As filed with the Securities and Exchange Commission on August 27, 1999
Registration Nos. 33-6930
811-4728
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 16 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 17 [X]
(Check appropriate box or boxes)
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Phoenix-Oakhurst Income & Growth Fund
(Exact Name of Registrant as Specified in Declaration of Trust)
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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)
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Pamela S. Sinofsky
Assistant Vice President and Assistant Counsel
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, Connecticut 06115-0479
(name and address of Agent for Service)
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Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on 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.
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<PAGE>
Cross Reference Sheet Pursuant to Rule 495(a)
Under The Securities Act of 1933
Part A:
Information Required in Prospectus
<TABLE>
<CAPTION>
Item Number Form N-1A Part A Prospectus Caption
- ---------------------------- ------------------
<S> <C> <C>
1. Front and Back Cover Pages ....................... Cover Page, Back Cover Page
2. Risk/Return Summary: Investments, Risks,
Performance ...................................... Investment Risk and Return Summary
3. Risk/Return Summary: Fee Table ................... Fund Expenses
4. Investment Objectives, Principal Investment
Strategies, and Related Risks .................... Investment Risk and Return Summary
5. Management's Discussion of Fund Performance ...... Performance Tables
6. Management, Organization, and Capital Structure .. Management of the Fund
7. Shareholder Information .......................... Pricing of Fund Shares; Sales Charges; Your Account;
How to Buy Shares; How to Sell Shares; Things You
Should Know When Selling Shares; Account Policies;
Investor Services; Tax Status of Distributions
8. Distribution Arrangements ........................ Sales Charges
9. Financial Highlights Information ................. Financial Highlights
</TABLE>
Part B:
Information Required in Statement of Additional Information
<TABLE>
<CAPTION>
Item Number Form N-1A, Part B Statement of Additional Information Caption
- ---------------------------- -------------------------------------------
<S> <C> <C>
10. Cover Page and Table of Contents ..................... Cover Page, Table of Contents
11. Fund History ......................................... The Fund
12. Description of the Fund and Its Investment Risks ..... Investment Objectives and Policies; Investment
Restrictions
13. Management of the Fund ............................... Management of the Fund
14. Control Persons and Principal Holders of
Securities ........................................... Management of the Fund
15. Investment Advisory and Other Services ............... Services of the Adviser; The Distributor; Distribution
Plans; Other Information
16. Brokerage Allocation and Other Practices ............. Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities ................... Other Information
18. Purchase, Redemption, and Pricing of Shares .......... Net Asset Value; How to Buy Shares; Investor Account
Services; Redemption of Shares; Tax Sheltered
Retirement Plans
19. Taxation of the Fund ................................. Dividends, Distributions and Taxes
20. Underwriters ......................................... The Distributor
21. Calculation of Performance Data ...................... Performance Information
22. Financial Statements ................................. Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C of this Registration Statement.
<PAGE>
Phoenix Investment Partners
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Prospectus
August 27, 1999
Neither the Securities and Exchange
Commission nor any state securities
commission has approved or disapproved of
Oakhurst(SM) these securities or determined if this
prospectus is truthful or complete. Any
Phoenix-Oakhurst representation to the contrary is a
Income & Growth Fund criminal offense.
This prospectus contains important
information that you should know before
investing in Phoenix-Oakhurst Income &
Growth Fund.
Our distinctive managers'
names are now part of our
Fund names. Please note the
name of your Fund is now
Phoenix-Oakhurst Income &
Growth Fund. Look for it
under the Phoenix-Oakhurst
heading in newspapers.
