As filed with the Securities and Exchange Commission on August 27, 1996
Registration Nos. 33-6930
811-4728
================================================================================
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. 12 [x]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940
Amendment No. 13 [x]
(Check appropriate box or boxes)
----------------
Phoenix Income and Growth Fund
(Exact Name of Registrant as Specified in Declaration of Trust)
----------------
101 Munson Street, Greenfield, MA 01301
(Address of Principal Executive Offices) (Zip Code)
c/o Phoenix Equity Planning Corporation--Shareholder Services
(800) 243-1574
(Registrant's Telephone Number, including Area Code)
----------------
Philip R. McLoughlin
Vice Chairman and Chief Executive Officer
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115-0479
(name and address of Agent for Service)
Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[x] on August 28 pursuant to paragraph (b)
[ ] 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.
Registrant has registered an indefinite number of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
A Rule 24f-2 Notice for the fiscal year ended on April 30, 1996 was filed by
Registrant with the Commission on June 27, 1996.
================================================================================
<PAGE>
PHOENIX INCOME AND GROWTH FUND
Cross Reference Sheet Pursuant to Rule 404
PART A
<TABLE>
<CAPTION>
Part I of Form N-1A Prospectus Caption
- ----------------------------------------- -----------------------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Introduction; Fund Expenses
3. Condensed Financial Information Financial Highlights; Performance
Information
4. General Description of Introduction; Investment
Registrant Objectives and Policies;
Investment Techniques and Related
Risks; Additional Information
5. Management of the Fund Introduction; Management of the
Fund; Distribution Plans
6. Capital Stock and Other Introduction; Dividends,
Securities Investment Restrictions;
Distributions and Taxes;
Additional Information; Investor
Accounts and Services Available
7. Purchase of Securities Being How to Buy Shares; The
Offered Underwriter; How to Obtain
Reduced Sales Charges; Net Asset
Value; Investor Accounts and
Services Available
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceeding Not Applicable
</TABLE>
PART B
<TABLE>
<CAPTION>
Part I of Form N-1A Statement of Additional Information
- ------------------------------------------- -----------------------------------
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information Cover Page; General Information
13. Investment Objectives and Cover Page; Investment Objective;
Policies Fundamental Policies; Other
Policies
14. Management of the Fund Services of the Adviser; Trustees
and Officers; Advisory Board
15. Control Persons and Principal Not Applicable
Holders of Securities
16. Investment Advisory & Other Trustees and Officers
Services
17. Brokerage Allocation and Other Portfolio Transactions and
Practices Brokerage
18. Capital Stock and Other Not Applicable
Securities
19. Purchase, Redemption and Pricing How to Buy Shares; Alternative
of Securities Purchase Arrangements; Exchange
Privileges; Redemption of Shares;
Net Asset Value; Reinstatement
Privilege
20. Tax Status Dividends, Distributions and
Taxes
21. Underwriter The National Distributor
22. Calculations of Performance Performance Information
Data
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
PROSPECTUS
Phoenix Income
and Growth Fund
Prospectus
August 28, 1996
Phoenix
Phoenix Duff & Phelps
<PAGE>
PHOENIX INCOME AND GROWTH FUND
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
August 28, 1996
Phoenix Income and Growth Fund (the "Fund") is a diversified, open-end
management investment company with a primary investment objective of
investing in a diversified group of securities that are selected for current
yield consistent with preservation of capital. The secondary objective of the
Fund, which is a non-fundamental policy, is to achieve capital appreciation
when it is consistent with the Fund's primary objective.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. No dealer, salesperson or
any other person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as
having been authorized by the Fund, Adviser or Distributor. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any
of the securities offered hereby in any state in which or to any person to
whom it is unlawful to make such offer. Neither the delivery of this
Prospectus nor any sale hereunder shall, under any circumstances, create an
implication that information herein is correct at any time subsequent to its
date. Investors should read and retain this Prospectus for future reference.
Additional information about the Fund is contained in the Statement of
Additional Information, dated August 28, 1996, which has been filed with the
Securities and Exchange Commission (the "Commission") and is available upon
request at no charge by calling (800) 243-4361 or by writing to Phoenix
Equity Planning Corporation at 100 Bright Meadow Boulevard, P.O. Box 2200,
Enfield, Connecticut 06083-2200. The Statement of Additional Information is
incorporated herein by reference.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union, or affiliated entity, and are not
federally insured or otherwise protected by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board, or any other agency and
involve investment risk, including possible loss of principal.
================================================================================
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS/EXCHANGES: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY): (800) 243-1926
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-------
<S> <C>
INTRODUCTION 3
FUND EXPENSES 4
FINANCIAL HIGHLIGHTS 5
PERFORMANCE INFORMATION 6
INVESTMENT OBJECTIVES AND POLICIES 6
INVESTMENT TECHNIQUES AND RELATED RISKS 7
INVESTMENT RESTRICTIONS 10
MANAGEMENT OF THE FUND 11
DISTRIBUTION PLANS 11
HOW TO BUY SHARES 13
INVESTOR ACCOUNTS AND SERVICES AVAILABLE 17
NET ASSET VALUE 19
HOW TO REDEEM SHARES 19
DIVIDENDS, DISTRIBUTIONS AND TAXES 21
ADDITIONAL INFORMATION 21
APPENDIX 23
</TABLE>
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of
Phoenix Income and Growth Fund (the "Fund"). The Fund is a diversified,
open-end management investment company established as a Massachusetts
business trust. The Fund's primary investment objective is to invest in a
diversified group of securities that are selected for current yield
consistent with preservation of capital. The secondary objective of the Fund
is to achieve capital appreciation when it is consistent with the Fund's
primary objective.
Investment Adviser
National Securities & Research Corporation (the "Adviser" or "National") is
the investment adviser of the Fund. The Adviser is a subsidiary of Phoenix
Duff & Phelps Corporation and prior to November 1, 1995, was an indirect
subsidiary of Phoenix Home Life Mutual Insurance Company. See "Management of
the Fund" for a description of the Investment Advisory Agreement, management
fees and the Adviser's undertaking to reimburse the Fund for certain
expenses.
Distributor and Distribution Plans
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
serves as National Distributor of the Fund's shares. See "Distribution Plans"
and the Statement of Additional Information. Equity Planning also acts as
financial agent of the Fund and as such receives a quarterly fee based on the
average of the aggregate daily net asset values of the Fund at an annual rate
of $300 per $1 million. Equity Planning also serves as the Fund's transfer
agent.
The Fund has adopted separate distribution plans pursuant to Rule 12b-1
under the Investment Company Act of 1940 as amended (the "1940 Act") for all
classes. Pursuant to the distribution plan adopted for Class A Shares, the
Fund shall reimburse the Distributor up to a maximum annual rate of 0.30% of
the Fund's average daily Class A Share net assets for distribution
expenditures incurred in connection with the sale and promotion of Class A
Shares and for furnishing of shareholder services. Although the Class A
Shares Plan provides for a 0.30% distribution fee, the Distributor has
voluntarily agreed to limit the 12b-1 fee charged to Class A Shares to 0.25%
for the fiscal year 1997. Pursuant to the distribution plan adopted for Class
B Shares, the Fund shall reimburse the Distributor up to a maximum annual
rate of 1.00% of the Fund's average daily Class B Share net assets for
distribution expenditures incurred in connection with the sale and promotion
of Class B Shares and for furnishing of shareholder services. See
"Distribution Plans."
Purchase of Shares
The Fund offers two classes of shares which may be purchased at a price
equal to their net asset value per share, plus a sales charge which, at the
election of the purchaser, may be imposed (i) at the time of purchase (the
"Class A Shares") or (ii) on a contingent deferred basis (the "Class B
Shares"). Completed applications for the purchase of shares should be mailed
to the Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301.
Class A Shares are offered to the public at the next determined net asset
value after receipt of the order by State Street Bank and Trust Company plus
a maximum sales charge of 4.75% of the offering price (4.99% of the amount
invested) on single purchases of less than $50,000. The sales charge for
Class A Shares is reduced on a graduated scale on single purchases of $50,000
or more and subject to other conditions stated below. See "How to Buy
Shares", "How to Obtain Reduced Sales Charges on Class A Shares", and "Net
Asset Value."
Class B Shares are offered to the public at the next determined net asset
value after receipt of an order by State Street Bank and Trust Company, with
no sales charge. Class B Shares are subject to a sales charge if they are
redeemed within five years of purchase. See "How to Buy Shares" and "Deferred
Sales Charge Alternative--Class B Shares."
Shares of each Class represent an identical interest in the investment
portfolio of the Fund and have the same rights, except that Class B Shares
bear the cost of the higher distribution fees which cause the Class B Shares
to have a higher expense ratio and to pay lower dividends than Class A
Shares. See "How to Buy Shares."
Minimum Initial and Subsequent Investments
The minimum initial investment is $500 ($25 if using the bank draft
investment program designated "Investo-Matic") and the minimum subsequent
investment is $25. Exceptions to the minimum and subsequent investment
amounts are available under certain circumstances. See "How to Buy Shares."
Redemption Price
Class A Shares may be redeemed at any time at the net asset value per share
next computed after receipt of a redemption request by Equity Planning, the
Fund's transfer agent. Class B shareholders redeeming shares within five
years of the date of purchase will normally be assessed a contingent deferred
sales charge. See "How to Redeem Shares."
Risk Factors
There can be no assurance that the Fund will achieve its investment
objectives. In addition, special risks may be presented by the particular
types of securities in which the Fund may invest. For example, investment in
lower-rated securities is speculative and involves risks not associated with
investment in higher rated securities, including overall greater risk of
non-payment of interest and principal and potentially greater sensitivity to
general economic conditions and changes in interest rates. See "Investment
Objectives and Policies."
3
<PAGE>
FUND EXPENSES
The following table illustrates all fees and expenses a shareholder will
incur. The fees and expenses set forth in the table are for the fiscal year
ended April 30, 1996.
<TABLE>
<CAPTION>
Class A Shares Class B Shares
--------------- ----------------
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as
a percentage of offering price) 4.75% None
Maximum Sales Load Imposed on Reinvested
Dividends None None
Deferred Sales Load (as a percentage of None 5% during the
original purchase price or redemption first year,
proceeds, as applicable) decreasing 1%
annually to 2%
during the
fourth and
fifth years;
thereafter
decreasing
to 0% after the
fifth year.
Redemption Fee None None
Exchange Fee None None
Annual Fund Operating Expenses
(as a percentage of average net assets for
the year ended April 30, 1996)
Management Fees 0.70% 0.70%
12b-1 Fees (a) 0.25% 1.00%
Other Operating Expenses 0.23% 0.23%
---- ----
Total Fund Operating Expenses 1.18% 1.93%
==== ====
</TABLE>
(a) "Rule 12b-1 fees" represent an asset based sales charge that, for a
long term shareholder, may be higher than the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc. ("NASD").
While the Class A Share Distribution Plan continues to provide for a 0.30%
distribution fee, the Distributor has voluntarily agreed to limit the fee to
0.25% for the fiscal year 1997. Rule 12b-1 fees stated for Class B Shares
include a service fee.
<TABLE>
<CAPTION>
Cumulative Expenses
Paid for the Period
1 3 5 10
Example* year years years years
----------------------------------------------------- ----- ----- ----- -------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a
$1,000 investment, (1) a 5% annual return and (2)
redemption at the end of each time period:
Class A Shares $59 $83 $109 $184
Class B Shares $70 $91 $124 $206
An investor would pay the following expenses on the
same $1,000 investment assuming no redemption at the
end of each time period:
Class A Shares $59 $83 $109 $184
Class B Shares $20 $61 $104 $206
</TABLE>
*The purpose of the above table is to help the investor understand the
various costs and expenses the investor will bear directly or indirectly. The
example should not be considered a representation of past or future expenses.
Actual expenses may be greater or less than those shown. See "Management of
the Fund", "Distribution Plans" and "How to Buy Shares."
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table sets forth certain financial information for respective
fiscal years of the Fund. The financial information has been audited by Price
Waterhouse LLP, independent accountants. Financial statements and notes
thereto are incorporated by reference in the Statement of Additional
Information. The Statement of Additional Information and the Fund's most
recent Annual Report (containing the report of independent accountants and
additional information relating to Fund performance) are available at no
charge upon request by calling (800) 243-4361.
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------------------
Year Ended April 30
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
----- ----- ----- ----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $8.88 $9.33 $9.92 $9.13 $8.48 $7.89 $8.31 $7.50 $8.21 $7.99
Income from
investment
operations:
Net investment
income 0.44 0.46 0.45 0.43(1) 0.45 0.45 0.50 0.50 0.49 0.41
Net realized
and unrealized
gain (loss) 1.22 0.03 (0.08) 0.88 0.88 0.65 (0.08) 1.05 (0.38) 0.62
---- ---- ---- ---- ---- ---- ---- ---- ---- -----
Total from
investment
operations 1.66 0.49 0.37 1.31 1.33 1.10 0.42 1.55 0.11 1.03
---- ---- ---- ---- ---- ---- ---- ---- ---- -----
Less
distributions:
Dividends from
net investment
income (0.42) (0.45) (0.44) (0.44) (0.44) (0.44) (0.50) (0.52) (0.44) (0.45)
Distributions
from net
realized gains (0.04) (0.33) (0.52) (0.08) (0.24) (0.07) (0.34) (0.22) (0.38) (0.36)
Distributions
in excess
of accumulated
net realized
gains -- (0.16) -- -- -- -- -- -- -- --
---- ---- ---- ---- ---- ---- ---- ---- ---- -----
Total
distributions (0.46) (0.94) (0.96) (0.52) (0.68) (0.51) (0.84) (0.74) (0.82) (0.81)
---- ---- ---- ---- ---- ---- ---- ---- ---- -----
Change in net
asset value 1.20 (0.45) (0.59) 0.79 0.65 0.59 (0.42) 0.81 (0.71) 0.22
---- ---- ---- ---- ---- ---- ---- ---- ---- -----
Net asset value,
end of period 10.08 $8.88 $9.33 $9.92 $9.13 $8.48 $7.89 $8.31 $7.50 $8.21
==== ==== ==== ==== ==== ==== ==== ==== ==== =====
Total return (2) 19.01% 5.95% 3.38% 14.78% 16.28% 14.60% 4.58% 21.72% 1.63% 13.59%
Ratios/supplemental
data:
Net assets,
end of period
(thousands) $493,454 $490,225 $524,855 $514,803 $357,366 $254,013 $201,249 $158,190 $141,298 $141,487
Ratio to
average net
assets of:
Expenses 1.18% 1.16% 1.23% 1.33% 1.38% 1.43% 1.22% 0.95% 0.91% 1.04%
Net investment
income 4.39% 5.07% 4.57% 4.60% 4.99% 5.52% 5.58% 6.37% 6.22% 4.88%
Portfolio
turnover rate 107% 90% 88% 44% 32% 38% 19% 23% 33% 17%
</TABLE>
<TABLE>
<CAPTION>
Class B
--------------------------------------------
From
inception
Year Ended April 30 1/3/92
to
1996 1995 1994 1993 4/30/92
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $8.88 $9.32 $9.92 $9.13 $8.98
Income from
investment
operations:
Net investment
income 0.36 0.39 0.38 0.25(1) 0.08
Net realized and
unrealized gain
(loss) 1.23 0.04 (0.08) 1.00 0.15
---- ---- ---- ---- -----
Total from
investment
operations 1.59 0.43 0.30 1.25 0.23
---- ---- ---- ---- -----
Less distributions:
Dividends from net
investment income (0.34) (0.38) (0.38) (0.38) (0.08)
Distributions from
net realized gains (0.04) (0.33) (0.52) (0.08) --
Distributions in
excess of
accumulated net
realized gains -- (0.16) -- -- --
---- ---- ---- ---- -----
Total
distributions (0.38) (0.87) (0.90) (0.46) (0.08)
---- ---- ---- ---- -----
Change in net asset
value 1.21 (0.44) (0.60) 0.79 0.15
---- ---- ---- ---- -----
Net asset value,
end of period $10.09 $8.88 $9.32 $9.92 $9.13
==== ==== ==== ==== =====
Total return (2) 2.69%
18.14% 5.23% 2.62% 14.09% (4)
Ratios/supplemental
data:
Net assets,
end of period
(thousands) $396,169 $386,515 $378,847 $217,432 $21,983
Ratio to average
net assets of:
Expenses 1.93% 1.91% 1.91% 2.03% 2.08%(3)
Net investment
income 3.64% 4.32% 3.98% 3.73% 4.07%(3)
Portfolio turnover
rate 107% 90% 88% 44% 32%
</TABLE>
(1)Computed using average shares outstanding.
(2)Maximum sales charge is not reflected in total return calculation.
(3)Annualized
(4)Not annualized
5
<PAGE>
PERFORMANCE INFORMATION
The Fund may, from time to time, include its yield and total return in
advertisements or reports to shareholders or prospective investors. Both
yield and total return figures are computed separately for Class A and Class
B Shares in accordance with formulas specified by the Securities and Exchange
Commission and are based on historical earnings and are not intended to
indicate future performance.
The yield of the Fund will be computed by dividing the Fund's net
investment income over a 30-day period by an average value of invested assets
(using the average number of shares entitled to receive dividends and the
maximum offering price per share at the end of the period), all in accordance
with applicable regulatory requirements. Such amount will be compounded for
six months and then annualized for a twelve- month period to derive the
Fund's yield.
Standardized quotations of average annual total return for Class A and
Class B Shares will be expressed in terms of the average annual compounded
rate of return of a hypothetical investment in either Class A or Class B
Shares over a period of 1, 5 and 10 years (or up to the life of the class of
shares). Standardized total return quotations reflect the deduction of a
proportional share of each Class's expenses (on an annual basis), deduction
of the maximum initial sales load in the case of Class A Shares and the
maximum contingent deferred sales charge applicable to a complete redemption
of the investment in the case of Class B Shares, and assume that all
dividends and distributions on Class A and Class B Shares are reinvested when
paid. It is expected that the performance of Class A Shares will be better
than that of Class B Shares as a result of lower distribution fees paid by
Class A Shares. The Fund also may quote supplementally a rate of total return
over different periods of time by means of aggregate, average, and
year-by-year or other types of total return figures. In addition, the Fund
may from time to time publish materials citing historical volatility for
shares of the Fund.
The Fund may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar,
Inc. Additionally, the Fund may compare its performance results to other
investment or savings vehicles (such as certificates of deposit) and may
refer to results published in various publications such as Changing Times,
Forbes, Fortune, Money, Barrons, Business Week and Investor's Daily,
Stanger's Mutual Fund Monitor, The Stanger Register, Stanger's Investment
Adviser, The Wall Street Journal, The New York Times, Consumer Reports,
Registered Representative, Financial Planning, Financial Services Weekly,
Financial World, U.S. News and World Report, Standard & Poor's The Outlook,
and Personal Investor. The Fund may from time to time illustrate the benefits
of tax deferral by comparing taxable investments to investments made through
tax-deferred retirement plans. The total return may also be used to compare
the performance of the Fund against certain widely acknowledged outside
standards or indices for stock and bond market performance, such as the
Standard & Poor's 500 Stock Index (the "S&P 500"), Dow Jones Industrial
Average, Europe Australia Far East Index (EAFE), Consumer's Price Index,
Shearson Lehman Corporate Index and Shearson Lehman T- Bond Index. The S&P
500 is a commonly quoted market value- weighted and unmanaged index showing
the changes in the aggregate market value of 500 common stocks relative to
the base period 1941-43. The S&P 500 is composed almost entirely of common
stocks of companies listed on the New York Stock Exchange, although the
common stocks of a few companies listed on the American Stock Exchange or
traded over the counter are included. The 500 companies represented include
400 industrial, 60 transportation and 40 financial services concerns. The S&P
500 represents about 80% of the market value of all issues traded on the New
York Stock Exchange.
Advertisements, sales literature and other communications may contain
information about the Fund or Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Fund
to respond quickly to changing market and economic conditions. From time to
time the Fund may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Fund may
separate its cumulative and average annual returns into income and capital
gains components; or cite separately as a return figure the equity or bond
portion of the Fund's portfolio; or compare the Fund's equity or bond return
figure to well-known indices of market performance including but not limited
to: the S&P 500 Index, Dow Jones Industrial Average, First Boston High Yield
Index and Salomon Brothers Corporate Bond and Government Bond Indices.
Performance information for the Fund reflects only the performance of a
hypothetical investment in Class A or Class B Shares of the Fund during the
particular time period on which the calculations are based. Performance
information should be considered in light of the Fund's investment objective
and policies, characteristics and qualities of the portfolio, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future. For a description of
the methods used to determine total return for the Fund, see the Statement of
Additional Information.
The Fund's Annual Report, available upon request and without charge,
contains a discussion of the performance of the Fund and a comparison of that
performance to a securities market index.
INVESTMENT OBJECTIVES
AND POLICIES
The primary investment objective of the Fund is to provide an investment
in a diversified group of securities that are selected for current yield
consistent with preservation of capital. The primary investment objective of
the Fund is a
6
<PAGE>
fundamental policy which may not be changed without the approval of the
holders of a majority of the outstanding shares of the Fund. The secondary
investment objective of the Fund is to achieve capital appreciation when that
is consistent with the Fund's primary investment objective. The secondary
investment objective of the Fund is a non-fundamental policy that is
changeable by a vote of the Trustees. At least 65% of the Fund's total assets
will be invested in securities that produce income and achieve capital
growth.
The Fund's portfolio will contain income producing securities, including
equity securities such as common stock, securities convertible to common
stock, debt securities, U.S. government securities and options on securities,
securities indexes and currencies. The proportion of holdings in each class
of securities will vary in accordance with the level of return that can be
obtained from these various types of securities. The Fund may invest up to
35% of its total net assets in high risk fixed income securities (commonly
referred to as "junk" bonds.) The Fund may, but is not required to, dispose
of debt securities whose credit quality falls below investment grade. There
is no assurance that the Fund will meet its investment objectives.
The Fund invested the following weighted average percentages of assets by
Standard & Poor's Corporation rating category or having a comparable rating
according to Moody's, Duff & Phelps Credit Rating Company or Fitch Investors
Service, during the fiscal year ended April 30, 1996:
<TABLE>
<CAPTION>
<S> <C>
AAA 15.85%
AA 3.14%
A 5.70%
BBB 7.97%
BB 10.17%
B 3.53%
CCC 0.05%
Unrated 0.44%
</TABLE>
The unrated bonds are equivalent to rated BBB 0.36%, BB 0.04% and B 0.04%.
Risk Considerations
Securities rated BBB are medium grade investment obligations that may have
speculative characteristics. Changes in economic conditions or other
circumstances are more likely to lead to weakened capacity to make principal
and interest payments in the case of such obligations, than is the case for
higher grade securities.
While the Fund's management will seek to minimize risk through
diversification and continual evaluation of current developments in interest
rates and economic conditions, the market prices of lower rated securities
generally fluctuate in response to changes in interest rates and economic
conditions more than those of higher rated securities. Using credit ratings
helps to evaluate the safety of principal and interest payments but does not
assess market risk. Fluctuations in the market value of portfolio securities
subsequent to acquisition by the Fund will not normally affect cash income
from such securities but will be reflected in the Fund's net asset value.
Additionally, with lower rated securities, there is a greater possibility
that an adverse change in the financial condition of the issuer, particularly
a highly leveraged issuer, may affect its ability to make payments of income
and principal and increase the expenses of the Fund seeking recovery from the
issuer. Also, because the Fund intends to invest in securities in lower
rating categories, the achievement of its goals will be more dependent on the
Adviser's ability than would be the case if the Fund were investing in
securities in the higher rating categories. Lower-rated securities may be
thinly traded and less liquid than higher rated securities and therefore
harder to value and more susceptible to adverse publicity concerning the
issuer.
Securities are selected for long-term investment and it is generally not
the policy of the Fund to purchase securities for trading purposes, although
there may be a limited number of short-term transactions. In general, the
assets of the Fund are kept fully invested in securities selected to meet the
investment objective of the Fund, but for temporary defensive purposes (as
when the Adviser believes that market conditions are adverse) any part of the
assets may be held, from time to time, in cash or money market instruments
including U.S. Government obligations maturing within one year from the date
of purchase.
INVESTMENT TECHNIQUES
AND RELATED RISKS
Repurchase Agreements
The Fund may enter into repurchase agreements with respect to U.S.
Government Securities. Repurchase agreements may be entered into only with
registered broker/ dealers or Government Securities dealers ("dealers") and
depository institutions ("banks") believed by National to present minimum
credit risk in accordance with guidelines approved by the Fund's Trustees.
National will review and monitor the creditworthiness of such dealers and
banks. Under such agreements, the dealer or bank agrees, upon entering into
the contract, to repurchase a security it sells at a time and price mutually
agreed upon with the purchaser of the security, thereby determining the yield
during the term of the agreement. This results in a fixed rate of return
insulated from market fluctuations during such period. The seller under a
repurchase agreement will be required to maintain the value of the securities
subject to the agreement at not less than the repurchase price, and such
value will be determined on a daily basis by marking the underlying
securities to their market value. With respect to any repurchase agreements
with a maturity of greater than one day, such agreement shall be
collateralized in an amount at least equal to 102 percent of the repurchase
price. The Fund does not bear the risk of a decline in value of the
underlying security unless the seller defaults under its repurchase
obligation. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, the Fund could experience both delays in liquidating
the underlying securities and losses, including (a) possible decline in the
7
<PAGE>
value of the underlying securities during the period while the Fund seeks to
enforce its rights thereto; (b) possible subnormal levels of income and lack
of access to income during this period; and (c) expenses of enforcing rights.
As a general matter, the Fund anticipates that 5-10% of its net assets will
be invested in repurchase agreements; however, during temporary defensive
periods, up to 50% of the Fund's net assets may be so invested.
When-Issued Securities
The Fund may purchase securities on a when-issued or delayed delivery basis.
In such transactions, the price is fixed at the time the commitment to
purchase is made, but delivery and payment for the securities take place more
than seven days in the future or after a period longer than the customary
settlement period for the particular security. Customary settlement for
newly-issued mortgage-backed securities occurs only when the composition of
the underlying mortgage pool is set, typically once a month.
At the time the Fund makes the commitment to purchase a security on a
when-issued or delayed delivery basis, it will record the transaction and
reflect the value of the security and the liability to pay the purchase price
in determining the Fund's net asset value. The value of the security on the
settlement date may be more or less than the price paid as a result of, among
other things, changes in the level of interest rates or other market factors.
Thus there is a risk of loss which is in addition to the risk of decline in
the value of the Fund's other assets. No interest accrues on the security
between the time the Fund enters into the commitment and the time the
security is delivered. The Fund will establish a segregated account with the
Custodian in which it will maintain cash and liquid high grade debt
securities equal in value to commitments for when-issued or delayed delivery
securities. Such segregated securities either will mature or, if necessary,
be sold on or before the settlement date. While when-issued or delayed
delivery securities may be sold prior to the settlement date, it is intended
that the Fund will purchase such securities with the purpose of actually
acquiring them unless a sale appears desirable for investment reasons, in
which case the Fund may sell its interest in the securities rather than take
delivery, and may reinvest the proceeds in similar or other securities. The
Fund may not invest more than 5% of its net assets at the time of investment
in securities purchased on a when-issued or delayed delivery basis.
Investing in Foreign Securities
The Fund may invest in the securities of foreign issuers. The Fund may
invest in a broad range of foreign securities including equity, debt and
convertible securities and foreign government securities. While the Fund may
purchase the securities of issuers from various countries, it is anticipated
that its foreign investments will be primarily in securities of issuers from
the major industrialized nations such as the United Kingdom, France, Canada,
Germany and Japan. The Fund may also invest in domestic securities
denominated in foreign currencies.
Investing in the securities of foreign companies involves special risks
and considerations not typically associated with investing in U.S. companies.
These include differences in accounting, auditing and financial reporting
standards, generally higher commission rates on foreign portfolio
transactions, the possibility of expropriation or confiscatory taxation,
adverse changes in investment or exchange control regulations, political
instability which could affect U.S. investments in foreign countries, and
potential restrictions on the flow of international capital. Additionally,
dividends payable on foreign securities may be subject to foreign taxes
withheld prior to distribution. Foreign securities often trade with less
frequency and volume than domestic securities and therefore may exhibit
greater price volatility, and changes in foreign exchange rates will affect
the value of those securities which are denominated or quoted in currencies
other than the U.S. dollar. Many of the foreign securities held by the Fund
will not be registered with, nor the issuers thereof be subject to the
reporting requirements of, the U.S. Securities and Exchange Commission (the
"SEC"). Accordingly, there may be less publicly available information about
the securities and about the foreign company or government issuing them than
is available about a domestic company or government entity. Moreover,
individual foreign economies may differ favorably or unfavorably from the
United States economy in such respects as growth of Gross National Product,
rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payment positions.
In investing in securities denominated in foreign currencies, the Fund
will be subject to the additional risk of currency fluctuations. An adverse
change in the value of a particular foreign currency as against the U.S.
dollar, to the extent that such change is not offset by a gain in other
foreign currencies, will result in a decrease in the Fund's assets. Any such
change may also have the effect of decreasing or limiting the income
available for distribution. Foreign currencies may be affected by
revaluation, adverse political and economic developments, and governmental
restrictions. Although the Fund will invest only in securities denominated in
foreign currencies that are fully convertible into U.S. dollars without legal
restriction at the time of investment, no assurance can be given that
currency exchange controls will not be imposed on any particular currency at
a later date.
Securities of U.S. issuers denominated in foreign currencies may be less
liquid and their prices more volatile than securities issued by domestic
issuers and denominated in U.S. dollars. In addition, investing in securities
denominated in foreign currencies often entails costs not associated with
investment in U.S. dollar-denominated securities of U.S. issuers, such as the
cost of converting foreign currency to U.S. dollars, higher brokerage
commissions, custodial expenses and other fees. Non-U.S. dollar denominated
securities may be subject to certain withholding and other taxes of the
relevant jurisdiction, which may reduce the yield on the securities to the
Fund and which may not be recoverable by the Fund or its investors.
