dividend paid on preferred stock until
the convertible security matures or is redeemed, converted or exchanged.
Convertible securities have several unique investment characteristics such as
(1) higher yields than common stocks, but lower yields than comparable
nonconvertible securities, (2) a lesser degree of fluctuation in value than the
underlying stock since they have fixed income characteristics, and (3) the
potential for capital appreciation if the market price of the underlying common
stock increases. Up to 5% of each of these Series' assets may be invested in
convertible securities that are rated below investment grade (commonly referred
to as "junk" securities). Such securities present greater credit and market
risks than investment grade securities. A convertible security might be subject
to redemption at the option of the issuer at a price established in the
convertible security's governing instrument. If a convertible security held by a
Series is called for redemption, the Series may be required to permit the issuer
to redeem the security, convert it into the underlying common stock or sell it
to a third party.
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REPURCHASE AGREEMENTS
The Money Market, Real Estate, International and Strategic Theme Series may
invest in repurchase agreements. However, no more than 10% of a Series' net
assets will be invested in repurchase agreements having maturities of more than
seven days. A repurchase agreement is a transaction where a Series buys a
security at one price and the seller simultaneously agrees to buy that same
security back at a higher price. Repurchase agreements will be entered into with
commercial banks, brokers and dealers considered by the Board of Trustees and
the Adviser acting at the Board's direction, to be creditworthy. In addition,
the repurchase agreements are always fully collateralized by the underlying
instrument and are marked to market every business day. However, the use of
repurchase agreements involves certain risks such as default by or insolvency of
the other party to the transaction.
OPTIONS
The Multi-Sector, Money Market, Growth, Total Return, Balanced, International
and Strategic Theme Series may write (sell) covered call options on securities
owned by them, including securities into which convertible securities are
convertible, provided that such call options are listed on a national securities
exchange. Generally, when a Series writes a covered call option, it will acquire
the underlying security or will have absolute and immediate right to acquire
that security without additional consideration upon conversion or exchange of
other securities held by the Series. The Money Market, Growth and Multi-Sector
Series may only purchase call options for the purpose of terminating a call
option previously written. The Total Return, Balanced, International and
Strategic Theme Series may also buy exchange-traded call and put options on
equity and debt securities and on stock market indexes. The International and
Strategic Theme Series may also write or buy Over-the-Counter (OTC) options, buy
put options on securities indices and enter into options transactions on a
foreign currency. Generally, 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 International and Strategic Theme
Series may also invest up to 5% of its net assets in warrants and stock rights,
which are almost identical to call options except that they are issued by the
issuer of the underlying security rather than an option writer. However, no more
than 2% of its net assets will be invested in warrants and stock rights not
traded on the New York Stock Exchange or American Stock Exchange. A complete
description of options, warrants and stock rights, and their associated risks is
contained in the Statement of Additional Information. Options are forms of
"derivatives" in that their value is dependent on fluctuations in the value of
other securities.
The Trust understands the position of the staff of the Securities and
Exchange Commission (the "SEC") to be that purchased OTC options and the assets
used as "cover" for written OTC options are illiquid securities. The Trust has
adopted procedures for engaging in OTC options transactions for the purpose of
reducing any potential adverse effect of such transactions upon the liquidity of
the International Series. A brief description of these procedures and related
limitations appears in the Statement of Additional Information.
FINANCIAL FUTURES AND RELATED OPTIONS
The Total Return and Balanced Series may enter into financial futures
contracts for the purchase or sale of debt obligations traded on exchanges
regulated by the Commodity Futures Trading Commission to hedge against
anticipated changes in interest rates that would otherwise have an adverse
effect upon the value of debt securities in its portfolio. A futures contract on
a debt obligation is a binding contractual commitment which, if held until
maturity, will result in an obligation to make or accept delivery of obligations
having a standard face value and rate of return. Hedging is the initiation of an
offsetting position in the futures market which is intended to minimize the risk
associated with a position's underlying securities in the cash market. The
purchase of such futures contracts will not be for speculation but will be
solely for protection of the Series against declines in value. Immediately after
entering into a futures contract for the receipt or delivery of a security, the
value of the securities called for by all of the Total Return or Balanced
Series' futures contracts (both receipts and delivery) will not exceed 10% of
such series' total assets.
The International and Strategic Theme Series may also enter into financial
futures contracts and related options to hedge against anticipated changes in
the market value of its portfolio securities or securities which it intends to
purchase or in the exchange rate of foreign currencies. The International and
Strategic Theme Series will not purchase or sell any financial futures contract
or related option if, immediately thereafter, the sum of the cash or U.S.
Treasury bills committed with respect to its existing futures and related
options positions and the premiums paid for related options would exceed 5% of
the market value of the Series' total assets.
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 or
Subadviser could be incorrect in its expectations as to the direction or extent
of various interest rate movements or foreign currency exchange rates, in which
case the Series' return might have been greater had hedging not taken place.
There is also the risk that a liquid secondary market may not exist. The risk in
purchasing an option on a financial futures contract is that the Series will
lose the premium it paid. Also, there may be circumstances when the purchase of
an option on a financial futures contract would result in a loss to the Series
even though the purchase or sale of the contract would not have resulted in a
loss. Futures are forms of derivatives.
A complete description of financial futures and related options is contained
in the Statement of Additional Information.
FOREIGN SECURITIES
The International and Strategic Theme Series will purchase foreign securities
as discussed above. In addition, the other Series may invest up to 25% (or 35%
as to the Strategic Theme Series) of total net asset value in foreign
securities. The Multi-Sector Series may invest up to 35% of total net asset
value in foreign debt securities. The Series other than the International and
Strategic
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Theme Series will purchase foreign debt securities only if issued in U.S.
dollar denominations. Investments in foreign securities, particularly those of
non-governmental issuers, involve considerations which are not ordinarily
associated with investing in domestic issuers. Those considerations are
discussed under "International Series."
Foreign Currency Transactions. The value of the assets of the Series invested
in foreign securities, as measured in United States dollars, may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Series may incur costs in connection with
conversions between various currencies. The Series will conduct foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market, or through forward contracts
to purchase or sell foreign currencies. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract. These
contracts are traded directly between currency traders (usually large commercial
banks) and their customers. At the time of the purchase of a forward foreign
currency exchange contract, an amount of cash, U.S. Government securities or
other appropriate high-grade debt obligations equal to the market value of the
contract, minus the Series' initial margin deposit with respect thereto, will be
deposited in a segregated account with the Trust's custodian bank to
collateralize fully the position and thereby ensure that it is not leveraged.
When a Series enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may want to establish the United States
dollar cost or proceeds, as the case may be. By entering into a forward contract
in United States dollars for the purchase or sale of the amount of foreign
currency involved in the underlying security transaction, a Series is able to
protect itself against a possible loss between trade and settlement dates
resulting from an adverse change in the relationship between the United States
dollar and such foreign currency. However, this tends to limit potential gains
which might result from a positive change in such currency relationships. A
Series may also hedge its foreign currency exchange rate risk by engaging in
currency financial futures and options transactions. For more information about
foreign currency transactions, see the Statement of Additional Information.
LEVERAGE
The Strategic Theme Series may from time to time increase its ownership of
securities holdings above the amounts otherwise possible by borrowing from banks
at fixed amounts of interest and investing the borrowed funds. The Fund will
borrow only from banks, and only if immediately after such borrowing the value
of the assets of the Series (including the amount borrowed), less its
liabilities (not including any borrowings) is at least three times the amount of
funds borrowed for investment purposes. The Fund may borrow up to 25% of the net
assets of such Series, not including the proceeds of any such borrowings.
However, the amount of the borrowings will be dependent upon the availability
and cost of credit from time to time. If, due to market fluctuations or other
reasons, the value of such Series' assets computed as provided above become less
than three times the amount of the borrowings for investment purposes, the Fund,
within three business days, is required to reduce bank debt to the extent
necessary to meet the required 300% asset coverage.
Interest on money borrowed will be an expense of those Series with respect to
which the borrowing has been made. Because such expense would not otherwise be
incurred, the net investment income of such Series is not expected to be as high
as it otherwise would be during periods when borrowings for investment purposes
are substantial.
Bank borrowings for investment purposes must be obtained on an unsecured
basis. Any such borrowing must also be made subject to an agreement by the
lender that any recourse is limited to the assets of such Series with respect to
which the borrowing has been made.
Any investment gains made with the additional monies borrowed in excess of
interest paid will cause the net asset value of such Series' shares to rise
faster than would otherwise be the case. On the other hand, if the investment
performance of the additional securities purchased fails to cover its cost
(including any interest paid on the monies borrowed) to such Series, the net
asset value of the Series will decrease faster than would otherwise be the case.
PRIVATE PLACEMENTS AND RULE 144A SECURITIES
The Strategic Theme Series may purchase securities which have been privately
issued and are subject to legal restrictions on resale or which are issued to
qualified institutional investors under special rules adopted by the SEC. Such
securities may offer higher yields than comparable publicly traded securities.
Such securities ordinarily can be sold by the Series in secondary market
transactions to certain qualified investors pursuant to rules established by the
SEC, in privately negotiated transactions to a limited number of purchasers or
in a public offering made pursuant to an effective registration statement under
the Securities Act of 1933, as amended ( the "1933 Act"). Public sales of such
securities by the Trust may involve significant delays and expense. Private
sales often require negotiation with one or more purchasers and may produce less
favorable prices than the sale of similar unrestricted securities. Public sales
generally involve the time and expense of the preparation and processing of a
registration statement under the 1933 Act (and the possible decline in value of
the securities during such period) and may involve the payment of underwriting
commissions. In some instances, the Series may have to bear certain costs of
registration in order to sell such shares publicly. Except in the case of
securities sold to qualifying institutional investors under special rules
adopted by the SEC for which the Trustees determine the secondary market is
liquid, Rule 144A securities will be considered illiquid. Trustees may determine
the secondary market is liquid based upon the following factors which will be
reviewed periodically as required pursuant to procedures adopted by the Series:
the number of dealers willing to purchase or sell the security; the frequency of
trades; dealer undertakings to make a market in the security, and the nature of
the security and its market. Investing in Rule 144A Securities could have the
effect of increasing the level of these Series' illiquidity to the extent that
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qualified institutional buyers become, for a time, uninterested in purchasing
these securities. Each Series, other than the Money Market Series, may invest up
to 15% of its net assets in illiquid securities. The Money Market Series may
invest up to 10% of its net assets in illiquid securities.
MORTGAGE-BACKED SECURITIES
The Real Estate Series may also invest in mortgage-backed securities such as
mortgage pass-through certificates, real estate mortgage investment conduit
("REMIC") certificates and collateralized mortgage obligations ("CMOs"). CMOs
are hybrid instruments with characteristics of both mortgage-backed and mortgage
pass-through securities. Similar to a bond, interest and pre-paid principal on a
CMO are paid, in most cases, semiannually. CMOs may be collateralized by whole
mortgage loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by Government National Mortgage Association
(GNMA), or Federal National Mortgage Association. CMOs are structured into
multiple classes, with each class bearing a different stated maturity. Monthly
payments of principal, including prepayments, are first returned to investors
holding the shortest maturity class; investors holding the longer maturity
classes receive principal only after the first class has been retired. REMICs
are similar to CMOs and are fixed pools of mortgages with multiple classes of
interests held by investors.
The Series may also invest in pass-through securities that are derived from
mortgages. A pass-through security is formed when mortgages are pooled together
and undivided interests in the pool or pools are sold. The cash flow from the
mortgages is passed through to the holders of the securities in the form of
periodic payments of interest, principal and prepayments (net of a service fee).
The Series may purchase pass-through securities at a premium or at a
discount. The values of pass-through securities in which the Series may invest
will fluctuate with changes in interest rates. The value of such securities
varies inversely with interest rates, except that when interest rates decline,
the value of pass-through securities may not increase as much as other debt
securities because of the prepayment feature. Changes in the value of such
securities will not affect interest income from those obligations but will be
reflected in the Series' net asset value.
A particular risk associated with pass-through securities involves the
volatility of prices in response to changes in interest rates, or prepayment
risk. Prepayment rates are important because of their effect on the yield and
price of securities. Prepayments occur when the holder of an individual mortgage
prepays the remaining principal before the mortgages' scheduled maturity date.
As a result of the pass-through of prepayments of principal on the underlying
securities, mortgage-backed securities are often subject to more rapid
prepayment of principal than their stated maturity would indicate. Although the
pattern of prepayments is estimated and reflected in the price paid for
pass-through securities at the time of purchase, the actual prepayment behavior
of mortgages cannot be known at that time. Therefore, it is not possible to
predict accurately the realized yield or average life of a particular issue of
pass-through securities. Prepayments that occur faster than estimated adversely
affect yields for pass-throughs purchased at a premium (that is, a price in
excess of principal amount) and may cause a loss of principal because the
premium may not have been fully amortized at the time the obligation is repaid.
The opposite is true for pass-throughs purchased at a discount. Furthermore, the
proceeds from prepayments usually are reinvested at current market rates, which
may be higher than, but usually are lower than, the rates earned on the original
pass-through securities. Prepayments on a pool of mortgage loans are influenced
by a variety of economic, geographic, social and other factors, including
changes in mortgagors' housing needs, job transfers, unemployment, mortgagors;
net equity in the mortgaged properties and servicing decisions. Generally,
however, prepayments on fixed rate mortgage loans will increase during a period
of falling interest rates and decrease during a period of rising interest rates.
Mortgage-backed securities may decrease in value as a result of increases in
interest rates and may benefit less than other fixed income securities or
decline in value from declining interest rates because of risk of prepayment.
Pass-through securities are forms of derivatives.
LENDING OF PORTFOLIO SECURITIES
Subject to certain investment restrictions, a Series from time to time may
lend securities from its portfolio to brokers, dealers and financial
institutions deemed creditworthy and receive, as collateral, cash or cash
equivalents which at all times while the loan is outstanding will be maintained
in amounts equal to at least 100% of the current market value of the loaned
securities. Any cash collateral will be invested in short-term securities which
will increase the current income of the Series lending its securities. A Series
will have the right to regain record ownership of loaned securities to exercise
beneficial rights such as voting rights and subscription rights. While a
securities loan is outstanding, the Series is to receive an amount equal to any
dividends, interest or other distributions with respect to the loaned
securities. A Series may pay reasonable fees to persons unaffiliated with the
Trust for services in arranging such loans.
Even though securities lending usually does not impose market risks on the
lending Series, a Series would be subject to risk of loss due to an increase in
value if the borrower fails to return the borrowed securities for any reason
(such as the borrower's insolvency). Moreover, if the borrower of the securities
is insolvent, under current bankruptcy law, a Series could be ordered by a court
not to liquidate the collateral for an indeterminate period of time. If the
borrower is the subject of insolvency proceedings and the collateral held may
not be liquidated, the result could be a material adverse impact on the
liquidity of the lending Series.
Investment Restrictions
- --------------------------------------------------------------------------------
The Trust may not invest more than 25% of the assets of any one Series in any
one industry (except that the Money Market and Total Return Series may invest
more than 25% of their assets in the banking industry and the Real Estate Series
may invest at least 75% of its assets in the real estate industry). If the Trust
makes loans of the portfolio securities of any Series, the market value of the
securities loaned may not exceed 25% of the market value of the total assets of
such Series. The Trust may borrow money from a
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bank provided such borrowing does not exceed 10% of the net asset value, not
considering any such borrowings as liabilities.
In addition to the investment restrictions described above, each Series'
investment program is subject to further restrictions which are described in the
Statement of Additional Information. The restrictions for each Series are
fundamental and may not be changed without shareholder approval.
Portfolio Turnover
- --------------------------------------------------------------------------------
Each Series pays brokerage commissions for purchases and sales of portfolio
securities. A high rate of portfolio turnover involves a correspondingly greater
amount of brokerage commissions and other costs which must be borne directly by
a Series and thus indirectly by its shareholders. It may also result in the
realization of larger amounts of short-term capital gains, which are taxable to
shareholders as ordinary income. The rate of portfolio turnover is not a
limiting factor when the Adviser deems changes appropriate. It is anticipated
that the turnover rate for the Multi-Sector Series will not generally exceed
350%; the turnover rate for the Growth Series will not generally exceed 300%;
the turnover rate for the International Series will not generally exceed 150%;
the turnover rate for the Real Estate Series will not generally exceed 75%; the
turnover rate for the Strategic Theme Series will not generally exceed 175%. The
turnover rate for the Balanced Series will not generally exceed 200% and the
turnover rates for the stock and bond segments of the Balanced Series are not
expected to exceed 250% and 100%, respectively. The turnover rate for the Total
Return Series will not generally exceed 350% and for the stock and bond segments
of the Total Return Series are not expected to exceed 350% and 200%,
respectively. Although securities for the Strategic Theme Series are not
purchased for the short-term, the Adviser's strict sell discipline may result in
rates of portfolio turnover equivalent to those identified by the SEC as
appropriate for capital appreciation funds with substantial short-term trading.
The Adviser's approach dictates that underperforming securities and securities
not consistent with prevailing themes will be sold. Portfolio turnover rate is
calculated by dividing the lesser of purchases or sales of portfolio securities
during the fiscal year by the monthly average of the value of the Series'
securities (excluding short-term securities). The turnover rate may vary greatly
from year to year and may be affected by cash requirements for redemptions of
shares of a Series and by compliance with provisions of the Internal Revenue
Code, relieving investment companies which distribute substantially all of their
net income from federal income taxation on the amounts distributed. The 1994 and
1995 rates of portfolio turnover for each Series are set forth under "Financial
Highlights." For more information regarding the consequences relating to a high
portfolio turnover rate, see "Portfolio Transactions and Brokerage" and
"Dividends, Distributions and Taxes" in the Statement of Additional Information.
The Trust and Its Management
- --------------------------------------------------------------------------------
The Trust is a mutual fund, technically known as an open-end, diversified
investment company. The Board of Trustees supervises the business affairs and
investments of the Trust, which is managed on a daily basis by the Trust's
investment advisers. The Trust was organized as a Massachusetts business trust
on February 18, 1986. The Trust is a series fund that issues eight classes of
shares of beneficial interest, one for each Series. The Statement of Additional
Information contains a list of the members of the Board of Trustees and the
officers of the Trust.
INVESTMENT ADVISERS
The Trust's investment advisers are Phoenix Investment Counsel, Inc. ("PIC")
and Phoenix Realty Securities, Inc. ("PRS") (collectively, the "Advisers"). PIC
is located at 56 Prospect Street, Hartford, Connecticut 06115. PRS is located at
38 Prospect Street, Hartford, Connecticut 06115. PIC was originally organized in
1932 as John P. Chase, Inc. In addition to the Trust, it also serves as
investment adviser to the Phoenix Series Fund, Phoenix Total Return Fund, Inc.
and Phoenix Multi-Portfolio Fund (all portfolios other than the Real Estate
Securities Portfolio) and as sub-adviser to American Skandia, Chubb America
Fund, Inc., JNL Series Trust and Sun America Series Trust.
PRS was formed in 1994 as an indirect subsidiary of Phoenix Home Life. In
addition to the Trust, it also serves as investment adviser to the Real Estate
Securities Portfolio of the Phoenix Multi-Portfolio Fund and to the American
Phoenix Investment Portfolio.
ABKB/LaSalle Securities Limited Partnership (ABKB), a subsidiary of LaSalle
Partners, serves as sub-adviser to the Real Estate Series. ABKB's principal
place of business is located at 100 East Pratt Street, Baltimore, Maryland
21202. ABKB has been a registered investment advisor since 1979.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("PEPCO"), an indirect subsidiary of Phoenix Duff & Phelps
Corporation. Phoenix Home Life owns a controlling interest in Phoenix Duff &
Phelps Corporation. PEPCO also performs bookkeeping and pricing and
administrative services for the Trust. PEPCO is registered as a broker-dealer in
fifty states. The executive offices of Phoenix Home Life and Phoenix Duff &
Phelps Corporation are located at One American Row, Hartford, Connecticut 06102
and the principal offices of PEPCO are located at 100 Bright Meadow Boulevard,
P.O. Box 2200, Enfield, Connecticut 06083-2200.
The Advisers furnish continuously an investment program for each Series and
manage the investment and reinvestment of the assets of each Series subject at
all times to the authority and supervision of the Trustees. All costs and
expenses (other than those specifically referred to as being borne by the
Advisers) incurred in the operation of the Account and the Trust are borne by
the Trust, Phoenix Home Life, or PHL Variable. A more detailed discussion of the
Advisers and the Investment Advisory Agreements are contained in the Statement
of Additional Information.
PORTFOLIO MANAGERS
Balanced Series. Mr. George I. Askew serves as portfolio manager of the
Balanced Series and as such is primarily responsible for the day-to-day
management of the Series' investments. Mr. Askew has served as a research
analyst for Phoenix Home Life Mutual Insurance Company since 1994, and an
associate in the investment banking division of Merrill Lynch & Co. from
1987-1992.
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Mr. Askew attended the University of California at Los Angeles from 1992-1994,
where he obtained his MBA.
Total Return Series. Mr. C. Edwin Riley, Jr. serves as portfolio manager of
the Total Return Series and as such is primarily responsible for the day-to-day
management of the Series' investments. Mr. Riley is also the portfolio manager
of the Phoenix Total Return, Inc. From 1988 to 1995, Mr. Riley served as Senior
Vice President and Director of Equity Management for Nationsbank Investment
Management.
Multi-Sector Series. Mr. Curtiss O. Barrows has served as portfolio manager
of the Bond Series since 1986 and, as such, is primarily responsible for the
day-to-day management of the Series' portfolio. Mr. Barrows is also portfolio
manager of the High Yield Series of the Phoenix Series Fund and is a Vice
President of the Adviser. Mr. Barrows is also Portfolio Manager, Public Bonds,
Phoenix Home Life Mutual Insurance Company.
Growth Series. Mr. John T. Wilson has served as portfolio manager of the
Growth Series since January, 1992 and as such, is primarily responsible for the
day-to-day management of the Series' portfolio. Mr. Wilson is Portfolio Manager,
Common Stock, Phoenix Home Life Mutual Insurance Company since 1990.
International Series. Ms. Jeanne H. Dorey has served as portfolio manager of
the International Series' since February, 1993 and as such is primarily
responsible for the day-to-day management of the Series' portfolio. Ms. Dorey is
also the Portfolio Manager of the International Portfolio of the Phoenix
Multi-Portfolio Fund, which is also advised by the Adviser. Ms. Dorey has served
as a Vice President of the Adviser since April, 1993, and as a Vice President of
Phoenix Worldwide Opportunities Fund and National Securities & Research
Corporation since May, 1993. Ms. Dorey is also Portfolio Manager, International,
Phoenix Home Life Mutual Insurance Company. From 1990 to 1992, Ms. Dorey was an
Investment Analyst and Portfolio Manager with Pioneer Group, Inc. From 1989 to
1990, Ms. Dorey was an Investment Analyst and Portfolio Manager with Bank of
Boston.
Money Market Series. Ms. Dorothy J. Skaret has served as the portfolio
manager of the Money Market Series since 1990 and as such, Ms. Skaret is
primarily responsible for the day-to-day management of the Series' portfolio.
Ms. Skaret is also the portfolio manager of the Money Market Series of the
Phoenix Series Fund, which also is advised by the Adviser. Ms. Skaret is also
Director, Public Fixed Income, Phoenix Home Life Mutual Insurance Company, and a
Vice President of National Securities & Research Corporation.
Real Estate Series. Ms. Barbara Rubin, President of PRS and William K.
Morrill, Jr., Managing Director of ABKB share primary responsibility for
managing the assets of the Real Estate Series from its inception. Barbara Rubin
has over 19 years real estate experience and has been associated with Phoenix
Home Life for the past 13 years. William Morrill has over 15 years of investment
experience and has been a portfolio manager with ABKB since 1985.
Strategic Theme Series. Mr. William J. Newman serves as Portfolio Manager of
the Strategic Theme Series and as such is primarily responsible for the
day-to-day management of the Series portfolio. Mr. Newman joined Phoenix Home
Life in March 1995 as Chief Investment Strategist and Managing Director for
Phoenix Investments. Mr. Newman is also Executive Vice President of PIC. Most
recently, Mr. Newman was Chief Investment Strategist for Kidder Peabody in New
York from May, 1993 to December, 1994. He was Managing Director at Bankers Trust
from March, 1991 to May, 1993 and Managing Director, McKay Shields, from June,
1988 to November, 1990.
ADVISORY FEES
As compensation for its services for all Series the Advisers are entitled to
a fee, payable within five days after the end of each month, as follows:
PHOENIX INVESTMENT COUNSEL, INC.
--------------------------------
RATE FOR THE
FIRST RATE FOR NEXT RATE FOR EXCESS
SERIES $250,000,000 $250,000,000 OVER $500,000,000
------ ------------ ------------ -----------------
Money Market... .40% .35% .30%
Multi-Sector... .50% .45% .40%
Balanced....... .55% .50% .45%
Total Return... .60% .55% .50%
Growth......... .70% .65% .60%
International.. .75% .70% .65%
Strategic Theme .75% .70% .65%
The total advisory fee of 0.75% of the aggregate net assets of the
International and Strategic Theme Series, is greater than that paid by most
mutual funds; however, the Board of Trustees of the Trust has determined that it
is similar to fees charged by other mutual funds whose investment objectives are
similar to those of the International and Strategic Theme Series.
PHOENIX REALTY SECURITIES, INC.
-------------------------------
RATE FOR RATE FOR EXCESS
FIRST RATE FOR NEXT OVER
SERIES $1,000,000,000 $1,000,000,000 $2,000,000,000
------ -------------- -------------- --------------
Real Estate.. .75% .70% .65%
The total advisory fee of 0.75% of the aggregate net assets of the Real
Estate Series is greater than that paid by most mutual funds; however, the Board
of Trustees of the Fund has determined that it is similar to fees charged by
other mutual funds whose investment objectives are similar to that of the Real
Estate Series. Pursuant to a Sub-Advisory Agreement with the Fund, PRS delegates
certain investment decisions and research functions to ABKB/LaSalle Securities
Limited Partnership ("ABKB") for which ABKB is paid a fee by PRS. In accordance
with the Sub-Advisory Agreement between the Trust and ABKB, ABKB is paid a
monthly fee at the annual rate of 0.45% of the average aggregate daily net asset
values of the Series up to $1 billion; 0.35% of such value between $1 billion
and $2 billion; and 0.30% of such value in excess of $2 billion. The
sub-advisory agreement relating to the Real Estate Series provides, among other
things, that ABKB shall maintain certain records for the Series and effectuate
the purchase and sale of securities for the Series. ABKB is not affiliated with
PRS, PIC, Phoenix Home Life or PHL Variable. The Real Estate Series pays other
operating expenses up to .25% of its total assets.
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<PAGE>
FINANCIAL AGENT
Under a Financial Agent Agreement, Phoenix Home Life acts as financial agent
of the Trust and as such is responsible for certain administrative functions and
the bookkeeping and pricing functions for the Trust. For its services as
financial agent, Phoenix Home Life receives a fee based on the average of the
aggregate daily net asset values of the Trust at the annual rate per each
$1,000,000 of $600. Phoenix Home Life may receive compensation from the Account,
as described in the accompanying prospectus.
EXPENSES
Each Series (except the International, Real Estate and Strategic Theme
Series) pays a portion or all of its total operating expenses other than the
management fee, up to .15% of its total net assets. The International, Real
Estate and Strategic Theme Series pay total operating expenses other than the
management fee up to .40%, .25% and .25%, respectively, of its total net assets.
Expenses above these limits are paid by the Advisers, Phoenix Home Life or PHL
Variable.
PORTFOLIO TRANSACTIONS AND BROKERAGE
No Series has any obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to the Statement
of Policy on Brokerage Allocation adopted by the Board of Trustees, the Advisers
(or ABKB) are primarily responsible for the portfolio decisions of each Series
and the placing of its portfolio transactions. In placing orders, it is the
policy of each Series to obtain the most favorable net results, taking into
account various factors, including price, dealer spread or commission, if any,
size of the transaction and difficulty of execution. While the Advisers
generally seek reasonably competitive spreads or commissions, the Series will
not necessarily be paying the lowest spread or commission available. The
Advisers may use broker-dealers that may be affiliated with the Advisers,
Phoenix Home Life, Phoenix Duff & Phelps Corporation, PHL Variable or ABKB
provided that the commissions, fees or other remuneration received by such
affiliated broker is reasonable and fair compared to those paid to other brokers
in connection with comparable transactions. The Statement of Additional
Information contains more information on brokerage allocation.
PERFORMANCE HISTORY
From time to time the Trust may include the performance history of any or all
of the Series (along with applicable separate account performance history) in
advertisements, sales literature or reports. Performance information about each
Series is based on that Series' past performance only and is not an indication
of future performance. Performance information may be expressed as yield and
effective yield of the Money Market Series, as yield of the Multi-Sector Series,
and as total return of any Series. Current yield for the Money Market Series
will be based on the income earned by the Series over a given 7-day period (less
a hypothetical charge reflecting deductions for expenses taken during the
period) and then annualized, i.e., the income earned in the period is assumed to
be earned every seven days over a 52-week period and is stated in terms of an
annual percentage return on the investment. Effective yield is calculated
similarly but reflects the compounding effect of earnings on reinvested
dividends.
For the Multi-Sector Series, quotations of yield will be based on all
investment income per share earned during a given 30-day period (including
dividends and interest), less expenses accrued during the period ("net
investment income"), and are computed by dividing net investment income by the
maximum offering price per share on the last day of the period.
When a Series advertises its total return, it will usually be calculated for
one year, five years, and ten years or since inception if the Series has not
been in existence for at least ten years. Total return is measured by comparing
the value of a hypothetical $1,000 investment in the Series at the beginning of
the relevant period to the value of the investment at the end of the period,
assuming the reinvestment of all distributions at net asset value and the
deduction of the maximum sales charge applicable at the beginning of the
relevant period.
AVERAGE ANNUAL TOTAL RETURN FOR
THE PERIOD ENDING 12/31/95
COMMENCEMENT LIFE OF
SERIES DATE 1 YEAR 5 YEARS 10 YEARS FUND
------ ----- ------ ------- -------- -----
Multi-Sector. 1/1/83 23.54% 12.20% 10.44% 10.89%
Balanced..... 5/1/92 23.28% N/A N/A 10.19%
Total Return. 9/17/84 18.22% 13.13% 12.07% 12.91%
Growth....... 1/1/83 30.85% 20.29% 16.89% 18.87%
International 5/1/90 9.59% 9.63% N/A 6.84%
Real Estate.. 5/1/95 N/A N/A N/A 17.79%
Strategic 1/29/96 N/A N/A N/A N/A
Theme
ANNUAL TOTAL RETURNS
YEAR MULTI-SECTOR BALANCED TOTAL RETURN GROWTH
---- ------------ -------- ------------ ------
1985 20.43% N/A 27.16% 34.70%
1986 19.45% N/A 15.61% 20.15%
1987 1.12% N/A 12.58% 7.05%
1988 10.36% N/A 2.33% 3.83%
1989 8.30% N/A 19.88% 36.06%
1990 5.14% N/A 5.62% 3.98%
1991 19.41% N/A 29.44% 43.83%
1992 10.03% 9.72% 10.67% 10.29%
1993 15.90% 8.57% 11.02% 19.69%
1994 -5.47% -2.80% -1.45% 1.48%
1995 23.54% 23.28% 18.22% 30.85%
STRATEGIC
YEAR INTERNATIONAL REAL ESTATE THEME
---- ------------- ----------- -----
1985 N/A N/A N/A
1986 N/A N/A N/A
1987 N/A N/A N/A
1988 N/A N/A N/A
1989 N/A N/A N/A
1990 -8.10% N/A N/A
1991 19.78% N/A N/A
1992 -12.89% N/A N/A
1993 38.44% N/A N/A
1994 0.03% N/A N/A
1995 9.59% 17.79%* N/A
*Since inception 5/1/95 to 12/31/95
Performance data is historical and includes changes in share price and
reinvestment of dividends and capital gains. Principal and investment return
(except Money Market Series) will vary and you may have a gain or loss when you
withdraw your money. The Multi-Sector Series includes high yielding, lower-rated
securities which are
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subject to greater price volatility and may involve greater risk of default.
The market for these securities may be less liquid. While Money Market Series
seeks to maintain a stable $1.00 share price, there is no assurance that it
will be able to do so.
Yield calculations of the Money Market Series used for illustration purposes
are based on the consideration of a hypothetical investment account having a
balance of exactly one Share at the beginning of a seven day period, which
period will end on the date of the most recent financial statements. The yield
for the Series during this seven day period will be the change in the value of
the hypothetical investment account's original Share. The following is an
example of this yield calculation for the Money Market Series based on a seven
day period ending December 31, 1995.
Assumptions:
Value of hypothetical pre-existing account with
exactly one share at the beginning of the period: 10.000000
Value of the same account (excluding capital
changes) at the end of the seven day period:..... 10.010779
Calculation:
Ending account value ....................... 10.010779
Less beginning account value................ 10.000000
Net change in account value ................ 0.010779
Base period return:
(adjusted change/beginning account value).. 0.001078
Current yield = return x (365/7) =............... 5.62%
Effective yield = [(1 + return) 365/7] -1 =...... 5.78%
The current yield and effective yield information will fluctuate, and
publication of yield information may not provide a basis for comparison with
bank deposits, other investments which are insured and/or pay a fixed yield for
a stated period of time.
The Advisers have voluntarily agreed to reimburse certain expenses as
described under "Expenses" above. If the Advisers had not reimbursed certain
expenses during the periods shown, the returns for these funds would have been
lower. PERFORMANCE NUMBERS ARE NET OF ALL FUND OPERATING EXPENSES, BUT DO NOT
INCLUDE ANY INSURANCE CHARGES IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. IF PERFORMANCE INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL
CHARGES, IT WOULD BE LOWER.
The Trust's Annual Report, available upon request and without charge,
contains a discussion of the performance of each Series and a comparison of that
performance to a securities market index.
Shares of Beneficial Interest
- --------------------------------------------------------------------------------
The Trust currently has eight classes of shares of beneficial interest, one
for each Series. Shares (including fractional shares) of each Series have equal
rights with regard to voting, redemptions, dividends, distributions, and
liquidations with respect to that Series. All voting rights of the Accounts as
shareholders are passed through to the Contractowners and Policyowners.
Shareholders of all Series currently vote on the election of Trustees and other
matters. On matters affecting an individual Series (such as approval of an
Investment Advisory Agreement or a change in fundamental investment policies), a
separate vote of that Series is required.
Fund shares attributable to any Phoenix Home Life or PHL Variable assets and
Fund shares for which no timely instructions from Contractowners or Policyowners
are received will be voted by Phoenix Home Life and PHL Variable in the same
proportion as those shares in that Series for which instructions are received.
Shares are fully paid, nonassessable, redeemable and fully transferable when
they are issued. Shares do not have cumulative voting rights, preemptive rights
or subscription rights.
The assets received by the Trust for the issue or sale of shares of each
Series, and all income, earnings, profits and proceeds thereof, subject only to
the rights of creditors, are allocated to such Series, and constitute the
underlying assets of such Series. The underlying assets of each Series are
required to be segregated on the books of account, and are to be charged with
the expenses of the Series and with a share of the general expenses of the
Trust. Any general expenses of the Trust not readily identifiable as belonging
to a particular Series shall be allocated by or under the direction of the
Trustees in such manner as the Trustees determine to be fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
Accounts as shareholders of a business trust such as the Trust may be liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Trust and that every written agreement, undertaking or
obligation made or issued by the Trust shall contain a provision to that effect.
The Declaration of Trust provides for indemnification out of the Trust property
for all losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of the Accounts, as shareholders,
incurring loss because of shareholder liability is limited to circumstances in
which the Trust itself would be unable to meet its obligations. Phoenix Home
Life and PHL Variable, as the sole shareholders, have a fiduciary duty to bear
this risk and Contractowners and Policyowners should be fully and completely
insulated from risk.
Purchase of Shares
- --------------------------------------------------------------------------------
The Trust offers its shares, without sales charge, for purchase by the
Accounts as an investment medium for the Variable Accumulation Annuity Contracts
and Variable Universal Life Insurance Policies issued by Phoenix Home Life and
PHL Variable. It is contemplated that in the future other separate accounts of
Phoenix Home Life, PHL Variable or other insurance companies may purchase shares
of the Trust. Shares of the Trust will not be sold to the public. The Trust
continuously offers shares in each Series to the Accounts at prices equal to the
respective net asset values of those Series. Net asset value is determined in
the manner set forth below under "NET ASSET VALUE."
It is conceivable that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Trust simultaneously. Although
2-23
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Phoenix Home Life, PHL Variable or the Trust currently do not foresee any
such disadvantages either to variable life insurance Policyowners or to variable
annuity Contractowners, the Trust's Board of Trustees intends to monitor events
in order to identify any material conflicts between such Policyowners and
Contractowners and to determine what action, if any, should be taken in response
thereto. Material conflicts could result from, for example, (1) changes in state
insurance laws, (2) changes in Federal income tax laws, (3) changes in the
investment management of any portfolio of the Fund, or (4) differences in voting
instructions between those given by Policyowners and those given by
Contractowners.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The net asset value of the shares of each Series of the Trust is determined
once daily as of the close of regular trading of the New York Stock Exchange, or
on each day during which there is a sufficient degree of trading in any of the
securities held in a Series of the Fund that the current net asset value of the
shares of the Series might be materially affected. The Board of Directors of the
Exchange reserves the right to change this schedule as conditions warrant.
Net asset value of a Series' shares is computed by dividing the value of the
net assets of the Series by the total number of Series shares outstanding.
Securities that are traded on the stock exchange are valued at the last sale
price as of the close of business on the day the securities are being valued,
or, lacking any sales, at the mean between closing bid and asked price.
Securities traded in the over-the-counter market are valued at the mean between
the bid and asked prices or yield equivalent as obtained from one or more
dealers that make markets in the securities. Series' securities that are traded
both in the over-the-counter market and on an exchange are valued according to
the broadest and most representative market. Securities and assets for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of Trustees, and
may include valuations furnished by a pricing service that may be retained by
the Trust with the Trustees' approval.
Money market securities held by the Fund are valued on an amortized cost
basis, absent extraordinary or unusual market conditions, which involves valuing
a portfolio instrument at its cost initially and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods when value, as
determined by amortized cost, is higher or lower than the price the Fund would
receive if it sold the security. The Statement of Additional Information
contains a more detailed discussion on amortized cost.