[PHOENIX LOGO]
PHOENIX
INVESTMENT PARTNERS
<PAGE>
Table of Contents
- ----------------------------------------------------
<TABLE>
<S> <C>
Investment Risk and Return Summary ......... 1
Fund Expenses .............................. 6
Management of the Fund ..................... 7
Pricing of Fund Shares ..................... 8
Sales Charges .............................. 9
Your Account ............................... 11
How to Buy Shares .......................... 13
How to Sell Shares ......................... 13
Things You Should Know When
Selling Shares ............................ 14
Account Policies ........................... 15
Investor Services .......................... 16
Tax Status of Distributions ................ 17
Financial Highlights ....................... 18
Additional Information ..................... 20
</TABLE>
> Phoenix-
Oakhurst
Income &
Growth
Fund
<PAGE>
Investment Risk and Return Summary
- -------------------------------------------
Investment Objectives
Phoenix-Oakhurst Income & Growth Fund has a primary investment
objective of investing in a diversified group of securities that are
selected for current yield consistent with the preservation of capital.
The fund has a secondary investment objective to achieve capital
appreciation when it is consistent with the fund's primary objective.
The secondary objective is a non-fundamental policy that may be changed
without shareholder vote. There is no guarantee that the fund will
achieve its objectives.
Principal Investment Strategies
> To pursue its investment objective, the fund invests in
income-producing securities including common stocks, convertible
securities, mutual funds and all types of fixed income securities,
including high yield (so called "junk bonds"), mortgage- and
asset-backed, government, corporate and municipal debt obligations.
The fund may invest in both U.S. and foreign (non-U.S.) securities,
including issuers in "emerging market" countries and may invest in
companies of any size.
> Equity securities are selected using a quantitative value approach
coupled with fundamental analysis. 1,500 of the largest capitalized
stocks are ranked based on value and growth criteria such as price to
earnings, sales and cash flow and reported and forecasted earnings
per share growth. The adviser seeks a desired balance of risk and
return potential, including a targeted yield greater than that of the
S&P 500.
> Fixed income securities are selected using a "sector rotation"
approach. The adviser seeks to adjust the proportion of fund
investment in various "sectors" (types of debt securities) and the
selections within sectors to obtain higher relative returns. Sectors
are analyzed by the adviser for attractive values. Securities within
sectors are selected based on general economic and financial
conditions, and the issuer's business, management, cash, assets
earnings and stability. Securities selected for investment are those
that the adviser believes offer the best potential for total return
based on risk-to-reward tradeoff.
> Interest rate risk is managed by a duration neutral strategy. The
adviser attempts to maintain the duration of the fund at a level
similar to that of its benchmark. Duration measures the interest rate
sensitivity of a fixed income security by assessing and weighting the
present value of the security's payment pattern. Generally, the
longer the maturity the greater the duration and therefore the
greater effect interest rate changes have on the price of the
security. By maintaining the duration of the fund at a level similar
to that of its benchmark, the Lehman Brothers Aggregate Bond Index,
the adviser believes that the fund's exposure to interest rate risk
is less than that of a fund that attempts to predict future interest
rate changes. On July 31, 1999 the modified average duration of the
Lehman Brothers Aggregate Bond Index was 4.97 years.
Phoenix-Oakhurst Income & Growth Fund 1
<PAGE>
> Fixed income securities considered for portfolio investment may be of
any maturity. However, the adviser attempts to maintain a maturity
composition similar to that of its benchmark in an effort to reduce
the portfolio's exposure to interest rate risk. Maturity composition
refers to the percentage of securities within specific maturity
ranges as well as the aggregate weighted average portfolio maturity.
On July 31, 1999 the maturity of the Lehman Brothers Aggregate Bond
Index was 9.02 years.
> The adviser's investment strategy may result in a higher portfolio
turnover rate for the fund. High portfolio turnover rates may
increase costs to the fund, may negatively affect fund performance,
and may increase capital gains distributions, resulting in greater
tax liability to you.
Temporary Defensive Strategy: When, in the adviser's opinion, adverse
market or economic conditions warrant, any part of the fund's assets
may be held in cash or money market instruments including U.S. Treasury
obligations maturing within one year from the date of purchase. In such
instances, the fund may not achieve its stated objectives.
Please refer to the Statement of Additional Information for more
detailed information about these and other investment techniques.
Principal Risks
If you invest in this fund, you risk that you may lose your investment.
General
The value of the fund's investments that support your share value can
decrease as well as increase. If between the time you purchase shares
and the time you sell shares the value of the fund's investments
decrease, you will lose money.