The Fund will calculate its net asset value and complete orders to
purchase, exchange or redeem shares only on a Monday-Friday basis (excluding
holidays on which the New
8
<PAGE>
York Stock Exchange is closed). Foreign securities in which the Fund may
invest may be primarily listed on foreign stock exchanges which may trade on
other days (such as Saturdays). As a result, the net asset value of the
Fund's portfolio may be affected by such trading on days when a shareholder
has no access to the Fund.
Investment income received by the Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. If
the Fund should have more than 50% of the value of its assets invested in
securities of foreign corporations at the close of its taxable year, the Fund
may elect to permit its shareholders to take foreign tax credit for their
proportionate shares of foreign income taxes paid. Investors are urged to
consult their tax attorney with respect to specific questions regarding
foreign, federal, state or local taxes.
Forward Foreign Currency Exchange Contracts
In order to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward foreign currency exchange
contracts ("forward currency contracts") for the purchase or sale of a
specified currency at a specified future date. Such contracts may involve the
purchase or sale of a foreign currency against the U.S. dollar or may involve
two foreign currencies. The Fund may enter into forward currency contracts
either with respect to specific transactions or with respect to the Fund's
portfolio positions. For example, when the Fund anticipates making a purchase
or sale of a security, it may enter into a forward currency contract in order
to set the rate (either relative to the U.S. dollar or another currency) at
which a currency exchange transaction related to the purchase or sale will be
made. Further, when the Adviser believes that a particular currency may
decline compared to the U.S. dollar or another currency, the Fund may enter
into a forward contract to sell the currency that the Adviser expects to
decline in an amount approximating the value of some or all of the Fund's
portfolio securities denominated in that currency. For a discussion of the
risks associated with such contracts.
The Fund's use of forward currency contracts involves certain investment
risks and transaction costs to which it might not otherwise be subject. These
include: (1) the Adviser may not always be able to accurately predict
movements within currency markets, (2) the skills and techniques needed to
use forward currency contracts are different from those needed to select the
securities in which the Fund invests and (3) there is no assurance that a
liquid secondary market will exist that would enable the Adviser to "close
out" existing (current) contracts when doing so is desirable. The Fund's
successful use of forward currency contracts, options on foreign currencies,
futures contracts on foreign currencies and options on such contracts depends
upon the Adviser's ability to predict the direction of he market and
political conditions, which require different skills and techniques than
predicting changes in the securities markets generally. For instance, if the
value of the securities being hedged moves in a favorable direction, the
advantage to the Fund would be wholly or partially offset by a loss in the
forward contracts or futures contracts. Further, if the value of the
securities being hedged does not change, the Fund's net income would be less
than if the Fund had not hedged since there are transactional costs
associated with the use of these investment practices. These practices are
subject to various additional risks. The correlation between movements in the
price of options and futures contracts and the price of the currencies being
hedged is imperfect. The use of these instruments will hedge only the
currency risks associated with investments in foreign securities, not market
risks. In addition, if the Fund purchases these instruments to hedge against
currency advances before it invests in securities denominated in such
currency and the currency market declines, the Fund might incur a loss on the
futures contract. The Fund's ability to establish and maintain positions will
depend on market liquidity. The ability of the Fund to close out a futures
position or an option depends upon a liquid secondary market. There is no
assurance that liquid secondary markets will exist for any particular futures
contract or option at any particular time. The loss from investing in futures
contracts is potentially unlimited.
U.S. Treasury and Corporate Zero Coupon Bonds
The Fund invests from time to time in U.S. Treasury and corporate zero
coupon bonds. Zero coupon bonds are issued and traded at a discount from
their face amount. The amount of the discount varies depending on such
factors as the time remaining until maturity of the bonds and prevailing
interest rates. The market price of U.S. Treasury zero coupon bonds are
generally more volatile than the U.S. Treasury securities that pay interest
periodically and zero coupon bonds are likely to respond to changes in
interest rates to a greater degree than do securities on which regular cash
payments of interest are being made that have similar maturities. In order to
satisfy a requirement for qualification as a "regulated investment company"
under the Code, the Fund must distribute its investment company taxable
income, including the original issue discount accrued on zero coupon bonds.
Because the Fund will not receive on a current basis cash payments in respect
of accrued original issue discount on zero coupon bonds during the period
before maturity, the Fund will distribute cash obtained from other sources in
order to satisfy the distribution requirement under the Code. See "Dividends,
Distributions and Taxes."
Private Placements and Rule 144A Securities
The Fund 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 Fund 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 (the "1933 Act").
Public sales of such securities by the Fund may involve significant delays
and expense. Private sales often require negotiation with one or more
purchasers and may produce less favorable prices than
9
<PAGE>
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 Fund 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 of the Fund determine the secondary
market is liquid, Rule 144A securities will be considered illiquid. Trustees
of the Fund 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 Fund: 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 the Fund's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities. The
Fund may invest up to 15% of its net assets in illiquid securities.
Mortgage-Backed Securities
The Fund may invest in mortgage-backed securities which are securities that
directly or indirectly represent an ownership participation in, or are
secured by and payable from, mortgage loans on real property
("Mortgage-Backed Securities"). Such securities include pass-through
securities representing participation interests in pools of residential
mortgage loans originated by U.S. governmental or private lenders and
guaranteed, to the extent provided in such securities, by the U.S. government
or one of its agencies or instrumentalities. Mortgage pass-through
securities, which are ownership interests in the underlying mortgage loans,
differ from conventional debt securities, which provide for periodic payment
of interest in fixed amounts (usually semi-annually) and principal payments
at maturity or on specified call dates. Mortgage pass-through securities
provide for monthly payments that are a "pass-through" of the monthly
interest and principal payments, including any prepayments, made by the
individual borrowers on the pooled mortgage loans, net of any fees paid to
the guarantor of such securities and the servicer of the underlying mortgage
loans. The underlying mortgages may be prepaid at any time and such payments
are passed through to the certificate holder as a prepayment of principal. As
a result, if the Fund purchases such a Mortgage-Backed Security at a premium,
a prepayment rate that is faster than expected will reduce yield to maturity,
while a prepayment rate that is slower than expected will have the opposite
effect of increasing yield to maturity. Conversely, if the Fund purchases a
Mortgage-Backed Security at a discount, faster than expected prepayments will
increase, while slower than expected prepayment will reduce, yield to
maturity.
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 from declining interest rates because of the risk of prepayment.
Accelerated prepayments on Mortgage-Backed Securities purchased by the Fund
at a premium also impose a risk of loss of principal because the premium may
not have been fully amortized at the time the principal is repaid in full.
Mortgage-Backed Securities are also subject to maturity extension risk
which is the possibility that rising interest rates may cause prepayments to
occur at a slower than expected rate. This particular risk may effectively
change a security which was considered short or intermediate term at the time
of purchase to a long-term security. Long-term securities generally fluctuate
more widely in response to changes in interest rates than short or
intermediate-term securities.
The Mortgage-Backed Securities in which the Fund may invest include those
issued and guaranteed by the Government National Mortgage Association
("Ginnie Mae"), the Federal National Mortgage Association ("Fannie Mae") and
the Federal Home Loan Mortgage Corporation ("Freddie Mac"). Ginnie Mae is a
wholly-owned corporate instrumentality of the United States and is authorized
to borrow from the U.S. Treasury without limitation to meet its payment
obligations on the mortgage-backed securities which it issues and guarantees.
Fannie Mae is a federally chartered but privately owned corporation which
guarantees the timely payment of principal of and interest on the
certificates it issues; the guarantee is not backed by the U.S. government.
Freddie Mac is a corporate instrumentality of the United States which
guarantees the timely payment of interest on and the ultimate payment of
principal of its certificates; the guarantee is not backed by the U.S.
government.
Other Investments
The Fund may also lend portfolio securities; invest up to 5% of its assets
in privately-issued asset backed securities, including collateralized
mortgage obligations ("CMO's"); and write options on securities (the Fund
will limit this technique to writing covered call option contracts on
securities held by the Fund). See the Fund's Statement of Additional
Information for further information.
INVESTMENT RESTRICTIONS
The investment restriction to which the Fund is subject, together with the
investment objectives of the Fund, are fundamental policies of the Fund which
may not be changed without the approval of the Fund's shareholders. Not more
than 25% of the total assets of the Fund will be concentrated in the
securities of any one industry. No security can be purchased by the Fund if
as a result (a) more than 5% of the value of the total assets of the Fund
would then be invested in the securities
10
<PAGE>
of a single issuer (other than U.S. Government obligations) or (b) more than
10% of any class of securities, or more than 10% of the outstanding voting
securities of an issuer, would be held by the Fund.
A detailed description of the Fund's investment restrictions is contained in
the Statement of Additional Information.
MANAGEMENT OF THE FUND
The Fund is a mutual fund, technically known as an open-end investment
management company. The Trustees of the Trust are responsible for the overall
supervision of the operations of the Fund and perform the various duties
imposed on Trustees by the 1940 Act and of Massachusetts business trust law.
The Adviser
The investment adviser to the Fund is National, which is located at 56
Prospect Street, Hartford, CT 06115-0486. National is a direct subsidiary of
Phoenix, Duff & Phelps Corporation. National also acts as the investment
adviser or manager for Phoenix Multi-Sector Short Term Bond Fund, Phoenix
California Tax Exempt Bonds, Inc., Phoenix Equity Opportunity Fund Series of
Phoenix Strategic Equity Series Fund, Phoenix Multi- Sector Fixed Income
Fund, Inc. and the Phoenix Worldwide Opportunities Fund. The Adviser
currently has approximately $1.7 billion in assets under management.
As compensation for its services, National receives a fee, which is
accrued daily against the value of the Fund's net assets and is paid monthly
by the Fund. The fee is computed at an annual rate of .70% of the Fund's
average daily net assets of up to $1 billion, .65% of the Fund's average
daily net assets from $1 billion to $2 billion and .60% of the Fund's average
daily net assets in excess of $2 billion.
The ratio of the management fees to average net assets for the fiscal year
ended April 30, 1996 for Class A Shares and Class B Shares was .70%.
The Portfolio Manager
Mr. John Hamlin serves as Portfolio Manager of the Fund. As such, Mr. Hamlin
is primarily responsible for the day to day management of the Fund's
portfolio. Mr. Hamlin is also the Portfolio Manager of the Phoenix
Convertible Fund Series of the Phoenix Series Fund, advised by Phoenix
Investment Counsel, Inc. an affiliate of National. Mr. Hamlin has served as
Portfolio Manager of the Phoenix Convertible Fund since 1992. Mr. Hamlin is
also Portfolio Manager, Common Stock, Phoenix Home Life Mutual Insurance
Company. From 1989 to 1992 Mr. Hamlin was Associate Portfolio Manager for
that Fund. Since May 14, 1993, he has served as Investment Officer of
National.
The Financial Agent
Equity Planning acts as financial agent of the Fund and, as such, performs
administrative, bookkeeping and pricing functions for the Fund. As
compensation, Equity Planning receives a quarterly fee based on the average
of the aggregate daily net asset values of the Fund at the annual rate of
$300 per $1 million. For its services during the Fund's fiscal year ended
April 30, 1996, Equity Planning received $267,997 or .03% of average net
assets.
The Custodian and Transfer Agent
The custodian of the assets of the Fund is State Street Bank and Trust
Company, P.O. Box 351, Boston, Massachusetts 02101 (the "Custodian").
Pursuant to a Transfer Agent and Service Agreement with the Phoenix Funds,
Equity Planning acts as transfer agent for the Fund (the "Transfer Agent")
for which it is paid $14.95 plus out of pocket expenses for each designated
shareholder account. The Transfer Agent engages sub-agents to perform certain
shareholder servicing functions from time to time for which such agents shall
be paid a fee by Equity Planning.
Brokerage Commissions
Although the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. prohibit its members form seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such Rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Fund.
DISTRIBUTION PLANS
The offices of Equity Planning, the national distributor of the Fund's
shares, are located at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. Philip R. McLoughlin is a Trustee and President of
the Fund and a director and officer of Equity Planning. David R. Pepin, a
Director and officer of Equity Planning, is an officer of the Fund. Michael
E. Haylon, a director of Equity Planning, is an officer of the Fund. G.
Jeffrey Bohne, James M. Dolan, Nancy G. Curtiss, William R. Moyer, William J.
Newman, Leonard J. Saltiel and Thomas N. Steenburg are officers of the Fund
and officers of Equity Planning.
Equity Planning and the Fund have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Fund shares sold subject to an initial sales charge and those
sold subject to a contingent deferred sales charge. The Fund has granted
Equity Planning the exclusive right to purchase from the Fund and resell, as
agent, shares needed to fill unconditional orders for Fund shares. Equity
Planning may sell Fund shares through its registered representatives or
through securities dealers with whom it has sales agreements. Equity Planning
may also sell Fund shares pursuant to sales agreements entered into with
banks or bank- affiliated securities brokers who, acting as agent for their
customers, place orders for Fund shares with Equity Planning. Although the
Glass-Steagall Act prohibits banks and bank affiliates from engaging in the
business of underwriting, distributing or selling securities (including
mutual fund shares), banking regulators have not indicated that such
institutions are prohibited from purchasing mutual fund shares upon the order
and for the account of their customers. If, because of changes in law or
regulations, or because of new interpretations of existing law, it is
determined that agency transactions of banks or bank-
11
<PAGE>
affiliated securities brokers are not permitted under the Glass- Steagall
Act, the Trustees will consider what action, if any, is appropriate. It is
not anticipated that termination of sales agreements with banks or
bank-affiliated securities brokers would result in a loss to their customers
or a change in the net asset value per share of a Series of the Fund.
The sale of Fund shares through a securities broker affiliated with a
particular bank is not expected to preclude the Fund from borrowing from such
bank or from availing itself of custodial or transfer agency services offered
by such bank.
The Trustees have adopted separate distribution plans under Rule 12b-1 of
the 1940 Act for each class of shares of the Fund (the "Class A Plan", the
"Class B Plan", and collectively the "Plans"). The Plans permit the Fund to
reimburse the Distributor for expenses incurred in connection with the sale
and promotion of Fund shares and the furnishing of shareholder services.
Pursuant to the Class A Plan, the Fund may reimburse the Distributor for
actual expenses of the Distributor up to 0.30% annually for the average daily
net assets of the Fund's Class A Shares. However, the Distributor has
voluntarily agreed to limit the maximum amount of reimbursement under the
Class A Plan for the fiscal year 1997 to 0.25% annually of the average daily
net assets of the Fund's Class A Shares. Under the Class B Plan, the Fund may
reimburse the Distributor monthly for actual expenses of the Distributor up
to 1.00% annually of the average daily net assets of the Fund's Class B
Shares.
Expenditures incurred under the Plans may consist of: (i) commissions to
sales personnel for selling shares of the Fund (including underwriting
commissions and finance charges related to the payment of commissions for
sales of Class B Shares); (ii) compensation, sales incentives and payments to
sales, marketing and service personnel; (iii) payments to broker-dealers and
other financial institutions which have entered into agreements with the
Distributor for services rendered in connection with the sale and
distribution of shares of the Fund; (iv) payment of expenses incurred in
sales and promotional activities including expenditures related to the Fund;
(v) the costs of preparing and distributing promotional materials; (vi) the
costs of printing the Fund's Prospectus and Statement of Additional
Information for distribution to potential investors; and (vii) such other
similar services that the Trustees of the Fund determine are reasonably
calculated to result in the sale of shares of the Fund; provided, however,
that a portion shall be equal to or less than 0.25% annually of the average
daily net assets of the Fund shares, may be paid for reimbursing the costs of
providing services to shareholders, including assistance in connection with
inquiries related to shareholder accounts (the "Service Fee"). From the
Service Fee the Distributor expects to pay a quarterly fee to qualifying
broker/dealer firms, as compensation for providing personal services and/or
the maintenance of shareholder accounts, with respect to shares sold by such
firms. This fee will not exceed on an annual basis of 0.25% of the average
annual net asset value of such shares, and will be in addition to sales
charges on Fund shares which are reallowed to such firms. To the extent that
the entire amount of the Service Fee is not paid to such firms, the balance
will serve as compensation for personal and account maintenance services
furnished by the Distributor.
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor,
such as services to the Fund's shareholders; or services providing the Fund
with more efficient methods of offering shares to groups of clients; members
or prospects of a participant; or services permitting bulking of purchases or
sales, or transmission of such purchases or sales by computerized tape or
other electronic equipment; or other batch processing.
Under the Class A Plan, reimbursement or payment of expenses may not be
made unless such payment or reimbursement occurs prior to the earliest of (a)
the last day of the one-year period commencing on the last day of the
calendar quarter during which the specific service or activity was performed,
or (b) the last day of the one-year period commencing on the last day of the
calendar quarter during which payment for the service or activity was made by
a third party on behalf of the Fund. The Class B Plan, however, does not
limit the reimbursement of distribution related expenses to expenses incurred
in specified time periods.
For the fiscal year ended April 30, 1996, the Fund paid $1,247,057 under
the Class A Plan and $3,945,039 under the Class B Plan. The fees were used to
compensate unaffiliated broker-dealers for servicing shareholder's accounts,
compensating sales personnel and reimbursing the Distributor for commission
expenses and expenses related to preparation of the marketing material. On a
quarterly basis, the Fund's Trustees review a report on expenditures under
each Plan and the purposes for which expenditures were made. The Trustees
conduct an additional more extensive review annually in determining whether
each Plan will be continued. By its terms, continuation of each Plan from
year to year is contingent on annual approval by a majority of the Fund's
Trustees and by a majority of the Trustees who are not "interested persons"
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the operation of either Plan or any related agreements (the "Plan
Trustees"). Each Plan provides that it may not be amended to increase
materially the costs which the Fund may bear without approval of the
applicable class of shareholders of the Fund and that other material
amendments must be approved by a majority of the Plan Trustees by vote cast
in person at a meeting called for the purpose of considering such amendments.
Each Plan further provides that while it is in effect, the selection and
nomination of Trustees who are not "interested persons" shall be committed to
the discretion of the Trustees who are not "interested persons." Each Plan
may be terminated at any time by vote of a majority of the Plan Trustees or a
majority of the applicable class of outstanding shares of the Fund.
The Trustees have concluded that there is a reasonable likelihood that the
Plans will benefit the Fund an all classes of shareholders. The Class A Plan
and the Class B Plan were approved by shareholders of the Fund at a special
meeting of shareholders held on April 30, 1993.
12
<PAGE>
The National Association of Securities Dealers ("NASD") regards certain
distribution fees as asset-based sales charges subject to NASD sales load
limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend either or both Plans.
HOW TO BUY SHARES
The minimum initial purchase is $500 and the minimum subsequent investment
is $25. Both the minimum initial and subsequent investment amounts are $25
for investments pursuant to the "Investo-Matic" plan, a bank draft investing
program administered by Equity Planning, or pursuant to the Systematic
Exchange Privilege (see Statement of Additional Information). Completed
applications for the purchase of shares should be mailed to The Phoenix
Funds, c/o State Street Bank and Trust Company, P.O. Box 8301, Boston, MA
02266-8301.
Each class of shares represents an interest in the same portfolio of
investments of the Fund, has the same rights, and is identical to the other
in all respects, except that Class B Shares bear the expenses of the deferred
sales arrangement and any expenses (including the higher distribution
services fee and any incremental transfer agency costs) resulting from such
sales arrangement. Each class has exclusive voting rights with respect to
provisions of the Rule 12b-1 distribution plan pursuant to which its
distribution services fee is paid and each class has different exchange
privileges. Only the Class B Shares are subject to a conversion feature. The
net income attributable to Class B Shares and the dividends paid on Class B
Shares will be reduced by the amount of the higher distribution services fee
and incremental expenses associated with such distribution services fee;
likewise, the net asset value of the Class B shares will be reduced by such
amount to the extent the Fund has undistributed net income.
Subsequent investments for the purchase of full and fractional shares in
amounts of $25 or more may be made through an investment dealer or by sending
a check to Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box
8301, Boston, MA 02266-8301. Share certificates representing any number of
full shares will be issued only on request, and subject to certain
conditions. A fee may be incurred by the shareholder for a lost or stolen
share certificate. Sales personnel of broker-dealers distributing the Fund's
shares may receive differing compensation for selling Class A or Class B
Shares.
The Fund offers combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange
privileges. Certain privileges may not be available in connection with Class
B shares. Shares of the Fund or shares of any other Phoenix Fund (except
Phoenix Multi-Sector Short Term Bond Fund Class A shares held less than 6
months and Class A Shares of Phoenix Money Market Series), may be exchanged
for shares of the same class on the basis of the relative net asset values
per share at the time of the exchange. Exchanges are subject to the minimum
initial investment requirement of the designated Phoenix Fund, except if made
in connection with the Systematic Exchange Privilege. Shareholders may
exchange shares held in book- entry form for an equivalent number (value) of
the same class of shares from any other Phoenix Fund. On Class B Share
exchanges, the contingent deferred sales charge schedule of the original
shares purchased continues to apply.
Alternative Sales Arrangements
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Fund, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the
Fund, the accumulated continuing distribution fee and contingent deferred
sales charges on Class B Shares prior to conversion would be less than the
initial sales charge and accumulated distribution fee on Class A Shares
purchased at the same time, and to what extent such differential would be
offset by the higher yield of Class A Shares. In this regard, Class A Shares
will be more beneficial to the investor who qualifies for certain reduced
initial sales charges. For this reason, the Distributor intends to limit
sales of Class B Shares sold to any shareholder to a maximum total value of
$250,000. Class B Shares sold to unallocated qualified employer sponsored
plans will be limited to a maximum total value of $1,000,000.
Class B Shares sold to allocated qualified employer sponsored plans,
including 401(k) plans, will be limited to a maximum total value of $250,000
for each participant. The Distributor reserves the right to decline the sale
of Class B Shares to allocated qualified employer sponsored plans not
utilizing an approved participant tracking system. In addition, Class B
Shares will not be sold to any qualified employee benefit plan, endowment
fund or foundation if, on the date of the initial investment, the plan, fund
or foundation has assets of $10,000,000 or more or at least 100 eligible
employees. Class B Shares will also not be sold to investors who have reached
the age of 85 because of such persons' expected distribution requirements.
Class A Shares are subject to a lower distribution fee and, accordingly,
pay correspondingly higher dividends per share. However, because initial
sales charges are deducted at the time of purchase, such investors would not
have all their funds invested initially and, therefore, would initially own
fewer shares. Investors not qualifying for reduced initial sales charges who
expect to maintain their investment for an extended period of time might
consider purchasing Class A shares because the accumulated continuing
distribution charges on Class B Shares may exceed the initial sales charge on
Class A Shares during the life of the investment. Again, however, such
investors must weigh this consideration against the fact that, because of
such initial sales charge, not all their funds will be invested initially.
However, other investors might determine that it would be more advantageous
to purchase Class B Shares to have all their funds invested initially,
although remaining subject to higher continuing distribution charges and, for
a five-year period, being subject to a contingent deferred sales charge.
13
<PAGE>
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A Shares is the net asset value plus a
sales charge, as set forth below. Offering prices become effective at the
close of the general trading session of the New York Stock Exchange. Orders
received by dealers prior to such time are confirmed at the offering price
effective at that time, provided the order is received by State Street Bank
and Trust Company prior to its close of business.
The sales charge varies with the size of the purchase and reduced charges
apply to the aggregate of purchases of the Fund made at one time by "any
person," which term includes an individual, an individual and his/her spouse
and their children under the age of 21, or a trustee or other fiduciary
purchasing shares for a single trust, estate or fiduciary account although
more than one beneficiary is involved.
Class A Shares of the Fund are offered to the public at the net asset
value next computed after the purchase order is received by State Street Bank
and Trust Company, plus a maximum sales charge of 4.75% of the offering price
(4.99% of the amount invested) on single purchases of less than $50,000. The
sales charge is reduced on a graduated scale on single purchases of $50,000
or more as shown below.
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Discount
Amount of as Percentage as Percentage or Agency Fee
Transaction of Offering of Amount as Percentage of
at Offering Price Price Invested Offering Price*
------------------ -------------- -------------- ----------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under
$100,000 4.50% 4.71% 4.00%
$100,000 but under
$250,000 3.50% 3.63% 3.00%
$250,000 but under
$500,000 3.00% 3.09% 2.75%
$500,000 but under
$1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None None**
</TABLE>
*Equity Planning will sponsor sales contests, training and educational
meetings and provide to all qualifying dealers, from its own profits and
resources, additional compensation in the form of trips, merchandise or
expense reimbursement. Brokers and dealers other than Equity Planning may
also make customary additional charges for their services in effecting
purchases, if they notify the Fund of their intention to do so. Equity
Planning shall also pay service and retention fees, from its own profits and
resources, to qualified wholesalers in connection with the sale of shares of
Phoenix Funds (exclusive of Class A Shares of Phoenix Money Market Series) by
registered financial institutions and related third party marketers.
**In connection with Class A Share purchases (or subsequent purchases in any
amount) by accounts held in the name of qualified employee benefit plans with
at least 100 eligible employees, Equity Planning may pay broker/dealers, from
its own resources, an amount equal to 1% on the first $3 million of
purchases, 0.50% on the next $3 million, plus 0.25% on the amount in excess
of $6 million.
In connection with Class A Share purchases of $1,000,000 or more (or
subsequent purchases in any amount), excluding purchases by qualified
employee benefit plans as described above, Equity Planning may pay
broker/dealers, from its own profits and resources, a percentage of the net
asset value of any shares sold as set forth below:
<TABLE>
<CAPTION>
Purchase Amount Payment to Broker-Dealer
- -------------------------- ---------------------------
<S> <C>
$1,000,000 to $3,000,000 1%
$3,000,001 to $6,000,000 0.50 of 1%
$6,000,001 or more 0.25 of 1%
</TABLE>
If part or all of such investment, including investments by qualified
employee benefit plans, is subsequently redeemed within one year of the
investment date, the broker/dealer will refund to the Distributor such
amounts paid with respect to the investment.
How to Obtain Reduced Sales Charges On Class A Shares
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
Qualified Purchasers. No sales charge will be imposed on sales of shares
to (1) any Phoenix Fund trustee, director or officer; (2) any director or
officer, or any full-time employee or sales representative (who has acted as
such for at least 90 days) of the Adviser or employee of Equity Planning; (3)
registered representatives and employees of securities dealers with whom
Equity Planning has sales agreements; (4) any qualified retirement plan
exclusively for persons described above; (5) any officer, director or
employee of a corporate affiliate of the Adviser or Equity Planning; (6) any
spouse, child, parent, grandparent, brother or sister of any person named in
(1), (2), (3) or (5) above; (7) employee benefit plans for employees of the
Adviser, Equity Planning and/or their corporate affiliates; (8) any employee
or agent who retires from the Adviser, Equity Planning and/or a corporate
affiliates; (9) any account held in the name of a qualified employee benefit
plan, endowment fund or foundation if, on the date of initial investment, the
plan, fund or foundation has assets of $10,000,000 or more or at least 100
eligible employees; (10) any person with a direct rollover transfer of shares
from an established Phoenix Fund qualified plan; (11) any Phoenix Home Life
separate account which funds group annuity contracts offered to qualified
employee benefit plans; (12) any state, county, city, instrumentality,
department, authority or agency prohibited by law from paying a sales charge;
(13) any fully matriculated student in a U.S. service academy; (14) any
unallocated accounts held by a third party administrator, registered
investment adviser, trust company, or bank trust department which exercises
discretionary authority and holds the account in a fiduciary, agency,
custodial or similar capacity if in the aggregate such accounts held by such
entity equal or exceed $1,000,000; (15) any person who is investing
redemption proceeds from investment companies other than the Phoenix Funds
if, in connection with the purchases or redemption of the redeemed shares,
the investor paid a prior sales charge provided such investor supplies
verification that the redemption occurred within 90 days of the Phoenix Fund
purchase and that a sales charge
14
<PAGE>
was paid; or (16) any account established by financial institutions,
broker/dealers or registered investment advisers for which an account
management fee or transaction fee is charged and, provided such entity has
entered into an agreement with the Distributor for this program; provided
that sales to persons listed in (1) through (15) above are made upon the
written assurance of the purchaser that the purchase is made for investment
purposes and that the shares so acquired will not be resold except to the
Fund.
Shares issued pursuant to the automatic reinvestment of income dividends
or capital gains distributions are not subject to any sales charges. The Fund
receives the entire net asset value of its Class A Shares sold to investors.
The Distributor's commission is the sales charge shown above less any
applicable discount or commission "re-allowed" to selected dealers and
agents. The Distributor will re-allow discounts to selected dealers and
agents in the amounts indicated in the table above. In this regard, the
Distributor may elect to re- allow the entire sales charge to selected
dealers and agents for all sales with respect to which orders are placed with
the Distributor. A selected dealer who receives re-allowance in excess of 90%
of such a sales charge may be deemed to be an "underwriter" under the
Securities Act of 1933.
Combination Purchase Privilege. Purchases, either singly or in any
combination, of shares of the Fund or shares of any other Phoenix Fund
(including Class B Shares and excluding Money Market Series Class A Shares),
if made at a single time by a single purchaser, will be combined for the
purpose of determining whether the total dollar amount of such purchases
entitles the purchaser to a reduced sales charge on any such purchases of
Class A shares. Each purchase of Class A Shares will then be made at the
public offering price, as described in the then current Prospectus relating
to such shares, which at the time of such purchase is applicable to a single
transaction of the total dollar amount of all such purchases. The term
"single purchaser" includes an individual, or an individual, his spouse and
their children under the age of majority purchasing for his or their own
account (including an IRA account) including his or their own trust, commonly
known as a living trust; a trustee or other fiduciary purchasing for a single
trust, estate or single fiduciary account, although more than one beneficiary
is involved; multiple trusts or 403(b) plans for the same employer; multiple
accounts (up to 200) under a qualified employee benefit plan or administered
by a third party administrator; or trust companies, bank trust departments,
registered investment advisers, and similar entities placing orders or
providing administrative services with respect to funds over which they
exercise discretionary investment authority and which are held in a
fiduciary, agency, custodial or similar capacity, provided all shares are
held in record in the name, or nominee name, of the entity placing the order.
