THE PHOENIX EDGE
SERIES FUND
IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT US AT:
[envelope] PHOENIX VARIABLE PRODUCTS
MAIL OPERATIONS
PO Box 8027
Boston, MA 02266-8027
[telephone] Tel. 800/541-0171
PROSPECTUS MAY 1, 1999
The Phoenix Edge Series Fund (the "Fund") is an open-end management
investment company which is intended to meet a wide range of investment
objectives with its 15 separate Series. Generally, each Series operates as if it
were a separate fund.
The shares of the Fund are not directly offered to the public. You can
invest in the Fund only by buying a Variable Accumulation Annuity Contract or a
Variable Universal Life Insurance Policy offered by Phoenix Home Life Mutual
Insurance Company ("Phoenix"), PHL Variable Insurance Company ("PHL Variable"),
or Phoenix Life and Annuity Company ("PLAC"), and directing the allocation of
your payment(s) to the Subaccount(s) corresponding to the Series in which you
wish to invest. The Subaccounts, in turn, invest in shares of the Fund. Not all
Series may be offered through a particular Contract or Policy. The Fund also
offers its shares through other Phoenix products.
This prospectus describes each of the Series and provides important
information you should know before investing in any Series of the Fund. You
should read this prospectus carefully and keep it for future reference.
MANAGED BY
PHOENIX INVESTMENT COUNSEL, INC.
[diamond] Phoenix-Goodwin Money Market Series
We are offering this product only where we may lawfully do so. You should
rely only on the information contained in this document or in one that we have
referred you to. We have not authorized anyone to provide you with information
that is different.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, nor has the Commission determined if this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
Phoenix Edge Series Fund 1
<PAGE>
TABLE OF CONTENTS
Heading Page
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PHOENIX-GOODWIN MONEY MARKET SERIES ...................... 3
Investment Risk and Return Summary ...................... 3
Series' Expenses ........................................ 4
Financial Highlights..................................... 5
ADDITIONAL DISCUSSION OF INVESTMENT
STRATEGIES AND MANAGEMENT................................ 6
Phoenix-Goodwin Money Market Series...................... 6
INVESTMENT RESTRICTIONS................................... 8
PORTFOLIO TURNOVER........................................ 8
THE FUND AND ITS MANAGEMENT............................... 8
SHARES OF BENEFICIAL INTEREST............................. 8
NET ASSET VALUE........................................... 9
TAXES..................................................... 9
APPENDIX.................................................. 10
2 Phoenix-Goodwin Money Market Series
<PAGE>
PHOENIX-GOODWIN MONEY MARKET SERIES
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INVESTMENT RISK AND RETURN SUMMARY
INVESTMENT OBJECTIVES
The Phoenix-Goodwin Money Market Series has an investment objective of
seeking as high a level of current income as is consistent with the preservation
of capital and maintenance of liquidity. There is no guarantee that the Series
will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
[diamond] The Series seeks to maintain a stable $1.00 per share price.
[diamond] The Series will invest in a diversified portfolio of high quality
money market instruments with maturities of 397 days or less. The
average maturity of the Series' portfolio securities, based on their
dollar value, will not exceed 90 days.
[diamond] The Series will invest exclusively in the following instruments:
[bullet] Obligations issued or guaranteed by the U.S. government, its
agencies, authorities and instrumentalities
[bullet] Obligations issued by banks and savings and loan
associations, including dollar-denominated obligations of
foreign branches of U.S. banks and U.S. branches of foreign
banks
[bullet] Dollar-denominated obligations guaranteed by banks or savings
and loan associations
[bullet] Federally insured obligations of other banks or savings and
loan associations
[bullet] Commercial paper
[bullet] Short-term corporate obligations
[bullet] Repurchase agreements
[diamond] At least 95% of the Series' total assets will be invested in
securities in the highest short-term rating category. Generally,
investments will be limited to securities in the two highest
short-term rating categories.
[diamond] The Series may invest more than 25% of its assets in the domestic
banking industry.
[diamond] The Series may forego purchasing securities with the highest available
yield due to considerations of liquidity and safety of principal.
[diamond] The adviser will buy, sell and trade securities in anticipation of, or
in response to, changing economic and money market conditions and
trends. This, and the short-term nature of money market instruments,
may result in a high portfolio turnover rate.
PRINCIPAL RISKS
An investment in the Series is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Series seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Series.