Conditions affecting the overall economy, specific industries or
companies in which the fund invests can be worse than expected and
investments may fail to perform as the adviser expects. As a result,
the value of your shares may decrease. Likewise, if interest rates
rise, generally the value of fixed income investments will fall, which
will also result in the decrease of share values.
In addition, if the adviser misjudges the return potential of
securities, or the ability of issuers to make scheduled principal and
interest payments, the fund's returns may be lower than prevailing
returns and the fund's income available for distribution may be less
than other funds of this type.
2 Phoenix-Oakhurst Income & Growth Fund
<PAGE>
Small Capitalizations
Given the limited operating history and rapidly changing fundamental
prospects, investment returns from smaller capitalization companies can
be highly volatile. Small capitalization companies may be affected to a
greater extent by changes in economic conditions and conditions in
particular industries, are subject to varying patterns of trading
volume and may, at times, be more difficult to sell.
Foreign Investing
Foreign markets and currencies may not perform as well as U.S. markets.
Political and economic uncertainty in foreign countries, including so
called "emerging market" countries (countries with less developed
markets), as well as less public information about foreign investments,
may negatively impact the fund's portfolio. Dividends and other income
payable on foreign securities may be subject to foreign taxes. Some
investments may be made in currencies other than U.S. dollars that will
fluctuate in value as a result of changes in the currency exchange
rate. Emerging market countries and companies doing business in
emerging market countries may not have the same range of opportunities
as more developed countries and their companies. They may also have
more obstacles to financial success.
Long-Term Maturities
Fixed income securities with longer maturities may be subject to
greater price fluctuations due to interest rate, tax law and general
market changes.
High Yield Fixed Income Securities
High yield securities (junk bonds) typically entail greater price
volatility and principal and interest rate risk. There is a greater
risk that an issuer will not be able to make principal and interest
payments on time. Analysis of the creditworthiness of issuers of high
yield securities may be complex, and as a result, it may be more
difficult for the adviser to accurately predict risk.
Mortgage-Backed and Asset-Backed Securities
It is difficult to predict cash flows from mortgage-backed and
asset-backed securities due to the variability of prepayments.
Prepayments will also tend to limit price gains when interest rates
drop and exaggerate price declines when interest rates rise. The fund
may also have to invest prepayments at a lower interest rate than if
such prepayment had not occurred.
U.S. Government Securities
Obligations issued or guaranteed by the U.S. Government, its agencies,
authorities and instrumentalities only guarantee principal and interest
will be timely paid to holders of the securities. The entities do not
guarantee that the value of portfolio shares will increase.
Phoenix-Oakhurst Income & Growth Fund 3
<PAGE>
Municipal Securities
Principal and interest payments on municipal securities may not be
guaranteed by the issuing body and may be payable only from monies
(revenue) derived from a particular source. If the source does not
perform as expected, principal and income payments may not be made on
time or at all. In addition, the market for municipal securities is
often thin and can be temporarily affected by large purchases and
sales, including those by the fund.
Impact of the Year 2000 Issue on Fund Investments
The Year 2000 issue is the result of computer programs being written
using two rather than four digits to define the applicable year. There
is the possibility that some or all of an entity's computer programs
that have date-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. If an entity whose securities
are held by the fund does not "fix" its Year 2000 issue it is possible
that its operations and financial results would be hurt. Also the cost
of modifying computer programs to become Year 2000 compliant may hurt
the financial performance and market price of companies whose
securities are held by the fund.
4 Phoenix-Oakhurst Income & Growth Fund
<PAGE>
Performance Tables
The bar chart and table below provide some indication of the risks of
investing in Phoenix-Oakhurst Income & Growth Fund. The bar chart shows
changes in the fund's Class A Shares performance from year to year over
the last ten years.(1) The table shows how the fund's average annual
returns for one, five and ten years compare to those of a broad-based
securities market index. The fund's past performance is not necessarily
an indication of how the fund will perform in the future.