Letter of Intent. Class A Shares or shares of any other Phoenix Fund
(including Class B shares and excluding Money Market Class A Shares) may be
purchased by a "single purchaser" (as defined above) within a period of
thirteen months pursuant to a Letter of Intent, in the form provided by
Equity Planning, stating the investor's intention to invest in such shares
during such period an amount which, together with the value (at their maximum
offering prices on the date of the Letter) of the Class A Shares of the Fund
or Class A or Class B shares of any other Phoenix Fund then owned by such
investor, equals a specified dollar amount. Each purchase of shares made
pursuant to a Letter of Intent will be made at the public offering price, as
described in the then current Prospectus relating to such shares, which at
the time of purchase is applicable to a single transaction of the total
dollar amount specified in the Letter of Intent.
An investor's Letter of Intent is not a binding commitment of the investor
to purchase or a binding obligation of the Fund or Equity Planning to sell a
specified dollar amount of shares qualifying for a reduced sales charge.
Accordingly, out of his initial purchase (and subsequent purchases if
necessary), 5% of the dollar amount of purchases required to complete his
investment (valued at the purchase price thereof) is held in escrow in the
form of shares registered in the investor's name until he completes his
investment, at which time escrowed shares are deposited to his account. If
the investor does not complete his investment and does not within 20 days
after written request by Equity Planning or his dealer pay the difference
between the sales charge on the dollar amount specified in his Letter and the
sales charge on the dollar amount of actual purchases, the difference will be
realized through the redemption of an appropriate number of the escrowed
shares and any remaining escrowed shares will be deposited to his account.
Right of Accumulation. "Single purchasers" (as defined above) may also
qualify for reduced sales charges based on the combined value of purchases of
either class of shares of the Fund, or any other Phoenix Fund, made over
time. Reduced sales charges are offered to investors whose shares, in the
aggregate, are valued (i.e., the dollar amount of such purchases plus the
current value (at the public offering price as described in the then current
prospectus relating to such shares) of shares of the Phoenix Funds owned) in
excess of the threshold amount described in the Section entitled "Initial
Sales Charge Alternative--Class A Shares." To use this option, the investor
must supply sufficient information as to account registrations and account
numbers to permit verification that one or more of his purchases qualifies
for a reduced sales charge.
Associations. A group or association may be treated as a "single
purchaser" and qualify for reduced initial sales charges under the
Combination Privilege and Right of Accumulation if the group or association
(1) has been in existence for at least six months; (2) has a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge;
(3) gives its endorsements or authorization to the investment program to
facilitate solicitation of the membership by the investment dealer, thus
effecting economies of sales effort; and (4) is not a group whose sole
organizational nexus is that the members are credit card holders of a
company, policyholders of an insurance company, customers of a bank or a
broker-dealer or clients of an investment adviser.
15
<PAGE>
Deferred Sales Charge Alternative--Class B Shares
Investors choosing the deferred sales charge alternative purchase Class B
Shares at net asset value per share without the imposition of a sales charge
at the time of purchase. The Class B Shares are being sold without an initial
sales charge, but are subject to a sales charge if redeemed within five years
of purchase.
Proceeds from the contingent deferred sales charge are paid to the
Underwriter and are used in whole or in part by the Underwriter to defray the
expenses of the Underwriter related to providing distribution-related
services to the Fund in connection with the sale of the Class B shares, such
as the payment of compensation to selected dealers and agents for selling
Class B shares. The combination of the contingent deferred sales charge and
the distribution fee facilitates the ability of the Fund to sell the Class B
shares without a sales charge being deducted at the time of purchase.
Contingent Deferred Sales Charge. Class B Shares which are redeemed within
five years of purchase will be subject to a contingent deferred sales charge
at the rates set forth below charged as a percentage of the dollar amount
subject thereto. The charge will be assessed on an amount equal to the lesser
of the current market value or the cost of the shares being redeemed.
Accordingly, no sales charge will be imposed on increases in net asset value
above the initial purchase price. In addition, no charge will be assessed on
shares derived from reinvestment of dividends or capital gains distributions.
The Underwriter intends to pay investment dealers a sales commission of 4%
of the sale price of Class B Shares sold by such dealers, subject to future
amendment or termination. The Underwriter will retain all or a portion of the
continuing distribution fee assessed to Class B shareholders and will receive
the entire amount of the contingent deferred sales charge paid by
shareholders on the redemption of shares to finance the 4% commission plus
interest and related marketing expenses.
The amount of the contingent deferred sales charges, if any, will vary
depending on the number of years from the time of payment for the purchase of
Class B Shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment for
the purchases of shares, all payments during a month will be aggregated and
deemed to have been made on the last day of the previous month.
<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge as
a Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
- ---------------------- ---------------------
<S> <C>
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 2%
Sixth 0%
</TABLE>
In determining whether a contingent deferred sales charge is applicable to
a redemption, it will be assumed that any Class A Shares are being redeemed
first. Class B Shares held for over 5 years and shares acquired pursuant to
reinvestment of dividends or distributions are redeemed next. Any Class B
Shares held longest during the five-year period are redeemed next unless the
shareholder directs otherwise. The charge will not be applied to dollar
amounts representing an increase in the net asset value since the time of
purchase.
To provide an example, assume in 1990, an investor purchased 100 Class B
Shares. In 1993, the investor purchased another 100 Class B Shares at $12 per
share. In 1995, the investor purchased 100 Class A Shares. Assume that in
1996, the investor owns 225 Class B Shares (15 Class B Shares resulting from
dividend reinvestment and distributions upon the Class B Shares purchased in
1990 and 10 Class B Shares resulting from dividend reinvestment and
distributions upon the Class B Shares purchased in 1993) as well as 100 Class
A Shares. If the investor wished to then redeem 300 shares and had not
specified a preference in redeeming shares; first, 100 Class A Shares would
be redeemed without charge. Second, 115 Class B Shares purchased in 1990
(including 15 shares issued as a result of dividend reinvestment and
distributions) would be redeemed next without charge. Finally, 85 Class B
Shares purchased in 1993 would be redeemed resulting in a deferred sales
charge of $27 [85 shares (85 shares minus 10 shares resulting from dividend
reinvestment) X $12 (original price) X 3% (applicable rate in the third year
after purchase)].
The contingent deferred sales charge is waived on redemptions of shares
(a) if redemption is made within one year of death (i) of the sole
shareholder on an individual account, (ii) of a joint tenant where the
surviving joint tenant is the deceased's spouse, or (iii) of the beneficiary
of Uniform Gifts to Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA)
or other custodial account; (b) if redemption is made within one year of
disability, as defined in Section 72(m)(7) of the Code; (c) in connection
with mandatory distributions upon reaching age 70-1/2 under any retirement
plan qualified under Sections 401, 408 or 403(b) of the Code or any
redemption resulting from the tax-free return of an excess contribution to an
IRA; (d) in connection with redemptions by 401(k) plans using an approved
participant tracking system for participant hardships, death, disability or
normal retirement, and loans which are subsequently repaid; (e) in connection
with the exercise of certain exchange privileges among Class B Shares of the
Fund and Class B Shares of other Phoenix Funds; (f) in connection with any
person with a direct rollover transfer of shares from an established Phoenix
Fund qualified plan into a Phoenix Fund IRA by participants terminating from
the qualifying plan; and (g) in accordance with the terms specified under the
Systematic Withdrawal Program. If, upon the occurrence of a death as outlined
above, the account is transferred to an account registered in the name of the
deceased's estate, the contingent deferred sales charge will be waived on any
redemption from the estate account occurring
16
<PAGE>
within one year of the death. If the Class B Shares are not redeemed within
one year of the death, they will remain Class B Shares and be subject to the
applicable contingent deferred sales charge when redeemed.
Class B Shares of the Fund will automatically convert to Class A Shares
without a sales charge at the relative net asset values of each of the
classes after eight years from the acquisition of the Class B Shares, and as
a result, will thereafter be subject to the lower distribution fee under the
Class A Plan. Such conversion will be on the basis of the relative net asset
value of the two classes without the imposition of any sales load, fee or
other charge. The purpose of the conversion feature is to relieve the holders
of Class B Shares that have been outstanding for a period of time sufficient
for the Distributor to have been compensated for distribution-related
expenses from the burden of such distribution-related expenses.
For purposes of conversion to Class A Shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares
in a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) are converted to Class A Shares, an
equal pro rata portion of the Class B Shares in the sub-account will also be
converted to Class A Shares.
The conversion of Class B Shares to Class A Shares is subject to the
continuing availability of an opinion of counsel or a ruling from the
Internal Revenue Service ("IRS") to the effect that the conversion of shares
does not constitute a taxable event under federal income tax law. If the Fund
were unable to obtain such assurances, it might make additional distributions
if doing so would assist in complying with the Fund's general practice of
distributing sufficient income to reduce or eliminate U.S. federal taxes. The
conversion of Class B Shares to Class A Shares may be suspended if such an
opinion or ruling is no longer available. In that event, no further
conversions of Class B Shares would occur, and shares might continue to be
subject to the higher distribution fee for an indefinite period which may
extend beyond the period ending six years after the end of the month in which
affected Class B Shares were purchased.
INVESTOR ACCOUNTS AND
SERVICES AVAILABLE
An account will be opened for the investor after the investor makes an
initial investment. Shares purchased will be held in the shareholder's
account by the Transfer Agent which will forward a statement each time there
is a change in the number of shares in the account. At any time, a
shareholder may request that a certificate be issued, subject to certain
conditions, representing any number of full shares held in his or her
account.
The Fund mails periodic reports to its shareholders. In order to reduce
the volume of mail, to the extent possible, only one copy of most Fund
reports will be mailed to household for multiple accounts with the same
surname at the same household address. Please contact Equity Planning to
request additional copies of shareholder reports.
Shareholder inquiries should be directed to the Fund at (800) 243-1574.
Bank Draft Investing Program (Investo-Matic Plan)
By completing the Investo-Matic Section of the New Account Application, a
shareholder may authorize the bank named in the form to draw $25 or more from
his personal checking account on or about the 15th day of the month, to be
used to purchase additional shares for his account. The amount the
shareholder designates will be made available, in form payable to the order
of the Transfer Agent by the bank on the date the bank draws on his account
and will be used to purchase shares at the applicable offering price. The
shareholder or his or her registered representative may, by telephone or
written notice, cancel or change the dollar amount being invested pursuant to
the Investo-Matic Plan unless the shareholder has notified the Fund or
Transfer Agent that his or her registered representative shall not have this
authority.
Distribution Option
The Fund currently declares all income dividends and all capital gain
distributions, if any, payable in shares of the Fund at net asset value or,
at the option of the shareholder, in cash. By exercising the distribution
option, a shareholder may elect to (1) receive both dividends and capital
gain distributions in additional shares; (2) receive dividends in cash and
capital gain distributions in additional shares or (3) to receive both
dividends and capital gain distributions in cash. If a shareholder elects to
receive dividends and/or distributions in cash and the check cannot be
delivered or remains uncashed by the shareholder due to an invalid address,
then the dividend and/or distribution will be reinvested after the Transfer
Agent has been informed that the proceeds are undeliverable. Additional
shares will be purchased for the shareholder's account at the then current
net asset value. Shareholders who maintain an account balance of at least
$5,000, or $2,000 for tax qualified retirement benefit plans (calculated on
the basis of the net asset value of the shares held in a single account), may
direct that any dividends and distributions paid with respect to shares in
that account be automatically reinvested in a single account of one of the
other Phoenix Funds at net asset value. Shareholders should obtain a current
prospectus and consider the objectives and policies of each such Fund
carefully before directing dividends and distributions to the other Fund.
Reinvestment election forms and prospectuses are available from Equity
Planning. Distributions may also be mailed to a second payee and/or address.
Dividends and capital gain distributions received in shares are taxable to
the shareholder and credited to the shareholder's account in full and
fractional shares computed at the closing net asset value on the next
business day after the record date. A distribution option may be changed at
any time by notifying Customer Service by telephone at 800-243-1574 or
sending a letter signed by the registered owner(s) of the account. Requests
for directing distributions to an alternate payee must be made in writing
with a signature guarantee of the registered owner(s). To be effective with
respect to a particular dividend or
17
<PAGE>
distribution, notification of the new distribution option must be received by
the Transfer Agent at least three days prior to the record date of such
dividend or distribution. If all shares in the shareholder's account are
repurchased or redeemed or transferred between the record date and the
payment date of a dividend or distribution, her will receive cash for the
dividend or distribution regardless of the distribution option selected.
Systematic Withdrawal Program
The Systematic Withdrawal Program allows shareholders to periodically redeem
a portion of their account on a predetermined monthly or quarterly,
semiannual or annual basis. A sufficient number of full and fractional shares
shall therefore be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareholder, on or about the 15th of the
month at the closing net asset value on the date of redemption. The
Systematic Withdrawal Program also provides for redemptions to be tendered on
or about the 10th, 15th or 25th of the month with proceeds to be directed
through Automated Clearing House (ACH) to the shareholder's bank account. In
addition to the limitations stated below, withdrawals may not be less than
$25 and minimum account balance requirements shall continue to apply. See
"Redemption of Small Accounts."
Class A shareholders participating in the Systematic Withdrawal Program
must own shares of the Fund worth $5,000 or more, as determined by the
then-current net asset value per share.
To participate in the Systematic Withdrawal Program, Class B shareholders
must initially own shares of the Fund worth $5,000 or more and elect to have
all dividends reinvested in additional Class B Shares of the Fund. Through
the Program, Class B shareholders may withdraw up to 1% of their aggregate
net investments (purchases, at initial value, to date net of non- Program
redemptions) each month; or up to 3% of their aggregate net investments each
quarter without incurring otherwise applicable contingent deferred sales
charges.
The purchase of shares while participating in the withdrawal program will
ordinarily be disadvantageous to the Class A Shares investor since a sales
charge will be paid by the investor on the purchase or Class A Shares at the
same time as other shares are being redeemed. For this reason, investors in
Class A Shares may not participate in an automatic investment program while
participating in the Systematic Withdrawal Program.
Class B shareholders redeeming more shares than the percentage permitted
by the withdrawal program shall be subject to any applicable contingent
deferred sales charge. Accordingly, the purchase of Class B Shares will
generally not be suitable for an investor who anticipates withdrawing sums in
excess of the above limits shortly after purchase.
Tax-Sheltered Retirement Plans
Shares of the Fund are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, Profit-Sharing and
Money Purchase Pension Plans which can be adopted by self-employed persons
("Keogh") and by corporations, and 403(b) Retirement Plans. Write or call
Equity Planning (800) 243-4361 for further information about the plans.
Exchange Privileges
Shareholders may exchange Class A or Class B shares held in book-entry form
for shares of the same class of other Phoenix Funds, (except Phoenix
Multi-Sector Short Term Bond Class A Shares held less than 6 months and Class
A Shares of Phoenix Money Market Series), provided the following conditions
are met: (1) the shares that will be acquired in the exchange (the "Acquired
Shares") are available for sale in the shareholder's state of residence; (2)
the Acquired Shares are the same class as the shares to be surrendered (the
"Exchanged Shares"); (3) the Acquired Shares will be registered to the same
shareholder account as the Exchanged Shares; (4) the account value of the
Fund whose shares are to be acquired must equal or exceed the minimum initial
investment amount required by that Fund after the exchange is implemented;
and (5) if a shareholder has elected not to utilize the Telephone Exchange
Privilege (see below), a properly executed exchange request must be received
by State Street Bank and Trust Company.
Subject to the above requirements for an exchange, a shareholder or
his/her registered representative may, by telephone or written notice, elect
to have Class A or Class B Shares of the Fund exchanged for the same class of
shares of another Phoenix Fund automatically on a monthly, quarterly,
semi-annual or annual basis or may cancel the privilege ("Systematic
Exchange").
Shareholders who maintain an account balance in the Fund of at least
$5,000, or $2,000 for tax qualified retirement benefit plans (calculated on
the basis of the net asset value of the shares held in a single account), may
direct that shares of the Fund be automatically exchanged at predetermined
intervals for shares of the same class of another Phoenix Fund. If the
shareholder is participating in the Self Security program offered by Phoenix
Home Life, it is not necessary to maintain the above account balances in
order to use the Systematic Exchange privilege.
Such exchanges will be executed upon the close of business on the 10th of
a month and if the 10th falls on a holiday or weekend, then at the close of
business on the next succeeding business day. The minimum initial and
subsequent amount that may be exchanged under the Systematic Exchange is $25.
Systematic Exchange forms are available from Equity Planning.
Exchanges will be based upon each Fund's net asset value per share next
computed following receipt of a properly executed exchange request, without
sales charge. On Class B share exchanges, the contingent deferred sales
charge schedule of the original shares purchased continues to apply.
The exchange of shares from one fund to another is treated as sale of the
Exchanged Shares and a purchase of the Acquired Shares for Federal income tax
purposes. The
18
<PAGE>
shareholder may, therefore, realize a taxable gain or loss. See "Dividends,
Distributions and Taxes" for information concerning the Federal income tax
treatment of a disposition of shares.
It is the policy of the Fund to discourage and prevent frequent trading by
shareholders among the Fund and other Phoenix Funds in response to market
fluctuations. The Fund reserves the right to refuse exchange purchases by any
person or broker/dealer if, in the Fund's or Adviser's opinion, the exchange
would adversely affect the Fund's ability to invest according to its
investment objectives and policies, or otherwise adversely affect the Fund
and its shareholders. The Fund reserves the right to terminate or modify its
exchange privileges at any time upon giving prominent notice to shareholders
at least 60 days in advance.
Each Phoenix Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the prospectus of the fund
into which the exchange it to be made before any exchange requests are made.
Telephone Exchanges
Telephone Exchange Privileges are only available in states where the shares
to be acquired may be legally sold. (See the Statement of Additional
Information.) Unless a shareholder elects in writing not to participate in
the Telephone Exchange Privilege, shares for which certificates have not been
issued may be exchanged by calling (800) 367-5877 provided that the exchange
is made between accounts with identical registrations. Under the Telephone
Exchange Privilege, telephone exchange orders may also be entered on behalf
of the shareholder by his or her legal representative.
The Fund and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. In addition to requiring
identical registrations on both accounts, the Transfer Agent will require
address verification and will record telephone instructions on tape. All
exchanges will be confirmed in writing with the shareholder. To the extent
that procedures reasonably designed to prevent unauthorized telephone
exchanges are not followed, the Fund and/or the Transfer Agent may be liable
for following telephone instructions for exchange transactions that prove to
be fraudulent. Broker/dealers other than Equity Planning have agreed to bear
the risk of any loss resulting from any unauthorized telephone exchange
instruction from the firm or its registered representatives. However, the
shareholder would bear the risk of loss resulting from instructions entered
by an unauthorized third party that the Fund and/or the Transfer Agent
reasonably believe to be genuine. The Telephone Exchange Privilege may be
modified or terminated at any time on 60 days' notice to shareholders. In
addition, during times of drastic economic or market changes, the Telephone
Exchange Privilege may be difficult to exercise or may be suspended
temporarily. In such event an exchange may be effected by following the
procedure outlined for tendering shares represented by certificate(s).
If a shareholder elects not to use the Telephone Exchange Privilege or if
the shares being exchanged are represented by a certificate or certificates,
in order to exchange shares the shareholder must submit a written request to
Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301. If the shares are being exchanged between accounts
that are not registered identically, the signature on such request must be
guaranteed by an eligible guarantor institution as defined by the Fund's
transfer agent in accordance with its signature guarantee procedures.
Currently such procedures generally permit guarantees by banks,
broker/dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings associations. Any
outstanding certificate or certificates for the tendered shares must be duly
endorsed and submitted.
Purchase and withdrawal plans and reinvestment and exchange privileges are
described more fully in the Statement of Additional Information. For further
information, call Equity Planning at (800) 243-1574.
NET ASSET VALUE
The net asset value per share is determined as of the close of regular
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading.
The net asset value per share of the Fund is computed by dividing the
value of the Fund's securities, plus any cash and other assets (including
dividends and interest accrued but not collected) less all liabilities
(including accrued expenses) by the number of shares of the Fund outstanding.
The total liability allocated to a class, plus that class' distribution fee
and other expenses specially allocated to that class, are deducted from the
proportionate interest of such class in the Fund's assets, and the resulting
amount for each class is divided by the number of shares of that class to
produce the net asset value per share. A security listed or traded on an
exchange is valued at its last sale price on the exchange where it is
principally traded. Lacking any sales on the exchange where it is principally
traded on the day of valuation prior to the time as of which assets are
valued, the security is valued at the mean between the last bid and asked
prices on that exchange. Short-term investments having a remaining maturity
of sixty days or less are valued at amortized cost which approximates market
value unless the Trustees determine that amortized cost does not reflect the
fair value of such securities. All other equity securities for which
over-the-counter market quotations are readily available are valued on the
basis of the mean between the last current bid and asked prices. Other assets
are valued at fair value as determined in good faith by the Trustees.
HOW TO REDEEM SHARES
Shareholders have the right to have the Fund buy back shares at the net
asset value next determined after receipt of a redemption request and any
other required documentation in proper form by Phoenix Funds, c/o State
Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301
(see
19
<PAGE>
"Net Asset Value"). In the case of Class B Share redemptions, investors will
be subject to the applicable deferred sales charge, if any, for such shares
(see "Deferred Sales Charge Alternative--Class B Shares" above). To redeem,
any outstanding share certificates in proper form for transfer must be
received by Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box
8301, Boston, MA 02266-8301. To be in proper form to redeem shares, the
signature of the shareholder(s) on the certificate or stock power must be
signed exactly as registered, including any fiduciary title, on a written
instruction letter, certificate, or accompanying stock power, such signatures
being guaranteed by an eligible guarantor institution as determined in
accordance with the standards and procedures established by the Transfer
Agent (please contact the Fund at (800) 243-1574 with any questions regarding
eligible guarantors).
If no certificate has been issued, the Transfer Agent requires a written
request with signature guarantee. The Transfer Agent may waive the signature
guarantee requirement in the case of shares registered in the names of
individuals singly, jointly, or as custodian under the Uniform Gifts to
Minors Act, if the proceeds do not exceed $50,000, and the proceeds are
payable to the registered owner(s) at the address of record. Such requests
must be signed by each person in whose name the account is registered. In
addition, a shareholder may sell shares back to the Fund through securities
dealers who may charge customary commissions for their services. The
redemption price in such case will be the price as of the close of the
general trading session of the New York Stock Exchange on that day, provided
the order is received by the dealer prior thereto, and is transmitted to the
Distributor prior to the close of its business. No charge is made by the Fund
on redemptions, but shares tendered through investment dealers may be subject
to a service charge by such dealers. Payment for shares redeemed is made
within seven days; provided, however, that redemption proceeds will not be
disbursed until each check used for purchase of shares has been cleared for
payment by the investor's bank, which may take up to 15 days after receipt of
the check.
Additional documentation may be required for redemptions by corporations,
partnership or other organizations, executors, administrators, trustees,
custodians, guardians, or from IRAs or other retirement plans, or if
redemption is requested by anyone but the shareholder(s) of record. To avoid
delay in redemption or transfer, shareholders having questions about specific
requirements should contact the Fund at (800) 243- 1574. Redemptions requests
will not be honored until all required documents in proper form have been
received.
Telephone Redemptions
Unless a shareholder elects in writing not to participate in the Telephone
Redemption Privilege, shares for which certificates have not been issued may
be redeemed by telephoning (800) 367-5877 and telephone redemptions will also
be accepted on behalf of the shareholder from his or her registered
representative.
The Fund and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. Address and bank account
information will be verified, the telephone redemption instructions will be
recorded on tape, and all redemptions will be confirmed in writing to the
shareholder. If there has been an address change within the past 60 days, a
telephone redemption will not be authorized. To the extent that procedures
reasonably designed to prevent unauthorized telephone redemptions are not
followed, the Fund and/or the Transfer Agent may be liable for following
telephone instructions for redemption transactions that prove to be
fraudulent. Broker/dealers other than Equity Planning have agreed to bear the
risk of any loss resulting from any unauthorized telephone redemption
instruction from the firm or its registered representatives. However, the
shareholder would bear the risk of loss resulting from instructions entered
by an unauthorized third party that the Fund and/or the Transfer Agent
reasonably believe to be genuine. The Telephone Redemption Privilege may be
modified or terminated at any time on 60 days' notice to shareholders. In
addition, during times of drastic economic or market changes, the Telephone
Redemption Privilege may be difficult to exercise and a shareholder should
submit a written redemption request, as described above.
If the amount of the redemption is over $500, the proceeds will be wired
to the shareholder's designated U.S. commercial bank account. If the amount
of the redemption is less than $500, the proceeds will be sent by check to
the address of record on the shareholder's account.
Telephone redemption requests must be received by the Transfer Agent by
the close of trading on the New York Stock Exchange on any day when the
Transfer Agent is open for business. Requests made after that time or on a
day when the Transfer Agent is not open for business cannot be accepted by
the Transfer Agent. The proceeds of a telephone redemption will normally be
sent on the first business day following receipt of the redemption request.
However, with respect to the telephone redemption of shares purchased by
check, such requests will only be effected after the Fund has assured itself
that good payment has been collected for the purchase of shares, which may
take up to 15 days. This expedited redemption privilege is not available to
HR-10, IRA and 403(b)(7) Plans.
Reinvestment Privilege
Shareholders have the privilege of using redemption proceeds to purchase
Class A Shares of any Phoenix Fund with no sales charge (at the net asset
value next determined after the request for reinvestment is made). For
Federal income tax purposes, a redemption and reinvestment will be treated as
a sale and purchase of shares. Special rules may apply in computing the
amount of gain or loss in these situations. (See "Dividends, Distributions
and Taxes" for information on the Federal income tax treatment of a
disposition of shares.) A written request for reinvestment must be received
by the Distributor within 180 days of the redemption, accompanied by payment
for the shares (not in excess of the redemption value). Class B shareholders
who have had the contingent deferred sales charge waived through
participation in the Systematic Withdrawal Program are not eligible to use
this reinvestment privilege.
20
<PAGE>
Redemption of Small Accounts
Due to the relatively high cost of maintaining small accounts, the Fund
reserves the right to redeem, at net asset value, the shares of any
shareholder whose account has a value, due to redemptions, of less than $200.
Before the Fund redeems these shares, the shareholder will be given notice
that the value of the shares in the account is less than the minimum amount
and will be allowed 30 days to make an additional investment in an amount
which will increase the value of the account to at least $200.
A shareholder should contact his/her broker/dealer if he/she wishes to
transfer shares from an existing broker/dealer street name account to a
street name account with another broker/ dealer. The Fund has no specific
procedures governing such account transfers.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
The Fund intends to continue to qualify annually as a regulated investment
company under Subchapter M of the Code, and to distribute annually to
shareholders all or substantially all of its net investment income and net
realized capital gains, after utilization of any capital loss carryovers. If
the Fund so qualifies, it generally will not be subject to Federal income tax
on the income it distributes. The discussion below is based upon the
assumption that the Fund will continue to qualify as a regulated investment
company.
The Fund intends to make distributions from net investment income
quarterly, and intends to distribute net realized capital gains, if any, at
least annually.
The Fund will be subject to a nondeductible 4% excise tax if it fails to
meet certain calendar year distribution requirements. In order to prevent
imposition of the excise tax, it may be necessary for the Fund to make
distributions more frequently than described in the previous paragraph.
Unless a shareholder elects to receive distributions in cash, dividends
and capital gain distributions will be paid in additional shares of the Fund
credited at the net asset value per share on the ex-date. Dividends and
distributions, whether received in cash or in additional shares of the Fund,
generally are subject to Federal income tax and may be subject to state,
local, and other taxes. Shareholders will be notified annually about the
amount and character of distributions made to them by the Fund.
Long-term capital gains, if any, distributed to shareholders and which are
designated by the Fund as capital gain distributions, are taxable to
shareholders as long-term capital gain distributions regardless of the length
of time shares of the Fund have been held by the shareholder. Distributions
of short-term capital gains and net investment income, if any, are taxable to
shareholders as ordinary income.
Dividends and distributions generally will be taxable to shareholders in
the taxable year of the shareholder in which they are received. However,
dividends and distributions declared by the Fund in October, November or
December of any calendar year, with a record date in such a month, and paid
during the following January, will be treated as if they were paid by the
Fund and received by shareholders on December 31 of the calendar year in
which they were declared.
A redemption or other disposition (including an exchange) of shares of the
Fund generally will result in the recognition of a taxable gain or loss,
which will be a long- or short-term capital gain or loss (assuming the shares
were a capital asset in the hands of the shareholder), depending upon a
shareholder's holding period for his or her shares. A capital loss realized
on a disposition of Fund shares held six months or less will be treated as a
long-term capital loss to the extent of capital gain dividends received with
respect to such shares. In addition, if shares of the Fund are disposed of at
a loss and are replaced (either through purchases or through reinvestment of
dividends) within a period commencing thirty days before and ending thirty
days after the disposition of such shares, the realized loss will be
disallowed and appropriate adjustments to the tax basis of the new shares
will be made. In addition, special rules may apply to determine the amount of
gain or loss realized on any exchange.