Securities which are primarily traded on foreign securities exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges where primarily traded. (See Statement of Additional
Information.) Over-the-Counter traded fixed income options are valued based upon
current prices provided by market makers. Financial futures are valued at the
settlement price established each day by the board of trade or exchange on which
they are traded.
Because of the need to obtain prices as of the close of trading on various
exchanges in different time zones throughout the world, the calculation of net
asset value does not take place for the International Series at the same time as
the determination of prices of the majority of the portfolio securities of the
International Series.
For purposes of determining the net asset value of the International Series,
all assets and liabilities initially expressed in foreign currency values will
be converted into United States dollar values at the mean between the bid and
offered quotations of such currencies against United States dollars as last
quoted by any recognized dealer. If an event were to occur after the value of an
investment was so established but before the net asset value per share was
determined, which was likely to materially change the net asset value, then the
instrument would be valued using fair value considerations by the Trustees or
their delegates. If at any time a Series has other investments, such investments
are valued at the fair value thereof as determined in good faith by the Trustees
although the actual calculations may be made by persons acting pursuant to the
direction of the Trustees.
Redemption of Shares
- --------------------------------------------------------------------------------
The Trust will redeem all full and fractional shares of the Trust presented
for redemption. The Trust may, at the discretion of the Trustees and to the
extent consistent with state and Federal law, make payment for shares of a
particular Series redeemed in whole or in part in securities or other assets of
such Series taken at current values. The redemption price is the net asset value
per share next determined after the initial receipt of proper notice of
redemption.
The right to redeem shares or to receive payment with respect to any
redemption may only be suspended for more than seven days for any period during
which trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission or such Exchange is closed (other than
customary weekend and holiday closings), for any period during which an
emergency exists as defined by the Securities and Exchange Commission as a
result of which disposal of portfolio securities or determination of the net
asset value of each Series is not reasonably practicable, and for such other
periods as the Securities and Exchange Commission may by order permit for the
protection of shareholders of each Series.
Dividends and Distributions
- --------------------------------------------------------------------------------
All dividends and distributions with respect to the shares of any Series will
be payable in shares of such Series at net asset value or, at the option of the
Account as shareholder, in cash.
The net investment income of the Money Market Series will be declared as
dividends daily. Dividends will be distributed and reinvested in additional
shares on the last business day of every month. The net income of the Money
Market Series for Saturdays,
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Sundays and other days on which the New York Stock Exchange is closed will be
declared as dividends on the next business day.
The Multi-Sector, Growth, Total Return, Balanced, International and Strategic
Theme Series will distribute substantially all net investment income and net
realized capital gains, if any, to shareholders at least annually, although it
is anticipated that these distributions will be made on a quarterly basis. The
Real Estate Series will distribute its net investment income to its shareholders
quarterly and net realized capital gains, if any, to its shareholders annually.
Taxes
- --------------------------------------------------------------------------------
The Trust intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code ("Code") and so qualified for its last
taxable year. In addition, the Trust intends to comply with the investment
diversification requirements for variable contracts contained in the Code.
Moreover, the Trust will distribute sufficient income to avoid imposition of any
Federal excise tax. Dividends derived from interest and distributions of any
realized capital gains are taxable, under Subchapter M, to the Trust's
shareholders, which in this case are the Accounts. The International Series may
incur liability for foreign income and withholding taxes on investment income.
The International Series intends to qualify for, and make an election permitted
under, the Code to enable the shareholder Accounts (and therefore Phoenix Home
Life) to claim a credit or deduction on Phoenix Home Life's income tax return
for the Accounts' pro rata share of the income and withholding taxes paid by the
International Series to foreign countries. Phoenix Home Life will also treat the
foreign income taxes paid by the Series as income. Contractowners and
Policyowners will not be required to treat the foreign income taxes paid by the
Series as income or be able to claim a credit or deduction for these taxes on
their income tax returns. For a discussion of the taxation of the Accounts, see
"Federal Tax Considerations" included in the Accounts' prospectuses.
Although the Real Estate Series may be a non-diversified portfolio, the Fund
intends to comply with the diversification and other requirements of the Code
applicable to "regulated investment companies" so that it will not be subject to
U.S. federal income tax on income and capital gain distributions to
shareholders. Accordingly, the Real Estate Series will insure that no more than
25% of its total assets would be invested in the securities of a single issuer
and that at least 50% of its total assets, is represented by cash and cash
items, and other securities limited in respect of any one issuer to an amount no
greater than 5% of the total value of the assets of The Series.
In addition, if the Real Estate Series has rental income or income from the
disposition of real property acquired as a result of a default on securities the
Real Estate Series may own, the receipt of such income may adversely affect its
ability to retain its tax status as a regulated investment company.
Custodian, Transfer Agent, and Dividend
Paying Agent
- --------------------------------------------------------------------------------
The Custodian of the assets of all Series of the Trust, except the
International and Real Estate Series, is The Chase Manhattan Bank, N.A., 1 Chase
Manhattan Plaza, Floor 3B, New York, NY 10081. The Custodian of the assets of
the International Series is Brown Brothers Harriman & Co., 40 Water Street,
Boston, Massachusetts 02109, Attention: Manager, Securities Division. The
Custodian of the assets of the Real Estate Series is State Street Bank & Trust,
1 Heritage Drive, P2N, North Quincy, Massachusetts 02171. The Trust has
authorized the Custodian to appoint one or more subcustodians of the assets of
the Trust held outside the United States. The securities and other assets of
each Series will be held by the Custodians or any subcustodian separate from the
securities and assets of each other Series.
The Transfer Agent and the Dividend Paying Agent for the Trust's shares is
Phoenix Equity Planning Corporation, 100 Bright Meadow Boulevard, PO Box 2200,
Enfield, Connecticut 06083-2200.
Other Information
- --------------------------------------------------------------------------------
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110, serves
as independent accountants for the Trust and audits its financial statements
annually.
Inquiries and requests for the Statement of Additional Information and the
Annual Report to Shareholders should be directed in writing to Variable Products
Operations, Phoenix Home Life Mutual Insurance Company, 101 Munson Street, PO
Box 942, Greenfield, Massachusetts 01302-0942, or by telephoning Variable
Products Operations at (800) 447-4312.
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.
2-25
<PAGE>
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 compromise 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 sometime in the future.
BAA--Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
STANDARD AND POOR'S CORPORATION'S CORPORATE BOND RATINGS
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
BB-B-CCC-CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
2-26
<PAGE>
THE PHOENIX EDGE SERIES FUND
101 Munson Street
P.O. Box 942
Greenfield, Massachusetts 01302-0942
Telephone Number: (800) 447-4312
c/o Variable Products Operations
Phoenix Home Life Companies
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1996
This Statement of Additional Information is not a prospectus. Much of the
information contained in this Statement of Additional Information expands upon
subjects discussed in the Prospectus. Accordingly, this Statement should be read
together with the Trust's current Prospectus, dated May 1, 1996, which may be
obtained by calling Variable Products Operations of Phoenix Home Life Companies,
at (800) 447-4312, or by writing to Variable Products Operations at 101 Munson
Street, P.O. Box 942, Greenfield, Massachusetts 01302-0942.
TABLE OF CONTENTS*
PAGE
The Phoenix Edge Series Fund (2-1)............................... 2
Investment Policies (2-10)....................................... 2
Investment Restrictions (2-19)................................... 10
Portfolio Turnover (2-20)........................................ 11
Management of the Trust (2-20)................................... 12
Investment Advisers (2-20)....................................... 19
Brokerage Allocation (2-22)...................................... 20
Determination of Net Asset Value (2-24).......................... 21
Investing In the Trust (2-23).................................... 22
Redemption of Shares (2-24)...................................... 22
Taxes (2-25)..................................................... 22
Custodian (2-25)................................................. 22
Independent Accountants.......................................... 23
Financial Statements............................................. 23
* Numbers in parentheses are cross-references to related sections of the
Prospectus.
1
<PAGE>
THE PHOENIX EDGE SERIES FUND
The Phoenix Edge Series Fund (formerly "The Big Edge Series Fund") (the
"Trust") is an open-end investment company as defined in the Investment Company
Act of 1940. It was formed on February 18, 1986 as a Massachusetts business
trust and commenced operations on December 5, 1986. The Phoenix Home Life
Variable Accumulation Account is a separate account of Phoenix Home Life Mutual
Insurance Company ("Phoenix Home Life") created on June 21, 1982. The Phoenix
Home Life Variable Universal Life Account is a separate account of Phoenix Home
Life created on June 17, 1985. The PHL Variable Accumulation Account is a
separate account of PHL Variable Insurance Company ("PHL Variable") formed on
December 7, 1994. The executive offices of the Accounts, Phoenix Home Life and
PHL Variable are located at One American Row, Hartford, Connecticut. The
Accounts own the majority of the shares of the Trust.
INVESTMENT POLICIES
The investment objectives and policies of each Series are described in the
"Investment Objectives and Policies" section of the Prospectus. The following
specific policies supplement the information contained in that section of the
Prospectus.
MONEY MARKET INSTRUMENTS
Certain money market instruments used extensively by the Money Market and
Total Return Series are described below. They may also be used by the
International, Real Estate and Strategic Theme Series and may be used by the
other Series to a very limited extent to invest otherwise idle cash or on a
temporary basis for defensive purposes.
Repurchase Agreements. Repurchase Agreements are agreements by which a Series
purchases a security and obtains a simultaneous commitment from the seller (a
member bank of the Federal Reserve System or, to the extent permitted by the
Investment Company Act of 1940, a recognized securities dealer) that the seller
will repurchase the security at an agreed upon price and date. The resale price
is in excess of the purchase price and reflects an agreed upon market rate
unrelated to the coupon rate on the purchased security. In fact, such a
transaction is a loan of money to the seller of the securities.
A repurchase transaction is usually accomplished either by crediting the
amount of securities purchased to the account of the custodian of the Trust
maintained in a central depository or book-entry system or by physical delivery
of the securities to the Trust's custodian in return for delivery of the
purchase price to the seller. Repurchase transactions are intended to be
short-term transactions with the seller repurchasing the securities, usually
within seven days.
Even though repurchase transactions usually do not impose market risks on the
purchasing Series, if the seller of the repurchase agreement defaults and does
not repurchase the underlying securities, the Series might incur a loss if the
value of the underlying securities declines, and disposition costs may be
incurred in connection with liquidating the underlying securities. In addition,
if bankruptcy proceedings are commenced regarding the seller, realization upon
the underlying securities may be delayed or limited, and a loss may be incurred
if the underlying securities decline in value.
U.S. Government Obligations. Securities issued or guaranteed as to principal
and interest by the United States Government include a variety of Treasury
securities, which differ only in their interest rates, maturities, and times of
issuance. Treasury bills have 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 United States Government which issue or guarantee obligations
include, among others, Export-Import Banks of the United States, Farmers Home
Administration, Federal Housing Administration, Government National Mortgage
Association, Maritime Administration, Small Business Administration and The
Tennessee Valley Authority. Obligations of instrumentalities of the United
States Government include securities issued or guaranteed by, among others, the
Federal National Mortgage Association, Federal Home Loan Banks, Federal Home
Loan Mortgage Corporation, Federal Intermediate Credit Banks, Banks for
Cooperatives, and the U.S. Postal Service. Securities issued or guaranteed by
the Export-Import Bank of the United States, Farmer's Home Administration,
Federal Housing Administration, Government National Mortgage Association,
Maritime Administration and Small Business Administration are supported by the
full faith and credit of the U.S. Treasury. Securities issued or guaranteed by
Federal National Mortgage Association and Federal Home Loan Banks are supported
by the right of the issuer to borrow from the Treasury. Securities issued or
guaranteed by the other agencies or instrumentalities listed above are supported
only by the credit of the issuing agency.
Certificates of Deposit. Certificates of deposit are generally short-term,
interest-bearing negotiable certificates issued by banks or savings and loan
associations against funds deposited in the issuing institution.
Time Deposits. Time deposits are deposits in a bank or other financial
institution for a specified period of time at a fixed interest rate for which a
negotiable certificate is not received.
Bankers' Acceptances. A banker's acceptance is a time draft drawn on a
commercial bank by a borrower usually in connection with an international
commercial transaction (to finance the import, export, transfer or storage of
goods). The borrower, as well as the bank, is liable for payment, and the bank
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most acceptances have maturities of six months or less and are traded in
secondary markets prior to maturity.
Commercial Paper. Commercial paper refers to short-term, unsecured promissory
notes issued by corporations to finance short-term credit needs. Commercial
paper is usually sold on a discount basis and has a maturity at the time of
issuance not exceeding nine months.
2
<PAGE>
Corporate Debt Securities. Corporate debt securities with a remaining
maturity of less than one year tend to become extremely liquid and are traded as
money market securities.
All of the Money Market Series' investments will mature in 397 days or less
and will have a weighted average age of not more than 90 days. By limiting the
maturity of its investments, the Series seeks to lessen the changes in the value
of its assets caused by market factors. This Series, consistent with its
investment objective, will attempt to maximize yield through portfolio trading.
This may involve selling portfolio instruments and purchasing different
instruments to take advantage of disparities of yields in different segments of
the high grade money market or among particular instruments within the same
segment of the market. It is expected that the Series' portfolio transactions
will be generally with issuers or dealers in money market instruments acting as
principal. Accordingly, this Series will normally not pay any brokerage
commissions.
The value of the securities in the Money Market Series' portfolio can be
expected to vary inversely to changes in prevailing interest rates, with the
amount of such variation depending primarily on the period of time remaining to
maturity of the security. Long-term obligations may fluctuate more in value than
short-term obligations. If interest rates increase after a security is
purchased, the security, if sold, could be sold at a loss. On the other hand, if
interest rates decline after a purchase, the security, if sold, could be sold at
a profit. If, however, the security is held to maturity, no gain or loss will be
realized as a result of interest rate fluctuations, although the day-to-day
valuation of the portfolio could fluctuate. Substantial withdrawals of the
amounts held in the Money Market Series could require it to sell portfolio
securities at a time when a sale might not be favorable. The value of a
portfolio security may also be affected by other factors, including factors
bearing on the credit-worthiness of its issuer. A more detailed discussion of
amortized cost is contained under "Determination of Net Asset Value".
TOTAL RETURN SERIES: MARKET SEGMENT INVESTMENTS
AND TRADING
Market Segment Investments. The Total Return Series seeks to achieve its
investment objective by investing in the three market segments of stocks, bonds,
and money market instruments described below.
(1) STOCK--common stocks and other equity-type securities such
as preferred stocks, securities convertible into common stock
and warrants;
(2) BONDS--bonds and other debt securities with maturities
generally exceeding one year, including:
(a) publicly offered straight debt securities having a rating
within the four highest grades as determined by Moody's
Investors Service, Inc. (Aaa, Aa, A or Baa) or Standard &
Poor's Corporation (AAA, AA, A or BBB) or, if unrated,
those publicly offered straight debt securities which are
judged by the Account 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;
(c) obligations (payable in U.S. dollars) issued or guaranteed
as to principal and interest by the Government of
Canada or of a Province of Canada or any instrumentality
or political subdivision thereof, provided such obligations
have a rating within the highest grades as determined
by Moody's (Aaa, Aa or A) or Standard & Poor's
(AAA, AA or A) and do not exceed 25% of the Total
Return Series' total assets;
(d) publicly offered straight 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 Standard &
Poor's (AAA, AA or A), and certificates of deposit of such
banks; and
(e) high yield, high risk fixed income securities (commonly
referred to as "junk bonds") having a rating below Baa by
Moody's Investors Service, Inc. or BBB by Standard &
Poor's Corporation or unrated securities of comparable
quality provided such securities do not exceed 5% of the
Total Return's total assets.
(3) MONEY MARKET--money market instruments and other debt
securities with maturities generally not exceeding one year,
including:
(a) those money market instruments described in this
Statement of Additional Information; and
(b) reverse repurchase agreements with respect to any of the
foregoing obligations. Reverse repurchase agreements
are agreements in which the Series, as the seller of the
securities, agrees to repurchase them at an agreed time
and price. This transaction constitutes a borrowing of
money by the seller of the securities. The Series will
maintain sufficient funds in a segregated account with its
Custodian to repurchase securities pursuant to any
outstanding reverse repurchase agreement. The Series is
required to maintain at all times asset coverage of at least
300% for all obligations under reverse repurchase
agreements.
Trading. In order to achieve the Series' investment objective, the timing and
amounts of purchases and sales of particular securities and particular type of
securities (i.e. common stock, debt, money market instruments) will be of
significance. As a result, the Total Return Series intends to use trading as a
means of managing the portfolio of the Series in seeking to achieve its
investment objective. Trading is used primarily in anticipation of, or in
response to, market developments or to take advantage of yield disparities. The
Investment Adviser will engage in trading when it believes that the trade, net
of transaction costs, will improve interest income or capital appreciation
potential, or will lessen capital loss potential. Whether these goals will be
achieved through trading depends on the
3
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Investment Adviser's ability to evaluate particular securities and anticipate
relevant market factors, including interest rate trends and variations. Such
trading places a premium on the Investment Adviser's ability to obtain relevant
information, evaluate it properly and take advantage of its evaluations by
completing transactions on a favorable basis. If the Investment Adviser's
evaluations and expectations prove to be incorrect, the Series' income or
capital appreciation may be reduced and its capital losses may be increased.
Portfolio trading involves transaction costs, but, as explained above, will
be engaged in when the Investment Adviser believes that the result of the
trading, net of transaction costs, will benefit the Series. Purchases and sales
of securities will be made, whenever necessary in the Investment Adviser's view,
to achieve the total return investment objective of the Series without regard to
the resulting brokerage costs.
In addition to the traditional investment techniques for purchasing and
selling, and engaging in trading, the Total Return Series may enter into
financial futures and options contracts.
FINANCIAL FUTURES AND RELATED OPTIONS
Total Return Series. The Total Return Series may enter into financial futures
contracts for the purchase or sale of debt obligations which are traded on
exchanges that are licensed and regulated by Commodity Futures Trading
Commission.
A futures contract on a debt obligation is a binding contractual commitment
which, if held to maturity, will result in an obligation to make or accept
delivery, during a particular month, of obligations having a standard face value
and rate of return. By entering into a futures contract for the purchase of a
debt obligation, the Series will legally obligate itself to accept delivery of
the underlying security and pay the agreed price. Futures contracts are valued
at the most recent settlement price, unless such price does not reflect the fair
value of the contract, in which case such positions will be valued by or under
the direction of the Board of Trustees of the Trust.
Positions taken in the futures markets are not normally held to maturity, but
are instead liquidated through offsetting transactions which may result in a
profit or loss. While futures positions taken by the Series would usually be
liquidated in this manner, it may instead make or take delivery of the
underlying securities whenever it appears economically advantageous for it to do
so.
The purpose of hedging in debt obligations is to establish more certainty
than would otherwise be possible in the effective rate of return on portfolio
securities. The Series might, for example, take a "short" position in the
futures markets by entering into contracts for the future delivery of securities
held by it in order to hedge against an anticipated rise in interest rates that
would adversely affect the value of such securities. When hedging of this type
is successful, any depreciation in the value of securities will be substantially
offset by appreciation in the value of the futures position. On the other hand,
the Series might take a "long" position by entering into contracts for the
future purchase of securities. This could be done when the Series anticipated
the future purchase of particular debt securities but expects the rate of return
then available in the securities market to be less favorable than rates that are
currently available in the futures markets.
The Total Return Series will incur brokerage fees in connection with its
financial futures transactions, and will be required to deposit and maintain
funds with its custodian in its own name as margin to guarantee performance of
its future obligations.
While financial futures would be traded to reduce certain risks, futures
trading itself entails certain other risks. One risk arises because of the
imperfect correlation between movements in the price of the futures contracts
and movements in the price of the debt securities which are the subject of such
contracts. In addition, the market price of futures contracts may be affected by
certain factors, such as the closing out of futures contracts by investors
through offsetting transactions, margin, deposit and maintenance requirements,
and the participation of speculators in the futures market. Another risk is that
there may not be a liquid secondary market on an exchange or board of trade for
a given futures contract or at a given time, and in such event it may not be
possible for the Series to close a futures position. Finally, successful use of
futures contracts by the Series is subject to the Investment Adviser's ability
to predict correctly movements in the direction of interest rates and other
factors affecting the market for debt securities. Thus, while the Series may
benefit from the use of such contracts, the operation of these risk factors may
result in a poorer overall performance for the Series than if it had not entered
into any futures contract.
The Total Return Series is required to maintain at all times an asset
coverage of at least 300% for all of its borrowings, which include obligations
under any financial futures contract on a debt obligation or reverse repurchase
agreement. In addition, immediately after entering into a futures contract for
the receipt or delivery of a security, the value of the securities called for by
all of the Series' futures contracts (both for receipts and delivery) will not
exceed 10% of its total assets. A futures contract for the receipt of a debt
obligation will be offset by cash, cash equivalents or liquid high quality debt
obligations held in a segregated account with the custodian bank for the Series
in an amount sufficient to cover the cost of purchasing the obligation.
International Series. The International Series may enter into financial
futures contracts and related options as a hedge against anticipated changes in
the market value of its portfolio securities or securities which it intends to
purchase or in the exchange rate of foreign currencies. Hedging is the
initiation of an offsetting position in the futures market which is intended to
minimize the risk associated with a positions' underlying securities in the cash
market.
Financial futures contracts consist of interest rate futures contracts,
foreign currency futures contracts and securities index futures contracts. An
interest rate futures contract obligates the seller of the contract to deliver,
and the purchaser to take delivery of, the interest rate securities called for
in the contract at a specified future time and at a specified price. A foreign
currency futures contract obligates the seller of the contract to deliver, and
the purchaser to take delivery of, the foreign currency called for in the
contract at a specified future time and at a specified price. A securities index
assigns relative values to the securities included in the index, and the index
fluctuates with changes in the market
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values of the securities so included. A securities index futures contract is
a bilateral agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of the last trading day of the
contract and the price at which the futures contract is originally struck. 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 Series may purchase and sell financial futures contracts which are traded
on a recognized exchange or board of trade and may purchase or exchange
board-traded put and call options on financial futures contracts.
The Series will engage in transactions in financial futures contracts and
related options only for hedging purposes and not for speculation. In addition,
it will not purchase or sell any financial futures contract or related option
if, immediately thereafter, the sum of the cash or U.S. Treasury bills committed
with respect to its existing futures and related options positions and the
premiums paid for related options would exceed 5% of the market value of its
total assets. At the time of the purchase of a futures contract or a call option
on a futures contract, an amount of cash, U.S. Government securities or other
appropriate liquid high-grade debt obligations equal to the market value of the
futures contract, minus the initial margin deposit with respect thereto, will be
deposited in a segregated account with the Trust's custodian bank to
collateralize fully the position and thereby ensure that it is not leveraged.
The extent to which the Series may enter into financial futures contracts and
related options may also be limited by requirements of the Internal Revenue Code
of 1986 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 or
Subadviser could be incorrect in its expectations as to the direction or extent
of various interest rate movements or foreign currency exchange rates, in which
case the Series' return might have been greater had hedging not taken place.
There is also the risk that a liquid secondary market may not exist. The risk in
purchasing an option on a financial futures contract is that the Series will
lose the premium it paid. Also, there may be circumstances when the purchase of
an option on a financial futures contract would result in a loss to the Series
while the purchase or sale of the contract would not have resulted in a loss.
Strategic Theme Series. The Strategic Theme Series may use financial futures
contracts and related options to hedge against changes in the market value of
its portfolio securities which it intends to purchase. Hedging is accomplished
when an investor takes a position in the futures market opposite to his cash
market position. There are two types of hedges--long (or buying) and short (or
selling) hedges. Historically, prices in the futures market have tended to move
in concert with cash market prices, and prices in the futures market have
maintained a fairly predictable relationship to prices in the cash market. Thus,
a decline in the market value of securities in a Series' portfolio may be
protected against to a considerable extent by gains realized on futures
contracts sales. Similarly, it is possible to protect against an increase in the
market price of securities which a Series may wish to purchase in the future by
purchasing futures contracts.
The Strategic Theme Series 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. 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 such Series purchases or sells a security,
no security is delivered or received by the Series upon the purchase or sale of
a financial futures contract. Initially, this Series will be required to deposit
in a segregated account with its custodian bank an amount of cash, U.S. Treasury
bills or liquid high grade debt obligations. 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 deposit required per contract is approximately 5%
of the contract amount. Brokers may establish deposit requirements higher than
this minimum. Subsequent payments, called variation margin, will be made to and
from the account on a daily basis as the price of the futures contract
fluctuates. This process is known as marking to market.
The writer of an option on a futures contract is required to deposit margin
pursuant to requirements similar to those applicable to futures contracts. Upon
exercise of an option on a futures contract, the delivery of the futures
position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's margin
account. This amount will be equal to the amount by which the market price of
the futures contract at the time of exercise exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on the
futures contract. For more information regarding options, see below.
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,
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whereas if the purchase price exceeds the offsetting sale price, the
purchaser would realize a loss.
The Strategic Theme Series will pay commissions on financial futures
contracts and related options transactions. These commissions may be higher
than those which would apply to purchases and sales of securities directly.
OPTIONS
MONEY MARKET, GROWTH, BALANCED, TOTAL RETURN AND STRATEGIC
THEME SERIES:
Writing Covered Call Options. The Money Market, Growth, Balanced, Total
Return and Strategic Theme Series may write (sell) covered call options on
securities owned by them, including securities into which convertible securities
are convertible, provided that such call options are listed on a national
securities exchange.
A call option gives the holder the right to buy a security at a specified
price (the exercise price) for a stated period of time. Prior to the expiration
of the option, the seller of the option has an obligation to sell the underlying
security to the holder of the option at the original price specified regardless
of the market price of the security at the time the option is exercised. The
seller of the call option receives a cash payment (premium) at the time of sale,
which premium is retained by the seller whether or not the option is exercised.
The premium represents consideration to the seller for undertaking the
obligations under the option contract and thereby foregoing the opportunity to
profit from an increase in the market price of the underlying security above the
exercise price (except insofar as the premium represents such a profit).
A call option may be purchased to terminate a call option previously written.
The premium paid in connection with the purchase of a call option may be more
than, equal to or less than the premium received upon writing the call option
which is being terminated.
When a Series writes a covered call option, an amount equal to the premium
received by it is included in assets of the Series offset by an equivalent
liability. The amount of the liability is subsequently marked to market to
reflect the current market value of the option written. Market value is the last
sale price of the options on the exchange on which it is traded, or in absence
of a sale, the mean between last bid and offer prices. If an option which the
Series has written either expires or if the Series enters into a closing
purchase transaction, the Series realizes a gain (or loss if the cost of a
closing purchase transaction exceeds the premium received when the option was
sold) without regard to any unrealized gain or loss on the underlying security,
and the liability related to such option is extinguished.
In order to maintain its qualification as a regulated investment company
under Subchapter M of the Internal Revenue Code, the Trust intends to limit
gains from the sale of securities held or deemed held for less than three months
to less than 30% of annual gross income. Accordingly, the Trust may be
restricted in the selling of securities which have been held less than three
months, in the writing of options on securities into which convertible
securities are convertible, in the writing of options on securities which have
been held for six months or less, in the writing of options which expire in less
than three months and in purchasing options to terminate options which it wrote
within the preceding three months. In this regard, the Trust can minimize the
possibility of a suspended holding period for purposes of the 30 percent rule to
the extent the Trust limits its covered call writing to options with more than
30 days to expiration that are not "deep in the money" and that satisfy certain
other requirements such that they will constitute "qualified covered call
options" as defined in Section 1092(c)(4)(B) of the Code, as recently enacted.
An option is generally considered to be "in the money" if the striking
price under the option is less than the currently prevailing price of the
stock covered by the option so that there is a built-in discount or intrinsic
value to the option. Section 1092(c)(4) of the Internal Revenue Code sets
forth complex rules defining options which are "deep in the money".
These rules vary in their application depending upon the prevailing stock
price and the stock price under option contracts available in the market,
but are designed to provide objective rules to classify as "deep in the
money" options those options whose primary value is attributable to their
built-in discount or intrinsic value.
Premium income earned with respect to a qualified covered call option
contract which lapses or gain or loss from such an option contract which is
closed out (other than by exercise) generally will be short-term capital gain or
loss. Further, gain or loss with respect to the exercise of such an option
contract generally will be short-term or long-term depending upon the actual or
deemed holding period of the underlying security. However, any loss realized
from writing a "qualified covered call option" which has a strike price that is
less than the applicable security price as defined in Section 1092(c)(4)(G) of
the Code will be treated as a long-term capital loss, if gain from the sale of
the underlying security at the time the loss is realized would be long-term
capital gain. Also, with respect to such options, the holding period of the
underlying security will not include any period during which the Trust has a
written option outstanding.
Buying Call and Put Options. The Total Return, Balanced and Strategic Theme
Series may buy national exchange-traded call and put options on equity and debt
securities and on various stock market indexes. The Money Market, Growth and
Bond Series may only purchase a call option to terminate a call option
previously written. (See "Writing Covered Call Options" above for a description
of call options).
A put option on equity or debt securities gives the holder the right to sell
such a security at a specified price (the exercise price) for a stated period of
time. Prior to the expiration of the option, the seller of the option has an
obligation to buy the underlying security from the holder of the option at the
original price specified regardless of the market price of the security at the
time the option is exercised.
Call and put options on stock market indexes operate the same way as call and
put options on equity or debt securities except that they are settled in cash.
In effect, the holder of a call option on a stock market index has the right to
buy the value represented by the index at a specified price for a stated period
of time. Conversely, the holder of a put option on a stock market index has the
right to sell the value represented by the index for a specified price for a
stated
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period of time. To be settled in cash means that if the option is exercised,
the difference in the current value of the stock market index and the exercise
value must be paid in cash. For example, if a call option was bought on the XYZ
stock market index with an exercise price of $100 (assuming the current value
of the index is 110 points, with each point equal to $1.00), the holder of the
call option could exercise the option and receive $10 (110 points minus 100
points) from the seller of the option. If the index equals 90 points, the holder
of the option receives nothing.
The seller of an option receives a cash payment (premium) at the time of
sale, which premium is retained by the seller whether or not the option is
exercised. The premium represents consideration to the seller for undertaking
the obligation under the option contract. In the case of call options, the
premium compensates the seller for the loss of the opportunity to profit from
any increase in the value of the security or the index. The premium to a seller
of a put option compenpsates the seller for the risk assumed in connection with
a decline in the value of the security or index.
The Total Return and Balanced Series may close an open call or put option
position by selling a call option, in the case of an open call position, or a
put option, in the case of an open put option, which is the same as the option
being closed. The Series will receive a premium for selling such an option. The
premium received may be more than, equal to or less than the premium paid by the
Series when it bought the option which is being closed.
Immediately after entering into an opening option position the total value of
all open option positions based on exercise price will not exceed ten percent
(10%) of the Total Return or Balanced Series' total assets. The premium paid by
the Series for the purchase of a call or a put option and the expiration or
closing sale transaction with respect to such options are treated in a manner
analogous to that described above, except there is no liability created to the
Series. The premium paid for any such option is included in assets and marked to
the market value on a current basis. If the options expire the Series will
realize a short-term loss on the amount of the cost of the option. If a
purchased put or call option is closed out by the Series entering into a closing
sale transaction, the Series will realize a short-term gain or loss, depending
upon whether the sale proceeds from the closing sale transaction are greater or
less than cost of the put or call option.
INTERNATIONAL AND STRATEGIC THEME SERIES. In furtherance of its objectives,
the Series may write covered call options and purchase call and put options on
securities. In addition, the Series may write secured put options and enter into
option transactions on foreign currency.
Writing (Selling) Call and Put Options. A call option on a security or a
foreign currency gives the purchaser of the option, in return for the premium
paid to the writer (seller), the right to buy the underlying security or foreign
currency 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 or foreign security, except that the value of the
option depends on the weighted value of the group of securities comprising the
index and all settlements are made in cash. A call option may be terminated by
the writer (seller) by entering into a closing purchase transaction in which it
purchases an option of the same series as the option previously written.
A put option on a security or foreign currency gives the purchaser
of the option, in return for the premium paid to the writer (seller), the
right to sell the underlying security or foreign currency 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 or foreign currency 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 options depends on the weighted
value of the group of securities comprising the index and all settle
ments are made in cash.
The Series may write exchange-traded call options on its securities. Call
options may be written on portfolio securities and on securities indices, and on
foreign currencies. The Series may, with respect to securities and foreign
currencies, write call and put options on an exchange or over the counter. Call
options on portfolio securities will be covered since the Series will own the
underlying securities or other securities that are acceptable for escrow 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.
Call options on foreign currencies and put options on securities and foreign
currencies will be covered by securities acceptable for escrow. The Series may
not write options on more than 50% of its total assets. Management presently
intends to cease writing options if and as long as 25% of such total assets are
subject to outstanding options contract.
The Series will write call and put 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 or foreign currencies 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 or reduce
the difference between the exercise price and market value.
During the option period, the writer of a call option gives up the
opportunity for appreciation in the market value of the underlying security or
currency above the exercise price. It retains the risk of loss should the price
of the underlying security or foreign currency decline. Writing call options
also involves risks relating to the Series' ability to close out options it has
written.
During the option period, the writer of a put option has assumed the risk
that the price of the underlying security or foreign currency will decline below
the exercise price. However, the writer of the put option has retained the
opportunity for any appreciation above the exercise price should the market
price of the underlying security or foreign currency increase. Writing put
options also involves risks relating to a Portfolio's ability to close out
options it has written.
Purchasing Call and Put Options, Warrants and Stock Rights. The International
and Strategic Theme Series may invest up to an aggregate of 5% of its total
assets in exchange-traded or over-the-counter
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call and put options on securities and securities indices and foreign
currencies. Purchases of such options may be made for the purpose of hedging
against changes in the market value of the underlying securities or foreign
currencies. The Series will invest in call and put options whenever, in the
opinion of the Adviser or Subadviser, a hedging transaction is consistent with
its investment objectives. The Series may sell a call option or a put option
which it has previously purchased prior to the purchase (in the case of a call)
or the sale (in the case of a put) of the underlying security or foreign
currency. Any such sale would result in a net gain or loss depending on whether
the amount received on the sale is more or less than the premium and other
transaction costs paid on the call or put which is sold. Purchasing a call or
put option involves the risk that the Series may lose the premium it paid plus
transaction costs.
Warrants and stock rights are almost identical to call options in their
nature, use and effect except that they are issued by the issuer of the
underlying security, rather than an option writer, and they generally have
longer expiration dates than call options. The International Series intends to
invest up to 5% of its net assets in warrants and stock rights, but no more than
2% of its net assets in warrants and stock rights not listed on the New York
Stock Exchange or the American Stock Exchange.
Over-the-Counter ("OTC") Options. OTC options differ from exchange-traded
options in several respects. They are transacted directly with dealers and not
with a clearing corporation, and there is a risk of non-performance by the
dealer. However, the premium is paid in advance by the dealer. OTC options are
available for a greater variety of securities and foreign currencies, and in a
wider range of expiration dates and exercise prices than exchange-traded
options. Since there is no exchange, pricing is normally done by reference to
information from a market maker, which information is carefully monitored or
caused to be monitored by the Adviser or Subadviser and verified in appropriate
cases.
A writer or purchaser of a put or call option can terminate it voluntarily
only by entering into a closing transaction. In the case of OTC options,
there can be no assurance that a continuous liquid secondary market will
exist for any particular option at any specific time. Consequently, the
International Series may be able to realize the value of an OTC option it has
purchased only by exercising it or entering into a closing sale transaction
with the dealer that issued it. Similarly, when the Series writes an OTC
option, it generally can close out that option prior to its expiration only by
entering into a closing purchase transaction with the dealer to which it
originally wrote the option. If a covered call option writer cannot effect a
closing transaction, it cannot sell the underlying security or foreign
currency until the option expires or the option is exercised. Therefore, the
writer of a covered OTC call option may not be able to sell an underlying
security even though it might otherwise be advantageous to do so.
Likewise, the writer of a secured OTC put option may be unable to sell the
securities pledged to secure the put for other investment purposes while
it is obligated as a put writer. Similarly, a purchaser of an OTC put or call
option might also find it difficult to terminate its position on a timely basis
in the absence of a secondary market.
The Trust understands the position of the staff of the Securities and
Exchange Commission (the "SEC") to be that purchased OTC options and the assets
used as "cover" for written OTC options are illiquid securities. Although the
Subadviser has found that dealers with which they will engage in OTC options
transactions are generally agreeable to and capable of entering into closing
transactions, the Trust has adopted procedures for engaging in OTC options
transactions for the purpose of reducing any potential adverse effect of such
transactions upon the liquidity of the International Series.
The Trust will engage in OTC options transactions only with dealers that meet
certain credit and other criteria established by the Board of Trustees of the
Trust. The Trust and the Adviser believe that the approved dealers present
minimal credit risks to the Trust and, therefore, should be able to enter into
closing transactions if necessary. The Trust currently will not engage in OTC
options transactions if the amount invested by the Trust in OTC options, plus a
"liquidity charge" related to OTC options written by the Trust in illiquid
securities plus any other portfolio securities considered to be illiquid, would
exceed 10% of the Trust's total assets. The "liquidity charge" referred to above
is computed as described below.
The Trust anticipates entering into agreements with dealers to which the
Trust sells OTC options. Under these agreements the Trust would have the
absolute right to repurchase the OTC options from the dealer at any time at a
price no greater than a price established under the agreements (the "Repurchase
Price"). The "liquidity charge" referred to above for a specific OTC option
transaction will be the Repurchase Price related to the OTC option less the
intrinsic value of the OTC option. The intrinsic value of an OTC call option for
such purposes will be the amount by which the current market value of the
underlying security exceeds the exercise price. In the case of an OTC put
option, intrinsic value will be the amount by which the exercise price exceeds
the current market value of the underlying security. If there is no such
agreement requiring a dealer to allow the Trust to repurchase a specific OTC
option written by the Trust, the "liquidity charge" will be the current market
value of the assets serving as "cover" for such OTC option.