The Series' focus is to optimize current income. The adviser intends to
select investments that provide higher returns relative to overall money market
investment returns while preserving capital and maintaining liquidity. If the
adviser misjudges the return potential or the ability of the issuer to make
scheduled income and principal payments, the Series' returns may be lower than
prevailing returns and the Series' income available for distribution may be
less. Neither the Series nor the adviser can assure you that a particular level
of income will be consistently achieved.
The adviser intends to select investments that optimize the Series' yield
while preserving capital and maintaining liquidity. Because market conditions
and interest rates determine portfolio security yields, neither the Series nor
the adviser can assure you that the Series' yield will remain constant or that a
particular level of income will be achieved.
A security's short-term investment rating may decline, increasing the
chances the issuer may not be able to make principal and interest payments on
time. This may reduce the Series' stream of income and decrease the Series'
yield.
Obligations issued or guaranteed by the U.S. government, its agencies,
authorities and instrumentalities, or guaranteed or insured by banks only
guarantee or insure principal and interest will be timely paid to holders of the
securities. The entities do not guarantee that the value of the Series' shares
will increase.
The Series may invest in repurchase agreements. If the seller of the
repurchase agreement does not repurchase the underlying securities, the Series
may incur a loss.
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of
investing in the Phoenix-Goodwin Money Market Series. The bar chart shows
changes in the Series' performance from year to year over a 10-year period.(1)
Phoenix-Goodwin Money Market Series 3
<PAGE>
PHOENIX-GOODWIN MONEY MARKET SERIES
[graphic ommitted]
CALENDAR YEAR ANNUAL RETURN (%)
1989 9.0
1990 8.22
1991 5.98
1992 3.58
1993 2.87
1994 3.83
1995 5.72
1996 5.09
1997 5.18
1998 5.09
(1)The Series' average annual returns in the chart above do not reflect the
deduction of any separate account or contract charges. The returns would have
been less than those shown if such charges were deducted. During the 10-year
period shown in the chart above, the highest return for a quarter was 2.37%
(quarter ending June 1989) and the lowest return for a quarter was .69%
(quarter ending September 1993).
The Series' 7-day yield on December 31, 1998 was 4.05%.
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AVERAGE ANNUAL
TOTAL RETURNS LIFE OF
(FOR THE PERIOD ONE FIVE TEN THE
ENDING 12/31/98) YEAR YEARS YEARS SERIES(1)
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Phoenix-Goodwin
Money Market 5.09% 4.98% 5.46% 6.34%
Series
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Lipper Money
Market Fund(2) 5.10% 4.90% 5.32% 6.27%
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(1) Since October 31, 1982.
(2) The Lipper Money Market Fund is comprised of the weighted average of the top
30 funds in the Money Market universe.
SERIES' EXPENSES
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the Series.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Sales Charge Imposed on Purchases None
Sales Charge Imposed on Reinvested Dividends None
Deferred Sales Charge None
Redemption Fee None
Exchange Fee None
ANNUAL SERIES' OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM THE SERIES' ASSETS)
Management Fees .40%
Distribution and Service (12b-1) Fees None
Other Expenses .15%
------------
TOTAL ANNUAL SERIES' OPERATING EXPENSES .55%
====
EXAMPLE
This example is intended to help you compare the cost of investing in the
Series with the cost of investing in other funds.
The example assumes that you invest $10,000 in the Series for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Series' operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
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ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
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Phoenix-Goodwin Money
Market Series $56 $176 $307 $689
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4 Phoenix-Goodwin Money Market Series
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Series' financial performance for the past 5 years (or, if shorter, the period
of the Series' operations). Certain information reflects financial results for a
single share. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the Series (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the Series'
financial statements, are included in the SAI or annual report, which is
available upon request.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
Income from investment operations
Net investment income..................................... 0.50 0.50 0.50 0.56 0.38(1)
---- ---- ---- ---- ----
Total from investment operations......................... 0.50 0.50 0.50 0.56 0.38
---- ---- ---- ---- ----
Less distributions:
Dividends from net investment income...................... (0.50) (0.50) (0.50) (0.56) (0.38)
------ ------ ------ ------ ------
Total distributions...................................... (0.50) (0.50) (0.50) (0.56) (0.38)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
========== ========== ========== ========== ==========
Total Return................................................ 5.09% 4.99% 4.98% 5.55% 3.77%
Ratios/supplemental data:
Net assets, end of period (thousands)..................... $196,811 $126,607 $131,361 $102,943 $ 94,586
Ratio to average net assets of:
Operating expenses........................................ 0.55% 0.55% 0.55% 0.53%(2) 0.55%
Net investment income..................................... 4.99% 5.07% 4.89% 5.57% 3.85%
</TABLE>
(1)Includes reimbursement of operating expenses by investment adviser of $0.003
per share.