Additional information about taxes is set forth in the Statement of
Additional Information. Also, legislation may be enacted in the future that
could affect the tax consequences described above. Shareholders are urged to
consult their attorneys or tax advisers regarding specific questions as to
Federal, foreign, state or local taxes. Foreign shareholders may be subject
to U.S. Federal income tax rules that differ from those described above. For
more information regarding distributions and taxes, see "Dividends,
Distributions and Taxes" in the Statement of Additional Information.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS regulations, the Fund may be required to withhold 31% of
all reportable payments including any taxable dividends, capital gain
distributions or share redemption proceeds for any account which does not
have a taxpayer identification number or social security number and certain
required certifications.
The Fund reserves the right to refuse to open an account for any person
failing to provide a taxpayer identification number along with the required
certifications.
The Fund sends to all shareholders, within 31 days after the end of the
calendar year, information which is required by the Internal Revenue Service
for preparing federal income tax returns.
Investors are urged to consult their attorney or tax adviser regarding
specific questions as to Federal, foreign, state or local taxes.
ADDITIONAL INFORMATION
Organization of the Fund
The Fund was organized under Massachusetts law in 1986 as a business trust.
On August 29, 1986, the Fund purchased all of the assets and assumed all of
the liabilities of the Total
21
<PAGE>
Income Series of National Securities Funds. National Securities Funds, as
such, had been in existence since 1940. The Fund is continuing the business
of the Total Income Series. On December 15, 1989, the Fund purchased all of
the assets and assumed all of the liabilities of the National Preferred Fund.
On May 30, 1990, the Fund purchased all of the assets and assumed all of the
liabilities of the National Premium Income Fund. On June 30, 1993, the
Trustees voted to change the name of the Fund to "Phoenix Income and Growth
Fund" to reflect the purchase of the Adviser by Phoenix Home Life and the
affiliation with the other Phoenix Funds.
The Declaration of Trust provides that the Fund's Trustees are authorized
to create an unlimited number of series and, with respect to each series, to
issue an unlimited number of full and fractional shares of one or more
classes and to divide or combine the shares into a greater or lesser number
of shares without thereby changing the proportionate beneficial interests in
the series. All shares have equal voting rights, except that only shares of
the respective series or separate classes within a series are entitled to
vote on matters concerning only that series or class. At the date of this
Prospectus, there is only one existing series of the Fund, which has two
classes of shares.
The shares of the Fund, when issued, will be fully paid and
non-assessable, have no preference, preemptive, or similar rights, and will
be freely transferable. There will normally be no meetings of shareholders
for the purpose of electing Trustees unless and until such time as less than
a majority of the Trustees holding office have been elected by shareholders,
at which time the Trustees then in office will call a shareholders' meeting
for the election of Trustees. Shareholders may, in accordance with the
Declaration of Trust, cause a meeting of shareholders to be held for the
purpose of voting on the removal of Trustees. Meetings of the shareholders
will be called upon written request of shareholders holding in the aggregate
not less than 10% of the outstanding shares having voting rights. Except as
set forth above and subject to the 1940 Act, the Trustees will continue to
hold office and appoint successor Trustees. Shares do not have cumulative
voting rights and the holders of more than 50% of the shares of the Fund
voting for the election of Trustees can elect all of the Trustees of the Fund
if they choose to do so and in such event the holders of the remaining shares
would not be able to elect any Trustees. Shareholders are entitled to redeem
their shares as set forth under "How to Redeem Shares."
The Declaration of Trust establishing the Fund, dated June 25, 1986 (a
copy of which, together with all amendments thereto, is on file in the office
of the Secretary of the Commonwealth of Massachusetts), provides that the
Fund's name refers to the Trustees under the Declaration of Trust
collectively as Trustees, but not as individuals or personally; and no
Trustee, shareholder, officer, employee or agent of the Fund shall be held to
any personal liability, nor shall report be had to their private property for
the satisfaction of any obligation or claim of said Fund but the "Trust
Property" only shall be liable.
Registration Statement
This Prospectus omits certain information included in the Statement of
Additional Information and Part C of the Registration Statement filed with
the Securities and Exchange Commission under the Securities Act of 1933 and
the 1940 Act. A copy of the Registration Statement may be obtained from the
Securities and Exchange Commission in Washington, D.C.
22
<PAGE>
APPENDIX
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.
23
<PAGE>
BACKUP WITHHOLDING INFORMATION
Step 1. Please make sure that the social security number or taxpayer
identification number (TIN) which appears on the Application complies
with the following guidelines:
<TABLE>
<CAPTION>
Account Type Give Social Security Number or
Tax Identification Number of:
<S> <C>
Individual Individual
Joint (or Joint Tenant) Owner who will be paying tax
Uniform Gifts to Minors Minor
Legal Guardian Ward, Minor or Incompetent
Sole Proprietor Owner of Business (also provide owner's name)
Trust, Estate, Pension Plan Trust Trust, Estate, Pension Plan Trust (not personal TIN of fiduciary)
Corporation, Partnership,
Other Organization Corporation, Partnership, Other Organization
Broker/Nominee Broker/Nominee
</TABLE>
Step 2. If you do not have a TIN, you must obtain Form SS-5 (Application for
Social Security Number) or Form SS-4 (Application for Employer
Identification Number) from your local Social Security or IRS office
and apply for one. Write "Applied For" in the space on the
application.
Step 3. If you are one of the entities listed below, you are exempt from
backup withholding.
(bullet) A corporation
(bullet) Financial institution
(bullet) Section 501(a) exempt organization (IRA, Corporate
Retirement Plan, 403(b), Keogh)
(bullet) United States or any agency or instrumentality thereof
(bullet) A State, the District of Columbia, a possession of the
United States, or any subdivision or instrumentality thereof
(bullet) International organization or any agency or instrumentality
thereof
(bullet) Registered dealer in securities or commodities registered in
the U.S. or a possession of the U.S.
(bullet) Real estate investment trust
(bullet) Common trust fund operated by a bank under section 584(a)
(bullet) An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1)
(bullet) Regulated Investment Company
If you are in doubt as to whether you are exempt, please contact the Internal
Revenue Service.
Step 4. IRS Penalties--If you do not supply us with your TIN, you will be
subject to an IRS $50 penalty unless your failure is due to
reasonable cause and not willful neglect. If you fail to report
interest, dividend or patronage dividend income on your federal
income tax return, you will be treated as negligent and subject to an
IRS 5% penalty tax on any resulting underpayment of tax unless there
is clear and convincing evidence to the contrary. If you falsify
information on this form or make any other false statement resulting
in no backup withholding on an account which should be subject to a
backup withholding, you may be subject to an IRS $500 penalty and
certain criminal penalties including fines and imprisonment.
This Prospectus sets forth concisely the information about the Phoenix Income
and Growth (the "Fund") which you should know before investing. Please read
it carefully and retain it for future reference.
The Fund has filed with the Securities and Exchange Commission a Statement of
Additional Information about the Fund, dated August 28, 1996. The Statement
contains more detailed information about the Fund and is incorporated into
this Prospectus by reference. You may obtain a free copy of the Statement by
writing the Fund c/o Phoenix Equity Planning Corporation, 100 Bright Meadow,
P.O. Box 2200, Enfield, Connecticut 06083-2200.
Financial information relating to the Fund is contained in the Annual Report
to Shareholders for the year ended April 30, 1996 and is incorporated into
the Statement of Additional Information by reference.
[recycle logo] Printed on recycled paper using soybean ink
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Bulk Rate Mail
U.S. Postage
PAID
Springfield, MA
Permit No. 444
Phoenix Income and Growth Fund
P.O. Box 2200
Enfield, CT 06083-2200
[LOGO]
Phoenix Duff & Phelps
PDP 693 (8/96)
<PAGE>
PHOENIX INCOME AND GROWTH FUND
101 Munson Street
Greenfield, Massachusetts 01301
Statement of Additional Information
August 28, 1996
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix Income and Growth Fund (the "Fund"), dated August 28, 1996, and
should be read in conjunction with it. The Fund's Prospectus may be obtained
by calling Phoenix Equity Planning Corporation ("Equity Planning") at (800)
243-4361 or by writing to Equity Planning at 100 Bright Meadow Boulevard,
P.O. Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
THE FUND 1
INVESTMENT OBJECTIVES AND POLICIES (8) 1
INVESTMENT RESTRICTIONS (12) 1
PERFORMANCE INFORMATION (7) 3
PORTFOLIO TRANSACTIONS AND BROKERAGE 5
SERVICES OF THE ADVISER (20) 6
NET ASSET VALUE (23) 6
HOW TO BUY SHARES (14) 6
ALTERNATIVE PURCHASE ARRANGEMENTS (15) 6
EXCHANGE PRIVILEGES (22) 8
REDEMPTION OF SHARES (23) 8
DIVIDENDS, DISTRIBUTIONS AND TAXES (25) 9
TAX SHELTERED RETIREMENT PLANS (22) 10
THE DISTRIBUTOR (3) 11
PLANS OF DISTRIBUTION (13) 11
TRUSTEES AND OFFICERS 13
OTHER INFORMATION 19
</TABLE>
Numbers appearing in parentheses correspond to
related disclosures in the Fund's Prospectus.
Customer Service--(800) 243-1574
Marketing--(800) 243-4361
Telephone Orders/Exchanges--(800) 367-5877
Telecommunication Device (TTY)--(800) 243-1926
<PAGE>
THE FUND
Phoenix Income and Growth Fund is an open-end diversified management
investment company which was organized under Massachusetts law in 1986 as a
Massachusetts business trust. The Fund's Prospectus describes the investment
objectives of the Fund. The following discussion supplements the description
of the Fund's investment policies and investment techniques in the
Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The primary investment objective of the Fund is to provide an investment
in a diversified group of securities that are selected for current yield
consistent with preservation of capital. The investment objective of the Fund
is a fundamental policy which may not be changed without the approval of the
holders of a majority of the outstanding shares of the Fund. The secondary
objective of the Fund is to achieve capital appreciation when it is
consistent with the Fund's primary objective. The secondary objective is a
non-fundamental policy and may be changed by a vote of the Trustees without
shareholder approval. The Fund will contain income producing securities,
including domestic or foreign equity, debt, options, convertible securities
and government securities. The proportion of holdings in bonds, preferred
stocks and equities will vary with the level of return obtained from these
various classes of securities. Only securities producing income at the time
of purchase will be included in the portfolio. There is no assurance that the
Fund will achieve its investment objectives.
INVESTMENT RESTRICTIONS
Fundamental Policies
The following investment restrictions constitute fundamental policies of the
Fund which may be changed only upon approval by the holders of a majority of
the outstanding shares of the Fund. The Fund cannot:
1. Borrow money;
2. Underwrite the securities of others;
3. Deal in real estate except that it may purchase marketable securities
of companies that deal in real estate or interests therein including
real estate investment trusts but, excluding real estate limited
partnerships;
4. Deal in commodities or commodities contracts;
5. Make loans to other persons except that it may lend portfolio
securities (up to 25% of net assets at the time the loan is made) to
brokers or dealers or other financial institutions not affiliated with
the Fund or the Adviser, subject to conditions established by the
Adviser (See "Lending of Securities") and enter into repurchase
transactions (in accordance with the Fund's current Prospectus);
6. Participate in any joint trading accounts;
7. Pledge, mortgage or hypothecate any securities or other property;
8. Purchase on margin;
9. Engage in short sales;
10. Issue senior securities;
11. Invest more than 25% of its assets in any one industry or group of
industries;
12. Purchase any securities (other than U.S. Government obligations) if,
as a result, more than 5% of the value of the total assets of the Fund
would be invested in securities of a single issuer;
13. Purchase any security if, as a result, more than 10% of any class of
securities or more than 10% of the outstanding voting securities of
any issuer would be held;
14. Purchase any security of an investment trust except for purchases in
the open market where no commission or profit to a sponsor or dealer
results from such purchases, other than a customary broker's
commission; and
15. Make an investment for the purpose of exercising control or
management.
Other Policies
The following investment restrictions do not constitute fundamental policies
and may be changed without shareholder approval. The Fund cannot:
1. Invest more than 15% of its net assets in illiquid securities,
including (a) securities with legal or contractual restrictions on
resale (except in the case of securities issued pursuant to Rule 144A
sold to qualifying institutional investors under special
1
<PAGE>
rules adopted by the Securities and Exchange Commission for which the
Trustees of the Fund determine the secondary market is liquid) (b)
repurchase agreements maturing in more than seven days and (c)
securities that are not readily marketable;
2. Purchase or retain any securities of any issuer if the officers, or
Trustees of the Fund, the Adviser who individually own beneficially
more than 1/2 of 1% of such issuer, together own beneficially more than
5% of such issuer's securities;
3. Invest more than 5% of total net assets in securities of issuers
(including their predecessors) who have been in business for less than
three years; or
4. Invest in interests (including leases) in oil, gas or other mineral
exploration development programs.
Investment Techniques
Options The Fund may, from time to time write covered call option contracts
as a means of increasing the total return of the Fund's portfolio and also as
a means of providing limited protection against increases in market value of
the Fund's portfolio. Such contracts will be written on securities in which
the Fund has authority to invest and on securities indices listed on an
organized national securities exchange. The aggregate value of the securities
will be limited to not more than 25% of the net assets of the Fund.
A call option on a security gives the purchaser of the option the right to
buy the underlying security from the writer at the exercise price at any time
prior to the expiration of the contract, regardless of the market price of
the security during the option period. A written call option is "covered" if,
throughout the life of the option (1) the Fund owns the optioned securities,
(2) the Fund maintains in a segregated account with its Custodian, cash or
cash equivalent or U.S. Government securities with a value sufficient to meet
its obligations under the call, or (3) if the Fund owns an offsetting call
option. The premium paid to the writer is the consideration for undertaking
the obligations under the option contract. The Fund will only write call
option contracts when it is believed that the total return to the Fund can be
increased through such premiums consistent with the Fund's investment
objective.
The Fund may also write covered call options on securities indices.
Through the writing of call index options, the Fund can achieve many of the
same objectives as through the use of call options on individual securities.
Call options on securities indices are similar to call options on a security
except that, rather than the right to take delivery of a security at a
specified price, a call option on a securities index gives the holder the
right to receive, upon the exercise of the option, an amount of cash if the
closing level of the securities index upon which the call option is based is
greater than the exercise price of the option. The writing of such index call
options would be subject to the present limitation of covered call option
writing of not more than 25% of the net assets of the Fund. The writing of
option contracts is a highly specialized activity which involves investment
techniques and risks different from those ordinarily associated with
investment companies, and the restrictions listed above would tend to reduce
such risks. The Fund has not written call options in the last fiscal year and
does not intend to do so in the future with respect to more than 5% of the
Fund's net assets.
The Fund may purchase options to close out a position, (i.e. a "closing
purchase transaction"--the purchase of a call option on the same security
with the same exercise price and expiration date as the call option which it
has previously written on any particular security). When a security is sold
from the Fund's portfolio, the Fund will first effect a closing purchase
transaction so as to close out any existing call option on that security,
realizing a profit or loss depending on whether the amount paid to purchase a
call option is less or more than the amount received from the sale thereof.
In addition, the Fund may wish to purchase a call option to hedge its
portfolio against any anticipated increase in the price of securities it
intends to purchase or to purchase a put option to hedge its portfolio
against an anticipated decline in securities prices. No more than 5% of the
assets of the Fund may be invested in the purchase of put and call options
including index options.
The purchase and writing of options involves certain risks. During the
option period, the covered call writer has, in return for the premium on the
option, given up the opportunity to profit from a price increase in the
underlying securities above the exercise price, but, as long as its
obligation as a writer continues, has retained the risk of loss should the
price of the underlying security decline. The writer of an option has no
control over the time when it may be required to fulfill its obligation as a
writer of the option. Once an option writer has received an exercise notice,
it cannot effect a closing purchase transaction in order to terminate its
obligation under the option and must deliver the underlying securities at the
exercise price. If a call option purchased by the Fund is not sold when it
has remaining value, and if the market price of the underlying security
remains less than or equal to the exercise price, the Fund will lose its
entire investment in the option. Also, where an option on a particular
security is purchased to hedge against price movements in a related security,
the price of the option may move more or less than the price of the related
security. There can be no assurance that a liquid market will exist when the
Fund seeks to close out an option position. Furthermore, if trading
restrictions or suspensions are imposed on the options market, the Fund may
be unable to close out an option position.
Lending of Securities The Fund may lend portfolio securities to
broker/dealers or other institutional borrowers, but only when the borrower
pledges cash collateral to the Fund and agrees to maintain such so that it
amounts at all times to at least 100% of the value of the securities loaned.
Furthermore, the Fund may terminate such loans at any time, and must receive
reasonable interest on the collateral as well as dividends, interest, or
other distributions paid on the security during the loan period. Upon
expiration of the loan, the borrower of the securities will be obligated to
return to the Fund the same number and kind of securities as those loaned
together with duly executed stock powers. The Fund must be permitted to vote
the proxies if a material event affecting
2
<PAGE>
the value of the security is to occur. The Fund may pay reasonable fees in
connection with the loan, including reasonable fees to the Fund's Custodian
for its services. During the past fiscal year, the Fund did not loan any of
its portfolio securities.
Privately Issued Asset-Backed Securities and Collateralized
Mortgage-Backed Obligations ("CMO") The Fund may invest up to 5% of its
assets in asset-backed securities, which represent a participation in, or are
secured by and payable from a stream of payments generated by particular
assets, most often a pool of assets similar to one another, such as motor
vehicle and credit card receivables.
Collateralized mortgage obligations or "CMO's" are debt obligations
collateralized by mortgage loans or mortgage pass-through securities.
Typically, privately issued CMO's are collateralized by Ginnie Mae, Fannie
Mae or Freddie Mac Certificates, but also may be collateralized by whole
loans or private pass-throughs (such collateral collectively hereinafter
referred to as "Mortgage Assets"). Multiclass pass-through securities are
equity interests in a trust composed of Mortgage Assets. Unless the context
indicates otherwise, all references herein to CMO's include multiclass
pass-through securities. Payments of principal of and interest on the
Mortgage Assets, and any reinvestment income thereon, are the sources of
funds used to pay debt service on the CMO's or make scheduled distributions
on the multiclass pass-through securities.
In a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMO's, often referred to as a "tranche", is issued at a
specific fixed or floating coupon rate and has a stated maturity or final
distribution date. Principal prepayments on the Mortgage Assets may cause the
CMO's to be retired substantially earlier than their stated maturities or
final distribution dates. The principal of and interest on the Mortgage
Assets may be allocated among the several classes of a CMO in innumerable
ways. The Fund may also invest in, among others, parallel pay CMO's and
Planned Amortization Class CMO's ("PAC Bonds"). Parallel pay CMO's are
structured to provide payments of principal on each payment date to more than
one class. These simultaneous payments are taken into account in calculating
the stated maturity date or final distribution date of each class, which, as
with other CMO structures, must be retired earlier. PAC Bonds generally call
for payments of a specified amount of principal on each payment date.
Stripped mortgage-backed securities ("SMBS") are derivative multiclass
mortgage securities. SMBS may be issued by agencies or instrumentalities of
the U.S. Government, or by private originators of, or investors in, mortgage
loans, including savings and loan associations, mortgage banks, commercial
banks, investment banks and special purpose subsidiaries of the foregoing.
SMBS are structured with two or more classes of securities that receive
different proportions of the interest and principal distributions on a pool
of Mortgage Assets. A common type of SMBS will have at least one class
receiving only a small portion of the interest and a larger portion of the
principal from the Mortgage Assets, while the other classes will receive
primarily interest and only a small portion of the principal. In the most
extreme case, one class will receive all of the interest (the interest-only
or "IO" class), while the other class will receive all of the principal (the
principal-only or "PO" class). The yield to maturity on an IO class is
extremely sensitive to the rate of principal payments (including prepayments)
on the related underlying Mortgage Assets, and a rapid rate of principal
payments may have a material adverse effect on such security's yield to
maturity. If the underlying Mortgage Assets experience greater than
anticipated prepayments of principal, the Fund may fail to recoup fully its
initial investment in these securities.
Forward Foreign Currency Exchange Contracts
In order to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward foreign currency exchange
contracts ("forward currency contracts") for the purchase or sale of a
specified currency at a specified future date. Such contracts may involve the
purchase or sale of a foreign currency against the U.S. dollar or may involve
two foreign currencies. The Fund may enter into forward currency contracts
either with respect to specific transactions or with respect to the Fund's
portfolio positions.
PERFORMANCE INFORMATION
The Fund may, from time to time, include performance information in
advertisements or reports to shareholders or prospective investors.
Performance information in advertisements and sales literature may be
expressed as yield of a class and as total return of any class of the Fund.
Standardized quotations of average annual total return for Class A or
Class B shares will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in either Class A or Class B
shares over periods of 1, 5 and 10 years or up to the life of the class of
shares), calculated for each class separately pursuant to the following
formula: P(1+T)n = ERV (where P = a hypothetical initial payment of $1,000, T
= the average annual total return, n = the number of years, and ERV = the
ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period). All total return figures reflect the deduction of a
proportional share of each Class's expenses (on an annual basis), deduction
of the maximum initial sales load in the case of Class A shares and the
maximum contingent deferred sales charge applicable to a complete redemption
of the investment in the case of Class B shares, and assume that all
dividends and distributions are on Class A and Class B shares reinvested when
paid.
3
<PAGE>
The Fund may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar,
Inc. Additionally, the Fund may compare its performance results to other
investment or savings vehicles (such as certificates of deposit) and may
refer to results published in various publications such as Changing Times,
Forbes, Fortune, Money, Barrons, Business Week and Investor's Daily,
Stanger's Mutual Fund Monitor, The Stanger Register, Stanger's Investment
Adviser, The Wall Street Journal, The New York Times, Consumer Reports,
Registered Representative, Financial Planning, Financial Services Weekly,
Financial World, U.S. News and World Report, Standard & Poor's The Outlook,
and Personal Investor. The Fund may from time to time illustrate the benefits
of tax deferral by comparing taxable investments to investments made through
tax-deferred retirement plans. The total return may also be used to compare
the performance of the Fund against certain widely acknowledged outside
standards or indices for stock and bond market performance, such as the
Standard & Poor's 500 Stock Index (the "S&P 500"), Dow Jones Industrial
Average, Europe Australia Far East Index (EAFE), Consumer's Price Index,
Shearson Lehman Corporate Index and Shearson Lehman T-Bond Index. The S&P 500
is a commonly quoted market value-weighted and unmanaged index showing the
changes in the aggregate market value of 500 common stocks relative to the
base period 1941-43. The S&P 500 is composed almost entirely of common stocks
of companies listed on the New York Stock Exchange, although the common
stocks of a few companies listed on the American Stock Exchange or traded
over the counter are included. The 500 companies represented include 400
industrial, 60 transportation and 40 financial services concerns. The S&P 500
represents about 80% of the market value of all issues traded on the New York
Stock Exchange.
Advertisements, sales literature and other communications may contain
information about the Fund and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Fund
to respond quickly to changing market and economic conditions. From time to
time the Fund may include specific portfolio holdings or industries, such as
IBM or health care in such communications. To illustrate components of
overall performance, the Fund may separate is cumulative and average annual
returns into income and capital gains components; or cite separately as a
return figure the equity or bond portion of the Fund's portfolio; or compare
the Fund's equity or bond return future to well-known indices of market
performance, including, but not limited to: the S&P 500 Index, Dow Jones
Industrial Average, First Boston High Yield Index and Salomon Brothers
Corporate Bond and Government Bond Indices.
Quotations of yield for the Fund will be based on all investment income
per share earned during a particular 30-day period (including dividends and
interest), less expenses accrued during the period ("net investment income"),
and is computed by dividing net investment income by the value of a share on
the last day of the period according to the following formula:
Yield = 2[(a-b/cxd + 1)6-1]
Where a = dividends and interest earned during the period by the Fund,
b = expenses accrued for the period (net of any reimbursements),
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the
period.
For the period ended April 30, 1996, the yield of the Class A Shares and
Class B Shares was 3.59% and 3.02%, respectively.
For the 1, 5 and 10 year periods ended April 30, 1996, the average annual
total return of the Class A Shares was 13.39%, 10.64% and 10.81%,
respectively. For the one year ended April 30, 1996, and since inception
(January 3, 1992), for Class B Shares, the average annual total return was
13.14% and 9.38%, respectively. Performance information reflects only the
performance of a hypothetical investment in each class during the particular
time period on which the calculations are based. Performance information
should be considered in light of the Fund's investment objectives and
policies, characteristics and quality of the portfolio, and the market
condition during the given time period, and should not be considered as a
representation of what may be achieved in the future.
The Fund may also compute aggregate total return for specified periods
based on a hypothetical Class A or Class B account with an assumed initial
investment of $10,000. The aggregate total return is determined by dividing
the net asset value of this account at the end of the specified period by the
value of the initial investment and is expressed as a percentage. Calculation
of aggregate total return reflects payment of the Class A shares's maximum
sales charge of 4.75% and assumes reinvestment of all income dividends and
capital gain distributions during the period. Based on the foregoing, the
Class A share's aggregate cumulative total return quotation for the period
commencing September 7, 1940 and ending April 30, 1996 was 24.475%. Class B
aggregate cumulative total return quotation for the period commencing with
the offering of the Class B Shares on January 3, 1992 and ending April 30,
1996 was 46.46%.
The Fund also may quote annual, average annual and annualized total return
and aggregate total return performance data, for both classes of shares of
the Fund, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such
data will be computed as described above, except that (1) the rates of return
4
<PAGE>
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate
rate of return calculations.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities,
supervises their execution and negotiates brokerage commissions on behalf of
the Fund. It is the practice of the Adviser to seek the best prices and best
execution of orders and to negotiate brokerage commissions which in the
Adviser's opinion are reasonable in relation to the value of the brokerage
services provided by the executing broker. Brokers who have executed orders
for the Fund are asked to quote a fair commission for their services. If the
execution is satisfactory and if the requested rate approximates rates
currently being quoted by the other brokers selected by the Adviser, the rate
is deemed by the Adviser to be reasonable. Brokers may ask for higher rates
of commission if all or a portion of the securities involved in the
transaction are positioned by the broker, if the broker believes it has
brought the Fund an unusually favorable trading opportunity, or if the broker
regards its research services as being of exceptional value, and payment of
such commissions is authorized by the Adviser after the transaction has been
consummated. If the adviser more than occasionally differs with the broker's
appraisal of opportunity or value, the broker would not be selected to
execute trades in the future. The Adviser believes that the Fund benefits
with a securities industry comprised of many and diverse firms and that the
long-term interest of shareholders of the Fund is best served by its
brokerage policies which include paying a fair commission rather than seeking
to exploit its leverage to force the lowest possible commission rate. The
primary factors considered in determining the firms to which brokerage orders
are given are the Adviser's appraisal of: the firm's ability to execute the
order in the desired manner, the value of research services provided by the
firm, and the firm's attitude toward and interest in mutual funds in general
including the sale of mutual funds managed and sponsored by the Adviser. The
Adviser does not offer or promise to any broker an amount or percentage of
brokerage commissions as an inducement or reward for the sale of shares of
the Fund. Over-the-counter purchases and sales are transacted directly with
principal market-makers except in those circumstances where in the opinion of
the Adviser better prices and execution are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller
firms in general tend to provide information and interpretations on a smaller
scale, frequently with a regional emphasis. In addition, several firms
monitor federal, state, local and foreign political developments; many of the
brokers also provide access to outside consultants. The outside research
assistance is particularly useful to the Adviser's staff since the brokers as
a group tend to monitor a broader universe of securities and other matters
than the Adviser's staff can follow. In addition, it provides the Adviser
with a diverse perspective on financial markets. Research and investment
information is provided by these and other brokers at no cost to the Adviser
and is available for the benefit of other accounts advised by the Adviser and
its affiliates and not all of this information will be used in connection
with the Fund. While this information may be useful in varying degrees and
may tend to reduce the Adviser's expenses, it is not possible to estimate its
value and in the opinion of the Adviser it does not reduce the Adviser's
expenses in a determinable amount. The extent to which the Adviser makes use
of statistical, research and other services furnished by brokers is
considered by the Adviser in the allocation of brokerage business but there
is no formula by which such business is allocated. The Adviser does so in
accordance with its judgment of the best interest of the Funds and their
shareholders.
Purchases and sales of fixed-income securities will usually be principal
transactions. Such securities often will be purchased or sold from or to
dealers serving as market makers for the securities at a net price. The Fund
will also purchase such securities in underwritten offerings and will, on
occasion, purchase securities directly from the issuer. Generally,
fixed-income securities are traded on a net basis and do not involve
brokerage commissions. The cost of executing fixed-income securities
transactions consists primarily of dealer spreads and underwriting
commissions.
In purchasing and selling fixed-income securities, it is the policy of the
Fund to obtain the best results taking into account the dealer's general
execution and operational facilities, the type of transaction involved and
other factors, such as the dealer's risk in positioning the securities
involved. While the Adviser generally seeks reasonably competitive spreads or
commissions, the Fund will not necessarily pay the lowest spread or
commission available.
The Fund may, in circumstances in which two or more dealers are in a
position to offer comparable results, give preference to a dealer which has
provided statistical or other research services to the Fund. By allocating
transactions in this manner, the Adviser is able to supplement its research
and analysis with the views and information of other securities firms.
During the fiscal years ended April 30, 1994, 1995 and 1996, brokerage
commissions paid by the Fund totaled $817,287, $1,211,199 and $1,189,884,
respectively. None of such commissions was paid to a broker who was an
affiliated person of the Fund or an affiliated person of such a person or, to
the knowledge of the Fund, to a broker an affiliated person of which was an
affiliated person of the Fund or the Adviser. Total brokerage commissions
paid during the fiscal year ended April 30, 1996 included brokerage
commissions of $1,161,441 on portfolio transactions aggregating $783,712,327
executed by brokers who provided research and other statistical and factual
information.