<TABLE>
<CAPTION>
Annual Return (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21.30% -1.50% 23.40% 11.90% 14.52% -6.25% 23.40% 12.70% 17.10% 10.96%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Calendar Year
</TABLE>
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 9.69% (quarter ending December 31,
1998) and the lowest return for a quarter was (8.44)% (quarter ending September
30, 1990). Year to date performance (through June 30, 1999) was 3.13%.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Returns(1) One Five Ten
(for the periods ending 12/31/98) Year Years Years
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<S> <C> <C> <C>
Class A Shares 5.70% 10.05% 11.80%
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Class B Shares 6.67% 10.35% N/A
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Class C Shares(3) N/A N/A N/A
- --------------------------------------------------------------------------------
Balanced Benchmark(4) 17.04% 13.98% 13.35%
- --------------------------------------------------------------------------------
S&P 500 Consumer Stock
Price Index(5) 22.71% 27.93% 18.78%
- --------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares
and a full redemption in the fund's Class B Shares.
(2) Class A Shares since September 6, 1940; Class B Shares since January 3,
1992.
(3) Class C Shares will be offered as of the effective date of this prospectus.
(4) The Balanced Benchmark is calculated based upon the performance of the
following indices: 40% S&P 500/60% Lehman Brothers Aggregate Bond Index. The
index's performance does not reflect sales charges.
(5) The S&P 500 Index is a measure of stock market total return performance. The
S&P 500's performance does not reflect sales charges.
Phoenix-Oakhurst Income & Growth Fund 5
<PAGE>
Fund Expenses
- ----------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares(b)
------ ------ ---------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from your
investment)
Maximum Sales Charge (load) Imposed on Purchases (as
a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (load) (as a percentage of None 5%(a) 1%(c)
the lesser of the value redeemed or the amount invested)
Maximum Sales Charge (load) Imposed on Reinvested
Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
-----------------------------------------
Class A Class B Class C
Shares Shares Shares
------ ------ ------
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 0.70% 0.70% 0.70%
Distribution and Service (12b-1) Fees(d) 0.25% 1.00% 1.00%
Other Expenses 0.22% 0.22% 0.22%
----- ----- -----
Total Annual Fund Operating Expenses 1.17% 1.92% 1.92%
===== ===== =====
</TABLE>
- ----------------
(a) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(b) Class C Shares will be offered as of the effective date of this prospectus.
(c) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) Distribution and Service 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").
Example
This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time
periods indicated and then redeem all of your shares at the end of
those periods. The example also assumes that your investment has a 5%
return each year and that the fund's operating expenses remain the
same. In the case of Class B Shares, it is assumed that your shares are
converted to Class A after eight years. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
6 Phoenix-Oakhurst Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
- -----------------------------------------------------
Class A $589 $829 $1,088 $1,828
- -----------------------------------------------------
Class B $595 $803 $1,037 $2,048
- -----------------------------------------------------
Class C $295 $603 $1,037 $2,243
- -----------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- -----------------------------------------------------
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
- -----------------------------------------------------
Class B $195 $603 $1,037 $2,048
- -----------------------------------------------------
Class C $195 $603 $1,037 $2,243
- -----------------------------------------------------
</TABLE>
Management of The Fund
- -------------------------------
The Adviser
Phoenix Investment Counsel, Inc. ("Phoenix") is the investment adviser
to the fund and is located at 56 Prospect Street, Hartford, CT 06115.
Phoenix also acts as the investment adviser for 14 other mutual funds,
as subadviser to three mutual funds and as adviser to institutional
clients. As of December 31, 1998, Phoenix had $23.9 billion in assets
under management. Phoenix has acted as an investment adviser for over
sixty years.
Subject to the direction of the fund's Board of Trustees, Phoenix is
responsible for managing the fund's investment program, the general
operations and the day-to-day management of the fund. Phoenix manages
the fund's assets to conform with the investment policies as described
in this prospectus. The fund pays Phoenix a monthly investment
management fee that is accrued daily against the value of the fund's
net assets at the following rates:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
$1+ billion
1st billion through $2 billion $2+ billion
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee 0.70% 0.65% 0.60%
- -----------------------------------------------------------------------
</TABLE>
During the fund's last fiscal year, the fund paid total management fees
of $5,907,808. The ratio of management fees to average net assets for
the fiscal year ended April 30, 1999 was 0.70%.