(2)The ratio of operating expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were included, the
ratio would not significantly differ.
Phoenix-Goodwin Money Market Series 5
<PAGE>
ADDITIONAL DISCUSSION OF INVESTMENT
STRATEGIES AND MANAGEMENT
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PHOENIX-GOODWIN MONEY MARKET SERIES
INVESTMENT STRATEGIES
INVESTMENT OBJECTIVE
The Phoenix-Goodwin Money Market Series has an investment objective of
seeking as high a level of current income as is consistent with the preservation
of capital and maintenance of liquidity. There is no guarantee that the Series
will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
The adviser will seek a high level of return relative to the market by
selecting securities for the Series' portfolio in anticipation of, or in
response to, changing economic conditions and money market conditions and
trends. The adviser may not purchase securities with the highest available yield
if the adviser believes that such an investment is inconsistent with the Series
objectives of preservation of capital and maintenance of liquidity.
The Series will invest in a diversified portfolio of high quality money
market instruments with maturities of 397 days or less. The average maturity of
the Series' portfolio securities, based on their dollar value, will not exceed
90 days.
The following money market instruments are the only investments the Series
will have in its portfolio at any time:
[diamond] Obligations issued or guaranteed by the U.S. government, its agencies,
authorities and instrumentalities, including U.S. Treasury obligations
and securities issued by:
[bullet] the Government National Mortgage Association (GNMA),
[bullet] the Federal Home Loan Mortgage Corporation (FHLMC),
[bullet] the Federal National Mortgage Association (FNMA),
[bullet] Student Loan Marketing Association (SLMA),
[bullet] and other federal agencies;
[diamond] Obligations issued by banks and savings and loan associations,
including dollar-denominated obligations of foreign branches of U.S.
banks and U.S. branches of foreign banks, including certificates of
deposits and bankers acceptances;
[diamond] Dollar-denominated obligations guaranteed by banks or savings and
loan associations;
[diamond] Federally insured obligations of other banks or savings and loan
associations;
[diamond] Commercial paper;
[diamond] Short-term corporate obligations; and
[diamond] Repurchase agreements:
[bullet] A repurchase agreement is a transaction where the Series buys
a security from a seller and the seller agrees to buy that
same security back at an agreed upon date and price.
[bullet] The adviser will enter into repurchase agreements only with
those sellers that it deems creditworthy.
Investments in the Series generally will be limited to securities in the two
highest short-term rating categories with at least 95% of the Series' total
assets invested in securities in the highest rating category. Securities in the
highest rating category carry the smallest degree of investment risk.
The Series may invest more than 25% of its assets in the domestic banking
industry.
The short-term nature of money market instruments and the Series' strategies
may result in a higher turnover rate as compared to other types of funds.
Please refer to the Statement of Additional Information for more detailed
information about these and other investment techniques.
RISKS RELATED TO INVESTMENT STRATEGIES
GENERAL
The Series' focus is to optimize current income. The adviser intends to
select investments that provide higher returns relative to overall money market
investment returns while preserving capital and maintaining liquidity. If the
adviser misjudges the return potential of the Series' investments, the Series'
returns may be lower than prevailing returns, and the Series' income available
for distribution to shareholders may be less. Similarly, if the adviser
misjudges the ability of the issuer of a portfolio security to make scheduled
interest or other income payments to the Series, the Series' income available
for distribution to shareholders may decrease. Neither the Series nor the
adviser can assure you that a particular level of income will be consistently
achieved.
The adviser intends to select investments that optimize the Series' yield
while preserving capital and maintaining liquidity. Because market conditions
and interest rates determine portfolio security yields, neither the Series nor
the adviser can assure you that the Series' yield will remain constant or that a
particular level of income will be achieved.
In addition to these general risks of investing in the Series, there are
several specific risks of investing in the Series that you should note.
6 Phoenix Edge Series Fund
<PAGE>
INVESTMENTS NOT GUARANTEED
Unlike cash held in a bank, investments in the Series are not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
NET ASSET VALUE LESS THAN $1.00
If the net asset value drops below $1.00 per share, you could lose money.