5
<PAGE>
SERVICES OF THE ADVISER
The Adviser provides certain services and facilities required to carry on
the day-to-day operations of the Fund (for which it receives a management
fee) other than the costs of printing and mailing proxy materials, reports
and notices to shareholders; outside legal and auditing accounting services;
regulatory filing fees and expenses of printing the Fund's registration
statements (but the Underwriter purchases such copies of the Fund's
prospectuses and reports and communications to shareholders as it may require
for sales purposes); insurance expense; association membership dues;
brokerage fees; and taxes.
As compensation for its services, the Adviser receives a fee, which is
accrued daily against the value of the Fund's net assets and is paid monthly
by the Fund. The fee is computed at an annual rate of 0.70% of the Fund's
average daily net assets up to $1 billion, 0.65% of the Fund's average daily
net assets from $1 billion to $2 billion and 0.60% of the Fund's average
daily net assets in excess of $2 billion. For the fiscal years 1994, 1995 and
1996, the net management fees paid by the Fund to the Adviser were
$6,302,647, $6,338,744 and $6,253,253, respectively.
The Adviser has agreed that if, in any fiscal year, the aggregate expenses
of the Fund, exclusive of taxes, distribution fees, brokerage, interest and
(with the prior consent of any necessary state securities commissions)
extraordinary expenses, but including the management fee, exceed the most
restrictive expense limitations applicable to the Fund under state securities
laws or published regulations thereunder, the Adviser will refund to the Fund
the excess over such amount. Currently, the most restrictive of such
limitations would require the Adviser to reimburse the Fund to the extent
that in any fiscal year such aggregate expenses exceed 2.5% of the first
$30,000,000 of the average net assets and 2.0% of the next $70,000,000, of
the average net assets and 1.5% of any amount of the average net assets in
excess of $100,000,000.
The Adviser is a direct subsidiary of Phoenix Duff & Phelps Corporation.
Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life") owns a
majority interest in Phoenix Duff & Phelps Corporation.
Phoenix Home Life is a mutual insurance company engaged in the insurance
and investment businesses. Phoenix Home Life's principal place of business is
located at One American Row, Hartford, Connecticut, where the company manages
combined assets of approximately $13 billion through advisory accounts and
mutual funds. The adviser also acts as the investment adviser or manager for
Phoenix Multi-Sector Short Term Bond Fund, Phoenix California Tax Exempt
Bonds, Inc., Equity Opportunities Fund Series of Phoenix Strategic Equity
Series Fund, Phoenix Multi-Sector Fixed Income Fund, Inc. and the Phoenix
Worldwide Opportunities Fund. The Adviser currently has approximately $1.7
billion in assets under management. The Adviser has acted as an investment
adviser for over sixty years.
The Management Agreement was approved by the Trustees of the Fund on March
16, 1993, and by the shareholders of the Fund on May 13, 1993. The Management
Agreement will continue in effect from year to year if specifically approved
annually (a) by the Trustees of the Fund, including a majority of the
disinterested Trustees, or by (b) a majority of the outstanding voting
securities of the Fund as defined in the 1940 Act. Shareholders were asked to
approve the Management Agreement at a Special Meeting of Shareholders held on
May 7, 1993 due to a change in control of National which resulted in the
termination of the Management Agreement which was previously in effect. The
Management Agreement may be terminated without penalty at any time by a
similar vote upon 60 days' notice or by the adviser upon 60 days' written
notice and will automatically terminate in the event of its assignment as
defined in Section 2(a)(4) of the 1940 Act.
NET ASSET VALUE
The net asset value per share of each class of shares of the Fund will be
determined at the close of the general trading session of the New York Stock
Exchange (the "Exchange"), on each business day the Exchange is open for
regular trading. The net asset value per share of each class of shares of the
Fund is computed by dividing the value of the Fund's securities, plus any
cash and other assets (including dividends and interest accrued but not
collected) less all liabilities (including accrued expenses) attributable to
such class, by the number of shares of the class outstanding. See the Fund's
current Prospectus for more information.
HOW TO BUY SHARES
Shares may be purchased from investment dealers having sales agreements
with the Underwriter at the public offering price (the net asset value next
computed following receipt by State Street Bank and Trust Company of a
purchase application in proper form, plus the applicable sales charge). The
minimum initial purchase is $500 ($25 if using the bank draft investing
program designated "Investo-Matic") and the minimum subsequent investment is
$25. In the case of employee payroll deductions plans, organized group plans
and other benefit programs or arrangements offered by certain dealers, the
minimum initial investment may be fixed from time to time at such lesser
amounts as the adviser in its sole discretion may determine, and may in
certain cases be waived from time to time by the Adviser, in its sole
discretion. See the Fund's current Prospectus.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares of the Fund may be purchased from investment dealers at a price
equal to their net asset value per share, plus a sales charge which, at the
election of the purchaser, may be imposed either (i) at the time of the
purchase (the "initial sales charge alternative"), or (ii) on a contingent
deferred basis (the "deferred sales charge alternative").
6
<PAGE>
Class A Shares
An investor who elects the initial sales charge alternative acquires Class A
shares. Class A shares incur a sales charge when they are purchased and enjoy
the benefit of not being subject to any sales charge when they are redeemed.
Class A shares are subject to an ongoing distribution services fee at an
annual rate of up to 0.30% of the Fund's aggregate average daily net assets
attributable to the Class A shares. However, for the calendar year 1994, the
Underwriter has voluntarily agreed to limit the distribution services fee for
Class A Shares to 0.25%. In addition, certain purchases of Class A shares
qualify for reduced initial sales charges. See the Fund's current Prospectus.
Class B Shares
An investor who elects the deferred sales charge alternative acquires Class
B shares. Class B shares do not incur a sales charge when they are purchased,
but they are subject to a sales charge if they are redeemed within five years
of purchase. The deferred sales charge may be waived in connection with
certain qualifying redemptions. See the Fund's current Prospectus.
Class B shares are subject to an ongoing distribution services fee at an
annual rate of up to 1.00% of the Fund's aggregate average daily net assets
attributable to the Class B shares. Class B shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment
is made. The higher ongoing distribution services fee paid by Class B shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class
A shares. Class B shares will automatically convert to Class A shares eight
years after the end of the calendar month in which the shareholder's order to
purchase was accepted, in the circumstances and subject to the qualifications
described in the Fund's Prospectus. The purpose of the conversion feature is
to relieve the holders of the Class B shares that have been outstanding for a
period of time sufficient for the adviser and the Underwriter to have been
compensated for distribution expenses related to the Class B shares from most
of the burden of such distribution related expenses. See "Conversion
Feature," below.
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Fund, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the
Fund, the accumulated continuing distribution services fee and contingent
deferred sales charges on Class B shares prior to conversion would be less
than the initial sales charge and accumulated distribution services fee on
Class A shares purchased at the same time, and to what extent such
differential would be offset by the lower expenses attributable to Class A
shares.
Class A shares are subject to a lower distribution services fee and,
accordingly, pay correspondingly higher dividends, to the extent any
dividends are paid, per share. However, because initial sales charges are
deducted at the time of purchase, such investors would not have all their
funds invested initially and, therefore, would initially own fewer shares.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time might consider
purchasing Class A shares because the accumulated continuing distribution
charges on Class B shares may exceed the initial sales charge on Class A
shares during the life of the investment. Again, however, such investors must
weigh this consideration against the fact that, because of such initial sales
charges, not all their funds will be invested initially. However, other
investors might determine that it would be more advantageous to purchase
Class B shares to have all their funds invested initially, although remaining
subject to higher continuing distribution charges and, for a five-year
period, being subject to a contingent deferred sales charge.
The distribution expenses incurred by the Underwriter in connection with
the sale of the shares will be paid, in the case of Class A shares, from the
proceeds of the initial sales charge and the ongoing distribution services
fee and, in the case of Class B shares, from the proceeds of the ongoing
distribution services fee and the contingent deferred sales charge incurred
upon redemption within five years of purchase. Sales personnel of
broker-dealers distributing the Fund's shares may receive differing
compensation for selling Class A or Class B shares. Investors should
understand that the purpose and function of the contingent deferred sales
charge and ongoing distribution services fee with respect to the Class B
shares are the same as those of the initial sales charge and ongoing
distribution services fees with respect to the Class A shares.
Dividends paid by the Fund, if any, with respect to Class A and Class B
shares will be calculated in the same manner at the same time on the same
day, except that the higher distribution services fee and any incremental
transfer agency costs relating to Class B shares will be borne exclusively by
that class. See "Dividends, Distributions and Taxes."
The Trustees of the Fund have determined that currently no conflict of
interest exists between the Class A and Class B shares. On an ongoing basis,
the Trustees of the Fund, pursuant to their fiduciary duties under the 1940
Act and state laws, will seek to ensure that no such conflict arises.
Conversion Feature
Class B shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period
ending eight years after the end of the month in which the shares were
issued. At the end of this period, Class B shares will automatically convert
to Class A shares and will no longer be subject to the higher distribution
services fee. Such
7
<PAGE>
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge. The
purpose of the conversion feature is to relieve the holders of Class B shares
that have been outstanding for a period of time sufficient for the
Underwriter to have been compensated for distribution expenses related to the
Class B shares from most of the burden of such distribution-related expenses.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B shares
in a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B shares in the shareholder's Fund account
(other than those in the sub-account) convert to Class A, an equal pro rata
portion of the Class B shares in the sub-account will also convert to Class
A.
EXCHANGE PRIVILEGES
Subject to limitations, shareholders may exchange Class A or Class B
shares held in book-entry form for shares of the same class of other Phoenix
Funds, provided the following conditions are met: (1) the shares that will be
acquired in the exchange (the "Acquired Shares") are available for sale in
the shareholder's state of residence; (2) the Acquired Shares are the same
class as the shares to be surrendered (the "Exchanged Shares"); (3) the
Acquired Shares will be registered to the same shareholder account as the
Exchanged Shares; (4) the account value of the Fund whose shares are to be
acquired must equal or exceed the minimum initial investment amount required
by that Fund after the exchange is implemented; and (5) if a shareholder has
elected not to utilize the Telephone Exchange Privilege (see below), a
properly executed exchange request must be received by Equity Planning.
Subject to the above requirements for an exchange, a shareholder or
his/her registered representative may, by telephone or written notice, elect
to have Class A or Class B shares of the Fund exchanged for the same class of
shares of another Phoenix Fund automatically on a monthly, quarterly,
semi-annual or annual basis or may cancel the privilege ("Systematic
Exchange").
Shareholders who maintain an account balance in the Fund of at least
$5,000, or $2,000 for tax qualified retirement benefit plans (calculated on
the basis of the net asset value of the shares held in a single account), may
direct that shares of the Fund be automatically exchanged at predetermined
intervals for shares of the same class of another Phoenix Fund. If the
shareholder is participating in the Self Security program offered by Phoenix
Home Life, it is not necessary to maintain the above account balances in
order to use the Systematic Exchange Privilege.
Such exchanges will be executed upon the close of business on the 10th of
a month and if the 10th falls on a holiday or weekend, then at the close of
business on the next succeeding business day. The minimum initial and
subsequent amount that may be exchanged under the Systematic Exchange is $25.
Systematic Exchange forms are available from Equity Planning.
Exchanges will be based upon each Fund's net asset value per share next
computed following receipt of a properly executed exchange request, without
sales charge. On Class B share exchanges, the contingent deferred sales
charge schedule of the original shares purchased continues to apply.
The exchange of shares from one fund to another is treated as sale of the
Exchanged Shares and a purchase of the Acquired Shares for Federal income tax
purposes. The shareholder may, therefore, realize a taxable gain or loss. See
"Dividends, Distributions and Taxes" of the Prospectus for information
concerning the Federal income tax treatment of a disposition of shares. It is
the policy of the Adviser to discourage and prevent frequent trading by
shareholders among the Fund and other Phoenix Funds in response to market
fluctuations. The Fund reserves the right to terminate or modify its exchange
privileges at any time upon giving prominent notice to shareholders at least
60 days in advance.
Each Phoenix Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the prospectus of the fund
into which the exchange is to be made before any exchange requests are made.
REDEMPTION OF SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended
and payment therefor postponed during periods when the New York Stock
Exchange is closed, other than customary weekend and holiday closings, or if
permitted by rules of the Securities and Exchange Commission, during periods
when trading on the Exchange is restricted or during any emergency which
makes it impracticable for the Fund to dispose of its securities or to
determine fairly the value of its net assets or during any other period
permitted by order of the Securities and Exchange Commission for the
protection of investors. Furthermore, the Transfer Agent will not mail
redemption proceeds until checks received for shares purchased have cleared,
which may take up to 15 days, but payment will be forwarded immediately upon
demand. See the Fund's current Prospectus for further information.
Redemptions by Class B shareholders will be subject to the applicable
deferred sales charge, if any.
Each shareholder account in the Fund which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the
giving of not less than 60 days' written notice to the shareholder mailed to
the address of record. During the 60 day period the shareholder has the right
to add to the account to bring its value to $200 or more. See the Fund's
current Prospectus for more information.
8
<PAGE>
Telephone Redemption
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Fund's current Prospectus for
additional information.
Reinvestment Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinstatement of their investment at
net asset value. See the Fund's current Prospectus for more information and
conditions attached to the privilege.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to remain qualified as a regulated investment company
under certain provisions of the Code. Under such provisions, the Fund will
not be subject to Federal income tax on such part of its ordinary income and
net realized capital gains which it distributes to shareholders provided it
meets certain distribution requirements. To qualify for treatment as a
regulated investment company, the Fund generally must, among other things,
(a) derive in each taxable year at least 90% of its gross income from
dividends, interest payments with respect to security loans and gains from
the sale or disposition of stock or securities and certain other items (b)
derive less than 30% of its gross income each taxable year as gains (without
deduction for losses) from the sale or other disposition of securities held
for less than three months and (c) diversify its holdings so that, at the end
of each quarter of the taxable year (i) at least 50% of the market value of
the Fund's assets are represented by cash, U.S. Government securities,
securities of other regulated investment companies and other securities, with
such other securities of any one issuer limited for purposes of this
calculation to an amount not greater than 5% of the Fund's total assets and
10% of the outstanding voting securities of any one issuer and (ii) not more
than 25% of the value of its total assets is invested in the securities of
any one issuer (other than U.S. Government securities or the securities of
other regulated investment companies). If, in any taxable year, the Fund does
not qualify as a regulated investment company all of its taxable income will
be taxed to the Fund at corporate rates.
It is the Fund's policy to distribute to its shareholders at least 98% of
net investment taxable income due to the Code imposing a 4% nondeductible
excise tax on a regulated investment company, such as the Fund, if it does
not distribute to its shareholders during the calendar year an amount equal
to 98% of its net ordinary income, with certain adjustments, plus 98% of the
Fund's net capital gains for the 12-month period ending on October 31 of such
calendar year. In addition, an amount equal to any undistributed investment
company taxable income or capital gain net income from the previous reporting
year must also be distributed to avoid the excise tax. The excise tax is
imposed on the amount by which the regulated investment company does not meet
the foregoing distribution requirements. If the Fund has taxable income that
would be subject to the excise tax, the Fund intends to distribute such
income so as to avoid payment of the excise tax.
Under another provision of the Code, any dividend declared by the Fund to
shareholders of record in October, November or December of any year will be
deemed to have been received by, and will be taxable to shareholders as of
December 31, provided that the dividend is actually paid by the Fund in
January of the following year.
Under certain circumstances, the sales charge incurred in acquiring shares
of the Fund may not be taken into account in determining the gain or loss on
the disposition of those shares. This rule applies where shares of the Fund
are disposed of within 90 days after the date on which they were acquired and
new shares of a regulated investment company are acquired without a sales
charge or at a reduced sales charge. In that case, the gain or loss realized
on the disposition will be determined by excluding from the charge incurred
in acquiring those shares. This exclusion applies to the extent that the
otherwise applicable sales charge with respect to the newly acquired shares
is reduced as a result of the shareholder having incurred a sales charge
initially. The portion of the sales charge affected by this rule will be
treated as a sales charge paid for the new shares.
Distributions by the Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value of a share below a
shareholder's cost for the share, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by the Fund.
The price of shares purchased at that time may include the amount of the
forthcoming distribution, but the distribution generally would be taxable to
them.
Some shareholders may be subject to withholding of Federal income tax on
dividends and redemption payments from the Fund backup withholding at the
rate of 31%. Corporate shareholders and certain other shareholders specified
in the Code generally are exempt from such backup withholding. Generally,
shareholders subject to backup withholding will be (i) those for whom a
certified taxpayer identification number is not on file with the Fund, (ii)
those about whom notification has been received (either by the shareholder or
the Fund) from the Internal Revenue Service that they are subject to backup
withholding or (iii) those who, to the Fund's knowledge, have furnished an
incorrect taxpayer identification number. Generally, to avoid backup
withholding, an
9
<PAGE>
investor must, at the time an account is opened, certify under penalties of
perjury that the taxpayer identification number furnished is correct and that
he or she is not subject to backup withholding.
The Fund may invest in certain debt securities that are originally issued
or acquired at a discount. Special rules apply under the Code to the
recognition of income with respect to such debt securities. Under the special
rules, the Fund may recognize income for tax purposes without a corresponding
current receipt of cash. In addition, gain on a disposition of a debt
security subject to the special rules may be treated wholly or partially as
ordinary income, not capital gain.
The Fund intends to accrue dividend income for Federal income tax purposes
in accordance with the rules applicable to regulated investment companies. In
some cases, these rules may have the effect of accelerating (in comparison to
other recipients of the dividend) the time at which the dividend is taken
into account by the Fund as taxable income.
Transactions in options on stock indexes are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by the Fund
during a taxable year or held by the Fund at the close of its taxable year,
will be treated as if sold for their market value. Generally, 60% of any net
gain or loss recognized on the deemed sale, as well as 60% of the gain or
loss with respect to any actual termination (including expiration), will be
treated as long-term capital gain or loss and the remaining 40% will be
treated as short-term capital gain or loss.
In order to qualify under Part I of Subchapter M, the Fund may be
restricted from certain activities, including (i) writing of options on
securities which have been held less than three months, (ii) writing of
options which expire in less than three months, and (iii) effecting closing
purchase transactions with respect to options which have been written less
than three months prior to such transactions.
The Fund may be subject to tax on dividend or interest income received
from securities of non-U.S issuers withheld by a foreign country at the
source. The United States has entered into tax treaties with many foreign
countries which entitle the Fund to a reduced rate of tax or exemption from
tax on income. It is impossible to determine the effective rate of foreign
tax in advance since the amount of the Fund's assets to be invested within
various countries is not known. The Fund intends to operate so as to qualify
for treaty tax benefits where applicable. To the extent that the Fund is
liable for foreign income taxes withheld at the source, the Fund may operate
so as to meet the requirements of the Code to "pass through" to the Fund's
shareholders tax benefits attributable to foreign income taxes paid by the
Fund. If more than 50% of the value of the Fund's total assets at the close
of its taxable year is comprised of securities issued by foreign
corporations, the Fund may elect with the Internal Revenue Service to "pass
through" to the Fund's shareholders the amount of foreign income taxes paid
by the Fund. Pursuant to this election, shareholders will be required to (i)
include in gross income, even though no actually received, their respective
pro rata share of foreign taxes paid by the Fund; (ii) treat their pro rata
share of foreign taxes as paid by them; (iii) either deduct their pro rata
share of foreign taxes in computing their taxable income, or use such share
as foreign tax credit against U.S. income tax (but not both). No deduction
for foreign taxes may be claimed by a non-corporate shareholder who does not
itemize deductions. The Fund may meet the requirements to "pass through" to
its shareholders foreign income taxes paid, but there can be no assurance
that the Fund will be able to do so. Each shareholder will be notified within
60 days after the close of each taxable year of the Fund if the foreign taxes
paid by the Fund will "pass through" for that year, and, if so, the amount of
each shareholder's pro rata share (by country) or (i) the foreign taxes paid
and (ii) the Fund's gross income from foreign sources. Shareholders who are
not liable for federal income taxes will not be affected by such "pass
through" of foreign tax credits.
If the Fund invests in stocks of certain passive foreign investment
companies, the Fund may be subject to U.S. Federal income taxation on a
portion of the "excess distribution" with respect to, or gain from the
disposition of such stock. The tax would be determined by allocating such
distribution or gain ratably to each day of the Fund's holding period for the
stock. The distribution or gain so allocated to any taxable year of the
excess distribution or disposition, would be taxed to the Fund at the highest
ordinary income rate in effect for such year, and the tax would be further
increased by an interest charge to reflect the value of the tax deferral
deemed to have resulted from ownership of foreign company's stock. Any amount
of distribution or gain allocated to the taxable year of the distribution or
disposition would be included in the Fund's investment Company taxable income
and, accordingly, would not be taxable to the Fund to the extend distributed
by the Fund as a dividend to its shareholder.
The foregoing is a general summary of the applicable provisions of the
Code and Treasury Regulations presently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and the
Treasury Regulations promulgated thereunder. The Code and these Treasury
Regulations are subject to change by legislative or administrative action
either prospectively or retroactively. Distributions and the transactions
referred to above may be subject to state and local income tax, and the
treatment thereof may differ from the federal treatment discussed herein.
Shareholders are advised to consult with their tax advisor or attorney.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund and other Phoenix Funds may be offered in connection
with employer-sponsored 401(k) plans. National and its affiliates may provide
administrative services to these plans and to their participants, in addition
to the services that National
10
<PAGE>
and its affiliates provide to the Phoenix Funds, and receive compensation
therefor. For information on the terms and conditions applicable to employee
participation in such plans, including information on applicable plan
administrative charges and expenses, prospective investors should consult the
plan documentation and employee enrollment information which is available
from participating employers.
THE DISTRIBUTOR
Pursuant to an Underwriting Agreement with the Fund, Phoenix Equity
Planning Corporation (the "Underwriter"), an indirect less than wholly-owned
subsidiary of Phoenix Home Life and an affiliate of National, serves as
underwriter for the Fund. The address of the Underwriter is P.O. Box 2200,
100 Bright Meadow Blvd., Enfield, Connecticut 06083-2200. As such, the
Underwriter conducts a continuous offering pursuant to a "best efforts"
arrangement requiring the Underwriter to take and pay for only such
securities as may be sold to the public. During the fiscal years 1994, 1995
and 1996, purchasers of the Fund shares paid aggregate sales charges of
$11,778,591, $3,664,991 and $2,500,197, respectively, of which the principal
Underwriter of the Fund received net commissions of $3,066,819, $2,230,339
and $1,910,302, respectively, for its services, the balance being paid to
dealers. The fees were used to compensate sales and services person for sell
shares of the Fund and for providing services to shareholders. In addition,
the fees were used to compensate the Underwriter for sales and promotional
activities.
The Underwriting Agreement may be terminated at any time on not more than
60 days written notice, without payment of a penalty, by the Underwriter, by
vote of a majority of the outstanding voting securities of the Fund, or by
vote of a majority of the Fund's Trustees who are not "interested persons" of
the Fund and who have no direct or indirect financial interest in the
operation of the Distribution Plan or in any related agreements. The
Underwriting Agreement will terminate automatically in the event of its
assignment.
Dealers with whom the Underwriter has entered into sales agreements
receive sales charges in accordance with the commission table set forth in
the Prospectus. The Underwriter may from time to time pay, from its own
resources or pursuant to the Plan of Distribution described below, a bonus or
other incentive to dealers (other than the Underwriter) which employ a
registered representative who sells a minimum dollar amount of the shares of
the Fund during a specific period of time. Such bonus or other incentive may
take the form of payment for travel expenses, including lodging, incurred in
connection with trips taken by qualifying registered representatives and
members of their families to places within or without the United States or
other bonuses such as gift certificates or the cash equivalent of such
bonuses. The Underwriter may, from time to time, reallow the entire portion
of the sales charge which it normally retains to individual selling dealers.
However, such additional reallowance generally will be made only when the
selling dealer commits to substantial marketing support such as internal
wholesaling through dedicated personnel, internal communications and mass
mailings.
PLANS OF DISTRIBUTION
The Fund has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each class of shares of the Fund (the "Class A Plan", the "Class
B Plan", and collectively the "Plans"). The Plans permit the Fund to
reimburse the Underwriter for expenses incurred in connection with activities
intended to promote the sale of shares of each class of shares of the Fund.
For fiscal year 1997, the Underwriter has voluntarily agreed to limit the
Rule 12b-1 fee for Class A Shares to 0.25%.
Pursuant to the Class A Plan, the Fund may reimburse the Underwriter for
actual expenses of the Underwriter up to .30% of the average daily net assets
of the Fund's Class A shares. Under the Class B Plan, the Fund may reimburse
the Underwriter monthly for actual expense of the Underwriter up to 1.00% of
the average daily net assets of the Fund's Class B shares. Expenditures under
the Plans shall consist of: (i) commissions to sales personnel for selling
shares of the Fund (including underwriting fees and financing expenses
incurred in connection with the sale of Class B shares); (ii) compensation,
sales incentives and payments to sales, marketing and service personnel;
(iii) payments to broker-dealers and other financial institutions which have
entered into agreements with the Underwriter in the form of the Dealer
Agreement for Phoenix Funds for services rendered in connection with the sale
and distribution of shares of the Fund; (iv) payment of expenses incurred in
sales and promotional activities, including advertising expenditures related
to the Fund; (v) the costs of preparing and distributing promotional
materials; (vi) the cost of printing the Fund's Prospectus and Statement of
Additional Information for distribution to potential investors; and (vii)
such other similar services that the Trustees of the Fund determines are
reasonably calculated to result in the sale of shares of the Fund; provided
however, a portion of such amount paid to the Distributor, which portion
shall be equal to or less than 0.25% annually of the average daily net assets
of the Fund shares may be paid for reimbursing the costs of providing
services to the shareholders, including assistance in connection with
inquiries related to shareholder accounts (the "Service Fee").
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Underwriter,
such as services to the Fund's shareholders; or services providing the Fund
with more efficient methods of offering shares to coherent groups of clients,
members or prospects of a participant; or services permitting bulking of
purchases or sales, or transmission of such purchases or sales by
computerized tape or other electronic equipment; or other processing.
11
<PAGE>
The fee received by the Underwriter under the early years of the Plans is
not likely to reimburse the Underwriter for the total distribution expenses
it will actually incur as a result of the Fund having fewer assets and the
Underwriter incurring greater promotional expenses during the start-up phase.
No amounts paid or payable by the Fund under the Plan for Class A shares may
be used to pay for, or reimburse payment for, sales or promotional services
or activities unless such payment or reimbursement takes place prior to the
earliest of (a) the last day of the one year period commencing on the last
day of the calendar quarter during which the specific service or activity was
performed, or (b) the last day of the one year period commencing on the last
day of the calendar quarter during which payment for the services or activity
was made by a third party on behalf of the Fund. If the Plans are terminated
in accordance with their terms, the obligations of the Fund to make payments
to the Underwriter pursuant to the Plans will cease and the Fund will not be
required to make any payments past the date on which each Plan terminates.
For the fiscal year ended April 30, 1996, the Fund paid Rule 12b-1 Fees in
the amount of $5,192,096 of which the principal underwriter received
$3,246,040 and unaffiliated broker-dealers received $1,946,056. The Rule
12b-1 payments for the fiscal year ended April 30, 1996 were used for (1)
compensation of dealers ($3,688,236), (2) compensation to sales and
shareholder services personnel ($1,081,310), (3) marketing material
($201,391), and (4) promotion expenses ($221,159).
On a quarterly basis, the Fund's Trustees review a report on expenditures
under the Plans and the purposes for which expenditures were made. The
Trustees conduct an additional, more extensive review annually in determining
whether the Plans will be continued. By its terms, continuation of the Plans
from year to year is contingent on annual approval by a majority of the
Fund's Trustees and by a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the Plans or any related agreements
(the "Plan Trustees"). The Plans provide that they may not be amended to
increase materially the costs which the Fund may bear pursuant to the Plans
without approval of the shareholders of the Fund and that other material
amendments to the Plans must be approved by a majority of the Plan Trustees
by vote cast in person at a meeting called for the purpose of considering
such amendments. The Plans further provides that while it is in effect, the
selection and nomination of Trustees who are not "interested persons" shall
be committed to the discretion of the Trustees who are not "interested
persons". The Plans may be terminated at any time by vote of a majority of
the Plan Trustees or a majority of the outstanding shares of the Fund.
The National Association of Securities Dealers ("NASD"), recently approved
certain amendments to the NASD's mutual fund maximum sales charge rule. The
amendments would, under certain circumstances, regard distribution fees to be
asset-based sales charges subject to NASD sales load limits. An amendment to
the NASD's maximum sales charge rule may require the Trustees to amend the
Plans.
12
<PAGE>
TRUSTEES AND OFFICERS
The following table set forth information concerning the Trustees and
executive officers of the Fund, including their principal occupations during
the past five years. Unless otherwise noted, the address of each executive
officer and Trustee is One American Row, Hartford, Connecticut, 06115. On
November 15, 1996, the Trustees voted to increase the number of Trustees to
fourteen and appoint Francis E. Jeffries, Everett L. Morris and Calvin J.
Pedersen to fill the vacancies caused by the increase. The elected and
appointed Trustees and executive officers are listed below.
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- -------------- ------------------------------------------------------------
<S> <C> <C>
C. Duane Blinn (68) Trustee Partner in the law firm of Day, Berry & Howard.
Day, Berry & Howard Director/Trustee, Phoenix Funds (1980-present). Trustee,
CityPlace Phoenix Duff & Phelps Institutional Mutual Funds
Hartford, CT 06103 (1996-present). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Robert Chesek (62) Trustee Trustee/Director, Phoenix Funds (1981-present) and
49 Old Post Road Chairman (1989-1994). Director/Trustee, the National
Wethersfield, CT 06109 Affiliated Investment Companies (until 1993). Vice
President, Common Stock, Phoenix Home Life Mutual
Insurance Company (1980-1994). Trustee, Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present).