FOREIGN CURRENCY TRANSACTIONS
The value of the assets of an International or Strategic Theme Series as
measured in United States dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control regulations, and
a Series may incur costs in connection with conversions between various
currencies. A Series will conduct its foreign currency exchange transactions
either on a spot (i.e. cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through forward contracts to purchase or sell
foreign currencies. A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. These contracts are traded
directly between currency traders (usually large commercial banks) and their
customers. At the time of the purchase of a forward foreign currency exchange
contract, an amount of cash, U.S. Government securities or other appropriate
high-grade debt obligations equal to the market
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value of the contract, minus the Series' initial margin deposit with respect
thereto, will be deposited in a segregated account with the Trust's custodian
bank to collateralize fully the position and thereby ensure that it is not
leveraged.
When a Series enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may want to establish the United States
dollar cost or proceeds, as the case may be. By entering into a forward contract
in United States dollars for the purchase or sale of the amount of foreign
currency involved in the underlying security transaction, a Series is able to
protect itself against a possible loss between trade and settlement dates
resulting from an adverse change in the relationship between the United States
dollar and such foreign currency. However, this tends to limit potential gains
which might result from a positive change in such currency relation ships. The
International Series may also hedge its foreign currency exchange rate risk by
engaging in currency financial futures and options transactions.
When the Adviser believes that the currency of a particular foreign country
may suffer a substantial decline against the United States dollar, it may enter
into a forward contract to sell an amount of foreign currency approximating the
value of some or all of a Series' portfolio securities denominated in such
foreign currency. The forecasting of short-term currency market movement is
extremely difficult and whether such a short-term hedging strategy will be
successful is highly uncertain.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a contract. Accordingly, it may be necessary for
a Series to purchase additional currency on the spot market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Series is obligated to deliver when a decision is
made to sell the security and make delivery of the foreign currency in
settlement of a forward contract. Conversely, it may be necessary to sell on the
spot market some of the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency the Series
is obligated to deliver.
If the Series retains the portfolio security and engages in an offsetting
transaction, it will incur a gain or a loss (as described below) to the extent
that there has been movement in forward contract prices. If the Series engages
in an offsetting transaction, it may subsequently enter into a new forward
contract to sell the foreign currency. Should forward prices decline during the
period between the Series' entering into a forward contract for the sale of a
foreign currency and the date it enters into an offsetting contract for the
purchase of the foreign currency, the Series would realize gain to the extent
the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Series
would suffer a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell. Although such
contracts tend to minimize the risk of loss due to a decline in the value of the
hedged currency, they also tend to limit any potential gain which might result
should the value of such currency increase. The Series will have to convert
holdings of foreign currencies into United States dollars from time to time.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies.
ZERO AND DEFERRED COUPON DEBT SECURITIES
The Multi-Sector Fixed Income Series ("Multi-Sector Series") may invest in
debt obligations that do not make any interest payments for a specified period
of time prior to maturity ("deferred coupon" obligations) or until maturity
("zero coupon" obligations). Because deferred and zero coupon bonds do not make
interest payments for a certain period of time, they are purchased by the Series
at a deep discount and their value fluctuates more in response to interest rate
changes than does the value of debt obligations that make current interest
payments. The degree of fluctuation with interest rate changes is greater when
the deferred period is longer. Therefore, there is a risk that the value of the
Series' shares may decline more as a result of an increase in interest rates
than would be the case if the Series did not invest in deferred or zero coupon
bonds.
REAL ESTATE INVESTMENT TRUSTS
As described in the Prospectus, the Real Estate Series intends under normal
conditions to invest in real estate investment trusts ("REITs"). REITs pool
investors' funds for investment primarily in income-producing commercial real
estate or real estate related loans. A REIT is not taxed on income distributed
to shareholders if it complies with several requirements relating to its
organization, ownership, assets, and income and a requirement that it distribute
to its shareholders at least 95% of its taxable income (other than net capital
gains) for each taxable year.
REITs can generally be classified as follows:
--Equity REITs, which invest the majority of their assets directly
in real property and derive their income primarily from rents.
Equity REITs can also realize capital gains by selling properties
that have appreciated in value.
--Mortgage REITs, which invest the majority of their assets in
real estate mortgages and derive their income primarily from
interest payments.
--Hybrid REITs, which combine the characteristics of both equity
REITs and mortgage REITs.
REITs are like closed-end investment companies in that they are essentially
holding companies which rely on professional managers to supervise their
investments. A shareholder in the Real Estate Series should realize that by
investing in REITs indirectly through the Series, he will bear not only his
proportionate share of the expenses of the Portfolio, but also, indirectly
similar expenses of underlying REITs.
DEBT SECURITIES
Up to 25% of the Real Estate Series total assets may be invested in debt
securities (which include for purposes of this investment policy convertible
debt securities which PRS or ABKB believes have attractive equity
characteristics). The Real Estate Series may invest in debt securities rated BBB
or better by Standard & Poor's Corpora-
9
<PAGE>
tion ("S&P") or Baa or better by Moody's Investor Service, Inc. ("Moody's") or,
if not rated, are judged to be of comparable quality as determined by PRS or
ABKB. In choosing debt securities for purchase by the Portfolio, PRS will employ
the same analytical and valuation techniques utilized in managing the equity
portion of the Real Estate Series holdings (see "Investment Advisory and Other
Services") and will invest in debt securities only of companies that satisfy
PRS' investment criteria.
The value of the Real Estate Series investments in debt securities will
change as interest rates fluctuate. When interest rates decline, the values of
such securities generally can be expected to increase and when interest rates
rise, the values of such securities can generally be expected to decrease. The
lower-rated and comparable unrated debt securities described above are subject
to greater risks of loss of income and principal than are higher-rated fixed
income securities. The market value of lower-rated securities generally tends to
reflect the market's perception of the creditworthiness of the issuer and
short-term market developments to a greater extent than is the case with more
highly rated securities, which reflect primarily functions in general levels of
interest rates.
JUNK BONDS
The International and Total Return Series may invest up to 10% and 5%,
respectively of total net assets in non-investment grade debt securities. The
market prices of such lower rated securities generally fluctuate in response to
changes in interest rates and economic conditions more than those of higher
rated securities. Additionally, there is a greater possibility that an adverse
change in the financial condition of an issuer, particularly a higher leveraged
issuer, may affect its ability to make payments of income and principal and
increase the expenses of the Series seeking recovery from the issuer. Lower
rated securities may be thinly traded and less liquid than higher rated
securities and therefore harder to value and more susceptible to adverse
publicity concerning the issuer.
REAL ESTATE SECURITIES
The Real Estate Series will not invest in real estate directly, but only in
securities issued by real estate companies. However, the Portfolio may be
subject to risks similar to those associated with the direct ownership of real
estate because of its policy of concentrating in the securities of companies in
the real estate industry. These include declines in the value of real estate,
risks related to general and local economic conditions, dependence on management
skill, cash flow dependence, possible lack of availability of long-term mortgage
funds, over-building, extended vacancies of properties, decreased occupancy
rates and increased competition, increases in property taxes and operating
expenses, changes in neighborhood values and the appeal of the properties to
tenants and changes in interest rates.
Selecting REITs requires an evaluation of the merits of each type of asset a
particular REIT owns, as well as regional and local economics. Due to the
proliferation of REITs in recent years and the relative lack of sophistication
of certain REIT managers, the quality of REIT assets has varied significantly.
In addition to these risks, equity REITs may be affected by changes in the
value of the underlying properties owned by the trusts, while mortgage REITs may
be affected by the quality of any credit extended. Further, equity and mortgage
REITs are dependent upon management skills and generally are not diversified.
Equity and mortgage REITs are also subject to potential defaults by borrowers,
self-liquidation, and the possibility of failing to qualify for tax-free status
of income under the Code and failing to maintain exemption from the Investment
Company Act of 1940. In the event of a default by a borrower or lessee, the REIT
may experience delays in enforcing its rights as a mortgagee or lessor and may
incur substantial costs associated with protecting its investments. In addition,
investment in REITs could cause the Series to possibly fail to qualify as a
regulated investment company.
INDUSTRY CLASSIFICATIONS
For the purposes of establishing industry classifications for the Strategic
Theme Series, the Adviser utilizes the William O'Neil & Co., Inc. Industry Group
Index. The William O'Neil & Co., Inc. Industry Group Index is presently
comprised of 197 industry classifications. Classifications are determined based
on the following broad sectors: Basic Material, Energy, Capital Equipment,
Technology, Consumer Cyclical, Retail, Consumer Staple, Health Care,
Transportation, Financial, and Utilities. Sectors are then divided into industry
groups based upon income sources and other economically relevant criteria as
determined by O'Neil & Co., Inc.
INVESTMENT RESTRICTIONS
The Trust's fundamental policies as they affect any Series cannot be changed
without the approval of a vote of a majority of the outstanding shares of such
Series, which is the lesser of (i) 67% or more of the voting securities of such
Series present at a meeting if the holders of more than 50% of the outstanding
voting securities of such Series are present or represented by proxy or (ii)
more than 50% of the outstanding voting securities of such Series. A proposed
change in fundamental policy or investment objective will be deemed to have been
effectively acted upon by any Series if a majority of the outstanding voting
securities of that Series votes for the approval of the proposal as provided
above, notwithstanding (1) that such matter has not been approved by a majority
of the outstanding securities of any other Series affected by such matter and
(2) that such matter has not been approved by a majority of the outstanding
voting securities of the Trust.
The following investment restrictions are fundamental policies of the Trust
with respect to all Series and may not be changed except as described above. The
Trust may not:
(1) Purchase real estate or any interest therein, except through
the purchase of corporate or certain government securities
(including securities secured by a mortgage or a leasehold
interest or other interest in real estate). A security issued by
a real estate or mortgage investment trust is not treated as
an interest in real estate. The Real Estate Series may,
however, invest in mortgage backed securities.
(2) Make loans other than loans of securities secured by cash
or cash equivalents for the full value of the securities; any
interest earned from securities lending will inure to the
10
<PAGE>
benefit of the Series which holds such securities. However, the
purchase of debt securities which are ordinarily purchased by
financial institutions are not considered the loaning of money.
(3) Invest in commodities or in commodity contracts or in
options, provided, however, that it may write covered call
option contracts; and provided further, that the Total Return
and Balanced Series may enter into financial futures contracts
to purchase and sell debt obligations and may buy call
and put options on securities and stock market indexes; and
provided further, that the International Series may purchase
call and put options on securities, engage in financial futures
contracts and related options transactions, write secured put
options, and enter into foreign currency and foreign currency
options transactions.
(4) Engage in the underwriting of securities of other issuers,
except to the extent any Series may be deemed an underwriter
in selling as part of an offering registered under the
Securities Act of 1933 securities which it has acquired. The
International Series will buy and sell securities outside the
United States that are not registered with the SEC or marketable
in the United States.
(5) Borrow money, except as a temporary measure where such
borrowing would not exceed 25% of the market value of
total assets at the time each such borrowing is made.
However, the Trust may borrow money for any general
purpose from a bank provided such borrowing does not
exceed 10% of the net asset value of the Trust, not considering
any such borrowings as liabilities. The Total Return and
International Series may borrow money to the extent of
financial futures transactions and reverse repurchase agreements,
provided that such borrowings are limited to 33-1/3% of the
value of the total assets of the Series.
(6) Invest in restricted securities in an amount greater than 10%
of the value of any Series' portfolio at the time any such
investment is made.
(7) Purchase securities on margin, except for short-term credits
as may be necessary for the clearance of purchases or sales
of securities, or to effect a short sale of any security. (The
deposit of "maintenance margin" in connection with financial
futures contracts is not considered the purchase of a
security on margin.)
(8) Invest for the purpose of exercising control over or management
of any company.
(9) Unless received as a dividend or as a result of an offer of exchange
approved by the Securities and Exchange Commission or of a plan of
reorganization, purchase or otherwise acquire any security issued by
an investment company if the Series would immediately thereafter own
(a) more than 3% of the outstanding voting stock of the investment
company, (b) securities of the investment company having an aggregate
value in excess of 5% of the Series' total assets, (c) securities of
investment companies having an aggregate value in excess of 10% of the
Series' total assets, or (d) together with investment companies having
the same investment adviser as the Trust (and companies controlled by
such investment companies), more than 10% of the outstanding voting
stock of any registered closed-end investment company.
(10) (a) Invest more than 5% of its total assets (taken at market value at
the time of each investment) in the securities (other than United
States government or government agency securities or in the case of
the International Series, other than foreign government securities),
or, with respect to the Total Return and Balanced Series, call or put
options contracts and financial futures contracts of any one issuer
(including repurchase agreements with any one bank); and (b) purchase
more than either (i) 10% in principal amount of the outstanding debt
securities of an issuer (the foregoing restriction being inapplicable
to the Real Estate Series), or (ii) 10% of the outstanding voting
securities of an issuer, except that such restrictions shall not apply
to securities issued or guaranteed by the United States government or
its agencies, bank money instruments or bank repurchase agreements.
The International Series will, with respect to 75% of its assets,
limit its investment in the securities of any one foreign government,
its agencies or instrumentalities, to 5% of the Series' total assets.
(11) Concentrate the portfolio investments in any one industry (the
foregoing restriction being inapplicable to the Real Estate Series).
No security may be purchased for a Series if such purchase would cause
the value of the aggregate investment in any one industry to exceed
25% of the Trust's total assets. However, the Money Market Series and
Total Return Series may invest more than 25% of their assets in the
banking industry. The Real Estate Series may invest not less than 75%
of its assets in the real estate industry.
(12) Issue senior securities.
(13) Enter into repurchase agreements which would cause more than 10% of
any Series' total assets (taken at market value) to be subject to
repurchase agreements maturing in more than seven days.
PORTFOLIO TURNOVER
The portfolio turnover rate of each Series is calculated by dividing the
lesser of purchases or sales of portfolio securities during the fiscal year by
the monthly average of the value of the Series' securities (excluding all
securities, including options, with maturities at the time of acquisition of one
year or less). All long-term securities, including long-term U.S. Government
securities, are included. A high rate of portfolio turnover generally involves
correspondingly greater brokerage commission expenses, which must be borne
directly by the Series. Turnover rates may vary greatly from year to year as
well as within a particular year and may also be affected by cash requirements
for redemptions of each Series' shares by
11
<PAGE>
requirements which enable the Trust to receive certain favorable tax treatments.
Based upon the formulation for calculating the turnover rate as stated above, it
is anticipated that the turnover rate for the Multi-Sector Series will not
generally exceed 350%; the turnover rate for the Growth Series will not
generally exceed 300%; and the turnover rate for the Balanced Series will not
generally exceed 200%. The turnover rates for the stock and bond segments of the
Balanced Series are not expected to exceed 250% and 100%, respectively. It is
anticipated that the turnover rate for the Total Return Series will not
generally exceed 350% and 200%, respectively. It is anticipated that the
turnover rate for the International Series will not generally exceed 150%. It is
anticipated that the turnover rate for the Real Estate Series will not exceed
75%. It is anticipated that the turnover rate for the Strategic Theme Series
will not generally exceed 175%.
MANAGEMENT OF THE TRUST
The Trustees and executive officers of the Trust and their principal
occupations for the last five years are set forth below. Unless otherwise noted,
the address of each executive officer and Trustee is One American Row, Hartford,
Connecticut 06102. On October 26, 1995, the shareholders elected to fix the
number of Trustees at eleven and to elect such number of Trustees. On November
15, 1995 the Trustees voted to increase the number of trustees 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 Trustees and
executive officers are listed below.
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>
C. Duane Blinn (68) Trustee Partner in the law firm of Day, Berry & Howard. Director/Trustee, Phoenix
City Place Funds (1980-present). Director/Trustee, the National Affiliated Investment
Hartford, CT 06103 Companies (until 1993). Trustee, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present).
Robert Chesek (61) Trustee Trustee/Director, the Phoenix Funds (1981-present) and Chairman
49 Old Post Road (1989-1994). Vice President, Common Stock, Phoenix Home Life Mutual
Wethersfield, CT 06109 Insurance Company (1980-1994). Director/Trustee, the National Affiliated
Investment Companies (until 1993). Trustee, Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present).
E. Virgil Conway (66) Trustee Director/Trustee, Phoenix Funds (1993-present). Trustee/Director,
9 Rittenhouse Road Consolidated Edison Company of New York, Inc. (1970-present), Pace
Bronxville, NY 10708 University (1978-present), Atlantic Mutual Insurance Company
(1974-present), HRE Properties (1989-present), Greater New York
Councils, Boy Scouts of America (1985-present), Union Pacific Corp.
(1978-present), Blackrock Fund for Fannie Mae Mortgage Securities
(Advisory Director) (1989- present); Centennial Insurance Company, Josiah
Macy, Jr. Foundation, and The Harlem Youth Development Foundation.
Chairman, Metropolitan Transportation Authority (1992-present). Chairman,
Audit Committee of the City of New York (1981-present). Director/Trustee,
the National Affiliated Investment Companies (1967-1993). Trustee, Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Accuhealth (1994-present), Trism, Inc. (1994-present). Director, Realty
Foundation of New York (1972-present), and Chairman, New York Housing
Partnership Development Corp. (1981-present). Advisory Director, Fund
Directions (1993-present). Former Director, New York Chamber of
Commerce and Industry (1974-1990).
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>
Harry Dalzell-Payne (66) Trustee Director/Trustee, Phoenix Funds (1983-present). Director, Farragut
330 East 39th Street Mortgage Co., Inc. (1991-1994). Trustee, Phoenix Duff & Phelps
Apt. 29G Institutional Mutual Funds (1996-present). Director/Trustee, the National
New York, NY 10016 Affiliated Investment Companies (1983-1993). Consultant, The Levett Group
Holding, Inc. (1989-1990). Independent real estate market consultant
(1982-1990). Formerly, a Major General of the British Army.
*Francis E. Jeffries (65) Trustee Director and Chairman of the Board, Phoenix Duff & Phelps Corporation.
Phoenix Duff & Phelps Corp. Trustee, Phoenix Duff & Phelps Mutual Funds. Director, Duff & Phelps
55 East Monroe Street Utilities Income Fund, Duff & Phelps Utilities Tax-Free Income, Inc., Duff &
Suite 3800 Phelps Utility and Corporate Bond Trust, Inc. and The Empire District Electric
Chicago, IL 60603 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) Trustee Director/Trustee, Phoenix Funds (1980-present). Chairman and Chief
Chairman and Executive Officer, Carson Products Company (1995-present). Director,
Chief Executive Officer Equifax Corporation (1991-present), and Keystone International Fund, Inc.
Carson Products Company (1989-present). Trustee, Keystone Liquid Trust, Keystone Tax Exempt
64 Ross Road Trust, Keystone Tax Free Fund, Master Reserves Tax Free Trust, and Master
Savannah, GA 31405 Reserves Trust. Trustee, Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). 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).
*Philip R. McLoughlin (49) Trustee and President Director (1994-present) and Executive Vice President and Chief Investment
Officer, Phoenix Home Life Mutual Insurance Company (1987-present).
Director/Trustee and President, Phoenix Funds (1989-present). Director,
Vice Chairman and Chief Executive Officer, Phoenix Duff & Phelps
Corporation (1995-present). Director, (1983-present) and Chairman (1995-
present) Phoenix Investment Counsel, Inc. Director (1984-present) and
President (1990-present), Phoenix Equity Planning Corporation. Director,
Phoenix Realty Group, Inc. (1994-present), Phoenix Realty Advisors, Inc.
(1987-present), Phoenix Realty Investors, Inc. (1994-present), Phoenix
Realty Securities, Inc. (1994-present), Phoenix Founders, Inc. (1981-
present), PXRE Corporation (Delaware)(1985-present). Trustee and
President, Phoenix Duff & Phelps Institutional Mutual Funds (1996-present),
World Trust Fund (1991-present). Director (1992-present) and President
(1992-1994), W. S. Griffith & Co., Inc. and Director (1992-1995) and
President (1992-1994), Townsend Financial Advisers, Inc. Director (1994-
present), Chairman (1995-present) and President and Chief Executive
Officer (1995-present), National Securities & Research Corporation and Phoenix
Securities Group, Inc. (1993-1995). Director/Trustee, the National
Affiliated Investment Companies (until 1993) Director and Vice President,
PM Holdings, Inc. (1995-present).
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>
Everett L. Morris (67) Trustee Vice President, W. H. Reaves and Company (1993 - present). Director/Trustee
164 Laird Road Phoenix Funds (1995-present). Trustee, Phoenix Duff & Phelps Institutional
Colts Neck, NJ 07722 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) Trustee Director/Trustee, Phoenix Funds (1987-present). Managing Director, The
Managing Director Wydown Group (1994-present). Director, Phoenix Duff & Phelps
The Wydown Group Corporation (1995-present), Investors Bank and Trust Corporation (1995-
50 Congress St. present), Investors Financial Services Corporation (1995-present), Blue
Boston, MA 02109 Cross and Blue Shield of New Hampshire (1994-present), Govett
Worldwide Opportunity Funds, Inc. (1991-present), Stifel Financial
Corporation (1986-1995), Plymouth Rubber Co. (1996-present), and
Savings Bank Life Insurance Company (1988-1994). Trustee, Phoenix Duff
& Phelps Institutional Mutual Funds (1996-present). Director/Trustee, the
National Affiliated Investment Companies (until 1993). Director and
President (1984-1994) and Chief Executive Officer (1986-1994), Neworld Bank.
*Calvin J. Pedersen (54) Trustee Director and President, Phoenix Duff & Phelps Corporation (1995-present).
Phoenix Duff & Phelps Corp. Director (since 1992) and President (since July 1993), Duff & Phelps.
55 East Monroe Street Executive Vice President, Duff & Phelps (January 1992 to July 1993). President
Suite 3800 and Chief Executive Officer, Duff & Phelps Utilities Tax-Free Income, Inc.
Chicago, IL 60603 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) Trustee Director/Trustee, Phoenix Funds (1984-present). Director, Vestaur
43 Montclair Drive Securities, Inc. (1972-present). Trustee and Treasurer, J. Walton Bissell
West Hartford, CT 06107 Foundation, Inc., (1988-present). Trustee, Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director/Trustee, the National
Affiliated Investment Companies (until 1993).
Herbert Roth, Jr. (67) Trustee Director/Trustee, Phoenix Funds (1980-present). Director, Boston Edison
134 Lake Street Company (1978-present), Phoenix Home Life Mutual Insurance Company
P. O. Box 909 (1972-present), Landauer, Inc. (medical services)(1970-present), Tech
Sherborn, MA 01770 Ops./Sevcon, Inc. (electronic controllers)(1987-present), Key Energy Group
(oil rig service)(1988-1993), and Mark IV Industries (diversified
manufacturer)(1985-present). Trustee, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Richard E. Segerson (50) Trustee Director/Trustee, Phoenix Funds (1993-present). Vice President and General
102 Valley Road Manager, Coats & Clark (previously Tootal American, Inc.) (1991-1993).
New Canaan, CT 06840 Consultant, Tootal Group (1989-1991). Trustee, Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director/Trustee, the National
Affiliated Investment Companies (1983-1993).
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>
Lowell P. Weicker, Jr. (64) Trustee Chairman, Dresing, Lierman, Weicker (1995-present). Trustee/Director, the
Dresing, Lierman, Weicker Phoenix Funds (1995-present). Trustee, Phoenix Duff & Phelps Institutional
6931 Arlington Road, Ste. 501 Mutual Funds (1996-present). Director, UST, Inc. (1995-present) and HPSC,
Bethesda, MD 20814 Inc. (1995-present). Governor of the State of Connecticut (1991-1995).
- ---------------------
* Trustees identified with an asterisk are considered to be interested
persons of the Trust (within the meaning of the Investment Company Act of
1940, as amended) because of their affiliation with the Phoenix Investment
Counsel, Inc., Phoenix Realty Securities, Inc., or Phoenix Equity Planning
Corporation.
Martin J. Gavin (46) Executive Executive Vice President, Finance and Operations, Phoenix Duff & Phelps
Vice President 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), National
Securities & Research Corporation (1993-present), Townsend Financial
Advisers, Inc. (1993-1995). Director (1993-present) and Executive Vice
President (1993-1994), W.S. Griffith & Co., Inc. Director and Vice
President, PM Holdings, Inc. (1994-present). Executive Vice President, the
Phoenix Funds (1993-present). Executive Vice President, National Affiliated
Investment Companies (until 1993).
Michael E. Haylon (38) Executive Executive Vice President, Investments, Phoenix Duff & Phelps Corporation
Vice President (1995-present). Senior Vice President, Securities Investments, Phoenix
Home Life Mutual Insurance Company (1993-present). Director and
Executive Vice President (1994-present), Vice President (1993-1994),
National Securities & Research Corporation. Executive Vice President,
Phoenix Funds (1995-present). Director (1994-present) and
President (1995-present), Phoenix Investment Counsel, Inc. Director,
Phoenix Equity Planning Corporation (1995-present). Vice President,
Phoenix Duff & Phelps Institutional Mutual Funds (1996-present). Various
other positions with Phoenix Home Life Mutual Insurance Company
(1990-1993).
William J. Newman (57) Senior Vice President Executive Vice President, Phoenix Investment Counsel, Inc.
(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).
George I. Askew (33) Vice President Vice President, The Phoenix Edge Series Fund (1996-present). Vice
President, Phoenix Duff & Phelps Institutional Mutual Funds (1996-present).
Research Analyst, Phoenix Home Life Mutual Insurance Company (1994-1995).
Graduate Student, UCLA (1992-1994). Various positions with the Investment
Banking Division of Merrill Lynch & Co.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>
Curtiss O. Barrows (45) Vice President Vice President, Phoenix Investment Counsel, Inc. (1985-present). Portfolio
Manager, Public Bonds, Phoenix Home Life Mutual Insurance Company
(1991-1995). Vice President, Phoenix Series Fund (1985-present,
Phoenix Multi-Portfolio Fund (1995-present). Vice President, National
Securities & Research Corporation (1993-present). Various other positions
with Phoenix Home Life Mutual Insurance Company (1985-1991).
Mary E. Canning (39) Vice President Vice President, Phoenix Investment Counsel, Inc. (1991-present). Associate
Portfolio Manager, Common Stock, Phoenix Home Life Mutual Insurance
Company (1989-1995). Vice President, Phoenix Series Fund (1987-present).
Various other positions with Phoenix Home Life Mutual Insurance
Company (1982-1989).
James M. Dolan (46) Vice President Vice President and Compliance Officer (1994-present) and Assistant
100 Bright Meadow Blvd. Secretary (1981-present), Phoenix Equity Planning Corporation. Vice
P.O. Box 2200 President, Phoenix Funds (1989-present). Vice President (1991-present),
Enfield, CT 06083-2200 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 and Compliance Officer,
Assistant Secretary (1994-present), Assistant Vice President (1993-1994),
National Securities & Research Corporation. Vice President, Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present). Vice President, the
National Affiliated Investment Companies (until 1993). Various other
positions with Phoenix Equity Planning Corporation (1978-1994).
Jeanne H. Dorey (34) Vice President Vice President, Phoenix Investment Counsel, Inc. (1993-present).
Portfolio Manager, International, Phoenix Home Life Mutual Insurance
Company (until 1995). Vice President, National Securities & Research
Corporation (1993-present), Phoenix Multi-Portfolio Fund (1993-present),
and Phoenix Worldwide Opportunities Fund (1993-present).
Christopher J. Kelleher (40) Vice President Vice President, Phoenix Investment Counsel, Inc. (1991-present). Portfolio
Manager, Public Bonds, Phoenix Home Life Mutual Insurance Company
(1991-1995). Vice President, National Securities & Research Corporation
(1993-present), Phoenix Series Fund (1989-present), Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present). Various other positions
with Phoenix Home Life Mutual Insurance Company (1983-1991).
William R. Moyer (51) Vice President Senior Vice President and Chief Financial Officer, Phoenix Duff & Phelps
100 Bright Meadow Blvd. Corporation (1995-present). Vice President, Investment Products Finance,
P.O. Box 2200 Phoenix Home Life Mutual Insurance Company (1990-1995). Senior Vice
Enfield, CT 06083-2200 President, Finance, and Treasurer (1994-present), Phoenix Equity Planning
Corporation and Phoenix Investment Counsel, Inc. (1990-present). Vice
President, Phoenix Funds (1990-present). Vice President, the National
Affiliated Investment Companies (until 1993). Senior Vice President,
Finance, Phoenix Securities Group, Inc. (1993-1995). Senior Vice President,
Finance (1993-present) and Treasurer (1994-present), National Securities
& Research Corporation (1993-present). Senior Vice President and Chief
Financial Officer (1993-1995) and Treasurer (1994-1995), Townsend
Financial Advisers, Inc. and W. S. Griffith & Co., Inc. Vice President,
Phoenix Duff & Phelps Institutional Mutual Funds (1996-present).
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>
Scott C. Noble (49) Vice President Senior Vice President, Real Estate, Phoenix Home Life Mutual Insurance
Company (1993-present). Director and Executive Vice President, Phoenix
Real Estate Securities, Inc. (1993-present). Vice President, Phoenix Multi-
Portfolio Fund (1994-present) and The Phoenix Edge Series Fund
(1995-present). Director (1991-present) and President (1993-present),
Phoenix Founders, Inc. Director and President (1994-present), Chief
Executive Officer (1995-present), Phoenix Realty Group, Inc. Director and
Chief Executive Officer (1991-present), President (1991-1995), Phoenix
Realty Advisors, Inc. Director, President and Chief Executive Officer
(1994-present), Phoenix Realty Investors, Inc. Various other positions
with Phoenix Home Life Insurance Company (1991-1993).
C. Edwin Riley, Jr. (42) Vice President Vice President, Phoenix Investment Counsel, Inc. (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).
Amy L. Robinson (40) Vice President Vice President, Phoenix Investment Counsel, Inc. (1992-present). Managing
Director, Securities Administration, Phoenix Home Life Mutual Insurance
Company (1991-1995). Vice President, National Securities & Research
Corporation (1993-present), Phoenix Series Fund (1989-present) and The
Phoenix Edge Series Fund (1989-present). Various other positions with
Phoenix Home Life Mutual Insurance Company (1979-1991).
Barbara Rubin (42) Vice President Vice President, Real Estate, Phoenix Home Life Mutual Insurance Company
(1995-present). Managing Director, Real Estate, Phoenix Home Life Mutual
Insurance Company (1992-1995). Vice President, Phoenix Multi-Portfolio
Fund (1994-present) and The Phoenix Edge Series Fund (1995-present).
Second Vice President, Real Estate, Phoenix Home Life Mutual Insurance
Company (1986-1992). Vice President (1991-present) 238 Columbus
Blvd., Inc. Director (1988-present) and Vice President (1993-present),
Phoenix Founders, Inc. Vice President (1993-present), Phoenix Real Estate
Securities, Inc. Director and President (1987-1991), Executive Vice
President (1991-1994), Phoenix Realty Advisors, Inc. Executive Vice
President, Phoenix Realty Group, Inc. (1994-present). Executive Vice
President (1994-1995), President (1995-present), Phoenix Realty
Securities, Inc.
Leonard J. Saltiel (42) Vice President Vice President, Investment Operations, Phoenix Home Life Mutual Insurance
100 Bright Meadow Blvd. Company (1994-present). Senior Vice President, Phoenix Equity Planning
P.O. Box 2200 Corporation (1994-present). Vice President, Phoenix Funds
Enfield, CT 06083-2200 (1994-present) and National Securities & Research Corporation
(1994-present). Various positions with Home Life Insurance Company and
Phoenix Home Life Mutual Insurance Company (1987-1994).
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>
Dorothy J. Skaret (43) Vice President Vice President, Phoenix Investment Counsel, Inc. (1991-present). Director,
Public Fixed Income, Phoenix Home Life Mutual Insurance Company
(1991-1995). Vice President, National Securities & Research Corporation
(1993-present), Phoenix Series Fund (1990-present), The Phoenix Edge Series
Fund (1991-present) and Phoenix Realty Securities, Inc. (1995-present),
Phoenix Duff & Phelps Institutional Mutual Funds (1996-present). Various
other positions with Phoenix Home Life Mutual Insurance Company (1986-1991).
James D. Wehr (38) Vice President Vice President, Phoenix Investment Counsel, Inc. (1991-present). Managing
Director, Public Fixed Income, Phoenix Home Life Mutual Insurance
Company (1991-1995). Vice President, National Securities & Research
Corporation (1993-present), Phoenix California Tax Exempt Bond Fund Inc.,
(1993-present), Phoenix Multi-Portfolio Fund (1988-present), Phoenix
Series Fund (1990-present) and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Various other positions with Phoenix Home
Life Mutual Insurance Company (1981-1991).
John T. Wilson (32) Vice President Vice President, Phoenix Investment Counsel, Inc. (1995-present). Portfolio
Manager, Common Stock, Phoenix Home Life Mutual Insurance Company
(1990-1995). Vice President, The Phoenix Edge Series Fund, Phoenix
Multi-Portfolio Fund, Phoenix Worldwide Opportunities Fund and National
Securities and Research Corporation (1994-present).
Nancy G. Curtiss (43) Treasurer Second Vice President and Treasurer, Fund Accounting, Phoenix Home Life
Mutual Insurance Company (1994-present). Treasurer, Phoenix Funds
(1994-present). Vice President, Fund Accounting, Phoenix Equity Planning
Corporation (1994-present). Treasurer, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Various positions with Phoenix Home Life
Insurance Company (1987-1994).
G. Jeffrey Bohne (48) Secretary Vice President and General Manager, Phoenix Home Life Mutual Insurance
101 Munson Street Company (1993-present). Vice President, Home Life of New York Insurance
Greenfield, MA 01301 Company (1984-1992). Vice President, Transfer Agent Operations, Phoenix
Equity Planning Corporation (1993-present). Secretary, the Phoenix Funds,
(1993-present) and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present).
</TABLE>
No person listed in the foregoing table has any immediate family relationship
with any other person listed in the table.
At December 31, 1995, the Trustees and officers as a group owned none of
the then outstanding shares of the Trust.
For services rendered to the Trust during the fiscal year ended December 31,
1995, the Trustees received an aggregate of $92,543 from the Trust as Trustees'
fees. For his services on the Boards of the Phoenix Funds, each Trustee who is
not a full-time employee of the Advisers or any of its affiliates currently
receives a retainer at the annual rate of $36,000 and $2,000 per joint meeting
of the Boards. Each Trustee who serves on the Audit Committee receives a
retainer at the annual rate of $2,000 and $2,000 per joint Audit Committee
meeting attended. The current members of the Audit Committee are Messrs. Blinn,
Conway, Oates, Roth, Segerson and Weicker. Each Trustee who serves on the
Executive Committee and who is not an interested person of the Trust receives a
retainer at the annual rate of $1,000 and $1,000 per joint Executive Committee
meeting attended. The current members of the Executive Committee are Messrs.
Conway, McLoughlin and Roth. Trustee costs are allocated equally to each of the
Series of the Funds within the Fund complex. The foregoing fees do not include
the reimbursement of expenses incurred in connection with meeting attendance.
Trustees and officers are compensated for their services by Phoenix Home Life
and receive no compensation from the Trust.
18
<PAGE>
For the Fund's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL FROM FUND AND
COMPENSATION ACCRUED AS PART OF BENEFITS UPON FUND COMPLEX
NAME FROM FUND FUND EXPENSES RETIREMENT PAID TO TRUSTEES
---- --------- ------------- ---------- ----------------
<S> <C> <C> <C> <C>
C. Duane Blinn $11,825* $47,500
Robert Chesek $10,558 $42,750
E. Virgil Conway $13,223 $53,500
Harry Dalzell-Payne $11,008 None for None for $44,500
any Trustee any Trustee
Leroy Keith, Jr. $10,488 $42,500
Philip R. McLoughlin $0 $0
James M. Oates $12,745 $51,500
Philip R. Reynolds $11,008 $44,500
Herbert Roth, Jr. $13,960* $56,500
Richard E. Segerson $12,745 $51,500
Lowell P. Weicker, Jr. $8,565 $34,500
</TABLE>
* This compensation (and the earnings thereon) was deferred to the Trustees
Deferred Compensation Plan.
THE INVESTMENT ADVISERS
The Trust has entered into Investment Advisory Agreements ("Agreements") with
Phoenix Investment Counsel, Inc. ("PIC") and Phoenix Realty Securities ("PRS")
whose offices are located in Hartford, Connecticut.
Phoenix Home Life is in the business of writing ordinary and group life and
health insurance and annuities. At December 31, 1995, Phoenix Home Life had
total assets of approximately $13.2 billion. PHL Variable writes variable
annuities, and at December 31, 1995 had total assets of approximately $34.6
million. Phoenix Equity Planning Corporation ("PEPCO") performs bookkeeping and
pricing and administrative services for the Trust. It also provides bookkeeping
and pricing services to other investment companies advised by PIC and PRS. PEPCO
is registered as a broker-dealer in fifty states. The executive offices of
Phoenix Home Life are located at One American Row, Hartford, Connecticut 06102
and the principal offices of Equity Planning are located at 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200. All of the
outstanding stock of PIC is owned by PEPCO, an indirect subsidiary of Phoenix
Duff & Phelps Corporation of Chicago, Illinois. Phoenix Home Life Mutual
Insurance Company ("Phoenix Home Life") of Hartford, Connecticut owns a majority
interest in Phoenix Duff & Phelps Corporation.
PRS was formed in 1994 as an indirect subsidiary of Phoenix Home Life.
ABKB/LaSalle Securities Limited Partnership (ABKB), a subsidiary of LaSalle
Partners, serves as sub-adviser to the Real Estate Series. ABKB's principal
place of business is located at 100 East Pratt Street, Baltimore, Maryland
21202. ABKB has been a registered investment advisor since 1979.
The Agreements provide that each Adviser shall furnish continuously, at its
own expense, an investment program for each of the Series, subject at all times
to the supervision of the Trustees. They also provide that all costs and
expenses not specifically enumerated as payable by the Advisers shall be paid by
the Trust or by Phoenix Home Life and PHL Variable. The Advisers or Phoenix Home
Life and PHL Variable have agreed to reimburse the Trust for certain operating
expenses for all Series. Each Series (except the International and Real Estate
Series) pays a portion or all of its total operating expenses other than the
management fee, up to .15% of its total net assets. The International and Real
Estate Series pays total operating expenses other than the management fee up to
.40% and .25%, respectively, of its total net assets. Expenses above these
limits are paid by the Advisers, Phoenix Home Life, or PHL Variable.