CREDIT RATING DECREASE
A security's short-term investment rating may decline, increasing the
chances the issuer may not be able to make principal and interest payments on
time. This may reduce the Series' stream of income and decrease the Series'
yield.
REPURCHASE AGREEMENTS
If a seller of a repurchase agreement defaults and does not repurchase the
underlying securities, the Series may incur a loss if the value of the
underlying securities declines. Disposition costs may be incurred in connection
with liquidating the underlying securities. If the seller enters into
bankruptcy, the Series may never receive the purchase price or it may be delayed
or limited.
IMPACT OF THE YEAR 2000 ISSUE ON SERIES INVESTMENTS
The Year 2000 issue is the result of computer programs being written using
two rather than four digits to define the applicable year. There is the
possibility that some or all of a company's computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. If a company whose securities are held by the Series does
not "fix" its Year 2000 issue, it is possible that its operations and financial
results would be hurt. Also, the cost of modifying computer programs to become
Year 2000 compliant may hurt the financial performance and market price of
companies whose securities are held by the Series.
MANAGEMENT OF THE SERIES
THE ADVISER
Phoenix Investment Counsel, Inc. ("PIC" or "Adviser") is the investment
adviser to the Series and is located at 56 Prospect Street, Hartford, CT 06115.
PIC also acts as the investment adviser for 14 other mutual funds, as subadviser
to three mutual funds and as adviser to institutional clients. As of December
31, 1998, PIC had $23.9 billion in assets under management. PIC has acted as an
investment adviser for over sixty years.
Subject to the direction of the fund's Board of Trustees, PIC is responsible
for managing the Series' investment program and the day-to-day management of the
Series' portfolio. PIC manages the Series' assets to conform with the investment
policies as described in this prospectus. The Series pays Phoenix a monthly
investment management fee that is accrued daily against the value of the Series'
net assets at the following rates.
- ---------------------------------------------------------------
FIRST NEXT OVER
$250,000,000 $250,000,000 $500,000,000
- ---------------------------------------------------------------
Management Fee .40% .35% .30%
- ---------------------------------------------------------------
During the Series' last fiscal year, the Series paid total management fees
of $564,665. The ratio of management fees to average net assets for the fiscal
year ended December 31, 1998 was .40%.
PORTFOLIO MANAGEMENT
Julie Sapia is the portfolio manager of the Series and as such is primarily
responsible for the day-to-day management of its investments. Ms. Sapia has
served as Director, Money Market Trading of PIC since 1997 and from 1991 until
1997, served in various money market investment management positions of
increasing responsibility with PIC and Phoenix Home Life Mutual Insurance
Company. She also is Vice President of The Phoenix Series Fund, Phoenix Duff &
Phelps Institutional Mutual Funds and Phoenix-Aberdeen Series Fund and serves as
portfolio manager for certain series of each of those funds.
IMPACT OF THE YEAR 2000 ISSUE ON SERIES OPERATIONS
The Trustees have directed management to ensure that the systems used by
service providers (PIC and its affiliates) in support of the Series' operations
be assessed and brought into Year 2000 compliance. Based upon preliminary
assessments, PIC has determined that it will be required to modify or replace
portions of its software so that its computer systems will properly utilize
dates beyond December 31, 1999. PIC management believes that the majority of
these systems are already Year 2000 compliant. PIC believes that with
modifications to existing software and conversions to new software, the Year
2000 issue will be mitigated. It is anticipated that such modifications and
conversions will be completed on a timely basis. It is not known at this time if
there could be a material impact on the operations of PIC or its affiliates or
the Series if such modifications and conversions are not completed timely.
PIC will utilize both internal and external resources to reprogram, or
replace, and test the software for Year 2000 modifications. Certain systems are
already in the process of being converted due to previous initiatives and it is
expected that all core systems will be remediated and tested by June 1999. The
total cost to become Year 2000 compliant is not an expense of the Series and is
not expected to have a material impact on the operating results of PIC.
Phoenix Edge Series Fund 7
<PAGE>
INVESTMENT RESTRICTIONS
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The Fund may not invest more than 25% of the assets of any one Series in any
one industry (except that the Phoenix-Goodwin Money Market and Phoenix-Goodwin
Strategic Allocation Series may invest more than 25% of their assets in the
banking industry and the Phoenix-Duff & Phelps Real Estate Securities Series may
invest at least 75% of its assets in the real estate industry). If the Fund
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.