E. Virgil Conway (67) Trustee Trustee/Director, Consolidated Edison Company of New York,
9 Rittenhouse Road Inc. (1970-present), Pace University (1978-present),
Bronxville, NY 10708 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) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr.,
Foundation (1995-present), and The Harlem Youth
Development Foundation (1987-present). Chairman,
Metropolitan Transportation Authority (1992-present).
Chairman, Audit Committee of the City of New York
(1981-present). Director/Trustee, the National Affiliated
Investment Companies (until 1993). Director/Trustee,
Phoenix Funds (1993-present). Trustee, Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present).
Director, Duff & Phelps Utilities Tax-Free Income Inc. and
Duff & Phelps Utility and Corporate Bond Trust Inc.
(1995-present). Director, Accuhealth (1994-present),
Trism, Inc. (1994-present), Realty Foundation of New York
(1972-present) and Chairman, New York Housing Partnership
Development Corp. (1981-present). Advisory Director, Fund
Directions (1993-present).
Harry Dalzell-Payne (67) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
330 East 39th Street Phoenix Duff & Phelps Institutional Mutual Funds (1996 to
Apartment 29G present). Director, Farragut Mortgage Co., Inc.
New York, NY 10022 (1991-1994). Director/Trustee, the National Affiliated
Investment Companies (1983-1993). Formerly a Major General
of the British Army.
13
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- -------------- ------------------------------------------------------------
*Francis E. Jeffries (65) Trustee Director and Chairman of the Board, Phoenix Duff & Phelps
Phoenix Duff & Phelps Corporation (1995-present). Director/Trustee, Phoenix
Corporation Funds (1995-present). Trustee, Phoenix Duff & Phelps
55 East Monroe Street Institutional Mutual Funds (1996-present). Director, Duff
Suite 3600 & Phelps Utilities Income Fund (1987- present), Duff &
Chicago, IL 60603 Phelps Utilities Tax-Free Income Inc. (1991-present), Duff
& Phelps Utility and Corporate Bond Trust Inc.
(1993-present) and The Empire District Electric Company
(1984-present). Director (1989-1995), Chairman of the
Board (1993-1995), President (1989- 1993), and Chief
Executive Officer (1989-1995), Duff & Phelps Corporation.
Leroy Keith, Jr. (57) Trustee Chairman and Chief Executive Officer, Carson Products
Chairman and Chief Company (1995-present). Director/Trustee, Phoenix Funds
Executive Officer (1980-present). Trustee, Phoenix Duff & Phelps
Carson Products Company Institutional Mutual Funds (1996-present). Director,
64 Ross Road Equifax Corp. (1991-present), and Keystone International
Savannah, GA 30750 Fund, Inc. (1989-present). Trustee, Keystone Liquid Trust,
Keystone Tax Exempt Trust, Keystone Tax Free Fund, Master
Reserves Tax Free Trust, and Master Reserves Trust.
Director/Trustee, the National Affiliated Investment
Companies (until 1993). Director, Blue Cross/Blue Shield
(1989-1993) and First Union Bank of Georgia (1989-1993).
President, Morehouse College (1987-1994). Chairman and
Chief Executive Officer, Keith Ventures (1992-1995).
*Philip R. McLoughlin (49) Trustee and Director, Vice Chairman and Chief Executive Officer,
One American Row President Phoenix Duff & Phelps Corporation (1995-present). Director
Hartford, CT 06102 (1994-present) and Executive Vice President, Investments
(1987-present), Phoenix Home Life Mutual Insurance
Company. Director/Trustee and President, Phoenix Funds
(1989-present). Trustee, Phoenix Duff & Phelps
Institutional Mutual Funds (1996-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), Phoenix Re Corporation (New
York) (1985-1992), World Trust Fund (1991-present).
Director/Trustee, the National Affiliated Investment
Companies (until 1993). Director, Chairman and Chief
Executive Officer, National Securities & Research
Corporation (1993-present) and Director and President,
Phoenix Securities Group, Inc. (1993- present). Director
(1992-present) and President, W.S. Griffith & Co., Inc.
(1992-1994) and Director (1992- present) and President
(1992-1994) Townsend Financial Advisers, Inc. (1992-1994).
Director and Vice President, PM Holdings, Inc.
(1985-present).
14
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- -------------- ------------------------------------------------------------
Everett L. Morris (68) Trustee Vice President, W.H. Reaves and Company (1993- present).
164 Laird Road Director/Trustee, Phoenix Funds (1995- present). Trustee,
Colts Neck, NJ 07722 Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present), and Trustee, Duff & Phelps Mutual Funds
(1994-present). Director, Duff & Phelps Utilities Tax-Free
Income Inc. (1991- present), Duff & Phelps Utility and
Corporate Bond Trust Inc. (1993-present), and Public
Service Enterprise Group, Incorporated (1986-1993).
President and Chief Operating Officer, Enterprise
Diversified Holdings Incorporated (1989-1993). Senior
Executive Vice President and Chief Financial Officer,
Public Service Electric and Gas Company (1986-1992).
Director, First Fidelity Bank, N.A., N.J. (1984-1991).
James M. Oates (50) Trustee Director, Phoenix Duff & Phelps Corporation (1995- present).
Managing Director Director/Trustee, Phoenix Funds (1987- present). Trustee,
The Wydown Group Phoenix Duff & Phelps Institutional Mutual Funds
50 Congress Street (1996-present). Director, Govett Worldwide Opportunity
Suite 1000 Funds, Inc. (1991-present), Blue Cross and Blue Shield of
Boston, MA 02109 New Hampshire (1994-present), Investors Financial Services
Corporation (1995-present), Investors Bank & Trust
Corporation (1995-present) and Plymouth Rubber Co.
(1995-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
Phoenix Duff & Phelps (1995-present). Director/Trustee, Phoenix Funds
Corporation (1995-present). Trustee, Phoenix Duff & Phelps
55 East Monroe Street Institutional Mutual Funds (1996-present). President and
Suite 3600 Chief Executive Officer, Duff & Phelps Utilities Tax-Free
Chicago, IL 60603 Income Inc. (1995-present), Duff & Phelps Utilities Income
Fund (1995-present), and Duff & Phelps Utility and
Corporate Bond Trust Inc. (1995-present). Trustee,
Chairman and Chief Executive Officer, Phoenix Duff &
Phelps Mutual Funds (since inception). Director
(1986-1995), President (1993-1995) and Executive Vice
President (1992-1993), Duff & Phelps Corporation.
Philip R. Reynolds (69) Trustee Director/Trustee, Phoenix Funds (1984-present). Director,
43 Montclair Drive Vestaur Securities, Inc. (1972-present). Trustee and
West Hartford, CT 06107 Treasurer, J. Walton Bissell Foundation, Inc.
(1988-present). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
15
<PAGE>
Herbert Roth, Jr. (67) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix Duff & Phelps Institutional Mutual Funds
P.O. Box 909 (1996-present). Director, Boston Edison Company
Sherborn, MA 01770 (1978-present), Phoenix Home Life Mutual Insurance Company
(1972-present), Landauer, Inc. (medical services)
(1970-present), Tech Ops./Sevcon, Inc. (electronic
controllers) (1987-present), Key Energy Group (oil rig
service) (1988-1993), and Mark IV Industries (diversified
manufacturer) (1985- present). Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Richard E. Segerson (50) Trustee Director/Trustee, Phoenix Funds, (1993-present). Trustee,
102 Valley Road Phoenix Duff & Phelps Institutional Mutual Funds
New Canaan, CT 06840 (1996-present). Managing Director, Mullin Associates
(1993-present). Vice President and General Manager, Coats
& Clark, Inc. (previously Tootal American, Inc.)
(1991-1993). Director/Trustee, the National Affiliated
Investment Companies (1984-1993).
Lowell P. Weicker, Jr. (65) Trustee Trustee/Director, the Phoenix Funds (1995-present).
Dresing Lierman Weicker Trustee, Phoenix Duff & Phelps Institutional Mutual Funds
6931 Arlington Road (1996-present). Chairman, Dresing, Lierman, Weicker
Suite 501 (1995-present). Director, UST Inc. (1995- present) and
Bethesda, MD 20814 HPSC Inc. (1995-present). Governor of the State of
Connecticut (1991-1995). President and Chief Executive
Officer, Research! America (1989-1990).
Michael E. Haylon (38) Executive Executive Vice President--Investments, Phoenix Duff &
Vice Phelps Corporation (1995-present). Executive Vice
President President, Phoenix Funds (1993-present). Director
(1994-present) and President (1995-present), Executive
Vice President (1994-1995), Vice President (1991-1994),
Phoenix Investment Counsel, Inc. Director and Executive
Vice President (1994- present), Vice President
(1993-1994), National Securities & Research Corporation.
Director, Phoenix Equity Planning Corporation
(1995-present). Vice President, Phoenix Duff & Phelps
Institutional Mutual Funds. Senior Vice President,
Securities Investments, Phoenix Home Life Mutual Insurance
Company (1993-1995). Various other positions with Phoenix
Home Life Mutual Insurance Company (1990-1993).
16
<PAGE>
William J. Newman (57) Senior Vice Executive Vice President, Phoenix Investment Counsel, Inc.
President (1995-present). Senior Vice President, National Securities
& Research Corporation (1995- present), Phoenix Equity
Planning Corporation (1995-present), Phoenix Strategic
Equity Series Fund (1996-present), The Phoenix Edge Series
Fund (1995-present), Phoenix Multi-Portfolio Fund (1995-
present), Phoenix Income and Growth Fund (1996- present),
Phoenix Series Fund (1996-present), Phoenix Total Return
Fund, Inc. (1996-present) and Phoenix Worldwide
Opportunities Fund (1996- present). Vice President, Common
Stock and Chief Investment Strategist, Phoenix Home Life
Mutual Insurance Company (April, 1995-November, 1995).
Chief Investment Strategist, Kidder, Peabody Co., Inc.
(1993-1994). Managing Director, Equities, Bankers Trust
Company (1991-1993). Managing Director, Equities, McKay
Shield (1988-1990).
David R. Pepin (52) Executive Executive Vice President, Phoenix Funds (1996- present).
Vice Executive Vice President and General Manager, Mutual Fund
President Marketing and Operations, Phoenix Duff & Phelps
Corporation (1995-present). Managing Director,
Phoenix-Aberdeen International Advisors, LLC
(1996-present). Director and Executive Vice President,
Phoenix Investment Counsel, Inc. and Phoenix Equity
Planning Corp. (1996-present). Various positions with
Phoenix Home Life Mutual Insurance Company (1994-1995).
Vice President and General Manager, Finance and Health,
Digital Equipment Corporation (1980-1994).
John M. Hamlin (38) Vice Portfolio Manager, Common Stock, Phoenix Home Life Mutual
President Insurance Company (1989-present). Vice President, Phoenix
Income and Growth Fund (1993- present).
James M. Dolan (47) Vice Vice President and Compliance Officer (1994-present), and
100 Bright Meadow Blvd. President Assistant Secretary (1981-present), Phoenix Equity
P. O. Box 2200 Planning Corporation. Vice President, Phoenix Funds
Enfield, CT 06083-2200 (1989-present) and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Vice President (1991-
present), Assistant Clerk and Assistant Secretary
(1982-present), Phoenix Investment Counsel, Inc., Vice
President and Chief Compliance Officer (1994-present),
Phoenix Realty Advisors, Inc. and Chief Compliance Officer
(1995-present), Phoenix Realty Securities, Inc. Assistant
Vice President (1993-1994), Vice President and Compliance
Officer, Assistant Secretary, National Securities &
Research Corporation (1994-present). Vice President, the
National Affiliated Investment Companies (until 1993).
Various other positions with Phoenix Equity Planning
Corporation (1978-1994).
17
<PAGE>
William R. Moyer (52) Vice Senior Vice President and Chief Financial Officer, Phoenix
100 Bright Meadow Blvd. President Duff & Phelps Corporation (1995-present). Senior Vice
P. O. Box 2200 President, Finance (1990-present) and Treasurer, Phoenix
Enfield, CT 06083-2200 Equity Planning Corporation (1994-present), and Phoenix
Investment Counsel, Inc. Vice President, Phoenix Funds
(1990-present). Senior Vice President, Finance, PHL Mutual
Funds Holdings, Inc. (1993-present), National Securities &
Research Corporation (1993-present). Senior Vice President
and Chief Financial Officer, W. S. Griffith & Co., Inc.
(1992-present) and Townsend Financial Advisers, Inc.
(1993-present). Vice President, the National Affiliated
Investment Companies (until 1993). Senior Manager, Price
Waterhouse (1983- 1990). Vice President, Investment
Products Finance, Phoenix Home Life Mutual Insurance
Company (1990-1995).
Leonard J. Saltiel (42) Vice Senior Vice President, Phoenix Equity Planning Corporation
President (1994-present). Vice President, Phoenix Funds
(1994-present), National Securities & Research Corporation
(1994-present), and Phoenix Duff & Phelps Institutional
Mutual Funds (1996- present). Vice President, Investment
Operations, Phoenix Home Life Mutual Insurance Company
(1994-1995). Various positions with Home Life Insurance
Company and Phoenix Home Life Mutual Insurance Company
(1987-1994).
G. Jeffrey Bohne (48) Secretary Vice President and General Manager, Phoenix Home Life
101 Munson St. Mutual Insurance Company (1993-present). Vice President,
Greenfield, MA 03101 Transfer Agent Operations, Phoenix Equity Planning
Corporation (1993-present). Secretary, the Phoenix Funds,
(1993-present). Vice President, Home Life Insurance
Company (1984-1992).
Nancy G. Curtiss (43) Treasurer Treasurer, Phoenix Funds (1994-present) and Phoenix Duff &
Phelps Institutional Mutual Funds (1996- present). Vice
President, Fund Accounting, Phoenix Equity Planning
Corporation (1994-present). Second Vice President and
Treasurer, Fund Accounts, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions with
Phoenix Home Life Mutual Insurance Company (1987-1994).
</TABLE>
- -----------------
*Indicates that the Trustee is an "interested person" of the Trust within the
meaning of the definition set forth in Section 2(a)(19) of the Investment
Company Act of 1940.
For services rendered to the Fund for the fiscal year ended April 30,
1996, the Trustees receive aggregate remuneration of $20,300. For services on
the Boards of Directors/Trustees of the Phoenix Funds, each Trustee who is
not a full-time employee of the Adviser or any of its affiliates currently
receives a retainer at the annual rate of $36,000 and a fee of $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 a fee of $2,000 per
joint Audit Committee meeting attended. Each Trustee who serves on the
Nominating Committee receives a retainer at the annual rate of $1,000 and a
fee of $1,000 per joint Nominating Committee meeting attended. The foregoing
fees do not include the reimbursement of expenses incurred in connection with
meeting attendance. Officers and interested Trustees of the Fund are
compensated for their services by the Adviser and receive no compensation
from the Fund.
18
<PAGE>
For the Fund's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits Estimated From Fund and
Accrued as Annual Fund Complex
Aggregate Part Benefits (10 Funds)
Compensation of Fund Upon Paid to
Name From Fund Expenses Retirement Trustees
- --------------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
C. Duane Blinn $1,960* $50,250
Robert Chesek $ 1,780 $45,750
E. Virgil Conway $ 2,200 $67,750
Harry Dalzell-Payne $ 1,840 None None $47,250
Francis E. Jeffries $ 0 for any for any $ 0
Leroy Keith, Jr. $ 1,760 Trustee Trustee $45,250
Philip R. McLoughlin $ 0 $ 0
Everett L. Morris $ 440 $40,750
James M. Oates $ 2,120 $54,250
Calvin J. Pedersen $ 0 $ 0
Philip R. Reynolds $ 1,840 $47,250
Herbert Roth, Jr. $ 2,320 $50,250
Richard E. Segerson $ 2,120 $54,250
Lowell P. Weicker, Jr. $ 1,920 $49,250
</TABLE>
*This compensation (and the earnings thereon) was deferred pursuant to the
Trustees' Deferred Compensation Plan.
On April 30, 1996, the Trustees and officers of the Fund beneficially
owned less than 1% of the outstanding shares of the Fund.
OTHER INFORMATION
Independent Accountants
Price Waterhouse LLP has been selected as the independent accountants for
the Fund. Price Waterhouse LLP audits the Fund's annual financial statements
and expresses an opinion thereon.
Custodian and Transfer Agent
State Street Bank and Trust Company, serves as custodian of the Fund's
assets (the "Custodian") and, Equity Planning acts as Transfer Agent for the
Fund (the "Transfer Agent").
Reports to Shareholders
The fiscal year of the Fund ends on April 30th. The Fund will send financial
statements to its shareholders at least semi-annually. An annual report
containing financial statements audited by the Fund's independent
accountants, will be sent to shareholders each year.
Financial Statements
The Financial Statements for the fiscal year ended April 30, 1996 appearing
in the Fund's 1996 Annual Report to Shareholders, are incorporated herein by
reference.
19
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
INVESTMENTS AT APRIL 30, 1996
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
-------- ------- -------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--8.5%
U.S. Treasury Notes--5.1%
U.S. Treasury Notes 7.375%, '97 AAA $ 5,000 $ 5,100,900
U.S. Treasury Notes 5.25%, '98 AAA 5,000 4,910,350
U.S. Treasury Notes 5%, '99 AAA 19,700 19,109,000
U.S. Treasury Notes 6.375%, '01 AAA 10,000 9,970,100
U.S. Treasury Notes
5.625%, '06(h) AAA 6,700 6,210,063
U.S. Treasury Notes 6%, '26 AAA 100 88,906
----------
45,389,319
----------
Agency Mortgage-Backed Securities--3.4%
GNMA 6.50%, '23-'24 AAA 32,334 30,313,648
----------
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $76,959,686) 75,702,967
----------
MUNICIPAL BONDS--2.4%
Alabama--0.1%
Alabama Agriculture/Mechanical
Univ. 5.50%, '20 AAA 800 755,832
----------
California--1.9%
Kern County Pension Oblig.
Taxable 7.26%, '14 AAA 4,350 4,144,071
Long Beach Pension
Oblig. Taxable 6.87%, '06 AAA 3,000 2,903,850
Sacramento County 95-A
Taxable 6.625%, '06 AAA 3,400 3,245,912
San Bernardino County Oblig.
Rev Tax 6.87%, '08 AAA 1,335 1,281,333
San Bernardino County Oblig.
Rev. Tax 6.94%, '09 AAA 3,625 3,479,021
Ventura County Pension
Taxable 6.54%, '05 AAA 2,200 2,100,208
----------
17,154,395
----------
Michigan--0.2%
Michigan Public Power Agency
Sinker 5.25%, '18 AAA 2,060 1,875,939
----------
South Carolina--0.2%
South Carolina Public Service
Series C 5%, '25 AAA 2,000 1,727,680
----------
TOTAL MUNICIPAL BONDS
(Identified cost $22,436,545) 21,513,846
----------
CONVERTIBLE BONDS--12.6%
Airlines--0.3%
Continental Airlines Cv. 144A
6.75%, '06 (b) CCC 2,000 2,202,500
----------
Conglomerates--1.6%
Hanson America, Inc. Cv. 144A
2.39%, '01 (b) A+ 18,200 14,423,500
----------
Electrical Equipment--0.5%
General Signal Corp. Cv.
5.75%, '02 A- 4,000 4,270,000
----------
Entertainment, Leisure & Gaming--2.8%
Comcast Corp. Cv. 1.125%, '07 B+ $ 19,650 $ 9,481,125
Comcast Corp. Cv. SIRENS 3.375%,
'05 (e) B+ 7,500 6,862,500
IMAX Corp. Cv. 144A 5.75%, '03
(b) B- 2,000 1,985,000
Time Warner, Inc. Cv. 0%, '13 BBB- 7,500 3,150,000
Turner Broadcasting Cv. 144A 0%,
'07 (b) BB- 8,000 3,830,000
----------
25,308,625
----------
Food--1.4%
Grand Metropolitan PLC Cv. 144A
6.50%, '00 (b) A+ 10,750 12,201,250
----------
Healthcare--Diversified--0.6%
Roche Holdings, Inc. Cv. 144A 0%,
'10 (b) NR 4,000 1,765,000
Sandoz Capital BVI LTD Cv. 144A
2%, '02 (b) NR 3,500 3,736,250
----------
5,501,250
----------
Healthcare--Drugs--0.3%
Chiron Corp. Cv. 144A
1.90%, '00 (b) BBB+ 2,500 2,375,000
---------
Hospital Management & Services--0.3%
PHP Healthcare Cv. 144A 6.50%,
'02 (b) B- 500 649,375
Tenet Healthcare Cv. 6%, '05 B+ 1,500 1,627,500
----------
2,276,875
----------
Insurance--0.1%
Chubb Corp. Cv. 6%, '98 AA 1,000 1,160,000
----------
Metals & Mining--0.5%
Molten Metal Technology Cv. 144A
5.50%, '06 (b) NR 4,750 4,850,937
----------
Natural Gas--1.3%
Apache Corp. Cv. 144A 6%, '02 (b) BBB- 4,000 4,455,000
Consolidated Natural Gas Co. Cv.
7.25%, '15 A+ 5,300 5,545,125
Cross Timbers Cv. 5.25%, '03 B 1,750 1,721,563
----------
11,721,688
----------
Office & Business Equipment--0.5%
Conner Peripherals
Cv. 6.50%, '02 BB+ 4,000 4,505,000
----------
Oil--0.6%
Pogo Producing Co. Cv. 5.50%, '04 B 3,000 5,100,000
----------
REITS--0.9%
Health Care Property, Inc. Cv.
144A 6%, '00 (b) BBB 1,500 1,462,500
Liberty Property Trust Cv. 8%,
'01 B(d) 6,000 6,270,000
----------
7,732,500
----------
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
-------- ------- -------------
<S> <C> <C> <C>
Retail--Drug--0.5%
Rite Aid Corp. Cv. 0%, '06 BBB+ $ 8,500 $ 4,483,750
-----------
Telecommunications Equipment--0.4%
BBN Corp. Cv. 6%, '12 B(d) 1,650 1,773,750
United Communications Cv. 144A
2.75%, '06 (b) NR 2,000 2,025,000
-----------
3,798,750
-----------
TOTAL CONVERTIBLE BONDS
(Identified cost $109,780,584) 111,911,625
-----------
NON-CONVERTIBLE BONDS--15.3%
Auto & Truck Parts--0.5%
American Car Line Equipment
8.25%, '08 BBB- 3,994 4,150,884
-----------
Chemical--Specialty--0.3%
Borden Chemical & Plastics 9.50%,
'05 BB+ 3,000 3,022,500
-----------
Entertainment, Leisure & Gaming--1.4%
Turner Broadcasting 8.375%, '13 BB+ 3,000 2,934,180
Viacom International, 8%, '06 BB- 10,000 9,325,000
-----------
12,259,180
-----------
Hospital Management & Services--0.6%
Tenet Healthcare
Corp. 9.625%, '02 B+ 5,000 5,362,500
-----------
Lodging & Restaurants--0.6%
Host Marriott Travel Plaza, Inc.
9.50%, '05 BB- 5,000 4,862,500
-----------
Natural Gas--0.5%
Coastal Corp. 8.125%, '02 BB+ 4,000 4,177,480
-----------
Non-Agency Mortgage Backed--7.7%
Airplanes Pass Through Trust 1D
10.875%, '19 BB 1,400 1,459,500
G.E. Capital Mortgage Serv. 94-9,
M 6.50%, '24 AA 11,739 10,447,667
G.E. Capital Mortgage Serv. 96-8,
M 7.25%, '26 (g) AA 500 472,500
Green Tree Financial Corp. 96-2
M1 7.60%, '27 AA- 3,325 3,242,914
Green Tree Financial Corp. 96-3,
B1 7.70%, '27 BBB+ 2,500 2,474,219
Merrill Lynch Mortgage Inv. 96-C1
B 7.42%, '28 AA 1,910 1,867,920
Prudential Home Mortgage 94-15, M
6.80%, '24 Aa(d) 8,562 7,770,198
Residential Funding Mtg. 96-S1, L
7.10%, '26 AAA 2,800 2,612,750
Residential Funding Mtg. 96-S4,
M1 7.25%, '26 AA 2,996 2,833,048
Resolution Trust Corp. 92-C8, D
8.835%, '23 BBB- 7,752 7,815,396
Resolution Trust Corp. 94-C2, C
8%, '25 A 7,650 7,671,516
Resolution Trust Corp. 94-C1, D
8%, '26 BBB 1,591 1,570,652
Resolution Trust Corp. 95-C2, B
6.80%, '27 Aa(d) $ 6,116 $ 5,854,502
SASC 95-C1 C 7.375%, '24 A 2,500 2,401,562
SASC 95-C4, B 7%, '26 AA 5,198 4,976,803
SASC 96-CFL, C 6.525%, '28 A 1,430 1,361,181
Securitized Asset Sales, Inc.,
93-J 2B 6.8076%, '23 A(d) 4,470 4,106,588
-----------
68,938,916
-----------
Oil--0.3%
Petropower Funding 144A 7.36%,
'14 (b) BBB 2,400 2,244,648
-----------
Paper & Forest Products--0.5%
Buckeye Cellulose 8.50%, '05 BB- 5,000 4,837,500
-----------
Publishing, Broadcasting, Printing & Cable--1.2%
Continental Cablevision 144A
8.30%, '06 (b) BB+ 5,000 5,150,000
News America Holdings 10.125%,
'12 BBB 5,000 5,568,300
-----------
10,718,300
-----------
REITS--0.3%
Meditrust Corp. 7.375%, '00 BBB- 3,000 2,974,440
-----------
Textile & Apparel--1.1%
Westpoint Stevens 8.75%, '01 BB- 5,000 5,000,000
Westpoint Stevens 9.375%, '05 B+ 5,000 4,912,500
-----------
9,912,500
-----------
Tobacco--0.1%
RJR Nabisco, Inc. 8%, '01 BBB- 1,000 972,960
-----------
Truckers & Marine--0.2%
Teekay Shipping
Corp. 8.32%, '08 BB 1,645 1,570,975
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $138,441,194) 136,005,283
-----------
FOREIGN NON-CONVERTIBLE BONDS--1.2%
Paper & Forest Products--0.3%
Asia Pulp & Paper Co. Yankee
11.75%, '05 (Indonesia) BB 2,500 2,437,500
-----------
Telecommunications Equipment--0.9%
Rogers Cablesystems Ltd. 9.625%,
'02 (Canada) BB+ 8,000 8,080,000
-----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $10,532,766) 10,517,500
-----------
FOREIGN GOVERNMENT SECURITIES--3.5%
Argentina--0.8%
Republic of Argentina FRB
6.3125%, '05 (e) BB- 2,228 1,701,253
Republic of Argentina Par L-GP
5.25%, '23 (e) BB- 5,000 2,728,125
Republic of Argentina Discount
L-GL Euro 6.5625%, '23 (e) BB- 4,500 3,113,438
-----------
7,542,816
----------
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
-------- ------- -------------
<S> <C> <C> <C>
Brazil--1.0%
Republic of Brazil, interest
capitalization, Series C Euro,
8%, '14 (e) B+ $2,165 $ 1,303,520
Republic of Brazil Par Z-L Euro
5%, '24 (e) B(d) 6,500 3,420,625
Republic of Brazil
Discount Series Z-L Euro 6.50%,
'24 (e) B+ 5,750 3,892,031
-----------
8,616,176
-----------
Colombia--0.2%
Republic of Colombia Euro 9%, '97 NR 1,500 1,519,860
-----------
Mexico--0.8%
United Mexican States Discount A
6.39844%, '19 (e)(f) BB 3,750 3,007,031
United Mexican States Euro D
6.54688%, '19 (e)(f) BB 1,500 1,202,813
United Mexican States Series B
Euro 6.25%, '19 (f) BB 4,250 2,805,000
-----------
7,014,844
-----------
Philippines--0.5%
Central Bank of Philippines NMB
Euro 6.3125%, '05 (e) BB 4,500 4,286,250
-----------
Poland--0.2%
Poland Discount Euro 6.4375%, '24
(e) BBB 750 697,500
Poland Global Reg Par Euro 2.75%,
'24 (e) BBB 500 251,563
Poland PDI B 3.75%, '14 (e) BBB 1,500 1,155,000
-----------
2,104,063
-----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $30,361,232) 31,084,009
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS--9.5%
Diversified Financial Services--0.6%
Great Western Financial Corp. Cv.
Pfd. 4.375% 300 17,400
H.F. Ahmanson & Co. Cv. Pfd. 6% 60,000 3,360,000
Morgan Stanley Group
PERCS 40,000 2,135,000
-----------
5,512,400
-----------
Electrical Equipment--0.9%
Westinghouse Electric Corp. Cv. Pfd.
144A $1.30 (b) 480,000 8,100,000
-----------
Entertainment, Leisure & Gaming--0.5%
Cablevision Systems Cv. Pfd. 8.50% 165,000 4,269,375
-----------
Machinery--0.3%
Cooper Industries 6%, "Wyman notes"
(DECS) 150,000 2,587,500
-----------
Medical Products & Supplies--0.5%
U.S. Surgical Corp. $2.20 Series A, '98 125,000 4,578,125
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -------------
<S> <C> <C>
Metals & Mining--1.0%
Bethlehem Steel Cv. Pfd. 144A
$3.50 (b) 35,000 $ 1,526,875
Coeur D'Alene Cv. Pfd. 7%, '00 150,000 3,131,250
Freeport-McMoRan Copper Cv. Pfd. 5%, '02 150,000 4,256,250
-----------
8,914,375
-----------
Natural Gas--0.3%
Enron Capital Corp. Cv. Pfd. 6.25% 100,000 2,562,500
-----------
Oil--2.8%
ARCO 9% "Lyondell" 150,000 4,237,500
Occidental Petroleum Corp. 144A $3.875, Cv.