Phoenix-Oakhurst Income & Growth Fund 7
<PAGE>
Portfolio Management
Investment and trading decisions for the fund are made by a team of
equity investment professionals and a team of fixed income investment
professionals. Steven L. Colton is the leader of the equity team and as
such is primarily responsible for the day-to-day decisions related to
the equity holdings in the fund's portfolio. Mr. Colton is also Vice
President and Portfolio Manager of the Phoenix-Oakhurst Growth & Income
Fund of Phoenix Equity Series Fund. Mr. Colton joined Phoenix in June
1997. Previously, Mr. Colton was Portfolio Manager for the American
Century Income & Growth Fund from its inception in 1990 through May,
1997.
Impact of the Year 2000 Issue on Fund Operations
The Trustees have directed management to ensure that the systems used
by service providers (Phoenix and its affiliates) in support of the
funds' operations be assessed and brought into Year 2000 compliance.
Based upon its assessments, Phoenix determined that they would be
required to modify or replace portions of their software so that their
computer systems would properly utilize dates beyond December 31, 1999.
Phoenix management believes that the majority of these systems are
already Year 2000 compliant. Phoenix believes that with modifications
to existing software and conversions to new software, the Year 2000
issue will be mitigated. However, if the problem is not fully
addressed, the fund may be negatively impacted.
Phoenix is utilizing both internal and external resources to reprogram,
or replace, and test the software for Year 2000 modifications. As of
June 30, 1999, Phoenix mission-critical systems have been upgraded and
tested for Year 2000 compliance. The total cost to become Year 2000
compliant is not an expense of the fund and is not expected to have a
material impact on the operating results of Phoenix.
Pricing of Fund Shares
- -------------------------------
How is the Share Price determined?
The fund calculates a share price for each class of its shares. The
share price is based on the net assets of the fund and the number of
outstanding shares. In general, the fund calculates net asset value by:
o adding the values of all securities and other assets of the
fund,
o subtracting liabilities, and
o dividing by the total number of outstanding shares of the
fund.
8 Phoenix-Oakhurst Income & Growth Fund
<PAGE>
Asset Value: The fund's investments are valued at market value. If
market quotations are not available, the fund determines a "fair value"
for an investment according to rules and procedures approved by the
Trustees. Foreign and domestic debt securities (other than short-term
investments) are valued on the basis of broker quotations or valuations
provided by a pricing service approved by the Trustees when such prices
are believed to reflect the fair value of such securities. Foreign and
domestic equity securities are valued at the last sale price or, if
there has been no sale that day, at the last bid price, generally.
Short-term investments having a remaining maturity of sixty days or
less are valued at amortized cost, which the Trustees have determined
approximates market value.
Liabilities: Class specific expenses, distribution fees, service fees
and other liabilities are deducted from the assets of each class.
Expenses and liabilities that are not class specific (such as
management fees) are allocated to each class in proportion to each
class's net assets, except where an alternative allocation can be more
fairly made.
Net Asset Value: The liability allocated to a class plus any other
expenses are deducted from the proportionate interest of such class in
the assets of the fund. The resulting amount for each class is then
divided by the number of shares outstanding of that class to produce
each class's net asset value per share.
The net asset value per share of each class of the fund is determined
on days when the New York Stock Exchange (the "NYSE") is open for
trading as of the close of trading (normally 4:00 PM eastern time). The
fund will not calculate its net asset values per share on days when the
NYSE is closed for trading. Trading of securities held by the fund in
foreign markets may negatively or positively impact the value of such
securities on days when the fund neither trades securities nor
calculates its net asset values (i.e., weekends and certain holidays).
At what price are shares purchased?
All investments received by the fund's authorized agents prior to the
close of regular trading on the NYSE (normally 4:00 PM eastern time)
will be executed based on that day's net asset value. Shares credited
to your account from the reinvestment of fund distributions will be in
full and fractional shares that are purchased at the closing net asset
value on the next business day on which the fund's net asset value is
calculated following the dividend record date.