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
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The 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
the Series and thus indirectly by its shareholders. It also may 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. 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. For more information regarding the consequences related to
a high portfolio turnover rate, see "Portfolio Transactions and Brokerage" and
"Dividends, Distributions and Taxes" in the Statement of Additional Information.
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------------
The Fund 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 Fund, which is managed on a daily basis by the Fund's
investment advisers. The Fund was organized as a Massachusetts business trust on
February 18, 1986. The Fund issues shares of beneficial interest in 15 Series.
The Statement of Additional Information contains a list of the members of the
Board of Trustees and the officers of the Fund.
SHARES OF BENEFICIAL INTEREST
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The Fund currently has fifteen Series of shares of beneficial interest.
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 Contract Owners 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, PHL Variable or PLAC assets and
Fund shares for which no timely instructions from Contract Owners or
Policyowners are received will be voted by Phoenix, PHL Variable and PLAC 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 Fund 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 Fund.
Any general expenses of the Fund 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 Fund may be liable for
debts or claims against the Fund. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Fund and that every written agreement, undertaking or
obligation made or issued by the Fund shall contain a provision to that effect.
The Declaration of Trust provides for indemnification out of the Fund's property
for all losses and expenses of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of the Accounts, as shareholders,
incurring loss because of shareholder liability is limited to circumstances in
which the Fund itself would be unable to meet its obligations. Phoenix, PHL
Variable and PLAC, as the sole shareholders, have a fiduciary duty to bear this
risk and Contract Owners and Policyowners are fully and completely insulated
from risk.
8 Phoenix Edge Series Fund
<PAGE>
NET ASSET VALUE
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The net asset value per share of the Series is determined as of the close of
regular trading of the NYSE on days when the NYSE is open for trading. The net
asset value per share of the Series is determined by adding the values of all
securities and other assets of the Series, subtracting liabilities and dividing
by the total number of outstanding shares of the Series.
The Series' investments are valued at market value or, where market
quotations are not available, at fair value as determined in good faith by the
Trustees or their delegates. Foreign and domestic debt securities (other than
short-term investments) are valued on the basis of broker quotations or
valuations provided by a pricing service approved by the Trustees when such
prices are believed to reflect the fair value of such securities. Foreign and
domestic equity securities are valued at the last sale price or, if there has
been no sale that day, at the last bid price, generally. Short-term investments
having a remaining maturity of less than 61 days are valued at amortized cost,
which the Trustees have determined approximates market. For further information
about security valuations, see the Statement of Additional Information.
TAXES
- --------------------------------------------------------------------------------
The Fund 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 Fund intends to comply with the investment
diversification requirements for variable contracts contained in the Code.
Moreover, the Fund intends to 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 Fund's
shareholders, which in this case are the Accounts. For a discussion of the
taxation of the Accounts, see "Federal Tax Considerations" included in the
Accounts' Prospectuses.
Phoenix Edge Series Fund 9
<PAGE>
APPENDIX
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A-1 AND P-1 COMMERCIAL PAPER RATINGS
The Phoenix-Goodwin Money Market Series will invest only in commercial paper
which at the date of investment is rated A-1 by S&P or P-1 by Moody's or, if not
rated, is issued or guaranteed by companies which at the date of investment have
an outstanding debt issue rated AA or higher by S&P or Aa or higher by Moody's.
Commercial paper rated A-1 by S&P has the following characteristics:
Liquidity ratios are adequate to meet cash requirements. Long-term senior debt
is rated "A" or better. The issuer has access to at least two additional
channels of borrowing. Basic earnings and cash flow have an upward trend with
allowance made for unusual circumstances. Typically, the issuer's industry is
well established and the issuer has a strong position within the industry. The
reliability and quality of management are unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's.
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 10 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 CORPORATE BOND RATINGS
AAA--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment 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.
S&P'S CORPORATE BOND RATINGS
AAA--This is the highest rating assigned by S&P 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.
10 Phoenix Edge Series Fund
<PAGE>
BB-B-CCC-CC--Bonds rated BB, B, CCC are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with terms of the obligation. BB indicates the lowest
degree of speculation and CCC the highest degree of speculation. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
Ability to pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service requirement.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
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.
Phoenix Edge Series Fund 11