To the extent that any expenses are paid by the Trust, they will be paid by
the Series incurring them or, in the case of general expenses, may be charged
among the Series in relation to the benefits received by the shareholders, as
determined by the financial agent under the supervision of the Board of
Trustees. Such expenses shall include, but shall not be limited to, all expenses
(other than those specifically referred to as being borne by the Advisers,
Phoenix Home Life or PHL Variable) incurred in the operation of the Trust and
any offering of its shares, including, among others, interest, taxes, brokerage
fees and commissions, fees of Trustees, expenses of Trustees' and shareholders'
meetings including the cost of printing and mailing proxies, expenses of
insurance premiums for fidelity and other coverage, expenses of repurchase and
redemption of shares, certain expenses of issue and sale of shares, association
membership dues, charges of custodians, transfer agents, dividend disbursing
agents and financial agents, bookkeeping, auditing and legal expenses. The
Trust, Phoenix Home Life or PHL Variable will also pay the fees and bear the
expense of registering and maintaining the registration of the Trust and its
shares with the Securities and Exchange Commission and registering or qualifying
its shares under state or other securities laws and the expense of preparing and
mailing prospectuses and reports to shareholders.
19
<PAGE>
The Investment Advisory Agreements provide that the Advisers shall not be
liable to the Trust or to any shareholder of the Trust for any error of
judgement or mistake of law or for any loss suffered by the Trust or by any
shareholder of the Trust in connection with the matters to which the Investment
Advisory Agreements relate, except a loss resulting from willful misfeasance,
bad faith, gross negligence or reckless disregard on the part of the Advisers in
the performance of its duties thereunder.
The Investment Advisory Agreements also provide that, as full
compensation for the services and facilities furnished to the Trust, the
Advisers shall be compensated as follows: within five days after the
end of each month, the Trust shall pay the Advisers the following fees:
PHOENIX INVESTMENT COUNSEL, INC.
--------------------------------
RATE FOR FIRST RATE FOR NEXT RATE FOR EXCESS
SERIES $250,000,000 $250,000,000 OVER $500,000,000
- ------ ------------ ------------ -----------------
Money Market.... .40% .35% .30%
Multi-Sector.... .50% .45% .40%
Balanced........ .55% .50% .45%
Total Return.... .60% .55% .50%
Growth.......... .70% .65% .60%
International... .75% .70% .65%
Strategic Theme. .75% .70% .65%
PHOENIX REALTY SECURITIES, INC.
-------------------------------
SERIES RATE FOR FIRST RATE FOR NEXT RATE FOR EXCESS OVER
$1,000,000,000 $1,000,000,000 $2,000,000,000
Real Estate..... .75% .70% .65%
The amounts payable to the Advisers shall be based upon the average of the
values of the net assets of the Trust as of the close of business each day.
There can be no assurance that the Trust will reach a net asset level high
enough to realize a reduction in the rate of the advisory fee.
The Investment Advisory Agreements continue in force from year to year for
all Series, provided that, with respect to each Series, the applicable agreement
must be approved at least annually by the Trustees or by vote of a majority of
the outstanding voting securities of that Series. In addition, and in either
event, the terms of the agreements and any renewal thereof must be approved by
the vote of a majority of Trustees who are not parties to the agreement or
interested persons (as that term is defined in the Investment Company Act of
1940) of any such party, cast in person at a meeting called for the purpose of
voting on such approval. The agreements will terminate automatically if assigned
and may be terminated at any time, without payment of any penalty, either by the
Trust or by the Advisers, on sixty (60) days written notice.
BROKERAGE ALLOCATION
In effecting portfolio transactions for the Trust, the Advisers and ABKB, as
subadviser to the Real Estate Series, adhere to the Trust's policy of seeking
best execution and price, determined as described below, except to the extent it
is permitted to pay higher brokerage commissions for "brokerage and research
services" as defined herein. The Advisers may cause the Trust to pay a broker an
amount of commission for effecting a securities transaction in excess of the
amount of commission which another broker or dealer would have charged for
effecting the transaction, if the Advisers determine 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
giving advice as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities; furnishing
analyses and reports concerning issuers, industries, economic factors and
trends, portfolio strategy and the performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such as
clearance and settlement). Brokerage and research services provided by brokers
to the Trust, the Advisers are considered to be in addition to and not in lieu
of services required to be performed by the Advisers under their contracts with
the Trust under their contracts with the Advisers and may benefit both the Trust
and other clients of the Advisers. Conversely, brokerage and research services
provided by brokers to other clients of the Advisers may benefit the Trust.
If the securities in which a particular Series of the Trust invests are
traded primarily in the over-the-counter market, where possible the Series will
deal directly with the dealers who make a market in the securities involved
unless better prices and execution are available elsewhere. Such dealers usually
act as principals for their own account. On occasion, securities may be
purchased directly from the issuer. Bonds and money market instruments are
generally traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes.
The determination of what may constitute best execution and price in the
execution of a securities transaction by a broker involves a number of
considerations including, without limitation, the overall direct net economic
result to the Trust (involving both price paid or received and any commissions
and other costs paid), the efficiency with which the transaction is effected,
the ability to effect the transaction at all where a large block is involved,
the availability of the broker to stand ready to execute possibly difficult
transactions in the future and the financial strength and stability of the
broker. Such considerations are judgmental and are weighed by the Advisers in
determining the overall reasonableness of brokerage commissions paid by the
Trust.
For the fiscal years ended December 31, 1993, 1994, and 1995 brokerage
commissions paid by the Fund on portfolio transactions totalled $2,530,449,
$4,360,577 and $5,452,277, respectively. The Trustees of the Trust, including a
majority of disinterested Trustees, have adopted procedures which allow the
Advisers to allocate a portion of the Trust's portfolio brokerage transactions
to brokers affiliated with the Trust or Adviser, including, without limitation,
Duff & Phelps Securities Co., an affiliate of Phoenix Investment Counsel, Inc.
In order for affiliated brokers to effect any portfolio transactions for the
Trust, the commissions, fees, or other remuneration received by such brokers
must be reasonable and fair compared to the commissions, fees or other
remuneration paid to other non-affiliated brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during
20
<PAGE>
a comparable period of time. None of such commissions was paid to a broker
who was an affiliated person of the Trust or an affiliated person of such a
person or, to the knowledge of the Trust, to broker an affiliated person of
which was an affiliated person of the Trust or the Adviser. Total brokerage
commissions paid during the fiscal year ended December 31, 1995 included
brokerage commissions of $5,360,926 on portfolio transactions aggregating
$3,403,042,755 executed by brokers who provided research and other statistical
and factual information.
Investment decisions for the Trust are made independently from those of the
other investment companies or accounts advised by the Advisers. 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 Advisers 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
Trust is concerned. In other cases, however, it is believed that the ability of
the Trust to participate in volume transactions will produce better executions
for the Trust. It is the opinion of the Board of Trustees of the Trust that the
desirability of utilizing the Advisers as investment advisers to the Trust as
manager of foreign securities owned by the Trust outweighs the disadvantages
that may be said to exist from simultaneous transactions.
DETERMINATION OF NET ASSET VALUE
The net asset value is the redemption price for a share. As described in more
detail in the Prospectus, the net asset value of shares of the Trust is
determined once daily as of the close of trading on the New York Stock Exchange
on each day the Exchange is open for trading or any other day on which there is
a sufficient degree of trading in the investments of any Series that the current
net asset value of such Series might be materially affected. Securities
primarily traded on foreign securities exchanges are generally valued at the
preceding closing values on their respective exchanges.
GROWTH, MULTI-SECTOR, TOTAL RETURN, BALANCED, INTERNATIONAL, REAL
ESTATE AND STRATEGIC THEME SERIES
In determining the value of the assets of the Growth, Multi-Sector, Total
Return, Balanced, International, Real Estate and Strategic Theme Series, the
securities for which market quotations are readily available are valued at
market value, which is currently determined using the last reported sale price,
or, if no sales are reported, as is the case with many securities traded
over-the-counter, the last reported bid price. Debt securities (other than
short-term obligations, which are valued on the basis of amortized cost as
defined below) are normally valued on the basis of 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 institutional-size trading in similar groups of securities, yield,
quality of issue, trading characteristics and other market data. Equity options
are valued at last sale price unless the bid price is higher or the asked price
is lower, in which event such bid or asked price is used. Exchange traded fixed
income options are valued at the last sale price unless there is no sale price,
in which event current prices provided by market makers are used.
Over-the-Counter fixed income options are valued based upon current prices
provided by market makers. Financial futures are valued at the settlement price
established each day by the board of trade or exchange on which they are traded.
All other securities and assets are valued at their fair value as determined in
good faith by the Trustees although the actual calculations are normally made by
persons acting pursuant to the direction of the Trustees.
Because of the need to obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of net asset value does not take
place for the International Series contemporaneously with the determination of
the prices of the majority of the portfolio securities of the Series. For
purposes of determining the net asset value of the International Series, all
assets and liabilities initially expressed in foreign currency values will be
converted into United States dollar values at the mean between the bid and
offered quotations of such currencies against United States dollars as last
quoted by any recognized dealer. If an event were to occur after the value of an
investment was so established but before the net asset value per share was
determined which was likely to materially change the net asset value, then the
instrument would be valued using fair value considerations by the Trustees or
their delegates.
MONEY MARKET SERIES
The securities of the Money Market Series are valued on the basis of
amortized cost absent extraordinary or unusual market conditions. Under the
amortized cost method of valuation, securities are valued at cost on the date of
purchase. Thereafter, the value of a security is increased or decreased
incrementally each day so that at maturity any purchase discount or premium is
fully amortized and the value of the security is equal to its principal amount.
Due to fluctuations in interest rates, the amortized cost value of the Money
Market Series securities may at times be more or less than their market value.
By using amortized cost valuation the Money Market Series seeks to maintain a
constant net asset value of $1.00 per share despite minor shifts in the market
value of its portfolio securities.
The yield on a shareholder's investment may be more or less than that which
would be recognized if the Series' net asset value per share was not constant
and was permitted to fluctuate with the market value of the Series' portfolio
securities. However, as a result of the following procedures, it is believed
that any difference will normally be minimal. The deviation is monitored
periodically by comparing the Series net asset value per share as determined by
using available market quotations with its net asset value per share as
determined through the use of the amortized cost method of valuation. The
Adviser makes such comparisons at least weekly under the direction of the
Trustees and will advise the Trustees promptly in the event of any significant
deviation. If the deviation
21
<PAGE>
exceeds 1/2 of 1%, the Trustees will consider what action, if any, should be
initiated to provide fair valuation of the Series' portfolio securities and
prevent material dilution or other unfair results to shareholders. Such action
may include redemption of shares in kind, selling portfolio securities prior to
maturity, withholding dividends or utilizing a net asset value per share as
determined by using available market quotations. Furthermore, the assets of the
Series will not be invested in any security with a maturity of greater than 397
days, and the average weighted maturity of its portfolio will not exceed 90
days. Portfolio investments will be limited to U.S. dollar-denominated
securities which present minimal credit risks and are of high quality as
determined either by a major rating service or, if not rated, by the Trustees.
INVESTING IN THE TRUST
Shares of the Trust are not available to the public directly. Although shares
of the Trust are owned by the Accounts, Contractowners and Policyowners do have
voting rights with respect to those shares, as described in the Prospectus under
"Shares of Beneficial Interest". You may invest in the Trust by buying a
Variable Accumulation Annuity Contract or a Variable Universal Life Insurance
Policy from Phoenix Home Life or PHL Variable and directing the allocation of
the net purchase payment(s) to the sub-accounts corresponding to the Series of
the Trust. Phoenix Home Life and PHL Variable will, in turn, invest payments in
shares of the Trust as the investor directs at net asset value next determined
with no sales load.
SALES CHARGE AND SURRENDER CHARGES
The Trust does not assess any sales charge, either when it sells or when it
redeems securities. The sales charges which may be assessed under the Contracts
or Policies are described in the accompanying prospectus, as are other charges.
REDEMPTION OF SHARES
The Trust will redeem any shares presented by the shareholder Accounts for
redemption. The Account's policies on when and whether to buy or redeem Fund
shares are described in the accompanying prospectus.
At the discretion of the Trustees, the Trust may, to the extent consistent
with state and Federal law, make payment for shares of a particular Series
repurchased or redeemed in whole or in part in securities or other assets of
such Series taken at current values. Should payment be made in securities, the
shareholder Accounts may incur brokerage costs in converting such securities to
cash.
The right of redemption may only be suspended or the payment date postponed
for more than seven days for any period during which trading on the New York
Stock Exchange is closed for other than customary weekend and holiday closings,
or when trading on the New York Stock Exchange is restricted, as determined by
the Securities and Exchange Commission, for any period when an emergency (as
defined by rules of the Commission) exists, or during any period when the
Commission has, by order, permitted such suspension. In case of a suspension of
the right of redemption, the shareholders may withdraw requests for redemption
of shares prior to the next determination of net asset value after the
suspension has been terminated or they will receive payment of the net asset
value so determined.
The shareholder Accounts may receive more or less than was paid for the
shares, depending on the net asset value of the shares at the time they are
repurchased or redeemed.
TAXES
As stated in the Prospectus, it will be the policy of the Trust and of each
Series to comply with those provisions of the Internal Revenue Code of 1986, as
amended, ("Code") which relieve investment companies that distribute
substantially all of their net income from Federal income tax on the amounts
distributed. The Trust also intends to comply with pertinent Code provisions in
order to avoid imposition of any Federal excise tax. Dividends derived from
interest and distributions of any realized capital gains are taxable, under
Subchapter M, to the Trust's Shareholders, which in this case are the Accounts.
Federal income taxation of separate accounts, life insurance companies, and
unit investment trusts are discussed in the accompanying prospectus for the
Account.
CUSTODIAN
The securities and cash of all Series except the International and Real
Estate Series are held by The Chase Manhattan Bank, N.A. under the terms of a
custodian agreement. The securities and cash of the International Series are
held by Brown Brothers Harriman & Co. under the terms of a custodian agreement.
With respect to the International Series, the address for the Custodian is Brown
Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts 02109,
Attention: Manager, Securities Department. The securities and cash of the Real
Estate Series are held by State Street Bank and Trust Company, located at 1
Heritage Drive, P2N, North Quincy, Massachusetts 02171. With respect to Series
other than the International and Real Estate Series, the address for the
Custodian is The Chase Manhattan Bank, N.A., 1 Chase Manhattan Plaza, Floor 13B,
New York, NY 10081. The Trust permits the Custodian to deposit some or all of
its securities in central depository systems as allowed by Federal law. The use
of foreign custodians and foreign central depositories has been authorized by
the Board of Trustees of the Trust if certain conditions are met.
FOREIGN CUSTODIAN
The Trust may use a foreign custodian in connection with its purchases of
foreign securities and may maintain cash and cash equivalents in the care of a
foreign custodian. The amount of cash or cash equivalents maintained in the care
of eligible foreign custodians will be limited to an amount reasonably necessary
to effect the Trust's foreign securities transactions. The use of a foreign
custodian involves 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
22
<PAGE>
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.
INDEPENDENT ACCOUNTANTS
The Trust's financial statements are audited by Price Waterhouse LLP, 160
Federal Street, Boston, Massachusetts 02110, independent accountants for the
Fund. The independent accountants also provide other accounting and tax-related
services as requested by the Trust from time to time.
FINANCIAL STATEMENTS
The financial statements and the notes thereto relating to the Trust and the
report of Price Waterhouse LLP with respect thereto for the fiscal year ended
December 31, 1995 are contained in the Trust's Annual Report. The Annual Report
is available by writing or calling Variable Products Operations at 101 Munson
Street, P.O. Box 942, Greenfield, Massachusetts 01302-0942, (800) 447-4312.
Phoenix Home Life and PHL Variable have agreed to send a copy of both the Annual
Report and the Semi-Annual Report to Shareholders containing the Fund's
financial statements to every Contractowner or Policyowner having an interest in
the Accounts. The Annual Report for the fiscal period ended December 31, 1995 is
included in this Statement of Additional Information.
23
<PAGE>
Annual Report
December 31, 1995
The Phoenix Edge Series Fund
<PAGE>
MONEY MARKET SERIES
The Money Market Series performed solidly during 1995. On December 31, the
Fund's current yield was 5.62%. This compares favorably with the 5.15%
average yield of taxable money market funds reported by Donoghue's Money Fund
Report.
The short-term markets were relatively quiet in 1995, as the Federal
Reserve Board gradually shifted from a restrictive monetary policy to a more
neutral stance. The Fed hiked short-term rates 50 basis points in February
and then reversed itself with two 25 basis point cuts in July and December
when it became evident the economy had weakened and inflation remained
subdued. Currently, most observers expect the Fed to continue easing once the
budget problems in Washington are resolved.
In anticipation of the Fed's easing, we continue to look for opportunities
to extend portfolio maturities where appropriate. We are also maintaining our
focus on floating-rate securities, which have been strong contributors to the
portfolio over this reporting period. Given the past uncertainties concerning
monetary policy and the trend for lower long-term rates, we believe this is
an appropriate investment strategy.
[typeset representation of line chart]
Donoghue Money Fund Report* Money Market Series
1/31/95 5.2% 5.47%
2/28/95 5.41 5.74
3/31/95 5.48 5.73
4/30/95 5.49 5.61
5/31/95 5.46 5.73
6/30/95 5.43 5.5
7/31/95 5.33 5.46
8/31/95 5.23 5.49
9/30/95 5.19 5.43
10/31/95 5.17 5.36
11/30/95 5.17 5.41
12/31/95 5.15 5.62
[end chart]
The above graph covers the period from January 31, 1995 to December 31, 1995.
The results are not indicative of the rate of return which may be realized
from an investment made in the Money Market Series today. The Money Market
Series is neither issued nor guaranteed by the U.S. Government, and there can
be no assurance the Series will be able to maintain a stable net asset value
at $10.00 per share.
*Average monthly yield of taxable Money Market Funds as reported by
Donoghue's Money Fund Report.
SCHEDULE OF INVESTMENTS
December 31, 1995
FACE
VALUE INTEREST MATURITY
(000) DESCRIPTION RATE DATE VALUE
----- -------------------------------- ------- -------- -------------
FEDERAL AGENCY SECURITIES--10.0%
$4,000 Federal Home Loan Banks 6.10% 01/02/96 $ 3,999,322
2,000 Federal National Mortgage
Association 5.50 01/08/96 1,997,861
830 Federal Home Loan Banks 6.52 01/19/96 827,294
3,500 Federal Home Loan Banks 7.15 01/26/96 3,500,039
-----------
TOTAL FEDERAL AGENCY SECURITIES 10,324,516
------------
RESET
DATE
------
FEDERAL AGENCY SECURITIES--VARIABLE--22.1% (b)
3,000 Student Loan Marketing Assoc.
(final maturity 08/16/96) 5.86 01/02/96 3,000,000
1,500 Federal Farm Credit Banks (final
maturity 02/24/97) 5.76 01/02/96 1,499,430
4,500 Federal Farm Credit Banks (final
maturity 07/24/00) 5.79 01/02/96 4,502,315
1,500 Federal Home Loan Banks (final
maturity 06/15/96) 5.85 01/02/96 1,501,400
1,500 Federal Home Loan Banks (final
maturity 01/14/97) 5.95 01/02/96 1,500,000
500 Student Loan Marketing Assoc.
(final maturity 07/19/96) 5.20 01/03/96 500,000
2,500 Student Loan Marketing Assoc.
(final maturity 11/24/97) 5.22 01/03/96 2,500,000
1,500 Student Loan Marketing Assoc.
(final maturity 11/10/98) 5.24 01/03/96 1,497,740
2,000 Student Loan Marketing Assoc.
(final maturity 01/11/96) 5.25 01/03/96 2,000,000
1,000 Student Loan Marketing Assoc.
(final maturity 02/22/99) 5.25 01/03/96 1,000,000
1,600 Student Loan Marketing Assoc.
(final maturity 10/30/97) 5.40 01/03/96 1,601,618
1,650 Federal National Mortgage Assoc.
(final maturity 12/14/98) 5.68 03/14/96 1,647,331
-----------
TOTAL FEDERAL AGENCY SECURITIES--VARIABLE 22,749,834
------------
See Notes to Financial Statements
2-2
<PAGE>
MONEY MARKET SERIES
STANDARD
FACE & POOR'S
VALUE RATING INTEREST MATURITY
(000) DESCRIPTION (Unaudited) RATE DATE VALUE
----- ------------------- -------- ------ ------- ------------
MEDIUM-TERM NOTES--VARIABLE--4.1% (b)
$1,450 General Electric
Capital Corp. AAA 5.62% 07/26/96 $ 1,451,004
2,800 General Electric
Capital Corp. A-1+ 5.87 08/22/96 2,801,007
---------
TOTAL MEDIUM-TERM NOTES--VARIABLE 4,252,011
----------
COMMERCIAL PAPER--59.0%
770 AT&T Corp. A-1+ 5.81 01/02/96 769,876
3,695 Vermont American
Corp. A-1+ 5.85 01/03/96 3,693,799
1,500 McDonald's Corp. A-1+ 5.95 01/08/96 1,498,265
3,000 Bellsouth
Telecommunications,
Inc. A-1+ 5.75 01/09/96 2,996,167
1,500 Corporate Asset
Securitization
Australia Ltd.,
Inc. A-1+ 5.80 01/10/96 1,497,825
1,000 Asset
Securitization
Cooperative Corp. A-1+ 5.78 01/11/96 998,394
800 Esc Securitization,
Inc. A-1+ 5.85 01/12/96 798,570
2,300 Kimberly-Clark
Corp. A-1+ 5.80 01/12/96 2,295,924
250 Receivable Capital
Corp. A-1 5.75 01/12/96 249,561
2,060 Abbott Laboratories A-1+ 5.70 01/16/96 2,055,108
255 AT&T Corp. A-1+ 5.73 01/16/96 254,391
3,580 First Deposit
Funding Trust A-1+ 5.80 01/16/96 3,571,348
500 Corporate Asset
Securitization
Australia Ltd.,
Inc. A-1+ 5.80 01/17/96 498,711
1,000 Greenwich Funding
Corp. A-1+ 5.75 01/17/96 997,444
2,063 Greenwich Funding
Corp. A-1+ 5.75 01/17/96 2,057,728
2,600 TDK USA Corp. A-1+ 5.74 01/17/96 2,593,367
4,000 Exxon Imperial
U.S., Inc. A-1+ 5.80 01/18/96 3,989,044
2,310 Gannett Co. A-1 5.75 01/19/96 2,303,359
2,100 Gannett Co. A-1 5.75 01/22/96 2,092,956
4,100 Receivables Capital
Corp. A-1 5.81 01/22/96 4,086,104
1,600 H.J. Heinz Co. A-1 5.75 01/29/96 1,592,844
2,185 Kimberly-Clark
Corp. A-1+ 5.65 01/30/96 2,175,055
220 Kimberly-Clark
Corp. A-1+ 5.58 02/01/96 218,943
2,000 CXC, Inc. A-1 5.65 02/02/96 1,989,956
475 H.J. Heinz Co. A-1 5.72 02/02/96 472,585
2,390 H.J. Heinz Co. A-1 5.57 02/05/96 2,377,058
1,500 Bellsouth
Telecommunications,
Inc. A-1+ 5.68 02/09/96 1,490,770
1,500 Preferred
Receivables
Funding Corp. A-1 5.71 02/13/96 1,489,770
900 First Deposit
Funding Trust A-1+ 5.70 02/16/96 893,445
2,855 Ameritech Capital
Funding Corp. A-1+ 5.58 02/23/96 2,831,546
3,500 Corporate
Receivables A-1 5.55 02/29/96 3,468,165
2,500 E.I. du Pont de
Nemours & Co. A-1+ 5.53 07/23/96 2,421,658
---------
TOTAL COMMERCIAL PAPER 60,719,736
----------
CERTIFICATES OF DEPOSIT-CALLABLE NOTE--1.0%
1,000 Societe Generale NY 5.95 07/15/96 1,000,000
---------
TOTAL CERTIFICATES OF DEPOSIT 1,000,000
----------
TOTAL INVESTMENTS--96.2%
(Identified cost $99,046,097) 99,046,097((a))
Cash and receivables, less liabilities--3.8% 3,897,340
----------
NET ASSETS--100.0% $102,943,437
==========
((a)) Federal Income Tax Information: At December 31, 1995 the aggregate cost
of securities was the same for book and tax purposes.
((b)) Variable rate demand note. The interest rates shown reflect the rate
currently in effect. The maturity dates shown reflect the next interest
rate reset dates.
See Notes to Financial Statements
2-3
<PAGE>
MONEY MARKET SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
Assets
Investment securities at value
(Identified cost $99,046,097) $ 99,046,097
Cash 3,582,584
Interest receivable 394,186
------------
Total assets 103,022,867
------------
Liabilities
Investment advisory fee 31,969
Financial agent fee 4,795
Trustee fee 3,056
Accrued expenses 39,610
------------
Total liabilities 79,430
------------
Net Assets $102,943,437
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $102,914,345
Undistributed net investment income 29,092
------------
Net Assets $102,943,437
============
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization 10,291,434
============
Net asset value and offering price per share $10.00
============
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
Investment Income
Interest $5,551,168
------------
Total investment income 5,551,168
------------
Expenses
Investment advisory fee 352,030
Financial agent fee 54,605
Printing 20,477
Audit 19,493
Custodian 19,669
Trustees' fee 14,550
Miscellaneous 4,054
------------
Total expenses 484,878
Custodian fees paid indirectly (4,119)
------------
Net expenses 480,759
------------
Net investment income 5,070,409
------------
Net increase in net assets resulting from operations $5,070,409
============
See Notes to Financial Statements
2-4
<PAGE>
MONEY MARKET SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Year
Ended Ended
12/31/95 12/31/94
------------ -------------
From Operations
Net investment income $ 5,070,409 $ 3,392,083
Net realized gain -- 100
---------- ------------
Net increase in net assets resulting from
operations 5,070,409 3,392,183
---------- ------------
From Distributions to Shareholders
Net investment income (5,055,199) (3,378,211)
Net realized gains -- (94)
---------- ------------
Decrease in net assets from distributions
to shareholders (5,055,199) (3,378,305)
---------- ------------
From Shares of Beneficial Interest
Transactions
Proceeds from sales of shares (19,415,954
and 23,586,003 shares, respectively) 194,159,531 235,860,031
Net asset value of shares issued from
reinvestment of distributions
(505,520 and 337,830 shares, respectively) 5,055,199 3,378,305
Cost of shares repurchased (19,087,235 and
21,761,240 shares, respectively) (190,872,354) (217,612,379)
---------- ------------
Increase in net assets from share
transactions 8,342,376 21,625,957
---------- ------------
Net increase in net assets 8,357,586 21,639,835
Net Assets
Beginning of period 94,585,851 72,946,016
---------- ------------
End of period (including undistributed net
investment income of $29,092 and
$13,882, respectively) $ 102,943,437 $ 94,585,851
========== ============
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
Year ended December 31,
1995 1994 1993 1992 1991
-------------- ------------ ------------ ----- -------
Net asset
value,
beginning of
period $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
Income from
investment
operations
Net
investment
income 0.56 0.38((1)) 0.28((1)) 0.35 0.58
------------ ---------- ---------- --- -----
Total from
investment
operations 0.56 0.38 0.28 0.35 0.58
------------ ---------- ---------- --- -----
Less
distributions
Dividends
from net
investment
income (0.56) (0.38) (0.28) (0.35) (0.58)
------------ ---------- ---------- --- -----
Total
distributions (0.56) (0.38) (0.28) (0.35) (0.58)
------------ ---------- ---------- --- -----
Net asset
value, end
of period $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
============ ========== ========== === =====
Total return 5.55% 3.77% 2.80% 3.50% 5.80%
Ratios/supplemental
data:
Net assets,
end of
period
(thousands) $102,943 $94,586 $72,946 $69,962 $51,692
Ratio to
average net
assets of:
Operating
expenses 0.53%((2)) 0.55% 0.55% 0.50% 0.50%
Net
investment
income 5.57% 3.85% 2.84% 3.49% 5.76%
((1)) Includes reimbursement of operating expenses by investment adviser of
$0.003 and $0.01 per share, respectively.
((2)) For the year ended December 31, 1995, the ratio of operating expenses
to average net assets excludes the effect of expense offsets for
custodian fees; if expense offsets were included, the ratio would not
significantly differ.
See Notes to Financial Statements
2-5
<PAGE>
GROWTH SERIES
The Fund made strong absolute gains over the reporting period. For the
year ended December 31, 1995, the Fund provided a total return of 30.85%.
Despite this performance the Fund trailed the Standard & Poor's 500 Composite
Index which returned 37.51% for the year. (All of these figures assume
reinvestment of any distributions.)
In the final analysis, 1995 will be viewed as a remarkable year for stocks
and for many large capitalization growth stocks in particular. During both
the first and fourth calendar quarters, investors opted for the relative
safety and predictability of such large cap names. Early in 1995, the Mexican
peso crisis and the weakness of the U.S. dollar led investors towards a more
conservative investment posture. Similarly, as recession odds slowly crept
higher late in the year, investors again shunned more volatile and
unpredictable stocks in favor of a small basket of steady growers. Technology
stocks garnered most of the investment headlines, but despite a meteoric rise
in the first half, their gains were pared significantly by yearend.
In terms of specific portfolio contribution, several factors influenced
the Fund's relative underperformance. During the first half of the year an
underweighting in the financial services sector, combined with a portfolio
shift away from several of the largest S&P 500 stocks, held performance back.
Underweighting in consumer staples also constrained performance. The
portfolio was aided by strong performance in the health care sector, where
sector weightings were increased throughout the year. Although the technology
sector was volatile, the portfolio's technology holdings were strong
contributors to performance. It should be mentioned that technology holdings
were reduced significantly by yearend. While we are optimistic that many
important environmental changes will continue to be driven by improvements in
the technology arena, we are also mindful that this group may not be immune
from an economic slowdown or decline in capital spending.
Looking into 1996, we expect corporate earnings gains to be moderate. As
the 1992-1995 period marks the first time that S&P 500 earnings have exceeded
10% in four consecutive years since World War II and given that corporate
profit margins are at record highs, we believe it is prudent to take a more
cautious view toward the new year. Yet with inflation still under control and
with the Federal Reserve poised to take further steps towards loosening the
monetary reins, the stock market can clearly make further gains. We believe
that solid opportunities continue to exist in many predictable and strong
growth firms.
[typeset representation of line chart]
S&P 500 Growth
Stock Index Series
12/31/85 10000 10000
12/31/86 11821 12015
12/31/87 12433 12862
12/31/88 14485 13354
12/31/89 19038 18170
12/31/90 18429 18894
12/31/91 24059 27175
12/31/92 25909 29971
12/31/93 28500 35872
12/31/94 28877 36403
12/31/95 39708 47633
[end chart]
Average Annual Total Returns for Periods Ending 12/31/95
1 Year 5 Years 10 Years
- ---------------------------------------------------------------
Growth Series 30.85% 20.29% 16.89%
- ---------------------------------------------------------------
S&P 500 Index* 37.51% 16.59% 14.79%
- ---------------------------------------------------------------
This chart assumes an initial gross investment of $10,000 made on 12/31/85.
Returns shown include the reinvestment of all distributions at net asset
value, and the change in share price for the stated period. 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. Foreign investing involves
special risks such as currency fluctuation and less public disclosure, as
well as economic and political risks.
*The S&P 500 Stock Index is an unmanaged but commonly used measure of stock
total return performance.
2-6
<PAGE>
GROWTH SERIES
SCHEDULE OF INVESTMENTS
December 31, 1995
SHARES VALUE
------- -------------
COMMON STOCKS--86.4%
Aerospace & Defense--1.6%
Boeing Company 200,000 $ 15,675,000
------------
Banks--1.4%
Chase Manhattan Corp. 234,000 14,186,250
------------
Chemical--1.0%
Monsanto Co. 80,000 9,800,000
------------
Chemical--Specialty--1.1%
Morton International, Inc. 300,000 10,762,500
------------
Computer Software & Services--4.3%
Adobe Systems, Inc. 210,000 13,020,000
BBN Corp. (b) 271,000 11,144,875
Oracle Systems Corp. (b) 222,000 9,407,250
Sybase, Inc. (b) 258,000 9,288,000
------------
42,860,125
------------
Diversified Financial Services--5.1%
Dean Witter Discover & Co. 200,000 9,400,000
Morgan Stanley Group, Inc. 115,000 9,271,875
Student Loan Marketing Assoc. 170,000 11,198,750
Travelers Group, Inc. 330,000 20,748,750
------------
50,619,375
------------
Electronics--1.8%
Intel Corp. 169,000 9,590,750
Oak Technology, Inc. (b) 179,200 7,571,200
------------
17,161,950
------------
Engineering & Construction--1.3%
Fluor Corp. 200,000 13,200,000
------------
Entertainment, Leisure & Gaming--3.8%
Viacom, Inc. Class B (b) 535,000 25,345,625
Walt Disney Co. 200,000 11,800,000
------------
37,145,625
------------
Food--1.7%
Nabisco Holdings Corp. Class A 360,800 11,771,100
Wrigley (WM) Jr. Co. 88,000 4,620,000
------------
16,391,100
------------
Healthcare--Diversified--1.1%
Bristol-Myers Squibb Co. 129,000 11,077,875
------------
Healthcare--Drugs--5.7%
Amgen, Inc. (b) 416,600 24,735,625
Biogen, Inc. (b) 325,000 19,987,500
Genzyme Corp. (b) 3,000 187,125
Pharmacia & Upjohn, Inc. 300,000 11,625,000
------------
56,535,250
------------
Hospital Management & Services--5.4%
Columbia/HCA Healthcare Corp. 250,000 12,687,500
PhyCor, Inc. (b) 198,750 10,049,297
United Healthcare Corp. 165,000 10,807,500
US Healthcare, Inc. 225,000 10,462,500
Vencor, Inc. (b) 275,000 8,937,500
------------
52,944,297
------------
Insurance--6.4%
Aetna Life & Casualty Co. 403,500 27,942,375
Cigna Corp. 174,000 17,965,500
Prudential Reinsurance Holdings, Inc. 747,000 17,461,125
------------
63,369,000
------------
Machinery--2.7%
Case Corp. 225,000 10,293,750
Deere & Co. 465,000 16,391,250
------------
26,685,000
------------
Medical Products & Supplies--4.9%
Baxter International, Inc. 415,000 $ 17,378,125
Boston Scientific Corp. (b) 220,000 10,780,000
Guidant Corp. 330,500 13,963,625
Medtronic, Inc. 100,000 5,587,500
------------
47,709,250
------------
Natural Gas--3.3%
Anadarko Petroleum Corp. 325,000 17,590,625
Apache Corp. 520,700 15,360,650
------------
32,951,275
------------
Office & Business Equipment--1.1%
Sun Microsystems, Inc. (b) 230,000 10,493,750
------------
Oil Service & Equipment--4.8%
BJ Services Co. (b) 511,000 14,819,000
Diamond Offshore Drilling (b) 95,000 3,206,250
Halliburton Co. 190,000 9,618,750
Schlumberger Ltd. 281,000 19,459,250
------------
47,103,250
------------
Paper & Forest Products--1.7%
Kimberly Clark Corp. 200,000 16,550,000
------------
Pollution Control--1.5%
WMX Technologies, Inc. 495,000 14,788,125
------------
Professional Services--1.0%
Mobile Telecommunications Technology Corp.
(b) 460,000 9,832,500
------------
Publishing, Broadcasting, Printing & Cable--1.3%
Tele-Communications TCI (b) 620,000 12,322,500
------------
Retail--2.9%
Federated Department Stores, Inc. (b) 315,000 8,662,500
Gap (The), Inc. 200,000 8,400,000
Staples, Inc. (b) 475,000 11,578,125
------------
28,640,625
------------
Telecommunications Equipment--9.6%
3Com Corp. (b) 402,000 18,743,250
Bay Networks, Inc. (b) 616,750 25,363,844
Cisco Systems, Inc. (b) 185,000 13,805,625
Glenayre Technologies, Inc. (b) 225,000 14,006,250
Newbridge Networks Corp. (b) 280,000 11,585,000
Stratacom, Inc. (b) 155,000 11,392,500
------------
94,896,469
------------
Tobacco--0.9%
Philip Morris Companies, Inc. 100,000 9,050,000
------------
Utility--Telephone--9.0%
AT&T Corp. 300,000 19,425,000
Frontier Corp. 425,000 12,750,000
MCI Communications Corp. 570,000 14,891,250
MFS Communications, Inc. (b) 134,000 7,135,500
Mobilemedia Corp. (b) 556,000 12,371,000
Paging Network, Inc. (b) 910,000 22,181,250
------------
88,754,000
------------
TOTAL COMMON STOCKS
(Identified cost $746,420,615) 851,505,091
------------
FOREIGN COMMON STOCKS--3.9%
Computer Software & Services--0.8%
Standard Application Software AG-Vorzug
(Germany) 52,450 7,952,468
------------
Oil--0.4%
YPF Sociedad Anonima ADR (Argentina) 200,000 4,325,000
------------
Publishing, Broadcasting, Printing & Cable--1.2%
News Corp. Ltd. Preference ADR (Australia) 592,000 11,396,000
------------
Telecommunications Equipment--0.8%
Ericsson L.M. Telephone Co. Class B ADR
(Sweden) 390,000 7,605,000
------------
See Notes to Financial Statements
2-7
<PAGE>
SHARES VALUE
------- -------------
Utility--Telephone--0.7%
Telecom Italia Mobile-DRNC (Italy) (b) 6,900,000 $ 7,245,000
------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $34,046,370) 38,523,468
------------
TOTAL LONG-TERM INVESTMENTS--90.3%
(Identified cost $780,466,985) 890,028,559
------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------- -------
SHORT-TERM OBLIGATIONS--9.9%
Commercial Paper--9.9%
AT&T Corp. 5.75%, 1-3-96 A-1+ $7,620 7,617,566
McDonald's Corp. 5.63%, 1-4-96 A-1+ 6,095 6,092,140
Gannett 5.75%, 1-8-96 A-1 5,000 4,994,410
Gannett 5.77%, 1-8-96 A-1 7,000 6,992,146
Albertsons, Inc. 5.73%, 1-10-96 A-1 3,725 3,719,664
AT&T Corp. 5.65%, 1-11-96 A-1+ 7,670 7,657,962
Bellsouth Capital Funding Corp.