Pfd. (b) 195,000 12,090,000
Unocal Corp. 144A $3.50 Cv. Pfd. (b) 125,000 6,828,125
Valero Energy Corp. Cv. Pfd. 6.25%, '49 30,500 1,769,000
-----------
24,924,625
-----------
Oil Service & Equipment--0.3%
Noble Drilling Corp. $1.50 Cv. Pfd. 79,000 2,932,875
-----------
Paper & Forest Products--0.6%
International Paper Co. Cv. Pfd. 144A
5.25% (b) 120,000 5,520,000
-----------
REITS--0.1%
Security Capital Industrial Trust 7% Cv.
Pfd. 50,000 1,150,000
-----------
Telecommunications Equipment--0.4%
Global Star Telecom Cv. Pfd. 144A
6.50% (b) 64,000 3,008,000
-----------
Tobacco--0.6%
RJR Nabisco, Inc. 9.25% PERCS 823,500 4,941,000
-----------
Utility--Electric--0.2%
California Energy Capital Trust Cv. Pfd.
144A (b) 35,000 1,890,000
-----------
Utility--Telephone--0.4%
Sprint Corp. Cv. Pfd. DECS 8.25%, '00 84,400 3,576,450
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified cost $77,425,890) 84,467,225
-----------
PREFERRED STOCKS--3.2%
Banks--1.0%
Citicorp 8%, Pfd. 200,000 5,025,000
Fleet Financial Group, Inc. Pfd. 9.30% 150,000 3,918,750
-----------
8,943,750
-----------
Insurance--0.5%
Aon Corp. 8%, Pfd. 166,500 4,224,937
-----------
Natural Gas--0.6%
Enron Capital $2.00 Pfd. Series C 225,000 5,568,750
-----------
Publishing, Broadcasting, Printing & Cable--1.1%
News Corp. Overseas Ltd. Series A 8.625%,
Pfd. 400,000 9,900,000
-----------
TOTAL PREFERRED STOCKS
(Identified cost $29,120,575) 28,637,437
-----------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -------------
<S> <C> <C>
COMMON STOCKS--39.6%
Advertising--1.1%
Interpublic Group Companies, Inc. 100,000 $ 4,675,000
Omnicom Group, Inc. 120,000 5,205,000
-----------
9,880,000
-----------
Aerospace & Defense--0.8%
Lockheed Martin Corp. 50,000 4,031,250
Loral Space and Communications Corp. 200,000 2,875,000
-----------
6,906,250
-----------
Autos & Trucks--0.5%
General Motors Corp. 75,000 4,068,750
-----------
Banks--0.6%
Barnett Banks, Inc. 79,246 5,022,190
-----------
Beverages--1.1%
Anheuser-Busch Companies, Inc. 50,000 3,356,250
PepsiCo, Inc. 75,000 4,762,500
Seagram Ltd. 50,000 1,693,750
-----------
9,812,500
-----------
Building & Materials--0.1%
Centex Corp. 50,000 1,350,000
-----------
Chemical--0.9%
Dow Chemical Co. 60,000 5,332,500
Union Carbide Corp. 60,000 2,730,000
-----------
8,062,500
-----------
Computer Software & Services--1.6%
America Online, Inc. (c) 30,000 1,920,000
Computer Associates International, Inc. 25,000 1,834,375
Informix Corp. (c) 79,000 2,083,625
Microsoft Corp. (c) 30,000 3,401,250
Oracle Systems Corporation (c) 79,500 2,683,125
Tektronix 50,000 1,981,250
-----------
13,903,625
-----------
Conglomerates--0.5%
Litton Industries, Inc. (c) 90,000 4,083,750
-----------
Cosmetics & Soaps--0.7%
Avon Products, Inc. 20,000 1,777,500
Colgate Palmolive Co. 60,000 4,597,500
-----------
6,375,000
-----------
Diversified Financial Services--0.5%
Travelers Group, Inc. 71,000 4,366,500
-----------
Diversified Miscellaneous--1.1%
Hillenbrand Industries, Inc. 125,000 4,750,000
Pioneer Hi Bred International, Inc. 85,000 4,738,750
-----------
9,488,750
-----------
Electronics--4.1%
Perkin Elmer Corp. 670,000 36,766,250
-----------
Entertainment, Leisure & Gaming--0.3%
Cox Communications, Inc. (c) 110,000 2,255,000
Harrah's Entertainment, Inc. (c) 15,600 538,200
-----------
2,793,200
-----------
Healthcare--Diversified--0.6%
Warner-Lambert Co. 46,000 5,140,500
-----------
Healthcare--Drugs--1.0%
Lilly (Eli) & Co. 56,000 $ 3,304,000
Merck & Co., Inc. 50,000 3,025,000
Pharmacia & Upjohn, Inc. 57,000 2,180,250
-----------
8,509,250
-----------
Hospital Management & Services--0.7%
Quorum Health Group, Inc. (c) 250,000 6,343,750
-----------
Insurance--2.2%
Aetna Life & Casualty Co. 55,000 3,918,750
Allstate Corp. 85,000 3,304,375
American International Group, Inc. 30,000 2,741,250
Cigna Corp. 45,000 5,101,875
IPC Holdings, Ltd. (c) 162,000 3,179,250
PartnerRe Ltd. 35,000 988,750
-----------
19,234,250
-----------
Machinery--0.3%
Albany International Corporation 125,000 2,687,500
-----------
Medical Products & Supplies--0.9%
Baxter International, Inc. 115,000 5,088,750
Johnson & Johnson 30,000 2,775,000
-----------
7,863,750
-----------
Natural Gas--8.1%
Anadarko Petroleum Corp. 163,000 9,494,750
Apache Corp. 225,000 6,525,000
Consolidated Natural Gas Co. 379,000 17,718,250
El Paso Natural Gas Co. 124,200 4,595,400
Enron Corp. 250,000 10,062,500
Enron Oil & Gas Co. 225,000 5,962,500
Seagull Energy Corp. (c) 230,000 5,606,250
Sonat, Inc. 279,000 12,171,375
-----------
72,136,025
-----------
Office & Business Equipment--0.7%
International Business Machines Corp. 15,000 1,612,500
Storage Technology Corp. (c) 100,000 3,075,000
Sun Microsystems, Inc. (c) 30,000 1,627,500
-----------
6,315,000
-----------
Oil--3.4%
Louisiana Land & Exploration Co. 200,000 10,825,000
Noble Affiliates, Inc. 252,700 8,876,087
Union Pacific Resources Group 137,900 3,792,250
Unocal Corp. 165,000 5,300,625
Valero Energy Corp. 43,100 1,244,513
-----------
30,038,475
-----------
Oil Service & Equipment--0.6%
Diamond Offshore Drilling (c) 28,000 1,393,000
Tidewater, Inc. 100,000 4,250,000
-----------
5,643,000
-----------
Pollution Control--0.7%
WMX, Inc. 190,000 6,602,500
-----------
Publishing, Broadcasting, Printing & Cable--1.0%
Harcourt General, Inc. 100,000 4,400,000
Tele-Communications TCI Group A (c) 250,000 4,781,250
-----------
9,181,250
-----------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -------------
<S> <C> <C>
REITS--0.5%
Meditrust Corp. 96,296 $ 3,262,027
Patriot American Hospitality 55,000 1,533,125
-----------
4,795,152
-----------
Retail--0.4%
Circuit City Stores, Inc. 120,000 3,810,000
-----------
Telecommunications Equipment--0.2%
Cisco Systems, Inc. (c) 35,000 1,815,625
-----------
Tobacco--0.2%
American Brands, Inc. 50,000 2,081,250
-----------
Truckers & Marine--0.2%
Caliber System, Inc. 50,000 2,006,250
-----------
Utility--Electric--1.0%
CMS Energy Corp. 150,000 4,368,750
Illinova Corp. 85,000 2,167,500
Pinnacle West Capital Corp. 90,000 2,396,250
-----------
8,932,500
-----------
Utility--Telephone--3.0%
AT&T Corp. 130,000 7,962,500
Frontier Corp. 100,000 3,162,500
GTE Corp. 108,000 4,684,500
NYNEX Corp. 113,000 5,551,125
U.S. West Communications Group 100,000 3,275,000
U.S. West Media Group (c) 100,000 1,950,000
-----------
26,585,625
-----------
TOTAL COMMON STOCKS
(Identified cost $296,429,042) 352,600,917
-----------
FOREIGN COMMON STOCKS--2.3%
Autos & Trucks--0.3%
Nissan Motor Co. (Japan) 138,000 1,164,720
Toyota Motor Corp. (Japan) 48,000 1,095,360
-----------
2,260,080
-----------
Beverages--0.1%
Panamerican Beverages, Inc. (Mexico) 20,000 877,500
-----------
Insurance--0.4%
GCR Holdings, Ltd. (Bermuda) 40,000 1,020,000
LaSalle Re Holdings, Ltd. (Bermuda) 40,000 795,000
Mid Ocean Ltd. (Bermuda) 20,000 715,000
Renaissance Holdings, Ltd. (Bermuda) 30,000 817,500
-----------
3,347,500
-----------
Rails--0.5%
Canadian Pacific Ltd. (Canada) 235,000 $ 4,788,125
-----------
Utility--Telephone--1.0%
BCE, Inc. (Canada) 225,000 8,859,375
-----------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $18,534,192) 20,132,580
-----------
TOTAL LONG-TERM INVESTMENTS--98.1%
(Identified cost $810,021,706) 872,573,389
-----------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
-------- -----
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--2.0%
Commercial Paper--1.5%
Anheuser-Busch Cos., Inc.
5.32%, 5-1-96 A-1+ $1,300 1,300,000
ESC Securitization 5.28%,
5-2-96 A-1+ 5,000 4,999,267
General Electric Capital
Corp. 5.29%, 5-3-96 A-1+ 145 144,957
Greenwich Funding Corp.
5.30%, 5-3-96 A-1+ 250 249,926
HJ Heinz Co. 5.23%, 5-3-96 A-1 3,380 3,379,018
Exxon Imperial U.S., Inc.
5.28%, 5-7-96 A-1+ 1,175 1,173,966
Receivables Capital Corp.
5.32%, 5-28-96 A-1 2,440 2,430,265
-----------
13,677,399
-----------
Federal Agency Securities--0.5%
Federal Farm Credit Bank 5.19%, 5-7-96 4,350 4,346,237
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $18,023,636) 18,023,636
-----------
TOTAL INVESTMENTS--100.1%
(Identified cost $828,045,342) 890,597,025(a)
Cash and receivables, less liabilities--(0.1)% (974,260)
-----------
NET ASSETS--100.0% $889,622,765
===========
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $77,764,621 and gross
depreciation of $15,218,396 for income tax purposes. At April 30, 1996,
the aggregate cost of securities for federal income tax purposes was
$828,050,800.
(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 April 30,
1996, these securities amount to a value of $102,318,960 or 11.5% of net
assets.
(c) Non-income producing.
(d) As rated by Moody's, Fitch or Duff & Phelp's.
(e) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
(f) Mexico Value Recovery Euro Rights (12,326,000 shares) incorporated as a
unit.
(g) When issued.
(h) Segregated as collateral for the when issued purchase ($500,000 par).
See Notes to Financial Statements.
7
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $828,045,342) $890,597,025
Cash 3,419
Receivables
Investment securities sold 1,368,180
Fund shares sold 369,813
Dividends and interest 6,388,169
-----------
Total assets 898,726,606
-----------
Liabilities
Payables
Investment securities purchased 6,347,428
Fund shares repurchased 1,524,965
Investment advisory fee 509,598
Distribution fee 425,334
Transfer agent fee 145,938
Financial agent fee 21,840
Trustees' fee 6,567
Accrued expenses 122,171
-----------
Total liabilities 9,103,841
-----------
Net Assets $889,622,765
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $783,705,128
Undistributed net investment income 2,996,598
Accumulated net realized gain 40,369,356
Net unrealized appreciation 62,551,683
-----------
Net Assets $889,622,765
===========
Class A
Shares of beneficial interest outstanding, $.0001
par value, unlimited authorization
(Net Assets $493,453,949) 48,947,772
Net asset value per share $ 10.08
Offering price per share
$10.08/(1 - 4.75%) $ 10.58
Class B
Shares of beneficial interest outstanding, $.0001
par value, unlimited authorization
(Net Assets $396,168,816) 39,262,569
Net asset value and offering price per share $ 10.09
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
<TABLE>
<S> <C>
Investment Income
Dividends $ 16,660,537
Interest 33,040,163
----------
Total investment income 49,700,700
Expenses
Investment advisory fee 6,253,253
Distribution fee--Class A 1,247,057
Distribution fee--Class B 3,945,039
Financial agent 267,997
Transfer agent 1,429,666
Custodian 82,722
Printing 78,230
Registration 69,198
Professional 52,461
Trustees 26,567
Miscellaneous 13,354
----------
Total expenses 13,465,544
----------
Net investment income 36,235,156
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 73,897,826
Net realized gain on foreign currency transactions 663,598
Net change in unrealized appreciation
(depreciation)
on investments 41,747,703
----------
Net gain on investments 116,309,127
----------
Net increase in net assets resulting from
operations $152,544,283
==========
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
April 30, April 30,
1996 1995
----------- -------------
<S> <C> <C>
From Operations
Net investment income $ 36,235,156 $ 42,940,111
Net realized gain (loss) 74,561,424 (15,384,412)
Net change in unrealized appreciation (depreciation) 41,747,703 20,259,660
--------- -----------
Increase in net assets resulting from operations 152,544,283 47,815,359
--------- -----------
From Distributions to Shareholders
Net investment income--Class A (21,775,957) (25,024,482)
Net investment income--Class B (13,920,528) (16,394,441)
Net realized gains--Class A (1,790,547) (18,457,864)
Net realized gains--Class B (1,413,822) (14,684,720)
Distribution in excess of accumulated net realized gains--Class A -- (8,670,770)
Distribution in excess of accumulated net realized gains--Class B -- (6,812,748)
--------- -----------
Decrease in net assets from distributions to shareholders (38,900,854) (90,045,025)
--------- -----------
From Share Transactions
Class A
Proceeds from sales of shares (4,186,098 and 8,604,772 shares,
respectively) 40,001,714 77,928,546
Net asset value of shares issued from reinvestment of distributions
(1,892,290 and 4,857,806 shares, respectively) 18,094,132 41,693,221
Cost of shares repurchased (12,338,773 and 14,515,244 shares,
respectively) (118,161,444) (130,803,842)
--------- -----------
Total (60,065,598) (11,182,075)
--------- -----------
Class B
Proceeds from sales of shares (3,371,066 and 8,760,924 shares,
respectively) 32,278,099 79,839,220
Net asset value of shares issued from reinvestment of distributions
(1,165,398 and 3,254,429 shares, respectively) 11,169,191 27,882,891
Cost of shares repurchased (8,800,122 and 9,116,661 shares, respectively) (84,143,012) (81,271,548)
--------- -----------
Total (40,695,722) 26,450,563
--------- -----------
Increase (decrease) in net assets from share transactions (100,761,320) 15,268,488
--------- -----------
Net increase (decrease) in net assets 12,882,109 (26,961,178)
Net Assets
Beginning of period 876,740,656 903,701,834
--------- -----------
End of period (including undistributed net investment income of $2,996,598
and $1,821,996, respectively) $ 889,622,765 $ 876,740,656
========= ===========
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------
Year Ended April 30,
1996 1995 1994 1993 1992
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.88 $ 9.33 $ 9.92 $ 9.13 $ 8.48
Income from investment operations:
Net investment income 0.44 0.46 0.45 0.43(1) 0.45
Net realized and unrealized gain (loss) 1.22 0.03 (0.08) 0.88 0.88
----- ----- ----- ----- -------
Total from investment operations 1.66 0.49 0.37 1.31 1.33
----- ----- ----- ----- -------
Less distributions:
Dividends from net investment income (0.42) (0.45) (0.44) (0.44) (0.44)
Distributions from net realized gains (0.04) (0.33) (0.52) (0.08) (0.24)
Distributions in excess of accumulated net realized gains -- (0.16) -- -- --
----- ----- ----- ----- -------
Total distributions (0.46) (0.94) (0.96) (0.52) (0.68)
----- ----- ----- ----- -------
Change in net asset value 1.20 (0.45) (0.59) 0.79 0.65
----- ----- ----- ----- -------
Net asset value, end of period $ 10.08 $ 8.88 $ 9.33 $ 9.92 $ 9.13
===== ===== ===== ===== =======
Total return (2) 19.01% 5.95% 3.38% 14.78% 16.28%
Ratios/supplemental data:
Net assets, end of period (thousands) $493,454 $490,225 $524,855 $514,803 $357,366
Ratio to average net assets of:
Expenses 1.18% 1.16% 1.23% 1.33% 1.38%
Net investment income 4.39% 5.07% 4.57% 4.60% 4.99%
Portfolio turnover 107% 90% 88% 44% 32%
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------
Year Ended April 30,
From
Inception
1/3/92 to
1996 1995 1994 1993 4/30/92
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.88 $ 9.32 $ 9.92 $ 9.13 $ 8.98
Income from investment operations:
Net investment income 0.36 0.39 0.38 0.25(1) 0.08
Net realized and unrealized gain (loss) 1.23 0.04 (0.08) 1.00 0.15
----- ----- ----- ----- -------
Total from investment operations 1.59 0.43 0.30 1.25 0.23
----- ----- ----- ----- -------
Less distributions:
Dividends from net investment income (0.34) (0.38) (0.38) (0.38) (0.08)
Distributions from net realized gains (0.04) (0.33) (0.52) (0.08) --
Distributions in excess of accumulated net realized gains -- (0.16) -- -- --
----- ----- ----- ----- -------
Total distributions (0.38) (0.87) (0.90) (0.46) (0.08)
----- ----- ----- ----- -------
Change in net asset value 1.21 (0.44) (0.60) 0.79 0.15
----- ----- ----- ----- -------
Net asset value, end of period $ 10.09 $ 8.88 $ 9.32 $ 9.92 $ 9.13
===== ===== ===== ===== =======
Total return (2) 18.14% 5.23% 2.62% 14.09% 2.69(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $396,169 $386,515 $378,847 $217,432 $21,983
Ratio to average net assets of:
Expenses 1.93% 1.91% 1.91% 2.03% 2.08(3)
Net investment income 3.64% 4.32% 3.98% 3.73% 4.07(3)
Portfolio turnover 107% 90% 88% 44% 32%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized
(4) Not annualized
See Notes to Financial Statements.
10
<PAGE>
PHOENIX INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Income and Growth Fund (the "Fund") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified open-end management investment company. The Fund's
primary investment objective is to invest in a diversified group of
securities that are selected for current yield consistent with preservation
of capital. The Fund offers both Class A and Class B shares. Class A shares
are sold with a front-end sales charge of up to 4.75%. Class B shares are
sold with a contingent deferred sales charge which declines from 5% to zero
depending on the period of time the shares are held. Both classes of shares
have identical voting, dividend, liquidation and other rights and the same
terms and conditions, except that each class bears different distribution
expenses and has exclusive voting rights with respect to its distribution
plan. Income and expenses of the Fund are borne pro rata by the holders of
both classes of shares, except that each class bears distribution expenses
unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and
expenses. Actual results could differ from those estimates.
A. Security valuation:
Equity securities traded on an exchange or quoted on the over-the-counter
market are valued at the last sale price, or if there had been no sale that
day, at the last bid price. Debt securities are valued on the basis of broker
quotations or valuations provided by a pricing service which utilizes
information with respect to market transactions in comparable securities,
quotations from dealers, and various relationships between securities in
determining value. Short-term investments having a remaining maturity of less
than 61 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.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign
securities, as soon as the Fund is notified. Interest income is recorded on
the accrual basis. Discounts are amortized to income using the effective
interest method. Realized gains and losses are determined on the identified
cost basis.
C. Income taxes:
It is the policy of the Fund to comply with the requirements of the
Internal Revenue Code (the "Code") applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. In addition, the Fund intends to distribute an amount
sufficient to avoid imposition of any excise tax under Section 4982 of the
Code. Therefore, no provision for federal income taxes or excise taxes has
been made.
D. Distributions to shareholders:
Distributions to shareholders are recorded on the ex-dividend date. Income
and capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non- taxable dividends, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, and
losses deferred due to wash sales and excise tax regulations. Permanent book
and tax basis differences relating to shareholder distributions will result
in reclassifications to paid in capital.
E. Foreign currency translation:
Foreign securities, other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at
the trade date. The gain or loss resulting from a change in currency exchange
rates between the trade and settlement dates of a portfolio transaction is
treated as a gain or loss on foreign currency. Likewise, the gain or loss
resulting from a change in currency exchange rates, between the date income
is accrued and paid, is treated as a gain or loss on foreign currency. The
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.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the Investment Adviser,
National Securities and Research Corporation, an indirect majority-owned
subsidiary of Phoenix Home Life Mutual Insurance Company ("PHL"), is entitled
to a fee at an annual rate of 0.70% of the average daily net
11
<PAGE>
PHOENIX INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1996 (Continued)
assets of the Fund for the first $1.0 billion and 0.65% for the second $1.0
billion.
As Distributor of the Fund's shares, Phoenix Equity Planning Corp.
("PEPCO"), an indirect majority-owned subsidiary of PHL, has advised the Fund
that it retained net selling commissions of $71,801 for Class A shares and
deferred sales charges of $1,838,501 for Class B shares for the year ended
April 30, 1996. In addition, the Fund pays PEPCO a distribution fee at an
annual rate of 0.25% for Class A shares and 1.00% for Class B shares of the
average daily net assets of the Fund. The Distribution Plan for Class A
shares provides for fees to be paid up to a maximum on an annual basis of
0.30%; the Distributor has voluntarily agreed to limit the fee to 0.25%. The
Distributor has advised the Fund that of the total amount expensed for the
year ended April 30, 1996, $3,246,040 was earned by the Distributor and
$1,946,056 was earned by unaffiliated participants.
As Financial Agent of the Fund, PEPCO receives a fee at an annual rate of
0.03% of the average daily net assets of the Fund for bookkeeping,
administration and pricing services. PEPCO serves as the Fund's Transfer
Agent with State Street Bank and Trust Company as sub-transfer agent. For the
year ended April 30, 1996, transfer agent fees were $1,429,666 of which PEPCO
retained $519,144 which is net of fees paid to State Street.
At April 30, 1996, PHL and affiliates held 106 Class A shares and 15 Class
B shares of the Fund with a combined value of $1,216.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities, excluding short-term securities, for the
year ended April 30, 1996, aggregated $907,905,059 and $994,112,297,
including $125,496,652 and $281,602,159 of U.S. Government securities,
respectively.
4. CAPITAL LOSS CARRYOVERS
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 fiscal
year. For the year ended April 30, 1996, the Fund did not defer any losses;
however, the Fund was able to utilize losses deferred in the prior year
against current year capital gains in the amount of $30,561,080.
5. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded several
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Fund and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of April 30, 1996,
the Fund increased capital paid in on shares of beneficial interest by
$10,166, increased undistributed net investment income by $635,931 and
decreased accumulated net realized gains by $646,097.
TAX INFORMATION NOTICE (Unaudited)
For federal income tax purposes, 24.2% of the ordinary income dividends paid
by the Fund qualify for the dividends received deduction of corporate
shareholders.
This report is authorized for use by other than shareholders only when
accompanied or preceded by the delivery of a current prospectus showing the
sales charge and other material information.
12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP [LOGO]
To the Trustees and Shareholders of
Phoenix Income and Growth Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments (except for bond ratings), and the
related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the financial
position of Phoenix Income and Growth Fund (the "Fund") at April 30, 1996,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for each of the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at April 30, 1996 by
correspondence with the custodian and brokers, and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Boston, Massachusetts
June 14, 1996
13
<PAGE>
PHOENIX INCOME AND GROWTH FUND
PART C--OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A: Financial Highlights
Included in Part B: Financial Statements and Notes thereto, and Report
of Independent Accountants are included in the
Annual Report to Shareholders for the year ended
April 30, 1996, incorporated by reference.
(b) Exhibits:
<TABLE>
<CAPTION>
<S> <C>
1.1 Declaration of Trust of the Registrant, as amended,
previously filed, and herein incorporated by reference.
1.2 Amendment to Declaration of Trust of the Registrant, filed
with Post-Effective Amendment No. 10 on August 25, 1994 and
herein incorporated by reference.
2. By-laws of the Registrant, previously filed, and herein
incorporated by reference.
3. Not Applicable.
4. Reference is made to Article VI of Registrant's Declaration
of Trust, as amended, and filed with the Registration
Statement referred to in Exhibit 1.1.
5.1 Management Agreement between Registrant and National
Securities & Research Corporation, dated May 14, 1993,
previously filed, and herein incorporated by reference.
5.2 Amendment to Management Agreement between Registrant and
National Securities & Research Corporation, dated January 1,
1994, filed with Post-Effective Amendment No. 10 on August
25, 1994 and herein incorporated by reference.
6.1 Underwriting Agreement for Class A Shares between Registrant
and Phoenix Equity Planning Corporation ("Equity Planning")
dated May 14, 1993, previously filed, and herein incorporated
by reference.
6.2 Underwriting Agreement for Class B Shares between Registrant
and Equity Planning, dated May 14, 1993, previously filed,
and incorporated herein by reference.
7. None.
8. Custodian Contract between Registrant and State Street Bank
and Trust Company dated October 14, 1993, filed with
Post-Effective Amendment No. 10 on August 25, 1994 and herein
incorporated by reference.
9.1 Transfer Agency and Service Agreement between Registrant and
Equity Planning dated June 1, 1994, filed with Post-Effective
Amendment No. 10 on August 25, 1994 and herein incorporated
by reference.
9.2 Form of Sales Agreement, filed with Post-Effective Amendment
No. 10 on August 25, 1994 and herein incorporated by
reference.
10. Opinion as to legality of the shares previously filed, and
herein incorporated by reference.
11.* Consent of Independent Accountant.
12. Not Applicable.
13. None.
14. None.
15.1 Distribution Plan for Class A Shares, dated May 14, 1993,
previously filed, and herein incorporated by reference.
15.2 Distribution Plan for Class B Shares, dated May 14, 1993,
previously filed, and herein incorporated by reference.
16. Schedule for computation of yield and effective yield
quotations, filed with Post-Effective Amendment No. 10 on
August 25, 1994 and herein incorporated by reference.
17.* Financial Data Schedule filed herewith and reflected on EDGAR
as Exhibit 27.
18.* Powers of attorney, filed via Edgar herewith.*
19.1* Rule 18f-3 Dual Distribution Plan, effective November 15,
1995, filed via Edgar herewith.
19.2* Amended and Restated Dual Distribution Plan, effective May 1,
1996, filed via Edgar herewith.
</TABLE>
*Filed herewith.
C-1
<PAGE>
Item 25. Persons Controlled by or Under Common Control With Registrant
No person is controlled by, or under common control, with the Registrant.
Item 26. Number of Holders of Securities
As of June 30, 1996, the number of record holders of each class of
securities of the Registrant was as follows:
<TABLE>
<CAPTION>
Number of
Title of Class Record-holders
-------------------------------------------- -------------
<S> <C>
Shares of Beneficial Interest--Class A 29,642
Shares of Beneficial Interest--Class B 22,673
</TABLE>
Item 27. Indemnification
Registrant's indemnification provision is set forth in Post-Effective
Amendment No. 9 filed with the Securities and Exchange Commission on June 30,
1993, and is incorporated herein by reference.
Item 28. Business and Other Connections of Investment Adviser
See "Management of the Fund" in the Prospectus and "Services of the Adviser"
and "Trustees and Officers" of the Statement of Additional Information in
which is included in this Post-Effective Amendment.
The directors and officers of National Securities & Research Corporation
(the "Adviser") and their business and other connections are as follows:
<TABLE>
<CAPTION>
Name and Position with
National Securities &
Research Corporation Other Business, Profession, Vocation or Employment
- ------------------------------- ----------------------------------------------------------
<S> <C>
Michael E. Haylon Executive Vice President--Investments, Phoenix Duff &
Director and Executive Phelps Corporation. Executive Vice President, Phoenix
Vice President Funds. Director and President, Phoenix Investment
Counsel, Inc. Director, Phoenix Equity Planning
Corporation. Vice President, Phoenix Duff & Phelps
Institutional Mutual Funds. Senior Vice President,
Securities Investments, Phoenix Home Life Mutual
Insurance Company.
Philip R. McLoughlin Director, Vice Chairman and Chief Executive Officer,
Director, Chairman, President Phoenix Duff & Phelps Corporation. Director and
and Chief Executive Officer Executive Vice President, Investments, Phoenix Home Life
Mutual Insurance Company. Director and President,
Phoenix Equity Planning Corporation. Director and
Chairman, Phoenix Investment Counsel, Inc., Trustee and
President, Phoenix Duff & Phelps Institutional Mutual
Funds. Director, Phoenix Realty Group, Inc., Phoenix
Realty Advisors, Inc., Phoenix Realty Investors, Inc.,
Phoenix Realty Securities, Inc., Phoenix Founders, Inc.,
and World Trust Fund; Director and Vice President, PM
Holdings, Inc. Director/Trustee/ President of the
Phoenix Funds; Director, W.S. Griffith & Co., Inc.
David R. Pepin Executive Vice President and General Manager, Mutual
Director and Executive Vice Fund Marketing and Operations, Phoenix Duff & Phelps
President Corporation. Managing Director, Phoenix-Aberdeen
International Advisors, LLC. Director and Executive Vice
President, Phoenix Investment Counsel, Inc., and Phoenix
Equity Planning Corporation. Various positions with
Phoenix Home Life Mutual Insurance Company.
C-2
<PAGE>
William R. Moyer Director, Senior Vice President and Chief Financial
Senior Vice President, Officer, Phoenix Duff & Phelps Corporation. Senior Vice
Finance, and Treasurer President, Finance, and Treasurer, Phoenix Equity
Planning Corporation and Phoenix Investment Counsel,
Inc. Vice President, the Phoenix Funds and Phoenix Duff
& Phelps Institutional Mutual Funds. Senior Vice
President, Chief Financial Officer, and Treasurer, W.S.