5.95%, 1-12-96 A-1+ 5,000 4,990,910
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------- ------- -------------
Commercial Paper--continued
Goldman Sachs 5.62%, 1-17-96 A-1+ $10,000 $ 9,975,022
Shell Oil 5.60%, 1-22-96 A-1+ 7,975 7,948,948
Wisconsin Electric Power 5.65%,
1-22-96 A-1+ 5,000 4,983,667
Southwestern Bell Telephone
5.55%, 1-25-96 A-1+ 14,390 14,336,757
Pfizer, Inc. 5.77%, 1-26-96 A-1+ 7,175 7,146,250
Kimberly Clark 5.59%, 1-30-96 A-1+ 10,000 9,954,969
H.J. Heinz Co. 5.72%, 2-2-96 A-1 1,225 1,218,773
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $97,629,184) 97,629,184
------------
TOTAL INVESTMENTS--100.2%
(Identified cost $878,096,169) 987,657,743((a))
Cash and receivables, less liabilities--(0.2%) (2,268,796)
------------
NET ASSETS--100.0% $985,388,947
============
((a)) Federal Income Tax Information: Net unrealized appreciation of
investment securities is comprised of gross appreciation of
$123,773,792 and gross depreciation of $14,212,218 for income tax
purposes. At December 31, 1995 the aggregate cost of securities for
federal income tax purposes was $878,096,169.
((b)) Non-income producing.
ADR--American Depository Receipt
See Notes to Financial Statements
2-8
<PAGE>
GROWTH SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
Assets
Investment securities at value (Identified cost
$878,096,169) $987,657,743
Cash 1,650,011
Dividends and interest receivable 952,491
Tax reclaim receivable 150,325
------------
Total assets 990,410,570
------------
Liabilities
Payable for investment securities purchased 4,294,426
Investment advisory fee 522,046
Financial agent fee 49,020
Trustee fee 3,084
Accrued expenses 153,047
------------
Total liabilities 5,021,623
------------
Net Assets $985,388,947
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $868,237,256
Undistributed net investment income 194,585
Accumulated net realized gain 7,395,532
Net unrealized appreciation 109,561,574
------------
Net Assets $985,388,947
============
Shares of beneficial interest outstanding, $1 par
value, unlimited authorization 54,341,075
============
Net asset value and offering price per share $18.13
============
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
Investment Income
Interest $ 6,565,743
Dividends 8,318,959
------------
Total investment income 14,884,702
------------
Expenses
Investment advisory fee 5,142,411
Financial agent fee 476,741
Custodian 175,989
Printing 51,171
Professional 41,041
Trustees' fee 15,173
Miscellaneous 80,003
------------
Total expenses 5,982,529
Custodian fees paid indirectly (17,397)
------------
Net expenses 5,965,132
------------
Net investment income 8,919,570
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain from investment transactions 113,442,888
Net realized loss on foreign currency transactions (1,458,655)
Net unrealized appreciation of investment securities 89,700,570
------------
Net gain on investments 201,684,803
------------
Net increase in net assets resulting from operations $210,604,373
============
See Notes to Financial Statements
2-9
<PAGE>
GROWTH SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Year
Ended Ended
12/31/95 12/31/94
------------- --------------
From Operations
Net investment income $ 8,919,570 $ 7,438,217
Net realized gain 111,984,233 21,194,240
Net unrealized appreciation (depreciation) 89,700,570 (22,581,225)
------------ -------------
Net increase in net assets resulting from
operations 210,604,373 6,051,232
------------ -------------
From Distributions to Shareholders
Net investment income (7,451,972) (7,512,592)
Net realized gains (105,927,796) (33,881,394)
------------ -------------
Decrease in net assets from distributions
to shareholders (113,379,768) (41,393,986)
------------ -------------
From Shares of Beneficial Interest
Transactions
Proceeds from sales of shares (16,787,870
and 17,499,498 shares, respectively) 302,038,455 293,876,374
Net asset value of shares issued from
reinvestment of distributions
(6,290,645 and 2,620,718 shares,
respectively) 113,379,768 41,393,986
Cost of shares repurchased (8,019,458 and
7,747,001 shares, respectively) (143,474,953) (130,074,382)
------------ -------------
Increase in net assets from share
transactions 271,943,270 205,195,978
------------ -------------
Net increase in net assets 369,167,875 169,853,224
Net Assets
Beginning of period 616,221,072 446,367,848
------------ -------------
End of period (including undistributed net
investment income of $194,585
and $70,685, respectively) $ 985,388,947 $ 616,221,072
============ =============
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993 1992 1991
------------ ------------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.69 $16.59 $15.01 $14.43 $11.72
Income from investment operations
Net investment income 0.20 0.23((1)(3)) 0.16((3)) 0.22((3)) 0.39((3))
Net realized and unrealized gain 4.60 0.02 2.77 1.25 4.64
---------- ---------------- ---------- ---------- ------------
Total from investment operations 4.80 0.25 2.93 1.47 5.03
---------- ---------------- ---------- ---------- ------------
Less distributions
Dividends from net investment income (0.17) (0.23) (0.15) (0.23) (0.37)
Dividends from net realized gains (2.19) (0.92) (1.20) (0.66) (1.95)
---------- ---------------- ---------- ---------- ------------
Total distributions (2.36) (1.15) (1.35) (0.89) (2.32)
---------- ---------------- ---------- ---------- ------------
Change in net asset value 2.44 (0.90) 1.58 0.58 2.71
---------- ---------------- ---------- ---------- ------------
Net asset value, end of period $18.13 $15.69 $16.59 $15.01 $14.43
========== ================ ========== ========== ============
Total return 30.85% 1.48% 19.69% 10.29% 43.83%
Ratios/supplemental data:
Net assets, end of period (thousands) $985,389 $616,221 $446,368 $245,565 $102,259
Ratio to average net assets of:
Operating expenses 0.75%((2)) 0.80% 0.79% 0.50% 0.50%
Net investment income 1.12% 1.38% 0.97% 1.66% 2.14%
Portfolio turnover rate 173% 185% 185% 214% 237%
</TABLE>
((1)) Includes reimbursement of operating expenses by investment adviser of
$0.003 per share.
((2)) For the year ended December 31, 1995, the ratio of operating expenses
to average net assets excludes the effect of expense offsets for
custodian fees; if expense offsets were included, the ratio would not
significantly differ.
((3)) Computed using average shares outstanding.
See Notes to Financial Statements
2-10
<PAGE>
BOND SERIES
Over the past year, the domestic fixed-income market produced strong
returns. Slow economic growth combined with low inflation helped all sectors
of the fixed-income market to post positive results. A strong rally in the
U.S. Treasury market reversed the previous year's dismal results. Most
importantly, the emerging markets sector staged a dramatic recovery from the
first quarter. Finally, the high-yield sector offered returns that were
superior to the bond market overall.
For the twelve months ended December 31, 1995, Phoenix Edge Bond Fund
produced a total return of 23.54%. This compares favorably to the 18.48%
return of its benchmark, the Lehman Brothers Aggregate Bond Index. (All of
these figures assume reinvestment of any distributions.) Our outperformance
for the year is primarily due to our emphasis on emerging markets and, to a
lesser extent, on domestic high- yield securities. Additionally, the Fund
benefited from the strong performance of the U.S. Treasury market over the
past year.
Throughout 1995, we focused on U.S. government securities, non-agency
mortgage-backed securities, emerging markets debt and also domestic
high-yield issues--all of which were strong contributors to the portfolio.
The emerging markets sector, in particular, enhanced performance over this
reporting period. Despite the first-quarter difficulties caused by the
Mexican debt crisis, emerging markets recovered, with an improving perception
by investors of value in this sector. We continue to believe that this
segment of the fixed-income market will offer significant potential in the
coming year.
[typeset representation of line chart]
Lehman Brothers Aggregate Bond Series
Bond Index*
12/31/85 10000 10000
12/31/86 11526 11945
12/31/87 11844 12079
12/31/88 12779 13330
12/31/89 14636 14437
12/31/90 15947 15179
12/31/91 18499 18125
12/31/92 19868 19943
12/31/93 21806 23114
12/31/94 21170 21849
12/31/95 25082 26993
[end line chart]
Average Annual Total Returns for Periods Ending 12/31/95
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
Bond Series 23.54% 12.20% 10.44%
- --------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index* 18.48% 9.48% 9.63%
- -------------------------------------------------------------------------------
This chart assumes an initial gross investment of $10,000 made on 12/31/85.
Returns shown include the reinvestment of all distributions at net asset
value, and the change in share price for the stated period. 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. High yield fixed income
securities generally are subject to greater market fluctuations and risk of
loss of income and principal than are investments in lower-yielding fixed
income securities. Foreign investing involves special risks such as currency
fluctuation and less public disclosure, as well as economic and political
risks.
*The Lehman Brothers Aggregate Bond Index is an unmanaged but commonly used
measure of bond performance. It is a combination of several Lehman Brothers
Fixed Income Indexes.
2-11
<PAGE>
BOND SERIES
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------- ------------ -----------
U.S. GOVERNMENT SECURITIES--21.8%
U.S. Treasury Bonds--6.0%
U.S. Treasury Bonds 6.875%, '25 Aaa $2,500 $ 2,818,425
U.S. Treasury Bonds 7.625%, '25 Aaa 3,000 3,665,040
----------
6,483,465
----------
U.S. Treasury Notes--10.5%
U.S. Treasury Notes 6.50%, '97 Aaa 1,000 1,016,630
U.S. Treasury Notes 5.50%, '98 Aaa 750 755,390
U.S. Treasury Notes 5.625%, '00 Aaa 500 505,000
U.S. Treasury Notes 5.875%, '05 Aaa 9,000 9,199,980
----------
11,477,000
----------
Agency Mortgage-Backed Securities--5.3%
FHLMC 7.50%, '18 Aaa 746 749,843
FNMA 7%, '24 Aaa 2,820 2,844,260
GNMA Seasoned 8%, '06 Aaa 253 263,601
GNMA 6.50%, '23 Aaa 1,963 1,949,241
----------
5,806,945
----------
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $22,579,804) 23,767,410
----------
NON-CONVERTIBLE BONDS--36.6%
Chemical--Specialty--1.1%
Borden Chemical & Plastics 9.50%,
'05 Ba 1,200 1,242,000
----------
Containers--2.1%
Owens-Illinois, Inc. 11%, '03 Ba 2,000 2,265,000
----------
Entertainment, Leisure & Gaming--1.9%
Paramount Communications Sr.
Debenture 8.25%, '22 Ba 2,000 2,070,280
----------
Hospital Management & Services--1.3%
Tenet Healthcare Corp. Sr. Note
9.625%, '02 Ba 500 551,250
Tenet Healthcare Corp. Sr. Sub.
Notes 10.125%, '05 Ba 750 832,500
----------
1,383,750
----------
Machinery--1.4%
Cincinnati Milacron, Inc. 8.375%,
'04 Ba 1,500 1,586,820
----------
Non-Agency Mortgage-Backed Securities--25.1%
Kidder Peabody Acceptance Corp.
94-C2, D 7.18%, '05 BBB((c)) 500 497,656
Nomura Asset Sec Corp. 94-MD2, A6,
7.24%, '03 (e) A((c)) 1,366 1,356,838
Prudential Home Mtg. 93-L, 3B2 144A
6.641%, '23 (b) NR 1,500 1,443,047
Resolution Trust Corp. 92-C7, A1C
7.90%, '23 Aa 729 731,601
Resolution Trust Corp. 92-C8, D
8.835%, '23 Baa 2,063 2,155,671
Resolution Trust Corp. 93-C3, A4
6.55%, '24 Aaa 907 901,403
Resolution Trust Corp. 94-C2, C 8%,
'25 A((c)) 2,600 2,687,750
Resolution Trust Corp. 94-C2, D 8%,
'25 BBB((c)) 975 996,130
Resolution Trust Corp. 94-C1, D 8%,
'26 BBB((c)) 1,904 1,941,192
Resolution Trust Corp. 95-C1, B
6.90%, '27 Aa 2,250 2,269,688
Resolution Trust Corp. 95-C2, C 7%,
'27 A 2,000 1,980,794
Resolution Trust Corp. 95-1, M2
7.50%, '28 Aa 2,663 2,707,213
Resolution Trust Corp. 95-2, C1
7.45%, '29 Aa 1,933 1,918,110
Ryland Mortgage Securities Corp.
92-A, 1A 8.33%, '30 (e) A-((c)) $1,010 $ 1,025,637
Securitized Asset Sales 95-A, M
7.53%, '24 AA+((c)) 1,839 1,896,819
White Hall Partners 95-C1, B 144A
7.43%, '25 (b) AA((c)) 2,750 2,814,453
----------
27,324,002
----------
Paper & Forest Products--0.9%
Buckeye Cellulose 8.50%, '05 Ba 950 982,062
----------
Publishing, Broadcasting, Printing & Cable--1.3%
Continental Cablevision 144A 8.30%,
'06 (b) BB+((c)) 1,500 1,509,375
----------
Retail--Food--0.1%
ARA Services, Inc. 10.625%, '00 Ba 54 61,695
----------
Telecommunications Equipment--1.1%
Panamsat L.P. 0%, '03 (e) B 1,500 1,215,000
----------
Textile & Apparel--0.3%
Westpoint Stevens 9.375%, '05 B 300 298,500
----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $38,199,368) 39,938,484
----------
FOREIGN NON-CONVERTIBLE BONDS--12.2%
Argentina--1.5%
Bridas Corp. Yankee 12.50%, '99 B 1,600 1,592,000
----------
Brazil--0.9%
Aracruz Cellulose 144A 10.375%, '02
(b) NR 1,000 955,000
----------
Canada--1.4%
Videotron Groupe Ltd. 10.25%, '02 Ba 1,400 1,480,500
----------
Chile--1.8%
CSAV 144A 7.375%, '03 (b) BBB((c)) 2,000 1,990,000
----------
Colombia--2.3%
Centragas Yankee 144A 10.65%, '10
(b) BBB-((c)) 2,413 2,557,961
----------
Indonesia--1.4%
P.T. Polysindo 13%, '01 B 1,500 1,560,000
----------
Mexico--0.5%
Banco Mexico 7.25%, '04 Ba 750 586,875
----------
Philippines--1.2%
Subic Power Corp. 144A 9.50%, '08
(b) NR 1,398 1,333,079
----------
Singapore--1.2%
Asia Pulp & Paper Co. Yankee
11.75%, '05 Ba 1,300 1,257,750
----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $12,653,916) 13,313,165
----------
FOREIGN GOVERNMENT SECURITIES--12.4%
Argentina--2.9%
Republic of Argentina Bear FRB
Float 6.8125%, '05 (e) B 2,500 1,779,688
Republic of Argentina Par L-GP 5%,
'23 (e) B 2,500 1,426,562
----------
3,206,250
----------
Brazil--3.4%
Republic of Brazil interest
capitalization, Series C Euro 8%,
'14 B+((c)) 3,184 1,820,638
Republic of Brazil El-L Euro Float
6.8125%, '06 (e) NR 2,000 1,376,250
Republic of Brazil Par Z-L Euro
4.25%, '24 (e) NR 1,000 528,750
----------
3,725,638
----------
See Notes to Financial Statements
2-12
<PAGE>
BOND SERIES
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------- ------------ -----------
Costa Rica--1.3%
Central Bank of Costa Rica 6.25%,
'10 NR $2,200 $ 1,375,000
----------
Ecuador--1.0%
Republic of Ecuador PDI interest
capitalization, Euro 6.8125%, '15
(e) NR 3,064 1,026,594
----------
Philippines--1.0%
Central Bank Philippines PCIR Euro
6.25%, '17 (e) BB((c)) 1,500 1,117,500
----------
Poland--2.8%
Poland Global Reg. Par Euro 2.75%,
'24 (e) Baa 1,000 471,250
Poland PDI 3.75%, '14 (e) Baa 4,000 2,590,000
----------
3,061,250
----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $11,650,404) 13,512,232
----------
MUNICIPAL BONDS--9.4%
Florida--1.5%
Palm Beach Waste Revenue Project B
10.50%, '11 NR 1,500 1,633,950
----------
Illinois--0.6%
Illinois Health Facilities
Authority 7%, '08 Aaa 550 638,622
----------
Michigan--0.2%
Brighton School District 0%, '18 Aaa 600 174,474
----------
New York--1.3%
Beth Israel Medical Center Taxable
7.58%, '15 Aaa 1,395 1,429,666
----------
Pennsylvania--4.3%
Pennsylvania Economic Development
Finance Authority 9.50%, '12 NR 2,500 2,675,000
Pennsylvania Financial Development
6.75%, '07 NR 1,950 1,993,738
----------
4,668,738
----------
Virginia--1.5%
Pittsylvania County Series B
7.65%, '10 NR 1,500 1,681,214
----------
TOTAL MUNICIPAL BONDS
(Identified cost $9,469,403) 10,226,664
----------
SHARES VALUE
------------ -----------
WARRANTS--0.1%
Paper & Forest Products--0.1%
SD Warren Warrants 144A (b)(d) 30,000 $ 150,000
----------
TOTAL WARRANTS
(Identified cost $142,500) 150,000
----------
PREFERRED STOCKS--4.1%
Paper & Forest Products--0.8%
SD Warren Co. Pfd. PIK 144A
Series B (b) 30,000 834,358
----------
Telecommunications Equipment--3.3%
Panamsat Corp. Pfd. 12.75%, '05 3,241 3,604,864
----------
TOTAL PREFERRED STOCKS
(Identified cost $3,926,836) 4,439,222
----------
TOTAL LONG-TERM INVESTMENTS--96.6%
(Identified cost $98,622,231) 105,347,177
----------
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000)
------- ------------
SHORT-TERM OBLIGATIONS--1.5%
Commercial Paper--1.5%
McDonalds' Corp. 5.75%, 1-2-96 P-1 $1,580 1,579,748
----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $1,579,748) 1,579,748
----------
TOTAL INVESTMENTS--98.1%
(Identified cost $100,201,979) 106,926,925((a))
Cash and receivables, less liabilities--1.9% 2,118,615
----------
NET ASSETS--100.0% $109,045,540
==========
((a)) Federal Income Tax Information: Net unrealized appreciation of
investment securities is comprised of gross appreciation of $7,197,217
and gross depreciation of $402,760 for income tax purposes. At December
31, 1995 the aggregate cost of securities for federal income tax
purposes was $100,132,468.
((b)) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally to qualified institutional buyers. At December
31, 1995, these securities amounted to a value of $13,587,273 or 12.5%
of net assets.
((c)) As rated by Standard & Poor's, Duff & Phelps or Fitch.
((d)) Non-income producing.
((e)) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
See Notes to Financial Statements
2-13
<PAGE>
BOND SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
Assets
Investment securities at value (Identified
cost $100,201,979) $106,926,925
Cash 301,854
Receivable for investment securities sold 2,003,737
Interest and dividends receivable 1,931,573
------------
Total assets 111,164,089
------------
Liabilities
Payable for investment securities purchased 1,999,140
Investment advisory fee 42,824
Financial agent fee 5,443
Trustee fee 2,900
Accrued expenses 68,242
------------
Total liabilities 2,118,549
------------
Net Assets $109,045,540
============
Net Assets Consist of:
Capital paid in on shares of beneficial
interest $103,960,390
Undistributed net investment income 135,344
Accumulated net realized loss (1,775,140)
Net unrealized appreciation 6,724,946
------------
Net Assets $109,045,540
============
Shares of beneficial interest outstanding, $1
par value, unlimited authorization 10,668,660
============
Net asset value and offering price per share $10.22
============
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
Investment Income
Interest $ 8,004,237
Dividends 419,853
------------
Total investment income 8,424,090
------------
Expenses
Investment advisory fee 458,093
Financial agent fee 54,971
Custodian 74,285
Professional 27,799
Printing 25,694
Trustees' fee 15,743
Miscellaneous 10,706
Expenses borne by investment adviser (70,000)
------------
Total expenses 597,291
Custodian fees paid indirectly (2,705)
------------
Net expenses 594,586
------------
Net investment income 7,829,504
------------
Net Realized and Unrealized Gain (Loss) on
Investments
Net realized gain from investment
transactions 1,405,058
Net unrealized appreciation of investment
securities 10,007,140
------------
Net gain on investments 11,412,198
------------
Net increase in net assets resulting from
operations $19,241,702
============
See Notes to Financial Statements
2-14
<PAGE>
BOND SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Year
Ended Ended
12/31/95 12/31/94
------------ -------------
From Operations
Net investment income $ 7,829,504 $ 5,726,303
Net realized gain (loss) 1,405,058 (4,421,816)
Net unrealized appreciation (depreciation) 10,007,140 (5,570,839)
---------- ------------
Net increase (decrease) in net assets
resulting from operations 19,241,702 (4,266,352)
---------- ------------
From Distributions to Shareholders
Net investment income (7,763,175) (5,746,498)
---------- ------------
Decrease in net assets from distributions
to shareholders (7,763,175) (5,746,498)
---------- ------------
From Shares of Beneficial Interest
Transactions
Proceeds from sales of shares (4,715,281 and
4,380,630 shares, respectively) 45,595,165 42,304,393
Net asset value of shares issued from
reinvestment of distributions
(796,247 and 617,518 shares, respectively) 7,763,175 5,746,498
Cost of shares repurchased (3,158,605 and
4,414,044 shares, respectively) (30,477,355) (42,745,168)
---------- ------------
Increase in net assets from share
transactions 22,880,985 5,305,723
---------- ------------
Net increase (decrease) in net assets 34,359,512 (4,707,127)
Net Assets
Beginning of period 74,686,028 79,393,155
---------- ------------
End of period (including undistributed net
investment income of $135,344 and $23,073,
respectively) $109,045,540 $ 74,686,028
========== ============
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993 1992 1991
------------ ------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.98 $10.27 $9.58 $9.33 $8.48
Income from investment operations
Net investment income ((2)) 0.83((1)) 0.72((1)) 0.66((1)) 0.66 0.74
Net realized and unrealized gain (loss) 1.22 (1.28) 0.84 0.25 0.85
---------- ---------- ---------- ------- --------
Total from investment operations 2.05 (0.56) 1.50 0.91 1.59
---------- ---------- ---------- ------- --------
Less distributions
Dividends from net investment income (0.81) (0.73) (0.66) (0.66) (0.74)
Dividends from net realized capital gains -- -- (0.15) -- --
---------- ---------- ---------- ------- --------
Total distributions (0.81) (0.73) (0.81) (0.66) (0.74)
---------- ---------- ---------- ------- --------
Change in net asset value 1.24 (1.29) 0.69 0.25 0.85
---------- ---------- ---------- ------- --------
Net asset value, end of period $10.22 $8.98 $10.27 $9.58 $9.33
========== ========== ========== ======= ========
Total return 23.54% -5.47% 15.90% 10.03% 19.41%
Ratios/supplemental data:
Net assets, end of period (thousands) $109,046 $74,686 $79,393 $43,090 $21,957
Ratio to average net assets of:
Operating expenses 0.65%((3)) 0.66% 0.65% 0.50% 0.50%
Net investment income 8.55% 7.62% 6.71% 7.47% 8.65%
Portfolio turnover rate 147% 181% 169% 166% 269%
</TABLE>
((1)) Includes reimbursement of operating expenses by investment adviser of
$0.007, $0.006 and $0.005 per share, respectively.
((2)) Computed using average shares outstanding.
((3)) For the year ended December 31, 1995, the ratio of operating expenses
to average net assets excludes the effect of expense offsets for
custodian fees; if expense offsets were included, the ratio would not
significantly differ.
See Notes to Financial Statements
2-15
<PAGE>
TOTAL RETURN SERIES
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%.
For the 1995 calendar year, Phoenix Edge Total Return Series provided a
return of 18.22% while 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. 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 yearend, 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 50% stocks, 28% bonds and 22% cash
reserves.
[typeset representation of line chart]
Total S&P 500 Lipper Analytical
Return Stock Service Flexible
Series Index* Fund**
12/31/85 10000 10000 10000
12/31/86 11561 11821 11511
12/31/87 13015 12433 12346
12/31/88 13319 14485 13310
12/31/89 15966 19038 15606
12/31/90 16864 18429 15643
12/31/91 21828 24059 19554
12/31/92 24157 25909 21112
12/31/93 26820 28500 23762
12/31/94 26431 28877 23208
12/31/95 31246 39708 29005
[end chart]
Average Annual Total Returns for Periods Ending 12/31/95
1 Year 5 Years 10 Years
- ------------------------------------------------------------------------------
Total Return Series 18.22% 13.13% 12.07%
- ------------------------------------------------------------------------------
S&P 500 Index* 37.51% 16.59% 14.79%
- ------------------------------------------------------------------------------
Lipper Analytical Service Flexible Fund** 24.98% 13.15% 11.24%
- ------------------------------------------------------------------------------
This chart assumes an initial gross investment of $10,000 made on 12/31/85.
Returns shown include the reinvestment of all distributions at net asset
value, and the change in share price for the stated period. 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 stock
total return performance.
** 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.
2-16
<PAGE>
TOTAL RETURN SERIES
SCHEDULE OF INVESTMENTS
December 31, 1995
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------- ------------ -----------
U.S. GOVERNMENT SECURITIES--14.5%
U.S. Treasury Notes--11.8%
U.S. Treasury Notes 7.25%, '96 AAA $ 7,000 $ 7,121,870
U.S. Treasury Notes 7.50%, '97 AAA 14,500 14,845,100
U.S. Treasury Notes 5.75%, '97 AAA 19,500 19,674,720
----------
41,641,690
----------
Agency Mortgage-Backed Securities--2.7%
GNMA 6.50%, '23 AAA 9,727 9,656,963
----------
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $50,495,017) 51,298,653
----------
SHARES
----------
COMMON STOCKS--46.3%
Advertising--2.0%
Interpublic Group Companies, Inc. 74,800 3,244,450
Omnicom Group, Inc. 104,000 3,874,000
----------
7,118,450
----------
Aerospace & Defense--2.6%
Boeing Company 70,000 5,486,250
United Technologies Corp. 40,000 3,795,000
----------
9,281,250
----------
Airlines--0.6%
Delta Airlines, Inc. 30,000 2,216,250
----------
Banks--3.3%
Bank of Boston Corp. 35,000 1,618,750
BankAmerica Corp. 25,000 1,618,750
Bankers Trust New York Corp. 40,000 2,660,000
Barnett Banks, Inc. 30,000 1,770,000
Chase Manhattan Corp. 20,000 1,212,500
Citicorp 40,000 2,690,000
----------
11,570,000
----------
Chemical--1.6%
IMC Global, Inc. 46,000 1,880,250
Monsanto Co. 30,000 3,675,000
----------
5,555,250
----------
Computer Software & Services--3.2%
First Data Corp. 65,400 4,373,625
Informix Corp. (b) 120,000 3,600,000
Oracle Systems Corp. (b) 75,000 3,178,125
----------
11,151,750
----------
Cosmetics & Soaps--0.1%
Colgate Palmolive Co. 4,000 281,000
----------
Diversified Financial Services--2.0%
Donaldson Lufkin & Jenrette 20,000 625,000
Morgan Stanley Group, Inc. 25,000 2,015,625
Paine Webber Group, Inc. 80,000 1,600,000
Travelers Group, Inc. 45,000 2,829,375
----------
7,070,000
----------
Electrical Equipment--3.9%
Emerson Electric Co. 39,000 3,188,250
General Electric Co. 50,000 3,600,000
Honeywell, Inc. 145,000 7,050,625
----------
13,838,875
----------
Electronics--1.7%
Altera Corp. (b) 25,000 1,243,750
Applied Materials, Inc. (b) 8,000 315,000
Integrated Device Technology, Inc. (b) 110,000 1,416,250
LSI Logic Corp. (b) 35,000 1,146,250
Oak Technology, Inc. (b) 20,000 845,000
S3, Inc. (b) 25,000 440,625
Texas Instruments, Inc. 13,000 672,750
----------
6,079,625
----------
Engineering & Construction--1.1%
Fluor Corp. 60,000 3,960,000
----------
Entertainment, Leisure & Gaming--1.5%
Gaylord Entertainment Co. Class A 75,750 2,102,063
Walt Disney Co. 55,000 3,245,000
----------
5,347,063
----------
Food--0.6%
Nabisco Holdings Corp. Class A 60,000 1,957,500
----------
SHARES VALUE
------------ -----------
Healthcare--Diversified--0.7%
American Home Products Corp. 26,000 $ 2,522,000
----------
Healthcare--Drugs--4.4%
Amgen, Inc. (b) 50,000 2,968,750
Ergo Science Corp. (b) 30,000 427,500
Genzyme Corp. (b) 20,000 1,247,500
Merck & Co. Inc. 85,000 5,588,750
Schering-Plough Corp. 60,000 3,285,000
Watson Pharmaceuticals, Inc. (b) 40,000 1,960,000
----------
15,477,500
----------
Hospital Management & Services--0.4%
Manor Care, Inc. 40,000 1,400,000
----------
Insurance--2.1%
Allstate Corp. 100,000 4,112,500
American International Group, Inc. 15,000 1,387,500
Cigna Corp. 20,000 2,065,000
----------
7,565,000
----------
Medical Products & Supplies--1.9%
Cordis Corp. (b) 5,000 502,500
Empi, Inc. (b) 45,000 1,147,500
Johnson & Johnson 20,000 1,712,500
Medtronic, Inc. 60,000 3,352,500
----------
6,715,000
----------
Natural Gas--1.0%
Anadarko Petroleum Corp. 65,000 3,518,125
----------
Office & Business Equipment--2.1%
Digital Equipment Corp. (b) 70,000 4,488,750
Hewlett Packard Co. 21,000 1,758,750
Silicon Graphics, Inc. (b) 42,000 1,155,000
----------
7,402,500
----------
Oil--1.1%
Mobil Corp. 35,000 3,920,000
----------
Oil Service & Equipment--2.8%
Halliburton Co. 75,000 3,796,875
Schlumberger Ltd. 50,000 3,462,500
Tidewater, Inc. 85,000 2,677,500
----------
9,936,875
----------
Publishing, Broadcasting, Printing & Cable--0.7%
Evergreen Media Corp. Class A (b) 20,000 640,000
Lin Television Corp. (b) 57,000 1,695,750
----------
2,335,750
----------
Retail--0.2%
OfficeMax, Inc. (b) 35,000 783,125
----------
Telecommunications Equipment--2.0%
Ascend Communications, Inc. (b) 10,000 811,250
Bay Networks, Inc. (b) 30,000 1,233,750
Cisco Systems, Inc. (b) 50,000 3,731,250
Gandalf Technologies, Inc. (b) 10,000 170,000
3Com Corp. (b) 25,000 1,165,625
----------
7,111,875
----------
Tobacco--1.0%
Philip Morris Companies, Inc. 37,800 3,420,900
----------
Utility--Telephone--1.7%
AT&T Corp. 25,000 1,618,750
Bellsouth Corp. 100,000 4,350,000
----------
5,968,750
----------
TOTAL COMMON STOCKS
(Identified cost $147,846,313) 163,504,413
----------
FOREIGN COMMON STOCKS--3.6%
Chemical--1.8%
Potash Corp. of Saskatchewan, Inc. (Canada) 90,000 6,378,750
----------
Oil--0.8%
British Petroleum PLC ADR (United Kingdom) 28,000 2,859,500
----------
Telecommunications Equipment--1.0%
Ericsson L.M. Telephone Co. Class B ADR
(Sweden) 179,300 3,496,350
----------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $10,557,865) 12,734,600
----------
See Notes to Financial Statements
2-17
<PAGE>
TOTAL RETURN SERIES
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
--------- -------- -------------
MUNICIPAL BONDS--4.8%
California--1.9%
Kern County Pension Obligation
7.26%, '14 AAA $ 1,500 $ 1,568,325
Long Beach Pension Obligation
6.87%, '06 AAA 840 864,688
Los Angeles County Series B Rev.
5.25%, '23 AAA 225 219,281
N. California Power Agency Rev. A
5.50%, '24 AAA 1,530 1,531,438
San Bernardino County Obligation
Revenue 6.87%, '08 AAA 410 421,841
San Bernardino County Obligation
Revenue 6.94%, '09 AAA 1,110 1,145,675
Ventura County Pension 6.54%, '05 AAA 975 985,121
------------
6,736,369
------------
Florida--1.5%
Florida Board of Education Series
E 5.25%, '23 AA 1,665 1,625,223
Florida State Turnpike Authority
Sinker 5%, '19 AAA 135 130,136
Miami Beach Spec. Oblig. Taxable
8.60%, '21 AAA 3,210 3,641,841
------------
5,397,200
------------
Georgia--0.1%
De Kalb County Water & Sewer
Sinker 5.25%, '23 AA 190 186,778
------------
Massachusetts--0.1%
Massachusetts Bay Transit
Authority Series B 5.375%, '25 AAA 225 220,678
------------
Michigan--0.1%
Michigan Public Power Agency
Sinker 5.25%, '18 AAA 225 220,970
------------
New York--0.2%
New York State Power Rev. Series
CC 5.25%, '18 AA- 765 750,335
------------
South Carolina--0.5%
South Carolina Public Service
Series C 5%, '25 AAA 1,270 1,205,090
South Carolina Public Service Rev.
C 5.125%, '21 A+ 610 571,283
------------
1,776,373
------------
Utah--0.4%
Intermountain Power Series A
5%, '23 AA- 1,505 1,403,127
------------
Washington--0.0%
Seattle Drain & Wastewater Sinker
5.25%, '25 AAA 135 131,055
------------
Other Territories--0.0%
Puerto Rico Commonwealth Sinker
5.375%, '22 AAA 155 154,502
------------
TOTAL MUNICIPAL BONDS
(Identified cost $16,299,559) 16,977,387
------------
NON-CONVERTIBLE BONDS--5.3%
Non-Agency Mortgage-Backed Securities--5.3%
CS First Boston Mtg 95-AE1, B
7.182%, '27 AA- 1,350 1,363,922
DLJ Mtg 95-T10, A 144A 6.955%, '23
(d) Aa((c)) 5,100 4,988,438
Lehman Commercial Conduit 95-C2, B
7.18%, '05 (e) AA 1,650 1,723,219
Non-Agency Mortgage-Backed Securities--continued
Merrill Lynch Mortgage, Inc.
95-C2, B 7.53%, '21 AA $ 994 $ 1,024,878
Resolution Trust Corp. 93-C1, B
8.75%, '24 Aa((c)) 1,600 1,671,500
Resolution Trust Corp. 95-C2, B
6.80%, '27 Aa((c)) 925 922,780
Resolution Trust Corp. 95-C1, A 5
6.0205%, '27 Aaa((c)) 1,887 1,879,128
Resolution Trust Corp. 95-C1, B
6.90%, '27 Aa((c)) 1,900 1,916,625
Resolution Trust Corp. 95-2, M1,
7.15%, '29 Aa((c)) 1,648 1,660,112
SASC 1995-C4, B 7%, '26 AA 1,650 1,674,750
------------
18,825,352
------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $18,562,707) 18,825,352
------------
FOREIGN NON-CONVERTIBLE BONDS--3.8%
Colombia--1.9%
Financiera Energ. Nacional EMTN
144A 9%, '99 (d) BBB- 3,200 3,356,000
Republic of Colombia Yankee 7.25%,
'04 BBB- 3,500 3,360,000
------------
6,716,000
------------
Poland--1.9%
Poland Par 2.75%, '24 (e) Baa3((c)) 7,400 3,487,250
Poland PDI 3.75%, '14 (e) Baa3((c)) 5,200 3,367,000
------------
6,854,250
------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $13,252,816) 13,570,250
------------
TOTAL LONG-TERM INVESTMENTS--78.3%
(Identified cost $257,014,277) 276,910,655
------------
SHORT-TERM OBLIGATIONS--21.1%
Commercial Paper--21.1%
Philip Morris Companies, Inc.
5.90%, 1-4-96 A-1 7,955 7,951,089
Abbott Labs 5.63%, 1-8-96 A-1+ 7,000 6,992,337
Campbell Soup Co. 5.78%,
1-8-96 A-1+ 1,515 1,513,297
Gannett, Inc. 5.77%, 1-8-96 A-1 8,000 7,991,024
Albertson's, Inc. 5.73%, 1-10-96 A-1 5,275 5,267,444
AT&T Corp. 5.65%, 1-11-96 A-1+ 4,330 4,323,204
BellSouth Telecommunications, Inc.
5.95%, 1-12-96 A-1+ 1,945 1,941,464
Wisconsin Electric Power Co.
5.60%, 1-22-96 A-1+ 5,000 4,983,667
Southwestern Bell Telephone Co.
5.55%, 1-25-96 A-1+ 13,525 13,474,958
Pfizer, Inc. 5.77%, 1-26-96 A-1+ 7,825 7,793,646
AT&T Corp. 5.57%, 2-2-96 A-1+ 4,560 4,537,423
Coca Cola Co. 5.55%, 2-9-96 A-1+ 5,540 5,506,691
Southwestern Bell Telephone Co.
5.50%, 2-20-96 A-1+ 2,540 2,520,596
------------
74,796,840
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $74,796,840) 74,796,840
------------
TOTAL INVESTMENTS--99.4%
(Identified cost $331,811,117) 351,707,495((a))
Cash and receivables, less liabilities--0.6% 2,130,654
------------
NET ASSETS--100.0% $353,838,149
============
((a)) Federal Income Tax Information: Net unrealized appreciation of
investment securities is comprised of gross appreciation of $24,063,565
and gross depreciation of $4,167,187 for income tax purposes. At
December 31, 1995 the aggregate cost of securities for federal income
tax purposes was $331,811,117.
((b)) Non-income producing.
((c)) As rated by Moody's.
((d)) 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 $8,344,438 or 2.4% of
net assets.
((e)) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
ADR--American Depository Receipt
See Notes to Financial Statements
2-18
<PAGE>
TOTAL RETURN SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
Assets
Investment securities at value (Identified
cost $331,811,117) $351,707,495
Cash 297,223
Receivable for investment securities sold 1,647,125
Interest and dividends receivable 1,848,932
------------
Total assets 355,500,775
------------
Liabilities
Payable for investment securities purchased 1,401,790
Investment advisory fee 173,526
Financial agent fee 17,772
Trustee fee 2,892
Accrued expenses 66,646
------------
Total liabilities 1,662,626
------------
Net Assets $353,838,149
============
Net Assets Consist of:
Capital paid in on shares of beneficial
interest $331,831,260
Undistributed net investment income 154,166
Accumulated net realized gain 1,956,345
Net unrealized appreciation 19,896,378
------------
Net Assets $353,838,149
============
Shares of beneficial interest outstanding, $1
par value, unlimited authorization 25,951,535
============
Net asset value and offering price per share $13.63
============
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
Investment Income
Interest $10,278,761
Dividends 2,407,992
------------
Total investment income 12,686,753
------------
Expenses
Investment advisory fee 1,831,161
Financial agent fee 192,596
Custodian 57,981
Professional 26,447
Printing 27,204
Trustees' fee 10,926
Miscellaneous 12,166
------------
Total expenses 2,158,481
Custodian fees paid indirectly (10,551)
------------
Net expenses 2,147,930
------------
Net investment income 10,538,823
------------
Net Realized and Unrealized Gain (Loss) on
Investments
Net realized gain from investment
transactions 23,633,671
Net realized loss on foreign currency
transactions (875)
Net unrealized appreciation of investment
securities 19,082,703
------------
Net gain on investments 42,715,499
------------
Net increase in net assets resulting from
operations $53,254,322
============
See Notes to Financial Statements
2-19
<PAGE>
TOTAL RETURN SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Year
Ended Ended
12/31/95 12/31/94
------------ -------------
From Operations
Net investment income $ 10,538,823 $ 7,505,444
Net realized gain (loss) 23,632,796 (3,768,797)
Net unrealized appreciation (depreciation) 19,082,703 (7,374,304)
----------- ------------
Net increase (decrease) in net assets
resulting from operations 53,254,322 (3,637,657)
----------- ------------
From Distributions to Shareholders
Net investment income (10,497,130) (7,923,603)
Net realized gains (21,419,046) (9,607,065)
----------- ------------
Decrease in net assets from distributions
to shareholders (31,916,176) (17,530,668)
----------- ------------
From Shares of Beneficial Interest Transactions
Proceeds from sales of shares (5,465,213 and
6,357,542 shares, respectively) 75,182,133 84,155,117
Net asset value of shares issued from
reinvestment of distributions
(2,341,879 and 1,367,449 shares,
respectively) 31,916,176 17,530,668
Cost of shares repurchased (4,646,668 and
3,611,175 shares, respectively) (63,681,697) (47,445,390)
----------- ------------
Increase in net assets from share
transactions 43,416,612 54,240,395
----------- ------------
Net increase in net assets 64,754,758 33,072,070
Net Assets
Beginning of period 289,083,391 256,011,321
----------- ------------
End of period (including undistributed net
investment income and distributions in
excess of net investment income of $154,166
and ($22,102), respectively $353,838,149 $289,083,391
=========== ============
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993 1992 1991
---------- ------------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.68 $13.71 $12.86 $12.97 $11.07
Income from investment operations
Net investment income 0.45 0.36((1)(3)) 0.23((3)) 0.37((3)) 0.42((3))
Net realized and unrealized gain (loss) 1.84 (0.56) 1.17 0.99 2.76
--------- ---------------- --------- --------- ----------
Total from investment operations 2.29 (0.20) 1.40 1.36 3.18
--------- ---------------- --------- --------- ----------
Less distributions
Dividends from net investment income (0.45) (0.37) (0.23) (0.37) (0.42)
Dividends from net realized gains (0.89) (0.46) (0.32) (1.10) (0.86)
--------- ---------------- --------- --------- ----------
Total distributions (1.34) (0.83) (0.55) (1.47) (1.28)
--------- ---------------- --------- --------- ----------
Change in net asset value 0.95 (1.03) 0.85 (0.11) 1.90
--------- ---------------- --------- --------- ----------
Net asset value, end of period $13.63 $12.68 $13.71 $12.86 $12.97
========= ================ ========= ========= ==========
Total return 18.22% -1.45% 11.02% 10.67% 29.44%
Ratios/supplemental data:
Net assets, end of period (thousands) $353,838 $289,083 $256,011 $163,628 $98,415
Ratio to average net assets of:
Operating expenses 0.67%((2)) 0.74% 0.74% 0.50% 0.50%
Net investment income 3.28% 2.71% 1.82% 2.90% 3.48%
Portfolio turnover rate 170% 220% 269% 326% 255%
</TABLE>
((1)) Includes reimbursement of operating expenses by investment adviser of
$0.001 per share.
((2)) For the year ended December 31, 1995, the ratio of operating expenses
to average net assets excludes the effect of expense offsets for
custodian fees; if expense offsets were included, the ratio would not
significantly differ.
((3)) Computed using average shares outstanding.
See Notes to Financial Statements
2-20
<PAGE>
INTERNATIONAL SERIES
While making general upward progress, world equity markets have oscillated
throughout this reporting period. This was due primarily to wide swings in
the economic outlook and earnings growth expectations. Early in the year,
there were worries about overheating economies, inflation and a shortage of
global productive capacity. Momentum in the markets was hampered by rising
interest rates but as investors' concerns eased, markets picked up again in
the second quarter. By October, investors began to worry about the lack of
growth: GDP in the U.S. did not greatly improve, Europe's growth slowed
sharply and Japan continued to trundle along the bottom. Overall, falling
interest rates greatly assisted equity markets in the second half of the
year. The Asian region was the only area where markets continued to struggle
as worries about too much economic growth and higher interest rates hampered
performance for most of the year.
The volatility of the U.S. Dollar had a significant impact on the
performance results. U.S. investors benefited from the declining U.S. dollar
in the first part of 1995 but lost ground as the dollar rebounded during the
second half of the year. In U.S. Dollar terms, Taiwan, Mexico and the
Philippines were among the worst performing countries during 1995, while
Switzerland, Sweden and Spain were among the best.
For the twelve months ended December 31, 1995, Phoenix Edge International
Fund posted a total return of 9.59%, while the market, as measured by the
Morgan Stanley Capital International EAFE Index, gained 11.55%. (All of these
figures assume reinvestment of any distributions.) The portfolio's relative
underperformance was due primarily to underweighting in Japan during the
second half of the year. Areas which contributed positively to performance
included exposure to technology and European stocks in the health care,
financial services, media, and capital goods sectors. Also helpful was our
hedge of yen into dollars, since the yen depreciated almost 20% over the last
six months. Holdings which hampered performance included European cyclicals,
much of our exposure to southeast Asia (particularly Korea and Taiwan) and
France, where turmoil in the government and its economic plans have troubled
the market for many months.
European growth rates have been revised down for 1995 and 1996 to
approximately 2% each year. Since we expect interest rates to fall further,
the second half of 1996 may well be stronger. With budget deficits coming
down because of spending restraints, monetary policy is the only option
available to create jobs in European countries.
In Japan, the outlook for 1996 growth has improved. A clearer statement on
bank restructuring is due in January, but individual banks have already taken
the initiative to write off bad loans at a faster pace. This clearing of the
decks, coupled with better-than-expected capital spending and a small
improvement from the consumer as deflation eases, could provide the first GDP
growth above 2% in 1996. This has helped the Japanese stock market
considerably in recent months and we expect further progress to be made.
In Southeast Asia, still the fastest growing part of the world, we expect
GDP growth in 1996 to be only slightly less than in 1995. However, after two
years of very poor performance, we believe 1996 will see an improved market,
providing governments stay the course and let their economies gently cool. We
also believe Latin America is past the worst of its recession, but still
expect growth to be relatively slow in 1996 (around 3%) since trouble spots
remain.
Overall, we expect foreign markets to perform well in 1996 due to their
attractive valuations, promising growth prospects and slower earnings
momentum in the United States. We are increasing the Fund's exposure to
economically sensitive areas in the Japanese market, broadening out from the
large exposure to technology which we held through most of 1995. We are
adding selectively to Asia and Latin Americas holdings as well. In Europe, we
shifted our focus from economically sensitive to growth and interest
rate-sensitive stocks in the fourth quarter--a focus we expect to maintain
until earnings expectations catch up with reality or we see signs of renewed
economic growth.
[typeset representation of line chart]
International Europe, Australia and EAFE excluding
Series the Far East (EAFE)* JAPAN
5/1/90 10000 10000 10000
12/31/90 9190 9640 10014
12/31/91 11008 10844 11608
12/31/92 9589 9559 11270
12/31/93 13275 12708 15498
12/31/94 13279 13732 15379
12/31/95 14552 15318 18541
[end chart]
Average Annual Total Returns for Periods Ending 12/31/95
From
Inception
5/1/90 to
1 Year 5 Years 12/31/95
- -------------------------------------------------------------------------------
International Series 9.59% 9.63% 6.84%
- -------------------------------------------------------------------------------
Morgan Stanley Capital International EAFE Index* 11.55% 9.71% 7.81%
- -------------------------------------------------------------------------------
This chart assumes an initial gross investment of $10,000 made on 5/1/90
(inception of the Fund). Returns shown include the reinvestment of all
distributions at net asset value, and the change in share price for the
stated period. 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. Foreign investing involves special risks such as currency fluctuation
and less public disclosure, as well as economic and political risks.
*The Morgan Stanley Capital International EAFE index is an unmanaged but
commonly used measure of foreign stock fund performance which includes
dividends reinvested. The EAFE index is an aggregate of 15 individual
country indexes in Europe, Australia, New Zealand and the Far East.
2-21
<PAGE>
INTERNATIONAL SERIES
SCHEDULE OF INVESTMENTS
December 31, 1995
SHARES VALUE
--------- -----------
COMMON STOCKS--93.4%
Argentina--1.7%
Quilmes (Beverages) 42,000 $ 655,200
YPF Sociedad Anonima ADR (Energy Sources) 75,000 1,621,875
----------
2,277,075
----------
Australia--1.2%
Australia & New Zealand Banking Group
(Banks) 350,000 1,642,862
----------
Austria--0.8%
Austria Mikro Systeme International
(Electronics) 6,200 1,006,633
----------
Chile--1.3%
Enersis SA ADR (Utility--Electric) 60,000 1,710,000
----------
Denmark--1.3%
Danisco A/S (Manufacturing--Food) 37,000 1,789,310
----------
Finland--1.1%
Valmet (Machinery) 56,800 1,425,887
----------
France--4.8%
Carrefour Supermarche (Retail--Food) 2,100 1,275,811
Christian Dior SA (Conglomerates) 16,300 1,759,892
Rexel (Business & Public Service) 10,200 1,724,925
SGS-Thomson Microelectronics (Electronics)
NV (b) 2,900 111,190
SGS-Thomson Microelectronics (Electronics)
ADR (b) 38,600 1,553,650
----------
6,425,468
----------
Germany--4.9%
Adidas AG (Textile & Apparel) (b) 33,800 1,792,496
Gehe AG (Health Care--Drugs) 2,900 1,479,178
Moebel Walther (Retail) 22,300 732,323
SGL Carbon AG (Specialty--Chemical) (b) 20,300 1,574,413
Standard Application Software AG Vorzug
(Computer Software & Services) 7,000 1,061,347
----------
6,639,757
----------
Hong Kong--8.2%
CDL Hotels International (Lodging &
Restaurants) 1,032,000 520,545
Cheung Kong Holdings, Ltd. (Real Estate
Development) 200,000 1,218,329
Dao Heng Bank Group, Ltd. (Banks) 200,000 719,099
First Pacific Co. (Conglomerates) 1,545,000 1,718,465
Guoco Group (Diversified Financial Services) 220,000 1,061,317
Henderson Land Development Corp. (Real
Estate Development) 150,000 904,047
HSBC Holdings PLC (Banks) 101,800 1,540,449
Hutchinson Whampoa (Conglomerates) 207,000 1,260,971
New World Development (Real Estate
Development) 480,000 2,092,112
----------
11,035,334
----------
Indonesia--1.9%
Matahari Putra Prima IDR (Retail) 87,000 153,154
PT Astra International (Automobiles) 483,000 1,003,422
PT Semen Gresik (Building Materials &
Components) 200,000 559,825
Wicaksana Overseas (Wholesale &
Distribution) 320,000 853,734
----------
2,570,135
----------
Italy--2.7%
Olivetti (Office & Business Equipment) (b) 2,216,700 1,778,783
Telecom Italia Mobile-DRNC (Utilty--
Telephone--Cellular)(b) 1,265,000 1,331,664
Telecom Italia Mobile SPA (Utility--
Telephone--Cellular) (b) 287,000 505,651
----------
3,616,098
----------
Japan--19.1%
Circle K Japan Co., Ltd. (Retail) (b) 41,000 1,808,503
Daimaru, Inc. (Retail) 202,000 1,566,626
Daiwa Securities Co., Ltd. (Financial
Services) 92,000 1,409,188
Japan--continued
Hankyu Department Store (Retail) 101,000 $ 1,498,086
Hoya (Electronics) 38,000 1,307,784
Keyence Corp. (Electronics) 9,000 1,038,278
Mitsubishi Bank (Banks) 78,000 1,837,490
Omron Corp. (Electronics) 48,000 1,107,496
Oriental Construction Co. (Engineering &
Construction) 62,000 1,322,326
Ricoh Corp. Ltd. (Office & Business
Equipment) 163,000 1,785,624
Rohm Co. (Electronics) 19,000 1,073,856
Sanwa Bank (Banks) 87,000 1,771,180
Sega Enterprises Ltd. (Entertainment,
Leisure & Gaming) 24,000 1,326,203
Shinko Electric Industries (Electronics) 15,000 604,935
SMC Corporation (Machinery) 22,000 1,593,189
TDK Corporation ORD (Electronics) 16,000 817,438
Tokyo Electron Ltd. (Electronics) 26,000 1,008,225
Toyoda Machine Works (Industrial Components) 149,000 1,437,253
Yokogawa Electric (Electronics) 146,000 1,381,423
----------
25,695,103
----------
Netherlands--6.6%
Ahrend Group NV (Office & Business
Equipment) 40,500 1,334,082
Fortis Amev NV (Insurance) 21,000 1,408,385
Gucci Group NV (Textiles & Apparel) (b) 36,000 1,358,787
Heineken NV (Beverages) 7,700 1,367,640
IHC Caland (Oil Service & Equipment) 57,500 1,937,114
Randstad Holdings NV (Professional Services) 31,000 1,407,948
----------
8,813,956
----------
Norway--1.7%
Uni Storebrand (Insurance) (b) 403,000 2,232,581
----------
Peru--1.4%
CPT B Pen (Utility--Telephone) 893,945 1,921,085
----------
Philippines--0.2%
Metropolitan Bank & Trust Co. (Banks) 15,043 292,497
----------
Poland--0.7%
Bank Gdanski (Banks) (b) 98,300 955,968
----------
Portugal--0.6%
Portugal Telecom (Telecommunications) (b) 40,000 753,756
----------
Singapore--1.2%
Development Bank of Singapore (Banks) 131,000 1,630,091
----------
South Korea--3.5%
Hana Bank (Banks) 44,990 937,875
Korea Electric Power Corporation
(Utilities--Electric) 34,210 1,494,131
Korea First Bank (Banks) 65,000 578,169
Korean Exchange Bank New (Banks) 6,720 79,430
L.G. Electronics (Electronics) 12,000 451,088
Pohang Iron & Steel Co., Ltd. (Metals &
Mining) 16,119 1,127,255
Samsung Electronics--GDR (Electronics) (b) 189 11,057
Samsung Electronics--GDR 144A (Electronics)
(b) (c) 311 16,753
Shinhan Bank (Banks) 2,210 48,500
----------
4,744,258
----------
Spain--1.7%
Iberdrola (Utilities--Electric) 252,000 2,305,712
----------
Sweden--5.1%
Astra AB Ser A (Health Care--Drugs) 49,050 1,961,348
Autoliv AB Reg S ORD (Auto & Truck Parts) 25,000 1,463,665
Frontec AB (Computer Software & Services)
(b) 37,000 1,066,363
Hoganas Series B (Auto & Truck Parts) 81,800 2,394,556
----------
6,885,932
----------
See Notes to Financial Statements
2-22
<PAGE>
INTERNTIONAAL SERIES
SHARES VALUE
--------- -----------
Switzerland--4.4%
Brown Boveri Bearer (Electrical Equipment) 520 $ 605,597
Brown Boveri B REGD (Electrical Equipment) 2,000 453,676
Ciba-Geigy AG Reg. (Heath Care--
Diversified) 1,820 1,605,510
Sandoz (Health Care--Drugs) 2,580 2,367,878
Swissair Reg. (Transportation--Airlines) (b) 1,100 803,059
----------
5,835,720
----------
Taiwan--2.5%
The Taiwan Fund, Inc. (Multi-Industry) 64,750 1,327,375
The R.O.C. Taiwan Fund (Multi-Industry) (b) 200,000 2,100,000
----------
3,427,375
----------
Thailand--2.3%
General Finance Securities (Financial
Services) 110,000 506,566
Krung Thai Bank (Banks) 110,000 454,163
Land & House Co. Ltd. (Real Estate
Development) 35,000 575,246
PTT Exploration & Production (Oil) (b) 146,000 1,530,180
----------
3,066,155
----------
United Kingdom--12.5%
Allied Irish Banks PLC (Banks) 280,000 1,526,087
Astec (BSR) PLC (Electronics) 718,000 1,276,568
British Aerospace Ord. (Aerospace & Defense) 124,000 1,534,596
British Airways PLC (Airlines) 297,000 2,149,099
Glaxo Wellcome PLC Spons ADR (Health
Care--Drugs) 48,000 1,356,000
Hays PLC (Professional Services) 76,000 442,547
Powergen PLC (Utilities--Electrical & Gas) 161,000 1,331,250
Reed International PLC (Broadcasting,
Publishing & Cable) 88,000 1,341,863
Shell Transport & Trading Co. PLC (Energy
Sources) 153,000 2,024,162
Standard Chartered PLC (Banks) 164,000 1,395,528
Takare (Hospital Management & Services) 256,000 711,553
WPP Group (Advertising) 686,000 1,746,957
----------
16,836,210
----------
TOTAL COMMON STOCKS
(Identified cost $113,650,644) 125,534,958
----------
STANDARD
& POOR'S PAR
RATINGS VALUE
(Unaudited) (000)
--------- --------
SHORT-TERM OBLIGATIONS--6.2%
Commercial Paper--3.7%
McDonald's Corp. 5.75%, 1-2-96 A-1+ $4,000 3,999,361
Coca Cola Co. 5.70%, 1-12-96 A-1+ 1,020 1,018,224
---------
5,017,585
---------
Federal Agency Securities--2.5%
Federal Home Loan Mortgage 5.52%
1-16-96 (d) 3,400 3,392,180
---------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $8,409,765) 8,409,765
---------
TOTAL INVESTMENTS--99.6%
(Identified cost $122,060,409) 133,944,723((a))
Cash and receivables, less liabilities--0.4% 509,851
---------
NET ASSETS--100.0% $134,454,574
=========
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of
Common Stocks
Advertising 1.4%
Aerospace & Defense 1.2
Airlines 2.4
Auto & Truck Parts 3.1
Automobiles 0.8
Banks 12.3
Beverages 1.6
Broadcasting, Publishing & Cable 1.1
Building Materials & Components 0.4
Business & Public Service 1.4
Computer Software & Services 1.7
Conglomerates 3.8
Diversified Financial Services 0.8
Electrical Equipment 0.8
Electronics 10.2
Energy Sources 2.9
Engineering & Construction 1.1
Entertainment, Leisure & Gaming 1.1
Financial Services 1.5
Health Care--Diversified 1.3
Health Care--Drugs 5.7
Hospital Management & Services 0.6
Industrial Components 1.1
Insurance 2.9
Lodging & Restaurants 0.4
Machinery 2.4
Manufacturing--Food 1.4
Metals & Mining 0.9
Multi-Industry 2.7
Office & Business Equipment 3.9
Oil (Oil Service & Equipment) 2.7
Professional Services 1.5
Real Estate Development 3.8
Retail (Retail--Food) 5.6
Specialty--Chemical 1.3
Telecommunications 0.6
Textile & Apparel 2.5
Utility--Electric (Utility--Electrical & Gas) 5.4
Utility--Telephone 3.0
Wholesale & Distribution 0.7
--------
100.0%
========
((a)) Federal Income Tax Information: Net unrealized appreciation of
investment securities is comprised of gross appreciation of $13,574,959
and gross depreciation of $1,706,742 for income tax purposes. At
December 31, 1995 the aggregate cost of securities for federal income
tax purposes was $122,076,506.
((b)) Non-income producing.
((c)) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally to qualified institutional buyers. At December
31, 1995, these securities amounted to a value of $16,753 or 0.01% of
net assets.
((d)) Segregated as collateral for forward currency contracts. At December
31, 1995, these securities amounted to $3,392,180 or 2.5% of net
assets.
ADR--American Depository Receipt
See Notes to Financial Statements
2-23
<PAGE>
INTERNATIONAL SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
Assets
Investment securities at market (Identified
cost $122,060,409) $133,944,723
Cash 54,224
Receivable for investment securities sold 757,525
Interest and dividends receivable 189,733
Tax reclaim receivable 86,611
Net unrealized appreciation on forward
currency contracts 112,204
------------
Total Assets 135,145,020
------------
Liabilities
Payable for closed forward currency
contracts 428,180
Payable for investment securities purchased 57,352
Investment advisory fee 83,763
Financial agent fee 6,251
Trustees' fee 2,997
Custodian fee 43,067
Accrued expenses 68,836
------------
Total Liabilities 690,446
------------
Net Assets $134,454,574
============
Net Assets Consist of:
Capital paid in on shares of beneficial
interest $123,073,809
Undistributed net investment income 917,632
Accumulated net realized loss (1,531,400)
Net unrealized appreciation 11,994,533
------------
Net Assets $134,454,574
============
Shares of beneficial interest outstanding, $1
par value, unlimited authorization 10,588,485
============
Net asset value and offering price per share $ 12.70
============
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
Investment income
Dividends $ 1,943,245
Interest 878,443
Foreign taxes withheld (158,081)
------------
Total investment income 2,663,607
------------
Expenses
Investment advisory fee 988,635
Financial agent fee 78,641
Custodian 246,904
Printing 32,723
Professional 24,591
Trustees' fee 15,333
Miscellaneous 28,980
------------
Total expenses 1,415,807
------------
Net investment income 1,247,800
------------
Net Realized and Unrealized Gain (Loss) on
Investments
Net realized gain on securities 2,867,931
Net realized loss on foreign currency
transactions (916,353)
Net unrealized appreciation on investments 8,063,640
Net unrealized appreciation on foreign
currency and foreign currency transactions 488,528
------------
Net gain on investments 10,503,746
------------
Net increase in net assets resulting from
operations $11,751,546
============
See Notes to Financial Statements
2-24
<PAGE>
INTERNATIONAL SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Year
Ended Ended
12/31/95 12/31/94
------------ -------------
From Operations
Net investment income $ 1,247,800 $ 691,783
Net realized gain (loss) 1,951,578 (74,826)
Net unrealized appreciation (depreciation) 8,552,168 (3,984,032)
---------- ------------
Net increase (decrease) in net assets
resulting from operations 11,751,546 (3,367,075)
---------- ------------
From Distributions to Shareholders
Net investment income (455,953) (257,332)
Net realized gains (2,629,683) (3,156,656)
---------- ------------
Decrease in net assets from distributions
to shareholders (3,085,636) (3,413,988)
---------- ------------
From Share Transactions
Proceeds from sales of shares (3,785,668 and
9,181,135, respectively) 45,431,812 115,954,555
Net asset value of shares issued from
reinvestment of distributions (238,826 and
282,805 shares, respectively) 3,085,636 3,413,988
Cost of shares repurchased (4,795,590 and
3,121,639 shares, respectively) (57,355,995) (39,201,848)
---------- ------------
(Decrease) increase in net assets from share
transactions (8,838,547) 80,166,695
---------- ------------
Net (decrease) increase in net assets (172,637) 73,385,632
Net Assets
Beginning of period 134,627,211 61,241,579
---------- ------------
End of period (including undistributed net
investment income of $917,632 and $388,998,
respectively) $134,454,574 $134,627,211
========== ============
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding through the indicated period)
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993 1992 1991
------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.85 $12.21 $8.82 $10.17 $9.07
Income from investment operations
Net investment income ((2)) 0.12 0.08 0.07((1)) 0.09 0.24((1))
Net realized and unrealized (loss) gain 1.02 (0.07) 3.32 (1.40) 1.53
------ ------ ---------- ------ ------------
Total from investment operations 1.14 0.01 3.39 (1.31) 1.77
------ ------ ---------- ------ ------------
Less distributions
Dividends from net investment income (0.04) (0.03) -- (0.04) (0.24)
Dividends from net realized gain (0.25) (0.34) -- -- (0.41)
Distributions from paid in capital -- -- -- -- (0.02)
------ ------ ---------- ------ ------------
Total distributions (0.29) (0.37) -- (0.04) (0.67)
------ ------ ---------- ------ ------------
Change in net asset value 0.85 (0.36) 3.39 (1.35) 1.10
------ ------ ---------- ------ ------------
Net asset value, end of period $12.70 $11.85 $12.21 $8.82 $10.17
====== ====== ========== ====== ============
Total return 9.59% 0.03% 38.44% -12.89% 19.78%
Ratio/supplemental data:
Net assets, end of period (thousands) $134,455 $134,627 $61,242 $13,772 $6,119
Ratio to average of net assets of:
Operating expenses 1.07% 1.10% 1.15% 1.50% 1.50%
Net investment income 0.95% 0.64% 0.49% 1.13% 2.44%
Portfolio turnover rate 249% 172% 193% 74% 104%
</TABLE>
((1)) Includes reimbursement of operating expenses by investment adviser of
$0.05 and $0.02, respectively.
((2)) Computed using average shares outstanding.
See Notes to Financial Statements
2-25
<PAGE>
BALANCED SERIES
Benign inflation and moderating economic growth contributed to very strong
investment results in both the equity and fixed-income markets. For the
twelve months ended December 31, 1995, the Balanced Series provided a total
return of 23.28%. The Fund's Balanced Benchmark returned 27.23% in the same
period. (All of these figures assume reinvestment of any distributions.)
The Fund's relative underperformance came during the first half of the
year when the equity segment of the portfolio was underweighted in the strong
technology and financial services sectors and the fixed-income segment had a
shorter duration versus the benchmark.
In the second half of the year we increased holdings in the health care,
financial services and technology sectors, with improved equity results.
Strong contributors to the Fund during the period were Equifax, Medtronic,
Amgen, Cisco Systems and Computer Sciences.
The fixed-income portion of the Fund was helped by a longer duration
during the second half of the year. In addition, the fixed-income segment has
benefited from increased diversification into sectors of the bond market,
such as mortgage-backed securities, municipal bonds, emerging markets debt
and high-yield corporate bonds.
As we enter the new year, we are maintaining a somewhat more cautious
stance toward the financial markets. Economic growth continues to moderate
and earnings growth appears to be slowing. Following a strong 1995, we
anticipate the equity market to enter a corrective phase in the first half of
1996. Consequently, we expect to maintain cash reserves above the 10%
benchmark allocation. Equity investments will continue to be driven by our
theme process. Dominant themes continue to be our 21st Century Medicine,
Hybrid Network, Energy Technology and The REITS themes. We will continue to
diversify our fixed income component into attractive sectors while
maintaining the duration at current levels.
[typeset representation of line chart]
Balanced Balanced
Benchmark* Series
5/1/92 10000 10000
12/31/92 10712 10972
12/31/93 11702 11912
12/31/94 11725 11579
12/31/95 14917 14274
[end chart]
Average Annual Total Returns for Periods Ending 12/31/95
From
Inception
5/1/92 to
1 Year 12/31/95
- --------------------------------------------------
Balanced Series 23.28% 10.19%
- --------------------------------------------------
Balanced Benchmark* 27.23% 11.51%
- --------------------------------------------------
This chart assumes an initial gross investment of $10,000 made on 5/1/92
(inception of the Fund). Returns shown include the reinvestment of all
distributions at net asset value, and the change in share price for the
stated period. 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 Balanced Benchmark is calculated based upon the performance of the
following indices: 55% S&P 500/35% Lehman Brothers Aggregate Bond Index/10%
U.S. Treasury Bills and is produced by Frank Russell Company.
2-26
<PAGE>
BALANCED SERIES
SCHEDULE OF INVESTMENTS
December 31, 1995
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
-------- -------- -----------
U.S. GOVERNMENT SECURITIES--22.8%
U.S. Treasury Bonds--7.8%
U.S. Treasury Bonds 6.50%, '05 AAA $3,465 $ 3,692,390
U.S. Treasury Bonds 6.50%, '05 AAA 4,700 5,006,962
U.S. Treasury Bonds 7.50%, '05 AAA 3,500 3,967,320
U.S. Treasury Bonds 7.50%, '16 AAA 2,125 2,491,520
----------
15,158,192
----------
U.S. Treasury Notes--13.6%
U.S. Treasury Notes 4.625%, '96 AAA 5,300 5,296,194
U.S. Treasury Notes 7.25%, '96 AAA 9,800 9,970,618
U.S. Treasury Notes 5.75%, '97 AAA 7,200 7,264,512
U.S. Treasury Notes 6.875%, '00 AAA 3,500 3,699,150
----------
26,230,474
----------
Agency Mortgage-Backed Securities--1.4%
GNMA 6.50%, '23 AAA 2,629 2,609,401
----------
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $42,885,895) 43,998,067
----------
CONVERTIBLE BONDS--3.8%
Airlines--1.0%
Delta Airlines, Inc. Cv. 3.23%,
'03 B+ 2,000 1,907,500
----------
Computer Software & Services--0.9%
First Financial Mgmt. Corp.
(FDC) Cv. 5%, '99 A 1,100 1,791,625
----------
Conglomerates--1.0%
Thermo Electron Corp. Cv. 144A
4.25%, '03 (c) A- 1,800 1,964,250
----------
Lodging & Restaurants--0.9%
Boston Chicken Sub. Deb. Cv.
4.50%, '04 B- 1,450 1,683,813
----------
TOTAL CONVERTIBLE BONDS
(Identified cost $6,998,575) 7,347,188
----------
NON-CONVERTIBLE BONDS--4.1%
Non-Agency Mortgage Backed Securities--2.9%
CS First Boston Mortgage 95-AE1,
B 7.182%, '27 AA- 425 429,383
DLJ Mortgage Acceptance 95-T10,
A 144A 6.955%, '23 (c) NR 1,300 1,271,562
Merrill Lynch Mortgage, Inc.
95-C2 B 7.53%, '21 Aa((d)) 248 256,189
Lehman Commercial Conduit 95-C2
B 7.18412%, '05 (e) AA 425 443,859
Resolution Trust Corp. 93-C1, B
8.75%, '24 Aa((d)) 425 443,992
Resolution Trust Corp. 95-C2, B
6.80%, '27 Aa((d)) 1,184 1,181,158
Resolution Trust Corp. 95-C1, A5
6.0205%, '27 Aaa((d)) 511 508,931
Resolution Trust Corp. 95-C1, B
6.90%, '27 Aa((d)) 525 529,594
Resolution Trust Corp. 95-2, M1,
7.15%, '29 Aa((d)) 509 512,682
----------
5,577,350
----------
Paper & Forest Products--0.4%
Buckeye Cellulose Corp. 8.50%,
'05 BB- 700 723,625
----------
Publishing, Broadcasting, Printing & Cable--0.4%
Continental Cablevision 144A
8.30%, '06 (c) BB+ 700 704,375
----------
Textile & Apparel--0.4%
Westpoint Stevens, Inc.
9.375%, '05 B+ 700 696,500
----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $7,632,413) 7,701,850
----------
FOREIGN NON-CONVERTIBLE BONDS--2.0%
Argentina--0.3%
Republic of Argentina Reg. FRB-L
Euro 6.8125%, '05 (e) BB- $ 750 $ 533,906
----------
Brazil--0.3%
Republic of Brazil 20 yr. Series
C Euro 8%, '14 B+ 902 515,843
----------
Colombia--0.5%
Financiera Energ. Nacional EMTN
144A 9%, '99 (c) BBB- 440 461,450
Republic of Colombia Yankee
7.25%, '04 BBB- 475 456,000
----------
917,450
----------
Mexico--0.2%
Banco Mexico 7.25%, '04 BB 570 446,025
----------
Philippines--0.2%
Central Bank of Philippines NMB
Euro 6.8125%, '05 (e) BB 500 450,625
----------
Poland--0.5%
Poland Global Reg. Par Euro
2.75%, '24 (e) Baa((d)) 1,000 471,250
Poland PDI 3.75%, '14 (e) Baa((d)) 700 453,250
----------
924,500
----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $3,645,094) 3,788,349
----------
MUNICIPAL BONDS--3.5%
California--1.2%
Kern County Pension Obligation
7.26%, '14 AAA 420 439,131
Long Beach Pension Obligation
6.87%, '06 AAA 230 236,760
Los Angeles County Series B Rev.
5.25%, '23 AAA 485 472,671
N. California Power Agency Rev.
A 5.50%, '24 AAA 415 415,390
San Bernardino County Obligation
Revenue 6.87%, '08 AAA 110 113,177
San Bernardino County Obligation
Revenue 6.94%, '09 AAA 300 309,642
Ventura County Pension 6.54%,
'05 AAA 260 262,699
----------
2,249,470
----------
Florida--0.9%
Florida Board of Education
Series E 5.25%, '23 AA 455 444,130
Florida State Turnpike Authority
Sinker 5%, '19 AAA 290 279,551
Miami Beach Special Obligation
Taxable 8.60%, '21 AAA 875 992,714
----------
1,716,395
----------
Georgia--0.2%
De Kalb County Water & Sewer
Sinker 5.25%, '23 AA 420 412,877
----------
Massachusetts--0.2%
Massachusetts Bay Transit Gen.
Series B 5.375%, '25 AAA 485 475,683
----------
Michigan--0.2%
Michigan Public Power Agency
Sinker 5.25%, '18 AAA 485 476,314
----------
New York--0.1%
New York State Power Rev. Series
CC 5.25%, '18 AA- 205 201,070
----------
See Notes to Financial Statements
2-27
<PAGE>
BALANCED SERIES
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
-------- -------- -----------
South Carolina--0.2%
South Carolina Public Service
Series C 5%, '25 AAA $ 345 $ 327,367
South Carolina Public Service
Rev. C 5.125%, '21 A+ 165 154,527
----------
481,894
----------
Utah--0.2%
Intermountain Power Series A
5%, '23 AA- 410 382,247
----------
Washington--0.1%
Seattle Drain & Wastewater
Sinker 5.25%, '25 AAA 295 286,380
----------
Other Territories--0.2%
Puerto Rico Commonwealth Sinker
5.375%, '22 AAA 340 338,909
----------
TOTAL MUNICIPAL BONDS
(Identified cost $6,802,975) 7,021,239
----------
SHARES
-------
CONVERTIBLE PREFERRED STOCKS--2.1%
Computer Software & Services--0.9%
American Express Co. DECS First Data 1996
Cv. 32,000 1,776,000
----------
Conglomerates--1.0%
Alco Standard Cv. Pfd $5.04 21,600 1,846,800
----------
Entertainment, Leisure & Gaming--0.2%
Time Warner Financing Cv. Pfd. PERCS $1.24 15,000 468,750
----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified cost $3,456,620) 4,091,550
----------
COMMON STOCKS--49.9%
Aerospace & Defense--1.8%
Boeing Company 25,000 1,959,375
United Technologies Corp. 15,600 1,480,050
----------
3,439,425
----------
Bank--1.1%
Golden West Financial Corp. 37,500 2,071,875
----------
Beverages--1.2%
Coca Cola Co. 11,800 876,150
Northland Cranberries, Inc. Class A 80,800 1,434,200
----------
2,310,350
----------
Chemical--1.7%
IMC Global, Inc. 34,000 1,389,750
Monsanto Co. 16,100 1,972,250
----------
3,362,000
----------
Computer Software & Services--2.4%
Citrix Systems, Inc. (b) 38,300 1,244,750
Computer Sciences Corp. (b) 25,000 1,756,250
Oracle Systems Corp. (b) 40,300 1,707,712
----------
4,708,712
----------
Conglomerates--0.9%
Tyco International Ltd. 50,100 1,784,813
----------
Cosmetics & Soaps--1.3%
Estee Lauder Co. Class A (b) 43,100 1,503,113
Procter & Gamble Co. 12,600 1,045,800
----------
2,548,913
----------
Diversified Financial Services--2.7%
American Express Co. 31,700 1,311,588
Equifax, Inc. 88,000 1,881,000
Travelers Group, Inc. 31,700 1,993,137
----------
5,185,725
----------
Engineering & Construction--0.9%
Fluor Corp. 25,200 1,663,200
----------
Entertainment, Leisure & Gaming--2.5%
Mattel, Inc. 55,500 1,706,625
Viacom, Inc. Class B (b) 36,000 1,705,500
Walt Disney Co. 23,400 1,380,600
----------
4,792,725
----------
SHARES VALUE
------- ----------
Food--1.0%
Nabisco Holdings Corp. Class A 62,800 $2,048,850
----------
Healthcare--Diversified--1.7%
American Home Products Corp. 19,900 1,930,300
Neuromedical Systems, Inc. (b) 70,000 1,408,750
----------
3,339,050
----------
Healthcare--Drugs--2.6%
Amgen, Inc. (b) 35,200 2,090,000
Liposome Company, Inc. (b) 49,800 996,000
Watson Pharmaceuticals, Inc. (b) 37,900 1,857,100
----------
4,943,100
----------
Hospital Management & Services--1.9%
Manor Care, Inc. 58,900 2,061,500
United Healthcare Corp. 25,800 1,689,900
----------
3,751,400
----------
Insurance--3.0%
Allstate Corp. 46,811 1,925,102
Cigna Corp. (b) 18,600 1,920,450
Pacificare Health Systems, Inc. (b) 22,700 1,974,900
----------
5,820,452
----------
Machinery--0.9%
Case Corp. 36,800 1,683,600
----------
Medical Products & Supplies--2.1%
Baxter International, Inc. 48,000 2,010,000
Medtronic, Inc. 36,700 2,050,613
----------
4,060,613
----------
Miscellaneous--0.5%
CUC International, Inc. (b) 29,600 1,010,100
----------
Natural Gas--0.6%
Seagull Energy Corp. (b) 48,100 1,070,225
----------
Office & Business Equipment--0.7%
Sun Microsystems, Inc. (b) 28,400 1,295,750
----------
Oil--1.0%
Mobil Corp. 17,300 1,937,600
----------
Oil Service & Equipment--3.4%
Diamond Offshore Drilling (b) 29,300 988,875
Halliburton Co. 40,000 2,025,000
Sonat Offshore Drilling 44,000 1,969,000
Western Atlas, Inc. (b) 30,500 1,540,250
----------
6,523,125
----------
Paper & Forest Products--1.6%
Boise Cascade Corp. 29,000 1,004,125
Kimberly Clark Corp. 24,700 2,043,925
----------
3,048,050
----------
Publishing, Broadcasting, Printing & Cable--1.0%
Times Mirror Co. Class A 55,300 1,873,288
----------
Real Estate Investment Trusts--0.7%
Equity Residential Properties Trust 43,400 1,329,125
----------
Retail--0.6%
Office Depot, Inc. (b) 62,400 1,232,400
----------
Telecommunications Equipment--4.2%
ADC Telecommunications, Inc. (b) 49,400 1,803,100
Bay Networks, Inc. (b) 44,700 1,838,286
Cisco Systems, Inc. (b) 18,500 1,380,562
Stratacom, Inc. (b) 26,500 1,947,750
U.S. Robotics Corporation (b) 13,800 1,210,950
----------
8,180,648
----------
Tobacco--1.9%
Philip Morris Companies, Inc. 20,000 1,810,000
RJR Nabisco Holdings Corp. 61,100 1,886,463
----------
3,696,463
----------
Utility--Telephone--4.0%
AT&T Corp. 31,900 2,065,525
Ameritech Corp. 19,800 1,168,200
MCI Communications Corp. 70,600 1,844,425
SBC Communications, Inc. 19,500 1,121,250
U.S. West Communications Group 44,800 1,601,600
----------
7,801,000
----------
See Notes to Financial Statements
2-28
<PAGE>
BALANCED SERIES
SHARES VALUE
-------- -----------
TOTAL COMMON STOCKS
(Identified cost $85,118,695) $ 96,512,577
----------
FOREIGN COMMON STOCKS--0.9%
Chemical--0.9%
Potash Corp. of Saskatchewan, Inc. (Canada) 24,600 1,743,525
----------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $1,609,393) 1,743,525
----------
TOTAL LONG-TERM INVESTMENTS--89.1%
(Identified cost $158,149,660) 172,204,345
----------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
--------- -------- -------------
SHORT-TERM OBLIGATIONS--11.2%
Commercial Paper--11.2%
McDonald's Corp. 5.75%, 1-2-96 A-1+ $2,820 $ 2,819,550
McDonald's Corp. 5.63%, 1-4-96 A-1+ 4,000 3,998,123
Philip Morris Companies, Inc.