Griffith & Co., Inc. Vice President, Investment Products
Finance, Phoenix Home Life Mutual Life Insurance
Company.
William J. Newman Executive Vice President, Phoenix Investment Counsel,
Senior Vice President Inc. Senior Vice President, Phoenix Equity Planning
Corporation, Phoenix Strategic Equity Series Fund, The
Phoenix Edge Series Fund, Phoenix Multi-Portfolio Fund,
Phoenix Income and Growth Fund, Phoenix Series Fund,
Phoenix Total Return Fund, Inc., Phoenix Worldwide
Opportunities Fund and Phoenix Duff & Phelps
Institutional Mutual Funds. Vice President, Common Stock
and Chief Investment Strategist, Phoenix Home Life
Mutual Insurance Company. Chief Investment Strategist,
Kidder, Peabody Co., Inc.
Michael K. Arends Vice President, Phoenix Series Fund, Phoenix Strategic
Vice President Equity Series Fund, and Phoenix Investment Counsel, Inc.
Portfolio Manager, Phoenix Home Life Mutual Insurance
Company.
Curtiss O. Barrows Vice President, Phoenix Series Fund, Phoenix Multi-
Vice President Portfolio Fund, The Phoenix Edge Series Fund, and
Phoenix Investment Counsel, Inc. Portfolio Manager,
Public Bonds, Phoenix Home Life Mutual Insurance
Company.
James M. Dolan Vice President, Compliance Officer and Assistant
Vice President and Secretary, Phoenix Equity Planning Corporation. Vice
Compliance Officer; President, Phoenix Funds and Phoenix Duff & Phelps
Assistant Secretary Institutional Mutual Funds. Vice President, Assistant
Clerk and Assistant Secretary, Phoenix Investment
Counsel, Inc. Vice President and Chief Compliance
Officer, Phoenix Realty Advisors, Inc. and Chief
Compliance Officer, Phoenix Realty Securities, Inc.
Assistant Vice President Compliance, Phoenix Home Life
Mutual Insurance Company.
Jeanne H. Dorey Vice President, The Phoenix Edge Series Fund, Phoenix
Vice President Multi-Portfolio Fund, Phoenix Investment Counsel, Inc.
and Phoenix Worldwide Opportunities Fund. Portfolio
Manager, International, Phoenix Home Life Mutual
Insurance Company.
Christopher J. Kelleher Vice President, Phoenix Series Fund, The Phoenix Edge
Vice President Series Fund, Phoenix Investment Counsel, Inc., and
Phoenix Duff & Phelps Institutional Mutual Funds.
Portfolio Manager, Public Bonds, Phoenix Home Life
Mutual Insurance Company.
C-3
<PAGE>
Thomas S. Melvin, Jr. Vice President, Phoenix Investment Counsel, Inc.,
Vice President Phoenix Multi-Portfolio Fund, and Phoenix Duff & Phelps
Institutional Mutual Funds. Portfolio Manager, Common
Stock, Phoenix Home Life Mutual Insurance Company.
Amy L. Robinson Vice President, The Phoenix Edge Series Fund, Phoenix
Vice President Series Fund, and Phoenix Investment Counsel, Inc.
Managing Director, Securities Administration, Phoenix
Home Life Mutual Insurance Company.
Elizabeth R. Sadowinski Vice President, Field and Investor Services, Phoenix
Vice President Equity Planning Corporation. Vice President,
Administration, Phoenix Duff & Phelps Corporation. Vice
President, Mutual Fund Customer Service, Phoenix Home
Life Mutual Insurance Company.
Leonard J. Saltiel Senior Vice President, Phoenix Equity Planning
Vice President Corporation. Vice President, Phoenix Funds and Phoenix
Duff & Phelps Institutional Mutual Funds. Vice
President, Investment Operations, Phoenix Home Life
Mutual Insurance Company.
Dorothy J. Skaret Vice President, Phoenix Series Fund, The Phoenix Edge
Vice President Series Fund, Phoenix Investment Counsel, Inc., Phoenix
Realty Securities, Inc. and Phoenix Duff & Phelps
Institutional Mutual Funds. Director, Public Fixed
Income, Phoenix Home Life Mutual Life Insurance Company.
James D. Wehr Vice President, Phoenix Series Fund, The Phoenix Edge
Vice President Series Fund, Phoenix Multi-Portfolio Fund, Phoenix
Investment Counsel, Inc., Phoenix California Tax- Exempt
Bonds, Inc. and Phoenix Duff & Phelps Institutional
Mutual Funds. Managing Director, Public Fixed Income,
Phoenix Home Life Mutual Insurance Company.
Eugene A. Charon Controller, Phoenix Equity Planning Corporation and
Controller Phoenix Investment Counsel, Inc.
Thomas N. Steenburg Vice President, Counsel and Secretary, Phoenix Duff &
Secretary Phelps Corporation. Counsel, Phoenix Home Life Mutual
Insurance Company. Secretary, Phoenix Investment
Counsel, Inc. and Phoenix Equity Planning Corporation.
Assistant Secretary, The Phoenix Funds and Phoenix Duff
& Phelps Institutional Mutual Funds.
</TABLE>
The respective principal addresses of the companies or other entities
named above are as follows:
<TABLE>
<CAPTION>
<S> <C>
Kidder, Peabody Co. Inc. }10 Hanover Square
}New York, NY 10005
National Securities & Research Corporation }One American Row
}Hartford, CT 06115
Phoenix Duff & Phelps Corporation }56 Prospect Street
}Hartford, CT 06115
C-4
<PAGE>
Phoenix Duff & Phelps Institutional Mutual }101 Munson Street
Funds }Greenfield, MA 01301
Phoenix Equity Planning Corporation }100 Bright Meadow Boulevard
}P.O. Box 2200
}Enfield, CT 06083-2200
Phoenix Home Life Mutual Insurance Company }One American Row
}Hartford, CT 06115
Phoenix Investment Counsel, Inc. }One American Row
}Hartford, CT 06115
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
PM Holdings, Inc. }One American Row
}Hartford, CT 06115
The Phoenix Funds }101 Munson Street
}Greenfield, MA 01301
W. S. Griffith & Co., Inc. }100 Bright Meadow Boulevard
}P.O. Box 2200
}Enfield, CT 06083-2200
</TABLE>
Item 29. Principal Underwriter
(a) See "Distribution Plans" and "How to Buy Shares" in the Prospectus and
"Distributor" and "Plans of Distribution" in the Statement of Additional
Information, both of which are included in this Post-Effective Amendment
to the Registration Statement.
(b) Directors and executive officers of Phoenix Equity Planning
Corporation are as follows:
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Underwriter with Registrant
- ------------------------- ------------------------- ---------------------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
One American Row
Hartford, CT 06115
David R. Pepin Director and Executive None
56 Prospect Street Vice President
P.O. Box 150480
Hartford, CT 06115-0480
Leonard J. Saltiel Senior Vice President Vice President
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
C-5
<PAGE>
William R. Moyer Senior Vice President, Vice President
100 Bright Meadow Blvd. Finance, and Treasurer
P.O. Box 2200
Enfield, CT 06083-2200
William J. Newman Senior Vice President Senior Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Secretary
101 Munson Street Transfer Agent
Greenfield, MA 01301 Operations
Nancy G. Curtiss Vice President, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Maris Lambergs Vice President, None
100 Bright Meadow Blvd. National Sales Manager
P.O. Box 2200
Enfield, CT 06083-2200
James M. Dolan Vice President and Vice President
100 Bright Meadow Blvd. Compliance Officer;
P.O. Box 2200 Assistant Secretary
Enfield, CT 06083-2200
Elizabeth R. Sadowinski Vice President, Field Assistant Secretary
100 Bright Meadow Blvd. and
Enfield, CT 06083-2200 Investor Services
Eugene A. Charon Controller None
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
Thomas N. Steenburg Secretary Assistant Secretary
One American Row
Hartford, CT 06115
</TABLE>
(c) Equity Planning received the following commissions or other compensation
from the Registrant during the fiscal year ending April 30, 1996:
Net Compensation
Underwriting on
Name of Discounts Redemption
Principal and and Brokerage Other
Underwriter Commissions Repurchase Commissions Compensation
- --------------- ------------ ----------- ---------- -------------
Equity Planning 71,801 1,838,501 0 267,997
Item 30. Location of Accounts and Records
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the Rules promulgated thereunder include Registrant's
investment adviser, National Securities & Research Corporation; Registrant's
financial agent, transfer agent and principal underwriter, Phoenix Equity
Planning Corporation; Registrant's dividend disbursing agent and custodian,
State Street Bank and Trust Company. The address of the Secretary of the
Trust is 101 Munson Street, Greenfield, Massachusetts 01301; the address of
National Securities & Research Corporation is One American Row, Hartford,
Connecticut 06115-2520; the address of Phoenix Equity Planning Corporation is
100 Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200;
the address of the dividend disbursing agent is P.O. Box 8301, Boston,
Massachusetts 02266-8301, Attention: Phoenix Funds, and the address of the
custodian is P.O. Box 351, Boston, Massachusetts 02101.
C-6
<PAGE>
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders upon request and without charge.
C-7
<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 the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Hartford
and State of Connecticut on the 23rd day of August, 1996.
PHOENIX INCOME AND GROWTH FUND
ATTEST: /s/ Thomas N. Steenburg By: /s/ Philip R. McLoughlin
------------------------- -----------------------------------
Thomas N. Steenburg Philip R. McLoughlin, President
Assistant Secretary
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 23rd day of August, 1996:
<TABLE>
<CAPTION>
Signature Title
- ----------------------------------- -----------------------------------
<S> <C>
Trustee
- -----------------------
C. Duane Blinn*
Trustee
- -----------------------
Robert Chesek*
Trustee
- -----------------------
E. Virgil Conway*
Treasurer (principal
- ----------------------- financial and
Nancy G. Curtiss* accounting officer)
Trustee
- -----------------------
Harry Dalzell-Payne*
Trustee
- -----------------------
Francis E. Jeffries*
Trustee
- -----------------------
Leroy Keith, Jr.*
Trustee and President
/s/ Philip R. McLoughlin (principal executive
- ----------------------- officer)
Philip R. McLoughlin
Trustee
- -----------------------
Everett L. Morris*
Trustee
- -----------------------
James M. Oates*
Trustee
- -----------------------
Calvin J. Pedersen*
Trustee
- -----------------------
Philip R. Reynolds*
Trustee
- -----------------------
Herbert Roth, Jr.*
S-1(c)
<PAGE>
Trustee
- -----------------------
Richard E. Segerson*
Trustee
- -----------------------
Lowell P. Weicker, Jr.*
</TABLE>
By /s/ Philip R. McLoughlin
-----------------------
*Philip R. McLoughlin
Attorney-in-fact pursuant to powers of attorney filed herewith.
S-2(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 12 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated June 14, 1996, relating to the financial
statements and financial highlights appearing in the April 30, 1996 Annual
Report to Shareholders of the Phoenix Income and Growth Fund, which is also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the heading "Financial Highlights" in the Prospectus
and under the heading "Independent Accountants" in the Statement of Additional
Information.
Price Waterhouse LLP
Boston, Massachusetts
August 22, 1996
POWER OF ATTORNEY
I, the undersigned Treasurer and Principal Accounting Officer of
Phoenix Income and Growth 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 Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ Nancy G. Curtiss
February 21, 1996 ___________________________________
Nancy G. Curtiss
Treasurer
Principal Financial and
Accounting Officer
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Phoenix Income and Growth 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
Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ E. Virgil Conway
February 21, 1996 ___________________________________
E. Virgil Conway, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Phoenix Income and Growth 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
Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ Harry Dalzell-Payne
February 21, 1996 ___________________________________
Harry Dalzell-Payne, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Phoenix Income and Growth 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
Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ Leroy Keith, Jr.
February 21, 1996 ___________________________________
Leroy Keith, Jr., Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Phoenix Income and Growth 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
Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ James M. Oates
February 21, 1996 ___________________________________
James M. Oates, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Phoenix Income and Growth 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
Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ Philip R. Reynolds
February 21, 1996 ___________________________________
Philip R. Reynolds, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Phoenix Income and Growth 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
Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ Herbert Roth, Jr.
February 21, 1996 ___________________________________
Herbert Roth, Jr., Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Phoenix Income and Growth 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
Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ Richard E. Segerson
February 21, 1996 ___________________________________
Richard E. Segerson, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Phoenix Income and Growth 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
Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ C. Duane Blinn
February 21, 1996 ___________________________________
C. Duane Blinn, Esq., Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Phoenix Income and Growth 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
Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ Robert Chesek
February 21, 1996 ___________________________________
Robert Chesek, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Phoenix Income and Growth 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
Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ Lowell P. Weicker, Jr.
February 21, 1996 ___________________________________
Lowell P. Weicker, Jr., Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Phoenix Income and Growth 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
Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ Everett L. Morris
February 21, 1996 ___________________________________
Everett L. Morris, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Phoenix Income and Growth 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
Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ Francis E. Jeffries
February 21, 1996 ___________________________________
Francis E. Jeffries, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Phoenix Income and Growth 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
Phoenix Income and Growth 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 Phoenix Income and Growth 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.
/s/ Calvin J. Pedersen
March 12, 1996 ___________________________________
Calvin J. Pedersen, Trustee
PHOENIX FUNDS
(the "Funds")
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended ("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the effective date of this Plan, the Funds shall offer multiple
classes of shares, as described herein, pursuant to Rule 18f-3 and this Plan.
2. The Multi-Class Structure
The portfolios of the Funds listed on Schedule A hereto shall offer two
classes of shares, Class A and Class B ("Multi-Class Portfolios"). Shares of the
Multi-Class Portfolios shall represent an equal pro rata interest in the
respective Portfolio and, generally, shall have identical voting, dividend,
liquidation, and other rights, preferences, powers, restrictions, limitations,
qualifications and terms and conditions, except that: (a) each class shall have
a different designation; (b) each class shall bear any Class Expenses, as
defined by Section B, below; (c) each class shall have exclusive voting rights
on any matter submitted to shareholders that relates solely to its distribution
arrangement; and (d) each class shall have separate voting rights on any matter
submitted to shareholders in which the interests of one class differ from the
interests of any other class. In addition, Class A and Class B shares shall have
the features described in Sections a, b, c and d, below.
a. Distribution Plan
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 with
respect to Class B shares for each Multi-Class Portfolio, containing
substantially the following terms:
Class B shares of each Portfolio shall reimburse Phoenix Equity
Planning Corporation (the "Distributor") for costs and expenses incurred in
connection with distribution and marketing of shares of the Fund, as provided in
the Distribution Plan and any supplements thereto, subject to an annual limit of
1.00% of the average daily net assets of a Portfolio's Class B shares.
<PAGE>
- 2 -
b. Allocation of Income and Expenses
i. General.
The gross income, realized and unrealized capital gains and
losses and expenses (other than Class Expenses, as defined below) of each
Portfolio shall be allocated to each class on the basis of its net asset value
relative to the net asset value of the Portfolio. Expenses to be so allocated
include expenses of the Fund that are not attributable to a particular Portfolio
or class of a Portfolio but are allocated to a Portfolio ("Fund Expenses") and
expenses of a particular Portfolio that are not attributable to a particular
class of that Portfolio ("Portfolio Expenses"). Fund Expenses include, but are
not limited to, Trustees' fees, insurance costs and certain legal fees.
Portfolio Expenses include, but are not limited to, certain state registration
fees, custodial fees, advisory fees and other expenses relating to the
management of the Portfolio's assets.
ii. Class Expenses.
Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (a) payments pursuant to the Distribution Plan for that
class; (b) transfer agent fees attributable to a specific class, (c) printing
and postage expenses related to preparing and distributing material such as
shareholder reports, prospectuses and proxy materials to current shareholders of
the class; (d) registration fees for shares of the class (other than those set
forth in Section b.i. above); (e) the expense of administrative personnel and
services as required to support the shareholders of a specific class; (f)
litigation or other legal expenses relating solely to one class of shares; and
(g) Trustees' fees incurred as a result of issues relating to a class of shares.
Expenses described in (a) of this paragraph must be allocated to the class for
which they are incurred. All other expenses described in this paragraph may be
allocated as Class Expenses, if the Fund's President and Treasurer have
determined, subject to Board approval or ratification, which of such categories
of expenses will be treated as Class Expenses, consistent with applicable legal
principles under the 1940 Act and the Internal Revenue Code of 1986, as amended
("Code").
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 18f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated
as Class Expenses and any subsequent changes thereto as set forth in this Plan
shall be reviewed by the Board of Trustees and approved by such Board and by a
majority of the Trustees who are not "interested persons" of the Fund, as
defined in the 1940 Act ("Independent Trustees")
<PAGE>
- 3 -
iii. Waivers or Reimbursements of Expenses
Expenses may be waived or reimbursed by the Funds' investment
adviser(s), their principal underwriters, or any other provider of services to a
Portfolio or Fund without the prior approval of the Board of Trustees.
c. Exchange Privileges
Shareholders of a Multi-Class Portfolio may exchange shares of a
particular class for shares of the same class in another Multi-Class Portfolio,
at the relative net asset values of the respective shares to be exchanged and
with no sales charge, provided the shares to be acquired in the exchange are, as
may be necessary, qualified for sale in the shareholder's state of residence and
subject to the applicable requirements, if any, as to minimum amount.
d. Conversion Feature
Class B Shares of a Multi-Class Portfolio will automatically convert to
Class A Shares of that portfolio, without sales charge, at the relative net
asset values of each of such classes, not later than eight years from the
acquisition of the Class B Shares. The conversion of Class B Shares to Class A
Shares is subject to the continuing availability of an opinion of counsel or a
ruling from the Internal Revenue Service to the effect that (i) the assessment
of the higher distribution fees and transfer agency costs with respect to Class
B Shares does not result in any dividends or distributions constituting
"preferential dividends" under the Internal Revenue Code of 1986, as amended,
and (ii) that the conversion of shares does not constitute a taxable event under
federal income tax law.
3. Board Review
a. Initial Approval
The Board of Trustees, including the Independent Trustees at a
meeting held on November 15, 1995, initially approved the Plan based on a
determination that the Plan, including the expense allocation, is in the best
interests of each class and Portfolio individually and of the Funds.
b. Approval of Amendments
The Plan may not be amended materially unless the Board of
Trustees, the Independent Trustees, have found that the proposed amendment,
including any proposed related expense allocation, is in the best interests of
each class and Portfolio individually and of the Fund.
<PAGE>
- 4 -
c. Periodic Review
The Board shall review reports of expense allocations and such
other information as they request at such times, or pursuant to such schedule,
as they may determine consistent with applicable legal requirements.
4. Contracts
Any agreement related to the Multi-Class System shall require the
parties thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
The Plan, having been reviewed and approved by the Board of Trustees
and the Independent Trustees, shall take effect as of March 15, 1996.
6. Amendments
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3.b. of this
Plan.
<PAGE>
SCHEDULE A
PHOENIX ASSET RESERVE
PHOENIX CALIFORNIA TAX-EXEMPT BONDS, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND
STRATEGIC THEME FUND
SMALL CAP FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND:
CAPITAL APPRECIATION PORTFOLIO
DIVERSIFIED INCOME
INTERNATIONAL PORTFOLIO
REAL ESTATE SECURITIES PORTFOLIO
TAX-EXEMPT BOND PORTFOLIO
EMERGING MARKETS BOND PORTFOLIO
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX SERIES FUND:
BALANCED SERIES
CONVERTIBLE SERIES
GROWTH SERIES
HIGH YIELD FUND SERIES
MONEY MARKET FUND SERIES
U.S. GOVERNMENT SECURITIES FUND
U.S. STOCK FUND
PHOENIX TOTAL RETURN FUND, INC.
PHOENIX WORLDWIDE OPPORTUNITIES FUND
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended ("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
The portfolios of the Funds listed on Schedule A hereto shall offer two
classes of shares, Class A and Class B ("Multi-Class Portfolios"). Shares of the
Multi-Class Portfolios shall represent an equal pro rata interest in the
respective Multi-Class Portfolio and, generally, shall have identical voting,
dividend, liquidation, and other rights, preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each
class shall have a different designation; (b) each class shall bear any Class
Expenses, as defined by Section B, below; (c) each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to its
distribution arrangement; and (d) each class shall have separate voting rights
on any matter submitted to shareholders in which the interests of one class
differ from the interests of any other class. In addition, Class A and Class B
shares shall have the features described in Sections a, b, c and d, below.
a. Distribution Plans
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio, containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall
reimburse Phoenix Equity Planning Corporation (the "Distributor") for costs and
expenses incurred in connection with distribution and marketing of shares
thereof, as provided in the Class A Distribution Plan and any supplements
thereto, subject to an annual limit of 0.25%, or in some cases 0.30%, of the
average daily net assets of a Multi-Class Portfolio's Class A shares.
<PAGE>
- 2 -
ii. Class B shares of each Multi-Class Portfolio shall
reimburse the Distributor for costs and expenses incurred in connection with
distribution and marketing of shares thereof, as provided in the Class B
Distribution Plan and any supplements thereto, subject to an annual limit of
1.00% of the average daily net assets of a Multi-Class Portfolio's Class B
shares.
b. Allocation of Income and Expenses
i. General.
The gross income, realized and unrealized capital gains and
losses and expenses (other than Class Expenses, as defined below) of each
Multi-Class Portfolio shall be allocated to each class on the basis of its net
asset value relative to the net asset value of the Multi-Class Portfolio.
Expenses to be so allocated include expenses of the Funds that are not
attributable to a particular Multi-Class Portfolio or class of a Multi-Class
Portfolio but are allocated to a Multi-Class Portfolio ("Fund Expenses") and
expenses of a particular Multi-Class Portfolio that are not attributable to a
particular class of that Multi-Class Portfolio ("Portfolio Expenses"). Fund
Expenses include, but are not limited to, trustees' fees, insurance costs and
certain legal fees. Portfolio Expenses include, but are not limited to, certain
state registration fees, custodial fees, advisory fees and other expenses
relating to the management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (1) transfer agency fees; (2) stationery, printing,
postage, and delivery expenses relating to preparing and distributing
shareholder reports, prospectuses, and proxy statements; (3) state Blue Sky
registration fees; (4) SEC registration fees; (5) expenses of administrative
personnel and services to the extent related to another category of
class-specific expenses; (6) trustees' fees and expenses; (7) accounting
expenses, auditors' fees, litigation expenses, and legal fees and expenses; and
(8) expenses incurred in connection with shareholder meetings. Expenses
described in subsection (a) of this paragraph must be allocated to the class for
which they are incurred. All other expenses described in this paragraph may be
allocated as Class Expenses, if a Fund's President and Treasurer have
determined, subject to Board approval or ratification, which of such categories
of expenses will be treated as Class Expenses, consistent with applicable legal
principles under the 1940 Act and the Internal Revenue Code of 1986, as amended
("Code"). The difference between the Class Expenses allocated to each share of a
class during a year and the Class Expenses allocated to each share of any other
class during such year shall at all times be less than .50% of the average daily
net asset value of the class of shares with the smallest average net asset
value. The afore-described description of Class Expenses and any amendment
thereto shall be subject to the continuing availability of an opinion of counsel
or a ruling from the Internal Revenue Service to the effect that any such
allocation of expenses or the assessment of higher distribution fees and
transfer agency costs on any class of shares does not result in any dividends or
distributions constituting "preferential dividends" under the Code.
<PAGE>
- 3 -
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 18f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated
as Class Expenses and any subsequent changes thereto as set forth in this Plan
shall be reviewed by the Board of Trustees and approved by such Board and by a
majority of the Trustees who are not "interested persons" of the Fund, as
defined in the 1940 Act ("Independent Trustees")
iii. Waivers or Reimbursements of Expenses
Expenses may be waived or reimbursed by the Fund's investment
adviser(s), its principal underwriters, or any other provider of services to a
Multi-Class Portfolio without the prior approval of the Board of Trustees.
c. Exchange Privileges
Shareholders of a Multi-Class Portfolio may exchange shares of a
particular class for shares of the same class in another Multi-Class Portfolio,
at the relative net asset values of the respective shares to be exchanged and
with no sales charge, provided the shares to be acquired in the exchange are, as
may be necessary, qualified for sale in the shareholder's state of residence and
subject to the applicable requirements, if any, as to minimum amount.
d. Conversion Feature
Class B Shares of a Multi-Class Portfolio will automatically convert to
Class A Shares of that portfolio, without sales charge, at the relative net
asset values of each such classes, not later than eight years from the
acquisition of the Class B Shares. The conversion of Class B Shares to Class A
Shares is subject to the continuing availability of an opinion of counsel or a
ruling from the Internal Revenue Service to the effect that the conversion of
shares does not constitute a taxable event under federal income tax law.
3. Board Review
a. Approval of Amended and Restated Plan
The Board of Trustees, including the Independent Trustees, at
a meeting held on August 21, 1996, approved the Amended and Restated Plan based
on a determination that the Plan, including the expense allocation, is in the
best interests of each class and Multi-Class Portfolio individually and of the
Funds.
<PAGE>
- 4 -
b. Approval of Amendments
The Plan may not be amended materially unless the Board of
Trustees, the Independent Trustees, have found that the proposed amendment,
including any proposed related expense allocation, is in the best interests of
each class and Multi-Class Portfolio individually and of the Funds.
c. Periodic Review
The Board shall review reports of expense allocations and such
other information as they request at such times, or pursuant to such schedule,
as they may determine consistent with applicable legal requirements.
4. Contracts
Any agreement related to the Multi-Class System shall require the
parties thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
The Amended and Restated Plan, having been reviewed and approved by the
Board of Trustees and the Independent Trustees, shall take effect as of the
first day of each Fund's current fiscal year.
6. Amendments
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3(b) of this
Plan.
<PAGE>
SCHEDULE A
PHOENIX CALIFORNIA TAX-EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND:
DIVERSIFIED INCOME PORTFOLIO
EMERGING MARKETS BOND PORTFOLIO
INTERNATIONAL PORTFOLIO
REAL ESTATE SECURITIES PORTFOLIO
SMALL CAP PORTFOLIO
TAX-EXEMPT BOND PORTFOLIO
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES
BALANCED FUND SERIES
CONVERTIBLE FUND SERIES
GROWTH FUND SERIES
HIGH YIELD FUND SERIES
MONEY MARKET FUND SERIES
U.S. GOVERNMENT SECURITIES FUND SERIES
PHOENIX TOTAL RETURN FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND
MICRO CAP FUND
STRATEGIC THEME FUND
SMALL CAP FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> PHOENIX INCOME & GROWTH FUND CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 828045
<INVESTMENTS-AT-VALUE> 890597
<RECEIVABLES> 8127
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 898727
<PAYABLE-FOR-SECURITIES> 6347
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2757
<TOTAL-LIABILITIES> 9104
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 783705
<SHARES-COMMON-STOCK> 48948
<SHARES-COMMON-PRIOR> 55208
<ACCUMULATED-NII-CURRENT> 2997
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 40369
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 62552
<NET-ASSETS> 889623
<DIVIDEND-INCOME> 16661
<INTEREST-INCOME> 33040
<OTHER-INCOME> 0
<EXPENSES-NET> (13466)
<NET-INVESTMENT-INCOME> 36235
<REALIZED-GAINS-CURRENT> 74561
<APPREC-INCREASE-CURRENT> 41748
<NET-CHANGE-FROM-OPS> 152544
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 21776
<DISTRIBUTIONS-OF-GAINS> 1790
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4186
<NUMBER-OF-SHARES-REDEEMED> 12339
<SHARES-REINVESTED> 1892
<NET-CHANGE-IN-ASSETS> 3229
<ACCUMULATED-NII-PRIOR> 1822
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (30342)
<GROSS-ADVISORY-FEES> 6253
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13466
<AVERAGE-NET-ASSETS> 893318
<PER-SHARE-NAV-BEGIN> 8.88
<PER-SHARE-NII> 0.44
<PER-SHARE-GAIN-APPREC> 1.22
<PER-SHARE-DIVIDEND> (0.42)
<PER-SHARE-DISTRIBUTIONS> (0.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.08
<EXPENSE-RATIO> 1.18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> PHOENIX INCOME & GROWTH FUND CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 828045
<INVESTMENTS-AT-VALUE> 890597
<RECEIVABLES> 8127
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 898727
<PAYABLE-FOR-SECURITIES> 6347
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2757
<TOTAL-LIABILITIES> 9104
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 783705
<SHARES-COMMON-STOCK> 39263
<SHARES-COMMON-PRIOR> 43526
<ACCUMULATED-NII-CURRENT> 2997
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 40369
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 62552
<NET-ASSETS> 889623
<DIVIDEND-INCOME> 16661
<INTEREST-INCOME> 33040
<OTHER-INCOME> 0
<EXPENSES-NET> (13466)
<NET-INVESTMENT-INCOME> 36235
<REALIZED-GAINS-CURRENT> 74561
<APPREC-INCREASE-CURRENT> 41748
<NET-CHANGE-FROM-OPS> 152544
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13921
<DISTRIBUTIONS-OF-GAINS> 1414
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3371
<NUMBER-OF-SHARES-REDEEMED> 8800
<SHARES-REINVESTED> 1165
<NET-CHANGE-IN-ASSETS> 9654
<ACCUMULATED-NII-PRIOR> 1822
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (30342)
<GROSS-ADVISORY-FEES> 6253
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13466
<AVERAGE-NET-ASSETS> 893318
<PER-SHARE-NAV-BEGIN> 8.88
<PER-SHARE-NII> 0.36
<PER-SHARE-GAIN-APPREC> 1.23
<PER-SHARE-DIVIDEND> (0.34)
<PER-SHARE-DISTRIBUTIONS> (0.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.09
<EXPENSE-RATIO> 1.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