5.90%, 1-4-96 A-1 1,800 1,799,115
Albertson's 5.73%, 1-10-96 A-1 6,000 5,991,405
Anheuser-Busch Companies, Inc.
5.55%, 1-16-96 A-1+ 5,000 4,988,438
Southwestern Bell Telephone
Co. 5.55%, 1-25-96 A-1+ 2,085 2,077,285
------------
21,673,916
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $21,673,916) 21,673,916
------------
TOTAL INVESTMENTS--100.3%
(Identified cost $179,823,576) 193,878,261((a))
Cash and receivables, less liabilities--(0.3%) (576,342)
------------
NET ASSETS--100.0% $193,301,919
============
((a)) Federal Income Tax Information: Net unrealized appreciation of
investment securities is comprised of gross appreciation of $15,416,172
and gross depreciation of $1,355,792 for income tax purposes. At
December 31, 1995 the aggregate cost of securities for federal income
tax purposes was $179,817,881.
((b)) Non-income producing.
((c)) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December
31, 1995, these securities amounted to a value of $4,401,637 or 2.3% of
net assets.
((d)) As rated by Moody's.
((e)) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
See Notes to Financial Statements
2-29
<PAGE>
BALANCED SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
Assets
Investment securities at value (Identified
cost $179,823,576) $193,878,261
Cash 148,257
Receivable for investment securities sold 1,605,000
Interest and dividends receivable 1,138,706
------------
Total assets 196,770,224
------------
Liabilities
Payable for investment securities purchased 3,300,000
Investment advisory fee 88,715
Financial agent fee 9,678
Trustee fee 3,106
Accrued expenses 66,806
------------
Total liabilities 3,468,305
------------
Net Assets $193,301,919
============
Net Assets Consist of:
Capital paid in on shares of beneficial
interest $172,186,268
Undistributed net investment income 74,806
Accumulated net realized gain 6,986,160
Net unrealized appreciation 14,054,685
------------
Net Assets $193,301,919
============
Shares of beneficial interest outstanding, $1
par value, unlimited authorization 15,716,275
============
Net asset value and offering price per share $12.30
============
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
Investment Income
Interest $ 5,545,194
Dividends 1,542,297
------------
Total investment income 7,087,491
------------
Expenses
Investment advisory fee 918,183
Financial agent fee 103,931
Custodian 37,875
Printing 24,377
Professional 23,182
Trustees' fee 12,128
Miscellaneous 6,243
------------
Total expenses 1,125,919
Custodian fees paid indirectly (2,717)
------------
Net expenses 1,123,202
------------
Net investment income 5,964,289
------------
Net Realized and Unrealized Gain (Loss) on
Investments
Net realized gain from investment
transactions 17,215,657
Net realized loss on foreign currency
transactions (36,784)
Net unrealized appreciation of investment
securities 13,277,376
------------
Net gain on investments 30,456,249
------------
Net increase in net assets resulting from
operations $36,420,538
============
See Notes to Financial Statements
2-30
<PAGE>
BALANCED SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Year
Ended Ended
12/31/95 12/31/94
----------- ------------
From Operations
Net investment income $ 5,964,289 $ 5,692,109
Net realized gain (loss) 17,178,873 (6,373,826)
Net unrealized appreciation (depreciation) 13,277,376 (4,002,731)
--------- -----------
Net increase (decrease) in net assets
resulting from operations 36,420,538 (4,684,448)
--------- -----------
From Distributions to Shareholders
Net investment income (6,004,047) (5,536,378)
Net realized gains (3,833,294) (1,538,238)
--------- -----------
Decrease in net assets from distributions
to shareholders (9,837,341) (7,074,616)
--------- -----------
From Shares of Beneficial Interest
Transactions
Proceeds from sales of shares (2,915,001 and
5,359,333 shares, respectively) 33,778,188 59,085,232
Net asset value of shares issued from
reinvestment of distributions
(828,862 and 660,710 shares, respectively) 9,837,341 7,074,616
Cost of shares repurchased (3,333,135 and
4,699,191 shares, respectively) (38,002,038) (51,439,961)
--------- -----------
Increase in net assets from share
transactions 5,613,491 14,719,887
--------- -----------
Net increase in net assets 32,196,688 2,960,823
Net Assets
Beginning of period 161,105,231 158,144,408
--------- -----------
End of period (including undistributed net
investment income of $74,806 and $208,187,
respectively) $193,301,919 $161,105,231
========= ===========
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
From
Inception
5/1/92
Year Ended December 31, to
1995 1994 1993 12/31/92
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.53 $11.31 $10.77 $10.00
Income from investment operations
Net investment income ((3)) 0.40 0.38((2)) 0.32((2)) 0.19
Net realized and unrealized gain (loss) 2.02 (0.70) 0.60 0.77
---------- ---------- ---------- ------------
Total from investment operations 2.42 (0.32) 0.92 0.96
---------- ---------- ---------- ------------
Less distributions
Dividends from net investment income (0.40) (0.36) (0.32) (0.19)
Dividends from net realized gains (0.25) (0.10) (0.06) --
---------- ---------- ---------- ------------
Total distributions (0.65) (0.46) (0.38) (0.19)
---------- ---------- ---------- ------------
Change in net asset value 1.77 (0.78) 0.54 0.77
---------- ---------- ---------- ------------
Net asset value, end of period $12.30 $10.53 $11.31 $10.77
========== ========== ========== ============
Total return 23.28% -2.80% 8.57% 9.72%
Ratios/supplemental data:
Net assets, end of period (thousands) $193,302 $161,105 $158,144 $54,467
Ratio to average net assets of:
Operating expenses 0.65%((4)) 0.69% 0.70% 0.50%((1))
Net investment income 3.44% 3.44% 3.16% 3.59%((1))
Portfolio turnover rate 223% 171% 161% 110%((1))
</TABLE>
((1)) Annualized
((2)) Includes reimbursement of operating expenses by investment adviser of
$0.001 and $0.001 per share, respectively.
((3)) Computed using average shares outstanding.
((4)) For the year ended December 31, 1995, the ratio of operating expenses
to average net assets excludes the effect of expense offsets for
custodian fees; if expense offsets were included, the ratio would not
significantly differ.
See Notes to Financial Statements
2-31
<PAGE>
REAL ESTATE SERIES
In general, real estate markets are in a state of supply and demand
balance. Economic and employment growth during the last several years,
combined with modest levels of new construction, have led to steady and
significant improvement in real estate occupancy rates. Apartments hover near
95% occupied in most markets. New construction has remained in control
despite warnings earlier this year of increased apartment permitting. The
office, office-industrial and hotel property type sectors have seen the most
dramatic improvement during 1995. These markets emerged later from the real
estate downturn and are benefiting now from a virtual lack of new
construction. As fundamentals continue to improve and traditional investors
return to these sectors, we expect improved values due to the return of
normal liquidity. A note of caution, however, must be sounded for the retail
sector. The retail industry is struggling due to competition among major
retailers and expansion of competing retail formats in the face of slow
growth in consumer spending. As a result, regional malls, discounters, strip
malls and factory outlets are competing fiercely for shares of the retail
spending pie.
Performance in the REIT market in 1995 has been driven by the underlying
real estate fundamentals, with office and hotel REITS among the strongest
performers and retail REITS among the weaker.
Phoenix Edge Real Estate Fund, which was launched on May 1, 1995,
performed well during this reporting period. From its inception date through
December 31, 1995, the Fund posted a total return of 17.79%. The NAREIT
Equity Index recorded a total return of 15.48% for the same period. (All
these figures assume reinvestment of any distributions.)
The Fund benefited from strong performance by some of its key holdings.
Bay Apartments (apartment), Kimco Realty (retail), Highwoods Properties
(office) and Starwood Lodging Trust (hotel) enjoyed growing market demand due
to favorable earnings growth forecasts. The Fund also benefited from its
investment strategy to concentrate in key sectors that expected to outperform
the market during 1995. Currently, the Fund is overweighted in the apartment,
office and hotel sectors and underweighted in the retail sector.
The favorable outlook for the real estate industry translates into strong
consensus growth estimates for Funds From Operations (FFO) in the REIT market
in 1996. (FFO is the earnings indicator used in the REIT industry to measure
dividend paying ability.) REIT FFOs are forecasted to grow 8.5% over the
course of 1996.
During 1995, share prices have barely kept pace with income growth.
Current dividend yields have been slow to decline despite tremendous strength
in the broad equity markets and steady declines in long-term bond yields. The
average dividend yield for equity REITs on December 31, 1995 was 7.42%. This
represents a spread over 10-year treasury notes of 179 basis points, the
widest spread over treasury yields since depths of the real estate recession
in 1990. REITs also offer a wider spread over the S&P 500 than at the
beginning of the year.
We believe that improving fundamentals in the real estate industry point
to continued earnings growth for REITs. Additionally, income yields are high
compared to alternative investments. In the wake of the tremendous bull
market in stocks and bonds during 1995, we believe REIT share prices offer
value. We expect to continue our emphasis on the office, industrial and hotel
sectors which offer the best prospects for income growth. We will also
continue to focus on companies with strong managements, excellent track
records and low debt levels.
[typeset representation of line chart]
Real Estate
Series NAREIT*
5/1/95 10000 10000
12/31/95 11779 11548
[end chart]
Total Returns for Period Ending 12/31/95
From
Inception
5/1/95 to
12/31/95
- ---------------------------------
Real Estate Series 17.79%
- ---------------------------------
NAREIT Index* 15.48%
- ---------------------------------
This chart assumes an initial gross investment of $10,000 made on 5/1/95
(inception of the fund). Returns shown include the reinvestment of all
distributions at net asset value, and the change in share price for the
stated period. 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 National Association of Real Estate Investment Trusts (NAREIT) is a
commonly used, unmanaged indicator of REIT performance.
2-32
<PAGE>
REAL ESTATE SERIES
SCHEDULE OF INVESTMENTS
December 31, 1995
SHARES VALUE
------ ----------
COMMON STOCKS--97.0%
REAL ESTATE INVESTMENT TRUSTS--95.6%
COMMERCIAL--20.1%
Industrial--5.2%
Security Capital Industrial Trust 12,483 $ 218,452
Weeks Corporation 8,700 218,588
---------
437,040
---------
Office--9.6%
Cali Realty Corp. 3,800 83,125
Duke Realty Investments, Inc. 6,500 203,937
Highwoods Properties, Inc. 10,200 288,150
Spieker Properties, Inc. 9,600 241,200
---------
816,412
---------
Storage--5.3%
Shurgard Storage Centers, Inc. 7,700 207,900
Storage USA, Inc. 7,500 244,687
---------
452,587
---------
Total Commercial 1,706,039
---------
DIVERSIFIED--0.6%
Colonial Properties Trust 1,800 45,900
---------
HEALTH CARE--7.8%
Health Care Properties Inv., Inc. 9,400 330,175
Nationwide Health Properties, Inc. 7,800 327,600
---------
657,775
---------
RESIDENTIAL--36.6%
Apartments--30.6%
Avalon Properties, Inc. 7,700 165,550
Bay Apartment Community, Inc. 10,500 254,625
Camden Property Trust 7,100 169,513
Equity Residential Properties Trust 9,000 275,625
Evans Withycombe Residential, Inc. 11,800 253,700
Merry Land & Investment Co. 12,700 300,037
Oasis Residential, Inc. 11,000 250,250
Post Properties, Inc. 7,400 235,875
Security Capital Pacific Trust 14,000 276,500
South West Property Trust 12,000 162,000
United Dominion Realty Trust 16,600 249,000
---------
2,592,675
---------
Manufactured Homes--6.0%
Chateau Properties, Inc. 5,200 117,000
Manufactured Home Communities 9,500 166,250
Sun Communities, Inc. 8,600 226,825
---------
510,075
---------
Total Residential 3,102,750
---------
RETAIL--25.1%
Community/Neighborhood--12.7%
Developers Diversified Realty Corp. 9,200 276,000
Federal Realty Investment Trust 7,600 172,900
Kimco Realty Corp. 5,700 155,325
Regency Realty Corp. 4,700 81,075
Vornado Realty Trust 6,400 240,000
Weingarten Realty Investors 4,000 152,000
---------
1,077,300
---------
Factory Outlet--3.0%
Chelsea G.C.A. Realty, Inc. 8,400 $ 252,000
---------
Regional Malls--9.4%
DeBartolo Realty Corp. 12,700 165,100
J.P. Realty, Inc. 9,300 203,438
Simon Property Group, Inc. 9,300 226,687
Taubman Centers, Inc. 20,400 204,000
---------
799,225
---------
Total Retail 2,128,525
---------
SPECIALTY--5.4%
Hotels--5.4%
FelCor Suite Hotels, Inc. 6,600 183,150
Patroit American Hospitality 7,000 180,250
Starwood Lodging Trust 3,300 98,175
---------
461,575
---------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Identified cost $7,264,007) 8,102,564
---------
REAL ESTATE OPERATING COMPANIES--1.4%
Hotels--1.4%
Bristol Hotel Co. (b) 500 12,188
Host Marriott Corp. (b) 7,900 104,675
---------
TOTAL REAL ESTATE OPERATING COMPANIES
(Identified cost $109,470) 116,863
---------
TOTAL COMMON STOCKS
(Identified cost $7,373,477) 8,219,427
---------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
--------- -------
SHORT-TERM OBLIGATIONS--3.7%
Commercial Paper--3.7%
McDonald's Corp. 5.75%, 1-2-96 A-1+ $ 315 314,950
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $314,950) 314,950
------------
TOTAL INVESTMENTS--100.7%
(Identified cost $7,688,427) 8,534,377((a))
Cash and receivables, less liabilities--(0.7%) (61,835)
------------
NET ASSETS--100.0% $8,472,542
============
((a)) Federal Income Tax Information: Net realized appreciation of investment
securities is comprised of gross appreciation of $855,009 and gross
depreciation of $9,139 for income tax purposes. At December 31, 1995
the aggregate cost of securities for federal income tax purposes was
$7,688,507.
((b)) Non-income producing.
See Notes to Financial Statements
2-33
<PAGE>
REAL ESTATE SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
Assets
Investment securities at value (Identified
cost $7,688,427) $8,534,377
Cash 7,528
Receivable from adviser 23,788
Interest and dividends receivable 70,477
----------
Total assets 8,636,170
----------
Liabilities
Payable for investment securities purchased 127,603
Trustees' fee 1,956
Financial agent fee 404
Accrued expenses 33,665
----------
Total liabilities 163,628
----------
Net Assets $8,472,542
==========
Net Assets Consist of:
Capital paid in on shares of beneficial
interest $7,626,672
Accumulated net realized loss (80)
Net unrealized appreciation 845,950
----------
Net Assets $8,472,542
==========
Shares of beneficial interest outstanding, $1
par value, unlimited authorization 747,675
==========
Net asset value and offering price per share $11.33
==========
STATEMENT OF OPERATIONS
From inception May 1, 1995 to December 31, 1995
Investment Income
Dividends $ 249,376
Interest 11,020
---------
Total investment income 260,396
---------
Expenses
Investment advisory fee 33,655
Financial agent fee 2,692
Printing 16,983
Professional 14,910
Custodian 8,810
Trustees' fee 8,690
Miscellaneous 3,107
Expenses borne by investment adviser (43,974)
---------
Total expenses 44,873
---------
Net investment income 215,523
---------
Net Realized and Unrealized Gain (Loss) on
Investments
Net realized gain from investment
transactions 44,211
Net unrealized appreciation on investment
securities 845,950
---------
Net gain on investments 890,161
---------
Net increase in net assets resulting from
operations $1,105,684
=========
See Notes to Financial Statements
2-34
<PAGE>
REAL ESTATE SERIES
STATEMENT OF CHANGES IN NET ASSETS
From Inception
5/1/95 to
12/31/95
---------------
From Operations
Net investment income $ 215,523
Net realized gain 44,211
Net unrealized appreciation 845,950
-------------
Net increase in net assets resulting from
operations 1,105,684
-------------
From Distributions to Shareholders
Net investment income (215,523)
Net realized gains (44,211)
Tax return of capital (19,252)
Distribution in excess of net realized gains (80)
-------------
Decrease in net assets from distributions
to shareholders (279,066)
-------------
From Shares of Beneficial Interest
Transactions
Proceeds from sales of shares (784,136
shares) 8,019,985
Net asset value of shares issued from
reinvestment of distributions (25,636
shares) 279,066
Cost of shares repurchased (62,097 shares) (653,127)
-------------
Increase in net assets from share
transactions 7,645,924
-------------
Net increase in net assets 8,472,542
Net Assets
Beginning of period 0
-------------
End of period (including undistributed net
investment income of $0) $8,472,542
=============
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the indicated period)
From Inception
5/1/95 to
12/31/95
---------------
Net asset value, beginning of period $10.00
Income from investment operations
Net investment income 0.33((2))
Net realized and unrealized gain 1.42
-------------
Total from investment operations 1.75
-------------
Less distributions
Dividends from net investment income (0.33)
Dividends from net realized gains (0.06)
Tax return of capital (0.03)
-------------
Total distributions (0.42)
-------------
Change in net asset value 1.33
-------------
Net asset value, end of period $11.33
=============
Total return 17.79%((3))
Ratios/supplemental data:
Net assets, end of period (thousands) $8,473
Ratio to average net assets of:
Operating expenses 1.00%((1))
Net investment income 4.80%((1))
Portfolio turnover rate 10%((3))
((1)) Annualized
((2)) Includes reimbursement of operating expenses by investment adviser of
$0.07 per share.
((3)) Not annualized
See Notes to Financial Statements
2-35
<PAGE>
THE PHOENIX EDGE SERIES FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
Note 1--Organization
The Phoenix Edge Series Fund (the "Fund") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Fund is comprised
of the Money Market, Growth, Bond, Total Return, International, Balanced and
Real Estate Series. The Fund was established as part of the December 8, 1986
reorganization of the Phoenix Home Life Variable Accumulation Account (the
Account) from a management investment company to a unit investment trust
under the Investment Company Act of 1940. The Fund is organized with Series
which are available only to the sub-accounts of the Phoenix Home Life
Variable Accumulation Account, the Phoenix Home Life Variable Universal Life
Account, the PHL Variable Accumulation Account, and the Phoenix Home Life
Separate Accounts B, C, and D.
Each series has distinct investment objectives. The Money Market Series seeks
to provide maximum current income consistent with capital preservation and
liquidity. The Growth Series seeks to achieve intermediate and long-term
growth of capital, with income as a secondary consideration. The Bond Series
seeks to provide long-term total return by investing in a diversified
portfolio of high yield and high quality fixed income securities. The Total
Return Series seeks to realize as high a level of total rate of return over
an extended period of time as is considered consistent with prudent
investment risk by investing in three market segments; stocks, bonds and
money market instruments. The International Series seeks as its investment
objective a high total return consistent with reasonable risk by investing
primarily in an internationally diversified portfolio of equity securities.
The Balanced Series seeks to provide reasonable income, long-term growth and
conservation of capital. The Real Estate Series seeks to achieve capital
appreciation and income with approximately equal emphasis through investments
in real estate investment trusts and companies that operate, manage, develop
or invest in real estate.
Note 2--Significant Accounting Policies
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
In determining the value of the investments of the Growth Series, Bond
Series, Total Return Series, International Series, Balanced Series and the
Real Estate Series, equity securities for which market quotations are readily
available are valued at market value, which is currently determined using the
last reported sale price, or if no sales are reported, the last reported 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 Trustees.
Short-term securities having a remaining maturity of less than sixty days,
are valued at amortized cost which approximates market. All other securities
and assets are valued at their fair value as determined in good faith by or
under the direction of the Trustees.
The Money Market Series uses the amortized cost method of security valuation
which, in the opinion of the Trustees, represents the fair value of the
particular security. The Trustees monitor the deviations between the Series'
net asset value per share as determined by using available market quotations
and its amortized cost per share. If the deviation exceeds 1/2 of 1%, the
Board of Trustees will consider what action, if any, should be initiated to
provide fair valuation. The Series attempts to maintain a constant net asset
value of $10 per share. The assets of the Series will not be invested in any
security with a maturity of greater than 397 days, and the weighted average
maturity of its portfolio will not exceed 90 days.
B. Security Transactions and Related Income
Security transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date, or in the case of certain foreign securities, as soon as the Fund is
notified. The Fund does not amortize premiums except for the Money Market
Series, but does amortize discounts using the effective interest method.
Realized gains and losses are determined on the identified cost basis.
2-36
<PAGE>
THE PHOENIX EDGE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1995
C. Income Taxes
Each of the Series is treated as a separate taxable entity. It is the policy
of each Series to comply with the requirements of the Internal Revenue Code,
applicable to regulated investment companies, and to distribute substantially
all of its taxable income to its shareholders. In addition, each Series
intends to distribute an amount sufficient to avoid imposition of any excise
tax under Section 4982 of the Code. Therefore, no provision for federal
income taxes or excise taxes has been made.
D. Distributions to Shareholders
Distributions are recorded by each Series on the ex-dividend date and all
distributions are reinvested into the Fund. 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.
Purchases and sales of foreign investments and income and expenses are
translated into U.S. dollars based upon exchange rates prevailing on the
respective dates of such transactions. The gain or loss resulting from a
change in exchange rates between the trade and settlement dates of a
portfolio transaction or 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.
F. Forward Currency Contracts
Each Series may enter into forward currency contracts in conjunction with the
planned purchase or sale of foreign denominated securities in order to hedge
the U.S. dollar cost or proceeds. Forward currency contracts involve, to
varying degrees, elements of market risk in excess of the amount recognized
in the statement of assets and liabilities. Risks arise from the possible
movements in foreign exchange rates or if the counterparty does not perform
under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time
of the contract. These contracts are traded directly between currency traders
and their customers. The contract is marked-to-market daily and the change in
market value is recorded by the Series as an unrealized gain (or loss). When
the contract is closed or offset with the same counterparty, the Series
records a realized gain (or loss) equal to the change in the value of the
contract when it was opened and the value at the time it was closed or
offset.
G. Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. A Series may enter into financial
futures contracts as a hedge against anticipated changes in the market value
of their portfolio securities. Upon entering into a futures contract, the
Fund is required to pledge to the broker an amount of cash and/or securities
equal to the "initial margin" requirements of the futures exchange on which
the contract is traded. Pursuant to the contract, the Fund agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
the value of the contract. Such receipts or payments are known as variation
margins and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and
the value at the time it was closed. The potential risk to the Series is that
the change in value of the futures contract may not correspond to the change
in value of the hedged instruments.
H. Trust Expenses
Expenses incurred by the Fund with respect to any two or more Series are
allocated in proportion to the net assets of each Series, except where
allocation of direct expense to each Series or an alternative allocation
method can be more fairly made. For the year ended December 31, 1995, total
Fund expenses were reduced $37,489 under expense offset arrangements with the
custodian. Custodian expenses in the Statement of Operations exclude these
credits. The Series could have invested a portion of the assets utilized in
connection with the offset arrangements in an income producing asset.
2-37
<PAGE>
THE PHOENIX EDGE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1995
Note 3--Investment Advisory Fees and Related Party Transactions
As compensation for its services to the Fund, the Adviser, Phoenix Investment
Counsel, Inc. ("PIC"), an indirect, less than wholly-owned subsidiary of
Phoenix Home Life Insurance Company ("PHL") is entitled to a fee, based upon
the following annual rates as a percentage of the average daily net assets of
each separate Series.
Rate for Rate for Rate for excess
first next over $500
Series $250 million $250 million million
------------- ------------- ------------ ----------------
Money Market .40% .35% .30%
Bond .50 .45 .40
Balanced .55 .50 .45
Total Return .60 .55 .50
Growth .70 .65 .60
International .75 .70 .65
The investment adviser for the Real Estate Series is Phoenix Realty
Securities, Inc. ("PRS"). PRS is an indirect, wholly-owned subsidiary of PHL.
For its services, PRS is entitled to a fee at an annual rate of 0.75% of the
average daily net assets for the first $1 billion.
Pursuant to a Sub-Advisory Agreement with the Series, PRS delegates certain
investment decisions and research functions to ABKB/LaSalle Securities
Limited Partnership ("ABKB") for which ABKB is paid a fee by PRS equal to
0.45% of the average daily net assets of the Real Estate Series for the first
$1 billion.
Each Series (except the International and Real Estate Series) pays a portion
or all of its other operating expenses (not including management fee,
interest, taxes, brokerage fees and commissions), up to .15% of its average
net assets. The International and Real Estate Series pay other operating
expenses up to .40% and .25%, respectively, of its average net assets.
Expenses above these limits are paid by the Advisers, PIC, PRS and/or PHL
and/or PHL Variable Insurance Company.
As Financial Agent to the Fund and to each Series, PHL receives a fee at an
annual rate of 0.06% of the average daily net assets of each Series for
bookkeeping, administrative and pricing services.
At December 31, 1995, PHL and affiliates held shares in the Phoenix Edge
Series Fund and/or in the underlying unit investment trusts which aggregated
the following:
Growth Series $7,606,203
Real Estate Series 5,841,310
Note 4--Purchases and Sales of Securities
Purchases and sales of securities during the period ended December 31, 1995
(excluding U.S. Government securities, short-term securities, and forward
currency contracts) aggregated the following:
Purchases Sales
------------- --------------
Bond Series $ 81,970,300 $ 72,082,225
Growth Series 1,410,082,225 1,184,097,550
Total Return Series 389,921,755 302,404,123
International Series 281,669,088 276,885,163
Balanced Series 255,518,719 228,537,422
Real Estate Series 8,067,052 660,084
There were no purchases or sales of such securities in the Money Market
Series.
Purchases and sales of long-term U.S. Government securities during the period
ended December 31, 1995 aggregated the following:
Purchases Sales
------------- --------------
Bond Series $ 69,365,864 $ 57,239,638
Total Return Series 67,477,130 74,064,981
Balanced Series 101,423,541 106,851,394
There were no purchases or sales of long-term U.S. Government securities in
the Money Market, Growth, International, or Real Estate Series.
2-38
<PAGE>
THE PHOENIX EDGE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1995
Note 5--Forward Currency Contracts
At December 31, 1995, the International Series had entered into various
forward currency contracts which contractually obligate the Series to deliver
currencies at specified dates. Open contracts were as follows:
Net
In Unrealized
Contracts Exchange Settlement Appreciation
to Deliver For Date Value (Depreciation)
---------- --------------- ---------- -------- -----------
SK 27,300,000 US$ 4,081,816 2/1/96 $ 4,119,387 $(37,571)
YEN 748,000,000 US$ 7,424,318 3/1/96 7,321,723 102,595
YEN 1,560,000,000 US$ 15,384,615 4/1/96 15,337,435 47,180
----------
$112,204
==========
SK = Swedish Krona
YEN = Japanese Yen
US$ = U.S. Dollar
As of December 31, 1995, the International Series had $3,392,180 in
short-term securities segregated as collateral to cover the open forward
currency contracts.
Note 6--Reclassification of Capital Accounts
In accordance with accounting pronouncements, the Series of the Fund have
recorded several reclassifications in the capital accounts. As of December
31, 1995, the Series recorded the following reclassifications to increase
(decrease) the accounts listed below:
Undistributed Capital paid
net Accumulated in on shares
investment net realized of beneficial
income gains/(losses) interest
------------- ------------ -------------
Growth $(1,343,698) $1,324,478 $ 19,220
Bond 45,942 (16,652) (29,290)
Total Return 134,575 (134,575) --
International (263,213) 711,397 (448,184)
Balanced (93,623) 87,927 5,696
Note 7--Capital Loss Carryovers
At December 31, 1995, the Series of the Fund had available for federal income
tax purposes unused capital losses as follows:
Expiring on 2001 2002
---------------- -----------
Bond $883,661 $825,646
In addition, the Balanced and Bond Series utilized capital loss carryovers in
the current year of $3,251,289 and $718,824, respectively.
Under current tax law, capital losses realized after October 31, 1995 may be
deferred and treated as occurring on the first day of the following tax year.
For the calendar year ended December 31, 1995, the International Series
elected to defer $1,730,497 in losses occurring between November 1, 1995 and
December 31, 1995. In addition, certain of the Series were able to utilize
post October losses deferred in the prior year against current year capital
gains as follows:
Reversal of
Prior year
Capital
losses deferred
----------------
Balanced $3,047,431
International 4,089,997
2-39
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[logo: Price Waterhouse LLP Price Waterhouse logo]
To the Shareholders and Trustees of
The Phoenix Edge Series Fund
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for bond ratings), and the
related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the financial
position of the Money Market Series, Growth Series, Bond Series, Total Return
Series, International Series, Balanced Series and Real Estate Series
(constituting The Phoenix Edge Series Fund, hereafter referred to as the
"Fund") at December 31, 1995, and the results of their operations, the
changes in their 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 custodians 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
2-40
<PAGE>
RESULTS OF SHAREHOLDER MEETING (UNAUDITED)
A special meeting in lieu of the Annual Meeting of shareholders of the
Phoenix Edge Series Fund was held on October 26, 1995 to approve the
following matters:
1. Fix the number of trustees 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.
3. That the Fund's investment restrictions be revised to permit up to 15%
of the Fund's net assets to be invested in illiquid securities.
Subsequently, and in accordance with the provision in the Fund's Declaration
of Trust, the Trustees voted to increase the number of Trustees to fourteen
and to appoint three additional Trustees to fill the vacancies caused by the
increase.
On the record date for this meeting, there were 113,999,512 shares
outstanding and 100% of the shares outstanding and entitled to vote were
present by proxy.
Number of votes: For Against Abstain
----------- --------- ----------
1. Election of Trustees 110,761,926 3,237,586
C. Duane Blinn
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Leroy Keith, Jr.
Philip R. McLoughlin
James M. Oates
Philip R. Reynolds
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
2. Price Waterhouse LLP 109,781,530 1,025,996 3,191,986
3. Investment Restriction 97,013,585 9,803,958 7,181,969
2-41
<PAGE>
THE PHOENIX EDGE SERIES FUND
101 Munson Street
Greenfield, Massachusetts 01301
Board of Trustees
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, Executive Vice President
Curtiss O. Barrows, Vice President
Mary E. Canning, Vice President
James M. Dolan, Vice President
Jeanne H. Dorey, Vice President
Christopher J. Kelleher, Vice President
William R. Moyer, Vice President
Scott C. Noble, Vice President
C. Edwin Riley, Jr., Vice President
Amy L. Robinson, Vice President
Barbara Rubin, Vice President
Leonard J. Saltiel, Vice President
Dorothy J. Skaret, Vice President
James D. Wehr, Vice President
John T. Wilson, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
Investment Adviser
Phoenix Investment Counsel, Inc.
56 Prospect Street
Hartford, Connecticut 06115-0480
Investment Adviser (Real Estate Series)
Phoenix Realty Securities, Inc.
38 Prospect Street
Hartford, CT 06115-2520
Custodian
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
Floor 3B
New York, New York 10081
International Series Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Real Estate Series Custodian
State Street Bank and Trust
P.O. Box 351
Boston, Massachusetts 02101
Legal Counsel
Jorden Burt, Berenson & Johnson LLP
Suite 400 East
1025 Thomas Jefferson Street N.W.
Washington, D.C. 20007-0805
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
_____________________________________________________________________________
This report is not authorized for distribution to prospective investors in
The Phoenix Edge Series Fund unless preceded or accompanied by an effective
Prospectus which includes information concerning the sales charge and other
pertinent information.
_____________________________________________________________________________
<PAGE>
THE PHOENIX EDGE SERIES FUND
PART C--OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
1. Condensed Financial Information is included in Part A of the
Registration Statement.
2. Financial Statements are included in Part B of the
Registration Statement:
The following financial statements, but no other
part of the report, are incorporated by reference to the
following portions of Registrant's Annual Report to
shareholders of The Phoenix Edge Series Fund for the period
ended December 31, 1995:
o Schedule of Investments
o Statement of Assets and Liabilities
o Statement of Operations
o Statement of Changes in Net Assets
o Financial Highlights
o Notes to financial statements
(b) Exhibits:
1. Declaration of Trust of the Registrant dated February 18,
1986, filed with the Registration Statement on Form N-1A on
April 18, 1986.
1.1 Amendment to Declaration of Trust, establishing the
International Series, filed with Post-Effective Amendment
No. 7 on March 2, 1992.
1.2 Amendment to Declaration of Trust, conforming Fund's
borrowing restrictions to California Department's Borrowing
Guidelines, filed with Post-Effective Amendment No. 7 on
March 2, 1992.
1.3 Amendment to Declaration of Trust, establishing the Balanced
Series, filed with Post-Effective Amendment No. 8 on
April 28, 1992.
1.4 Amendment to Declaration of Trust, establishing the Real
Estate Securities Series, filed with Post-Effective
Amendment No. 12 on February 16, 1995.
1.5 Amendment to Declaration of Trust, establishing the
Strategic Theme Series, filed with Post-Effective Amendment
No. 16 on January 29, 1995.
1.6 Amendment to Declaration of Trust, changing the name of the
Series currently designated "Bond Series" to the
"Multi-Sector Fixed Income Series", filed herewith.
2. Not Applicable.
3. Not Applicable.
4. Not Applicable.
5. Form of Investment Advisory Agreement between Registrant and
Phoenix Investment Counsel, Inc. covering the Balanced,
Bond, Growth, Money Market, Total Return and International
Series, filed with Post-Effective Amendment No. 11 on
May 2, 1994.
5.1 Form of Investment Advisory Agreement between Registrant and
Phoenix Realty Securities, Inc. covering the Phoenix Real
Estate Securities Series, filed with Post-Effective
Amendment No. 13, on April 28, 1995.
5.2 Form of Subadvisory Agreement among the Registrant, Phoenix
Realty Securities, Inc. and ABKB/LaSalle Partners
Limited Partnership, covering the Phoenix Real Estate
Securities Series, filed with Post-Effective Amendment
No. 13 on April 28, 1995.
6. Not Applicable.
7. Not Applicable.
8. Form of Custodian Agreement between Registrant and The Chase
Manhattan Bank, N.A. covering the International Series,
filed with Post-Effective Amendment No. 4 on March 13, 1990.
C-1
<PAGE>
8.1 Form of Amendment to Custodian Agreement covering
International, Money Market, Growth, Bond, Total Return and
Balanced Series, filed with Post-Effective Amendment No. 7
on March 2, 1992.
8.2 Custodian Agreement between Registrant and Brown Brothers
Harriman & Co. covering the International Series, filed
with Post-Effective Amendment No. 12 on February 16, 1995.
8.3 Form of Custodian Agreement between Registrant and State
Street Bank and Trust Company covering the Real Estate
Securities Series, filed with Post-Effective Amendment No.
12 on February 16, 1995.
9.1. Form of Transfer Agency Agreement, filed with original
Registration Statement on Form N-1A on April 18, 1986.
9.2. Form of Financial Agent Agreement, filed with Post-Effective
Amendment No. 16 on January 29, 1995.
10. Opinion and Consent of Counsel covering shares of the
International, Bond, Growth, Money Market, Balanced and
Total Return Series, filed with Post-Effective Amendment
No. 7 on March 2, 1992.
10.1 Opinion and Consent of Counsel covering shares of the Real
Estate Securities Series, filed with Post-Effective
Amendment No. 13 on April 28, 1995.
10.2 Opinion and Consent of Counsel covering shares of the
Strategic Theme Series, filed with Post-Effective Amendment
No. 16 on January 29, 1995.
11. Written Consent of Price Waterhouse LLP, filed herewith.
12. Not Applicable.
13. Not Applicable.
14. Not Applicable.
15. Not Applicable.
16. Not Applicable.
17. Financial Data Schedule filed herewith and reflected on
Edgar as Exhibit 27.
18. Powers of Attorney filed herewith.
- ---------------------
C-2
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The following diagram illustrates the Registrant's place in the
organizational structure:
[GRAPHIC OMITTED]
Item 26. Number of Holders of Securities
NUMBER OF RECORD HOLDERS
TITLE OF CLASS AS OF APRIL 1, 1996
- --------------- -------------------
Multi-Sector Series 3
Money Market Series* 3
Growth Series 6
Total Return Series 3
Balanced Series 3
International Series 3
Real Estate Series 4
Strategic Theme Series 4
---------------------
*Phoenix Mutual purchased 1 share of the Money Market Series at a price of
$10.00 per share on February 18, 1986.
ITEM 27. INDEMNIFICATION
The Declaration of Trust provides that the Trust shall indemnify each of its
Trustees and officers against liabilities arising by reason of being or having
been a Trustee or officer, except for matters as to which such Trustee or
officer shall have been finally adjudicated not to have acted in good faith and
except for liabilities arising by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of duties.
Insofar as indemnification for liability 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 in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been
C-3
<PAGE>
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS
The Trust's investment advisers are Phoenix Investment Counsel, Inc. ("PIC")
and Phoenix Realty Securities ("PRS"), which are located at One American Row,
Hartford, Connecticut 06115. PIC also serves as the investment adviser to other
investment companies: Phoenix Total Return Fund, Inc., Phoenix Series Fund and
Phoenix Multi-Portfolio Fund and as the sub-adviser to American Skandia Trust,
Chubb America Fund, Inc., JNL Series Trust and SunAmerica Series Trust. PRS also
serves as the investment adviser to the Real Estate Portfolio of the Phoenix
Multi-Portfolio Fund. One or more of these companies may have investment
objectives similar to those of one or more Series of the Trust.
Set forth below is a list of each executive officer and director of Phoenix
Investment Counsel, Inc., indicating the business, profession, vocation, or
employment in which each person has been engaged at any time during the past two
fiscal years, for his own account or in the capacity of director, officer,
partner, or trustee.
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER BUSINESS, PROFESSION,
PHOENIX INVESTMENT COUNSEL, INC. VOCATION, OR EMPLOYMENT
<S> <C>
Martin J. Gavin Executive Vice President-Finance and Operations, Phoenix Duff & Phelps Corporation.
Director and Executive Vice President Senior Vice President, Investment Products, Phoenix Home Life Mutual Insurance
Company. Director and Executive Vice President, National Securities & Research
Corporation, Phoenix Equity Planning Corporation and Phoenix Securities Group, Inc.
Director, Townsend Financial Advisers, Inc. and W.S. Griffith & Co., Inc. Director and
Vice President, PM Holdings, Inc. Executive Vice President, Phoenix Funds.
Michael E. Haylon Executive Vice President-Investments, Phoenix Duff & Phelps Corporation. Senior Vice
Director and President President, Securities Investments, Phoenix Home Life Mutual Insurance Company.
Executive Vice President, Phoenix Funds. Director and Executive Vice President,
National Securities & Research Corporation. Director, Phoenix Equity Planning
Corporation. Vice President, Phoenix Duff & Phelps Institutional Mutual Funds.
Philip R. McLoughlin Executive Vice President and Chief Investment Officer, Investments, and Director,
Director and Chairman Phoenix Home Life Mutual Insurance Company. Director/Trustee of the Phoenix Funds.
Director and President, Phoenix Equity Planning Corporation, Director, Vice Chairman
and Chief Executive Officer, Phoenix Duff & Phelps Corporation., World Trust Fund and
Phoenix Securities Group, Inc. Director, Townsend Financial Advisers, Inc., W.S.
Griffith & Co., Inc., Phoenix Realty Advisors, Inc., Phoenix Realty Group, Inc.,
Phoenix Realty Investors, Inc. and Phoenix Realty Securities, Inc. Phoenix Founders,
Inc., Director, President and Chief Executive Officer, National Securities & Research
Corporation. Director and Vice President, PM Holdings, Inc. Director, W.S. Griffith
& Co., Inc.
William J. Newman Chief Investment Strategist and Managing Director, Phoenix Home Life Mutual Insurance
Executive Vice President Company. Senior Vice President, Phoenix Equity Planning Corporation and National
Securities & Research Corporation. Senior Vice President, The Phoenix Edge Series Fund,
Phoenix Income and Growth Fund, Phoenix Multi-Portfolio Fund, Phoenix Series Fund,
Phoenix Strategic Equity Series Fund, Phoenix Total Return Fund, Inc., Phoenix
Worldwide Opportunities Fund and Phoenix Duff & Phelps Institutional Mutual Funds.
Chief Investment Strategist, Kidder, Peabody Co. Inc. Managing Director, Equities
Bankers Trust.
Paul A. Atkins Vice President, Institutional Investment Sales, Phoenix Home Life Mutual Insurance
Senior Vice President Company.
William R. Moyer Vice President, Investment Products Finance, Phoenix Home Life Mutual Insurance
Senior Vice President, Finance, Company. Senior Vice President, Finance, Phoenix Equity Planning Corporation and
and Treasurer Phoenix Securities Group, Inc. Senior Vice President, Chief Financial Officer and
Treasurer, Senior Vice President and Chief Financial Officer, Phoenix Duff & Phelps
Corporation. W.S. Griffith & Co., Inc. Senior Vice President, Finance and Treasurer,
National Securities & Research Corporation. Vice President, The Phoenix Funds. Vice
President, Phoenix Duff & Phelps Institutional Mutual Funds.
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER BUSINESS, PROFESSION,
PHOENIX INVESTMENT COUNSEL, INC. VOCATION, OR EMPLOYMENT
<S> <C>
David L. Albrycht Portfolio Manager, Phoenix Home Life Mutual Insurance Company. Vice President, Phoenix
Vice President Multi-Portfolio Fund and Phoenix Multi-Sector Fixed Income Fund, Inc. and Phoenix
Multi-Sector Short-Term Bond Fund.
Michael K. Arends Portfolio Manager, Phoenix Home Life Mutual Insurance Company. Vice President, Phoenix
Vice President Series Fund,Phoenix Strategic Equity Series Fund, and National Securities & Research
Corporation. Portfolio Manager, Kemper Investment Portfolio Growth Fund (until 1994).
Curtiss O. Barrows Portfolio Manager, Public Bonds, Phoenix Home Life Mutual Insurance Company. Vice
Vice President President, National Securities & Research Corporation, The Phoenix Edge Series Fund,
Phoenix Multi-Portfolio Fund and Phoenix Series Fund.
Sandra L. Becker Managing Director, Private Placements, Phoenix Home Life Mutual Insurance Company.
Vice President
Kathleen A. Bloomquist Vice President, Institutional Client Relations/Service, Phoenix Home Life Mutual
Vice President Insurance Company. Director and Vice President, Worldwide Phoenix Limited.
James C. Bly Regional Group Pension Manager, Phoenix Home Life Mutual Insurance Company.
Vice President
Mary E. Canning Associate Portfolio Manager, Common Stock, Phoenix Home Life Mutual Insurance
Vice President Company. Vice President, The Phoenix Edge Series Fund and Phoenix Series Fund.
Paul M. Chute Managing Director, Private Placements, Phoenix Home Life Mutual Insurance Company.
Vice President
Nelson Correa Managing Director, Private Placements, Phoenix Home Life Mutual Insurance Company.
Vice President
James M. Dolan Vice President and Compliance Officer, Phoenix Equity Planning Corporation. Vice
Vice President, Assistant Clerk and President, the Phoenix Funds. Vice President and Compliance Officer, Assistant
Assistant Secretary Secretary, National Securities & Research Corporation. Vice President and Chief
Compliance Officer, Phoenix Realty Advisors, Inc. and Chief Compliance Officer, Phoenix
Realty Securities, Inc. Vice President, Phoenix Duff & Phelps Institutional Mutual
Funds.
Jeanne H. Dorey Portfolio Manager, International, Phoenix Home Life Mutual Insurance Company. Vice
Vice President President, National Securities & Research Corporation, The Phoenix Edge Series Fund,
Phoenix Multi-Portfolio Fund and Phoenix Worldwide Opportunities Fund.
John M. Hamlin Portfolio Manager, Common Stock, Phoenix Home Life Mutual Insurance Company. Vice
Vice President President, Phoenix Income and Growth Fund, and Phoenix Series Fund.
Richard C. Harland Portfolio Manager, Phoenix Home Life Mutual Insurance Company. Managing Director,
Vice President J&W Seligman & Company (1990-1995).
Christopher J. Kelleher Portfolio Manager, Public Bonds, Phoenix Home Life Mutual Insurance Company. Vice
Vice President President, National Securities & Research Corporation, The Phoenix Edge Series Fund,
Phoenix Series Fund, and Phoenix Duff & Phelps Institutional Mutual Funds.
Peter S. Lannigan Director, Public Fixed Income, Phoenix Home Life Mutual Insurance Company. Vice
Vice President President, Phoenix Multi-Portfolio Fund. Associate Director, Bond Rating Group,
Standard & Poor's Corp. (until 1993).
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER BUSINESS, PROFESSION,
PHOENIX INVESTMENT COUNSEL, INC. VOCATION, OR EMPLOYMENT
<S> <C>
Thomas S. Melvin, Jr. Portfolio Manager, Common Stock, Phoenix Home Life Mutual Insurance Company. Vice
Vice President President, Phoenix Multi-Portfolio Fund, Phoenix Duff & Phelps Institutional Mutual
Funds and National Securities & Research Corporation.
Charles L. Olson Regional Marketing Manager, Phoenix Home Life Mutual Insurance Company.
Vice President
C. Edwin Riley, Jr. Vice President, Phoenix Series Fund, Phoenix Total Return Fund, Inc., and The Phoenix
Vice President Edge Series Fund. Portfolio Manager, Phoenix Home Life Mutual Insurance Company. Sr.
Vice President and Director of Equity Management for Nationsbank Investment
Management (1988-1995).
Amy L. Robinson Managing Director, Securities Administration, Phoenix Home Life Mutual Insurance
Vice President Company. Vice President, National Securities & Research Corporation, The Phoenix Edge
Series Fund and Phoenix Series Fund.
David M. Schans, C.L.U. Regional Group Pension Manager, Phoenix Home Life Mutual Insurance Company.
Vice President
Holly S. Simeon Regional Vice President, Phoenix Home Life Mutual Insurance Company.
Vice President
Dorothy J. Skaret Director, Public Fixed Income, Phoenix Home Life Mutual Insurance Company. Vice
Vice President President, National Securities & Research Corporation, The Phoenix Edge Series Fund,
Phoenix Duff & Phelps Institutional Mutual Funds, and Phoenix Series Fund.
Rosemary T. Strekel Vice President, Private Placements, Phoenix Home Life Mutual Insurance Company.
Vice President
James D. Wehr Managing Director, Public Fixed Income, Phoenix Home Life Mutual Insurance Company.
Vice President Vice President, National Securities & Research Corporation, Phoenix California Tax
Exempt Bond Fund, Phoenix Multi-Portfolio Fund, The Phoenix Edge Series Fund,
Phoenix Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds.
John T. Wilson Portfolio Manager, Common Stock, Phoenix Home Life Mutual Insurance Company. Vice
Vice President President, Phoenix Multi-Portfolio Fund, Phoenix Worldwide Opportunities Fund and
National Securities & Research Corporation.
G. Jeffrey Bohne Vice President and General Manager, Phoenix Home Life Mutual Insurance Company. Vice
Clerk President, Transfer Agent Operations, Phoenix Equity Planning Corporation. Secretary,
the Phoenix Funds and Phoenix Duff & Phelps Institutional Mutual Funds. Clerk, Phoenix
Total Return Fund, Inc.
Thomas N. Steenburg Secretary, Vice President and Counsel, Phoenix Duff & Phelps Corporation. Counsel,
Secretary Phoenix Home Life Mutual Insurance Company. Secretary, National Securities & Research
Corporation, and Phoenix Equity Planning Corporation. Assistant Secretary, Phoenix
Duff & Phelps Institutional Mutual Funds.
</TABLE>
PHOENIX REALTY SECURITIES, INC.
Phoenix Realty Securities, Inc., is a registered investment adviser which
serves as investment adviser to the Registrant's Real Estate Securities
Portfolio.
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 Phoenix Realty Securities, Inc. is, or at any time during the past two years
has been, engaged for his or her own account or in the capacity of director,
officer, employee, partner or trustee.
C-6
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER BUSINESS, PROFESSION,
PHOENIX REALTY SECURITIES, INC. VOCATION, OR EMPLOYMENT
<S> <C>
Robert W. Fiondella Director, Phoenix Duff & Phelps Corporation. Chairman, President and Chief Executive
Director Officer, Phoenix Home Life Mutual Insurance Company. Director, Phoenix Equity Planning
Corporation, Phoenix Securities Group, Inc., National Securities & Research
Corporation, Townsend Financial Advisers, Inc., Phoenix Realty Advisors, Inc., Phoenix
Realty Investors, Inc. and Phoenix Realty Group, Inc. Director and President of PM
Holdings, Inc.
Philip R. McLoughlin Director, Vice Chairman and Chief Executive Officer, Phoenix Duff & Phelps Corporation.
Director Executive Vice President, Chief Investment Officer and Director, Phoenix Home Life
Mutual Insurance Company. Director/Trustee, President, 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 and Vice President, PM Holdings, Inc., Director, Phoenix Re
Corporation (Delaware). World Trust Fund, W.S. Griffith & Co., Townsend Financial
Advisers, Inc., Phoenix Realty Group, Inc., Phoenix Realty Advisors, Inc., Phoenix
Realty Investors, Inc. and Phoenix Investment Counsel, Inc.
Scott C. Noble Senior Vice President, Real Estate, Phoenix Home Life Mutual Insurance Company.
Director and Chief Executive Officer Director and Executive Vice President, Phoenix Real Estate Securities, Inc. Vice
President, Phoenix Multi-Portfolio Fund and The Phoenix Edge Series Fund. Director and
President, Phoenix Founders, Inc., Phoenix Realty Advisors, Inc. and Phoenix Realty
Group, Inc. Director, President and Chief Executive Officer, Phoenix Realty Investors,
Inc.
Charles J. Paydos Executive Vice President and Director, Phoenix Home Life Mutual Insurance Company.
Director Director, Phoenix Equity Planning Corporation, National Securities & Research
Corporation, W.S. Griffith & Co., Inc., Townsend Financial Advisers, Inc., Phoenix
Securities Group, Inc., and Phoenix Realty Group, Inc. Director and Vice President,
PM Holdings, Inc.
David W. Searfoss Executive Vice President and Chief Financial Officer, Phoenix Home Life Mutual
Director and Treasurer Insurance Company. Director, Phoenix Equity Planning Corporation. Director, Vice
President and Treasurer. PM Holdings, Inc. Director and Treasurer, Phoenix Realty
Group, Inc. Treasurer, Phoenix Realty Advisors, Inc. and Phoenix Realty Investors, Inc.
Dona D. Young Executive Vice President, Individual Insurance and General Counsel, Phoenix Home Life
Director Mutual Insurance Company. Director, Executive Vice President and General Counsel,
Phoenix American Life Insurance Company. Director and Vice President, PM Holdings, Inc.
Director, 238 Columbus Blvd., Inc., American Phoenix Life and Reassurance Company,
PHL Variable Insurance Company, Worldwide Phoenix Offshore, Inc., Phoenix Equity
Planning Corporation, Phoenix Investment Counsel, Inc., Townsend Financial Advisers,
Inc., W.S. Griffith & Co., Inc. and Phoenix Realty Group, Inc.
Barbara Rubin Vice President, Real Estate, Phoenix Home Life Mutual Insurance Company. Vice
President President, Phoenix Multi-Portfolio Fund and The Phoenix Edge Series Fund. Director,
Phoenix Home Life Federal Credit Union, and VNA Health Care, Inc. and Phoenix American
Life Insurance Company. Vice President, 238 Columbus Blvd., Inc., Director and Vice
President, Phoenix Founders, Inc. Vice President, Phoenix Real Estate Securities, Inc.
Executive Vice President, Phoenix Realty Group, Inc. and Phoenix Realty Investors, Inc.
Steven R. Blomquist Managing Director, Real Estate, Phoenix Home Life Mutual Insurance Company. Senior
Executive Vice President Vice President, Phoenix Realty Group, Inc. Executive Vice President, Phoenix Realty
Investors, Inc.
Charles J. Bello Managing Director, South Central Region, Phoenix Home Life Mutual Insurance Company.
Senior Vice President Director, Mass Mutual Life Insurance Company (1985-1995).
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER BUSINESS, PROFESSION,
PHOENIX REALTY SECURITIES, INC. VOCATION, OR EMPLOYMENT
<S> <C>
James F. Conway Managing Director, Southeast Region, Phoenix Home Life Mutual Insurance Company.
Senior Vice President Regional Vice President, The Travelers Insurance Company (1989-1995).
Douglas G. Denyer Managing Director, Real Estate, Phoenix Home Life Mutual Insurance Company. Senior
Senior Vice President Vice President and Treasurer, Phoenix Realty Group, Inc. Senior Vice President,
Phoenix Realty Advisors, Inc.
Geoffrey S. Emanuel Managing Director, Real Estate, Phoenix Home Life Mutual Insurance Company. Senior
Senior Vice President Investment Officer, Connecticut Mutual Life Insurance Company (1992-1995).
Terence P. O'Day Managing Director, Real Estate, Phoenix Home Life Mutual Insurance Company. Senior
Senior Vice President Vice President, Phoenix Realty Advisors, Inc. and Phoenix Realty Group, Inc.
James M. Dolan Vice President and Compliance Officer, Phoenix Equity Planning Corporation and Phoenix
Chief Compliance Officer Realty Advisors, Inc. Vice President, the Phoenix Funds, and National Securities &
Research Corporation. Vice President, Phoenix Duff & Phelps Institutional Mutual Funds.
Edward F. Kaeser, Jr. Director, Real Estate, Phoenix Home Life Mutual Insurance Company. Vice President,
Vice President Phoenix Realty Advisors, Inc. and Phoenix Realty Group, Inc.
Susan M. Motowidlak Director, Real Estate, Phoenix Home Life Mutual Insurance Company (1987-present).
Vice President
Rodney E. Pelletier Director, Real Estate, Phoenix Home Life Mutual Insurance Company. Vice President,
Vice President Phoenix Realty Group, Inc.
Antonia G. Rhodus Director, Real Estate, Phoenix Home Life Mutual Insurance Company. Vice President,
Vice President Phoenix Realty Group, Inc. and Phoenix Realty Advisors, Inc.
Dorothy J. Skaret Director, Public Fixed Income, Phoenix Home Life Mutual Insurance Company. Vice
Vice President President, Phoenix Series Fund, The Phoenix Edge Series Fund, Phoenix Investment
Counsel, Inc., National Securities & Research Corporation, and Phoenix Duff &
Phelps Institutional Mutual Funds.
Gretchen E. Spielman Director, Real Estate, Phoenix Home Life Mutual Insurance Company.
Vice President
Stephen C. Swett Director, Real Estate, Phoenix Home Life Mutual Insurance Company. Vice President,
Vice President Phoenix Realty Group, Inc.
Keith D. Robbins Vice President and Investment Counsel, Phoenix Home Life Mutual Insurance Company.
Secretary
</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
C-8
<PAGE>
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 Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
Phoenix Home Life Mutual One American Row
Insurance Company Hartford, CT 06115
Phoenix Investment Counsel, Inc. One American Row
Hartford, CT 06115
Phoenix Re Corporation (Delaware) 80 Maiden Lane
New York, NY 10038
Phoenix Realty Advisors, Inc. One American Row
Hartford, CT 06115
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 Securities Group, Inc. One American Row
Hartford, CT 06115
PM Holdings, Inc. One American Row
Hartford, CT 06115
The Phoenix Funds 101 Munson Street
Greenfield, MA 01301
Townsend Financial Advisers, Inc. 100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
W.S. Griffith & Co., Inc. 101 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
238 Columbus Blvd., Inc. One American Row
Hartford, CT 06115
C-9
<PAGE>
World Trust Fund KREDIETRUST
Societe Anonyme
11, rue Aldringen
L-2690 Luxembourg
R.C. Luxembourg B 10.750
Worldwide Phoenix Limited 41 Cedar House
Hamilton HM 12, Bermuda
Worldwide Phoenix Offshore, Inc. One American Row
Hartford, CT 06115
ITEM 29. PRINCIPAL UNDERWRITERS
Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Phoenix Home Life Mutual Insurance Company
One American Row
Hartford, Connecticut 06115
and
101 Munson Street
P.O. Box 942
Greenfield, Massachusetts 01302-0942
ITEM 31. MANAGEMENT SERVICES
All management-related service contracts are discussed in Part A or B
of this Registration Statement.
ITEM 32. UNDERTAKINGS
(a) Not Applicable.
(b) 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.
C-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Hartford and the
State of Connecticut on the 16th day of April, 1996.
THE PHOENIX EDGE SERIES FUND
Attest: /s/ Thomas N. Steenburg By: /s/ 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 16th day of April, 1996.
SIGNATURE TITLE
--------- -----
Trustee
- ---------------------------------------------
C. Duane Blinn*
Trustee
- ---------------------------------------------
Robert Chesek*
Trustee
- ---------------------------------------------
E. Virgil Conway*
Treasurer
- ---------------------------------------------
Nancy G. Curtiss* (Principal Financial and
Accounting Officer)
Trustee
- ---------------------------------------------
Harry Dalzell-Payne*
Trustee
- ---------------------------------------------
Francis E. Jeffries*
Trustee
- ---------------------------------------------
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin Trustee and President
- ---------------------------------------------
Philip R. McLoughlin (Principal Executive Officer)
Trustee
- ---------------------------------------------
Everett L. Morris*
Trustee
- ---------------------------------------------
James M. Oates*
Trustee
- ---------------------------------------------
Calvin J. Pedersen*
Trustee
- ---------------------------------------------
Philip R. Reynolds*
Trustee
- ---------------------------------------------
Herbert Roth, Jr.*
S-1(C)
<PAGE>
Trustee
- ---------------------------------------------
Richard E. Segerson*
Trustee
- ---------------------------------------------
Lowell P. Weicker, Jr.*
By: /s/ Philip R. McLoughlin
-------------------------
* Philip R. McLoughlin, pursuant to powers of attorney filed herewith.
S-2(C)
EXHIBIT 1.6
AMENDMENT TO DECLARATION OF TRUST
<PAGE>
THE PHOENIX EDGE SERIES FUND
AMENDMENT TO DECLARATION OF TRUST
We, the undersigned, being a majority of the members of the Board of Trustees
of The Phoenix Edge Series Fund, a Massachusetts business trust organized under
a Declaration of Trust dated February 18, 1986, as amended December 9, 1986,
February 28, 1990, November 14, 1991, May 1, 1992, January 1, 1995 and November
15, 1995 acting pursuant to ARTICLE VII Section 7.3 of said Declaration of Trust
for the purpose of changing the name of the Series currently designated "Bond
Series" to the "Multi-Sector Fixed Income Series," hereby further amend said
Declaration of Trust, effective February 21, 1996, by deleting the first
paragraph of Section 4.2 of ARTICLE IV thereof and by inserting in lieu of such
paragraph the following paragraph:
"Without limiting the authority of the Trustees set forth in Section
4.1 to establish and designate any further Series, the following eight
Series are hereby established and designated: 'Balanced Series,'
'Growth Series,' 'International Series,' 'Money Market Series,'
'Multi-Sector Fixed Income Series,' 'Real Estate Securities,'
'Strategic Theme Series,' and 'Total Return Series.'"
WITNESS our hands this 21st day of February, 1996.
/S/ C. DUANE BLINN /S/ PHILIP R. MCLOUGHLIN
- ------------------------- ------------------------------
C. Duane Blinn Philip R. McLoughlin
/S/ ROBERT CHESEK /S/ EVERETT L. MORRIS
- ------------------------- ------------------------------
Robert Chesek Everett L. Morris
/S/ E. VIRGIL CONWAY /S/ JAMES M. OATES
- ------------------------- ------------------------------
E. Virgil Conway James M. Oates
/S/ HARRY DALZELL-PAYNE /S/ PHILIP R. REYNOLDS
- ------------------------- ------------------------------
Harry Dalzell-Payne Philip R. Reynolds
/S/ FRANCIS E. JEFFRIES /S/ HERBERT ROTH, JR.
- ------------------------- ------------------------------
Francis E. Jeffries Herbert Roth, Jr.
/S/ LEROY KEITH, JR. /S/ RICHARD E. SEGERSON
- ------------------------- ------------------------------
Leroy Keith, Jr. Richard E. Segerson
/S/ LOWELL P. WEICKER, JR.
------------------------------
Lowell P. Weicker, Jr.
EXHIBIT 11
Written Consent of Price Waterhouse LLP
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 17 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
of the Money Market Series, Growth Series, Multi-Sector Fixed Income Series
(formerly the "Bond" Series), Total Return Series, International Series,
Balanced Series and Real Estate Series of the Phoenix Edge Series Fund, which
appears in such Statement of Additional Information, and to the incorporation
by reference of our report into the Prospectus which constitutes part of this
Registration Statement. We also consent to the references to us under the
headings "Independent Accountants" and "Financial Statements" in such Statement
of Additional Information and to the reference to us under the heading
"Financial Highlights" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
April 16, 1996
EXHIBIT 18
POWERS OF ATTORNEY
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The Phoenix Edge Series
Fund, 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
The Phoenix Edge Series Fund, 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 The Phoenix Edge Series Fund, 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, Trustee
------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The Phoenix Edge Series
Fund, 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
The Phoenix Edge Series Fund, 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 The Phoenix Edge Series Fund, 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, Trustee
-----------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The Phoenix Edge Series
Fund, 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
The Phoenix Edge Series Fund, 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 The Phoenix Edge Series Fund, 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, Trustee
--------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned Treasurer and Principal Accounting Officer of The Phoenix
Edge Series Fund, 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 The Phoenix Edge Series Fund, 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 The Phoenix Edge Series Fund, 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
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The Phoenix Edge Series
Fund, 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
The Phoenix Edge Series Fund, 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 The Phoenix Edge Series Fund, 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, Trustee
-----------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The Phoenix Edge Series
Fund, 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
The Phoenix Edge Series Fund, 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 The Phoenix Edge Series Fund, 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/ FRANCIS E. JEFFRIES, Trustee
-----------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The Phoenix Edge Series
Fund, 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
The Phoenix Edge Series Fund, 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 The Phoenix Edge Series Fund, 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., Trustee
--------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The Phoenix Edge Series
Fund, 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
The Phoenix Edge Series Fund, 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 The Phoenix Edge Series Fund, 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/ EVERETT L. MORRIS, Trustee
---------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The Phoenix Edge Series
Fund, 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
The Phoenix Edge Series Fund, 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 The Phoenix Edge Series Fund, 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, Trustee
------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The Phoenix Edge Series
Fund, 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
The Phoenix Edge Series Fund, 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, Trustee
---------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The Phoenix Edge Series
Fund, 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
The Phoenix Edge Series Fund, 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 The Phoenix Edge Series Fund, 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/ PHILIP R. REYNOLDS, Trustee
----------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The Phoenix Edge Series
Fund, 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
The Phoenix Edge Series Fund, 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 The Phoenix Edge Series Fund, 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., Trustee
---------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The Phoenix Edge Series
Fund, 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
The Phoenix Edge Series Fund, 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 The Phoenix Edge Series Fund, 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, Trustee
-----------------------
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The Phoenix Edge Series
Fund, 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
The Phoenix Edge Series Fund, 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 The Phoenix Edge Series Fund, 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., Trustee
--------------------------
<PAGE>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000792359
<NAME> THE PHOENIX EDGE SERIES FUND
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET SERIES
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 99046
<INVESTMENTS-AT-VALUE> 99046
<RECEIVABLES> 394
<ASSETS-OTHER> 3583
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 103023
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 79
<TOTAL-LIABILITIES> 79
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 102914
<SHARES-COMMON-STOCK> 10291
<SHARES-COMMON-PRIOR> 9457
<ACCUMULATED-NII-CURRENT> 29
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 102943
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5551
<OTHER-INCOME> 0
<EXPENSES-NET> (481)
<NET-INVESTMENT-INCOME> 5070
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5070
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5055)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19416
<NUMBER-OF-SHARES-REDEEMED> (19087)
<SHARES-REINVESTED> 506
<NET-CHANGE-IN-ASSETS> 8358
<ACCUMULATED-NII-PRIOR> 14
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 352
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 481
<AVERAGE-NET-ASSETS> 91008
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.56)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000792359
<NAME> THE PHOENIX EDGE SERIES FUND
<SERIES>
<NUMBER> 2
<NAME> GROWTH SERIES
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 878096
<INVESTMENTS-AT-VALUE> 987658
<RECEIVABLES> 1103
<ASSETS-OTHER> 1650
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 990411
<PAYABLE-FOR-SECURITIES> 4295
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 727
<TOTAL-LIABILITIES> 5022
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 868237
<SHARES-COMMON-STOCK> 54341
<SHARES-COMMON-PRIOR> 39282
<ACCUMULATED-NII-CURRENT> 195
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7396
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 109561
<NET-ASSETS> 985389
<DIVIDEND-INCOME> 8319
<INTEREST-INCOME> 6566
<OTHER-INCOME> 0
<EXPENSES-NET> (5965)
<NET-INVESTMENT-INCOME> 8920
<REALIZED-GAINS-CURRENT> 111984
<APPREC-INCREASE-CURRENT> 89700
<NET-CHANGE-FROM-OPS> 210604
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7452)
<DISTRIBUTIONS-OF-GAINS> (105928)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16788
<NUMBER-OF-SHARES-REDEEMED> (8019)
<SHARES-REINVESTED> 6291
<NET-CHANGE-IN-ASSETS> 369168
<ACCUMULATED-NII-PRIOR> 71
<ACCUMULATED-GAINS-PRIOR> 15
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5142
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5965
<AVERAGE-NET-ASSETS> 794544
<PER-SHARE-NAV-BEGIN> 15.69
<PER-SHARE-NII> 0.20
<PER-SHARE-GAIN-APPREC> 4.60
<PER-SHARE-DIVIDEND> (0.17)
<PER-SHARE-DISTRIBUTIONS> (2.19)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.13
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000792359
<NAME> THE PHOENIX EDGE SERIES FUND
<SERIES>
<NUMBER> 3
<NAME> BOND SERIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 100202
<INVESTMENTS-AT-VALUE> 106927
<RECEIVABLES> 3935
<ASSETS-OTHER> 302
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 111164
<PAYABLE-FOR-SECURITIES> 1999
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 120
<TOTAL-LIABILITIES> 2119
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 103961
<SHARES-COMMON-STOCK> 10669
<SHARES-COMMON-PRIOR> 8316
<ACCUMULATED-NII-CURRENT> 135
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1775)
<ACCUM-APPREC-OR-DEPREC> 6725
<NET-ASSETS> 109046
<DIVIDEND-INCOME> 420
<INTEREST-INCOME> 8004
<OTHER-INCOME> 0
<EXPENSES-NET> (594)
<NET-INVESTMENT-INCOME> 7830
<REALIZED-GAINS-CURRENT> 1405
<APPREC-INCREASE-CURRENT> 10007
<NET-CHANGE-FROM-OPS> 19242
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7763)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4715
<NUMBER-OF-SHARES-REDEEMED> (3159)
<SHARES-REINVESTED> 796
<NET-CHANGE-IN-ASSETS> 34360
<ACCUMULATED-NII-PRIOR> 23
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (3164)
<GROSS-ADVISORY-FEES> 458
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 664
<AVERAGE-NET-ASSETS> 91502
<PER-SHARE-NAV-BEGIN> 8.98
<PER-SHARE-NII> 0.83
<PER-SHARE-GAIN-APPREC> 1.22
<PER-SHARE-DIVIDEND> (0.81)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.22
<EXPENSE-RATIO> 0.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000792359
<NAME> THE PHOENIX EDGE SERIES FUND
<SERIES>
<NUMBER> 4
<NAME> TOTAL RETURN SERIES
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 331811
<INVESTMENTS-AT-VALUE> 351708
<RECEIVABLES> 3496
<ASSETS-OTHER> 297
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 355501
<PAYABLE-FOR-SECURITIES> 1402
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 261
<TOTAL-LIABILITIES> 1663
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 331831
<SHARES-COMMON-STOCK> 25952
<SHARES-COMMON-PRIOR> 22791
<ACCUMULATED-NII-CURRENT> 154
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1956
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 19897
<NET-ASSETS> 353838
<DIVIDEND-INCOME> 2408
<INTEREST-INCOME> 10279
<OTHER-INCOME> 0
<EXPENSES-NET> (2148)
<NET-INVESTMENT-INCOME> 10538
<REALIZED-GAINS-CURRENT> 23633
<APPREC-INCREASE-CURRENT> 19083
<NET-CHANGE-FROM-OPS> 53254
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10497)
<DISTRIBUTIONS-OF-GAINS> (21419)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5465
<NUMBER-OF-SHARES-REDEEMED> (4647)
<SHARES-REINVESTED> 2342
<NET-CHANGE-IN-ASSETS> 64755
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (22)
<OVERDIST-NET-GAINS-PRIOR> (123)
<GROSS-ADVISORY-FEES> 1831
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2148
<AVERAGE-NET-ASSETS> 320738
<PER-SHARE-NAV-BEGIN> 12.68
<PER-SHARE-NII> 0.45
<PER-SHARE-GAIN-APPREC> 1.84
<PER-SHARE-DIVIDEND> (0.45)
<PER-SHARE-DISTRIBUTIONS> (0.89)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.63
<EXPENSE-RATIO> 0.67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000792359
<NAME> THE PHOENIX EDGE SERIES FUND
<SERIES>
<NUMBER> 5
<NAME> INTERNATIONAL SERIES
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 122060
<INVESTMENTS-AT-VALUE> 133945
<RECEIVABLES> 1034
<ASSETS-OTHER> 54
<OTHER-ITEMS-ASSETS> 112
<TOTAL-ASSETS> 135145
<PAYABLE-FOR-SECURITIES> 57
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 633
<TOTAL-LIABILITIES> 690
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 123074
<SHARES-COMMON-STOCK> 10588
<SHARES-COMMON-PRIOR> 11360
<ACCUMULATED-NII-CURRENT> 918
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1531)
<ACCUM-APPREC-OR-DEPREC> 11994
<NET-ASSETS> 134455
<DIVIDEND-INCOME> 1943
<INTEREST-INCOME> 879
<OTHER-INCOME> (158)
<EXPENSES-NET> (1416)
<NET-INVESTMENT-INCOME> 1248
<REALIZED-GAINS-CURRENT> 1952
<APPREC-INCREASE-CURRENT> 8552
<NET-CHANGE-FROM-OPS> 11752
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (456)
<DISTRIBUTIONS-OF-GAINS> (2630)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3786
<NUMBER-OF-SHARES-REDEEMED> (4796)
<SHARES-REINVESTED> 239
<NET-CHANGE-IN-ASSETS> (173)
<ACCUMULATED-NII-PRIOR> 389
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1565)
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1416
<AVERAGE-NET-ASSETS> 131597
<PER-SHARE-NAV-BEGIN> 11.85
<PER-SHARE-NII> 0.12
<PER-SHARE-GAIN-APPREC> 1.02
<PER-SHARE-DIVIDEND> (0.04)
<PER-SHARE-DISTRIBUTIONS> (0.25)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.70
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000792359
<NAME> THE PHOENIX EDGE SERIES FUND
<SERIES>
<NUMBER> 6
<NAME> BALANCED SERIES
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 179824
<INVESTMENTS-AT-VALUE> 193878
<RECEIVABLES> 2744
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 196770
<PAYABLE-FOR-SECURITIES> 3300
<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 3468
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 172186
<SHARES-COMMON-STOCK> 15716
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<ACCUMULATED-NII-CURRENT> 75
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<ACCUMULATED-NET-GAINS> 6986
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14055
<NET-ASSETS> 193302
<DIVIDEND-INCOME> 1542
<INTEREST-INCOME> 5545
<OTHER-INCOME> 0
<EXPENSES-NET> (1123)
<NET-INVESTMENT-INCOME> 5964
<REALIZED-GAINS-CURRENT> 17179
<APPREC-INCREASE-CURRENT> 13277
<NET-CHANGE-FROM-OPS> 36420
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6004)
<DISTRIBUTIONS-OF-GAINS> (3833)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2915
<NUMBER-OF-SHARES-REDEEMED> (3333)
<SHARES-REINVESTED> 829
<NET-CHANGE-IN-ASSETS> 32197
<ACCUMULATED-NII-PRIOR> 208
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (6447)
<GROSS-ADVISORY-FEES> 918
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1123
<AVERAGE-NET-ASSETS> 173398
<PER-SHARE-NAV-BEGIN> 10.53
<PER-SHARE-NII> 0.40
<PER-SHARE-GAIN-APPREC> 2.02
<PER-SHARE-DIVIDEND> (0.40)
<PER-SHARE-DISTRIBUTIONS> (0.25)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.30
<EXPENSE-RATIO> 0.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000792359
<NAME> THE PHOENIX EDGE SERIES FUND
<SERIES>
<NUMBER> 7
<NAME> REAL ESTATE SERIES
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 7688
<INVESTMENTS-AT-VALUE> 8534
<RECEIVABLES> 94
<ASSETS-OTHER> 8
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8636
<PAYABLE-FOR-SECURITIES> 128
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 36
<TOTAL-LIABILITIES> 164
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7627
<SHARES-COMMON-STOCK> 748
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 846
<NET-ASSETS> 8473
<DIVIDEND-INCOME> 250
<INTEREST-INCOME> 11
<OTHER-INCOME> 0
<EXPENSES-NET> (45)
<NET-INVESTMENT-INCOME> 216
<REALIZED-GAINS-CURRENT> 44
<APPREC-INCREASE-CURRENT> 846
<NET-CHANGE-FROM-OPS> 1106
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (216)
<DISTRIBUTIONS-OF-GAINS> (44)
<DISTRIBUTIONS-OTHER> (19)
<NUMBER-OF-SHARES-SOLD> 784
<NUMBER-OF-SHARES-REDEEMED> (62)
<SHARES-REINVESTED> 26
<NET-CHANGE-IN-ASSETS> 8473
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 34
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 89
<AVERAGE-NET-ASSETS> 6923
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.33
<PER-SHARE-GAIN-APPREC> 1.42
<PER-SHARE-DIVIDEND> (0.33)
<PER-SHARE-DISTRIBUTIONS> (0.06)
<RETURNS-OF-CAPITAL> (0.03)
<PER-SHARE-NAV-END> 11.33
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