Sales Charges
- ----------------------
What are the classes and how do they differ?
The fund presently offers three classes of shares that have different
sales and distribution charges (see "Fund Expenses" previously in this
prospectus). The fund has adopted distribution and service plans
allowed under Rule 12b-1 of the Investment Company Act of 1940 that
authorize the fund to pay distribution and service fees for the sale of
its shares and for services provided to shareholders.
Phoenix-Oakhurst Income & Growth Fund 9
<PAGE>
What arrangement is best for you?
The different classes permit you to choose the method of purchasing
shares that is most beneficial to you. In choosing a class, consider
the amount of your investment, the length of time you expect to hold
the shares, whether you decide to receive distributions in cash or to
reinvest them in additional shares, and any other personal
circumstances. Depending upon these considerations, the accumulated
distribution and service fees and contingent deferred sales charges of
one class may be more or less than the initial sales charge and
accumulated distribution and service fees of another class of shares
bought at the same time. Because distribution and service fees are paid
out of the fund's assets on an ongoing basis, over time these fees will
increase the cost of your investment and may cost you more than paying
other types of sales charges.
Class A Shares. If you purchase Class A Shares, you will pay a sales
charge at the time of purchase equal to 4.75% of the offering price
(4.99% of the amount invested). The sales charge may be reduced or
waived under certain conditions. Class A Shares are not subject to any
charges by the fund when redeemed. Class A Shares have lower
distribution and service fees (0.25%) and pay higher dividends than any
other class.
Class B Shares. If you purchase Class B Shares, you will not pay a
sales charge at the time of purchase. If you sell your Class B Shares
within the first 5 years after they are purchased, you will pay a sales
charge of up to 5% of your shares' value. See "Deferred Sales Charge
Alternative--Class B and Class C Shares" below. This charge declines to
0% over a period of 5 years and may be waived under certain conditions.
Class B shares have higher distribution and service fees (1.00%) and
pay lower dividends than Class A Shares. Class B Shares automatically
convert to Class A Shares eight years after purchase. Purchases of
Class B Shares may be inappropriate for any investor who may qualify
for reduced sales charges of Class A Shares and anyone who is over 85
years of age. The underwriter may decline purchases in such situations.
Class C Shares. If you purchase Class C Shares, you will not pay a
sales charge at the time of purchase. If you sell your Class C Shares
within the first year after they are purchased, you will pay a sales
charge of 1%. See "Deferred Sales Charge Alternative--Class B and C
Shares" below. Class C Shares have the same distribution and service
fees (1.00%) and pay comparable dividends as Class B Shares. Class C
Shares do not convert to any other class of shares of the fund.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A Shares is the net asset value plus
a sales charge that varies depending on the size of your purchase (see
"Class A Shares--Reduced Sales Charges: Combination Purchase Privilege"
in the Statement of Additional Information). Shares purchased based on
the automatic reinvestment of income dividends or capital gains
distributions are not subject to any sales charges. The sales charge is
divided between your investment dealer and the fund's underwriter
(Phoenix Equity Planning Corporation or "PEPCO").
10 Phoenix-Oakhurst Income & Growth Fund
<PAGE>
Sales Charge you may pay to purchase Class A Shares
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
----------------------
Amount of Net
Transaction Offering Amount
at Offering Price Price Invested
- --------------------------------------------------------
<S> <C> <C>
Under $50,000 4.75% 4.99%
$50,000 but under $100,000 4.50 4.71
$100,000 but under $250,000 3.50 3.63
$250,000 but under $500,000 3.00 3.09
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
</TABLE>
Deferred Sales Charge Alternative--
Class B and Class C Shares
Class B and Class C Shares are purchased without an initial sales
charge; however, shares sold within a specified time period are subject
to a declining contingent deferred sales charge ("CDSC") at the rates
listed below. The sales charge will be multiplied by the then current
market value or the initial cost of the shares being redeemed,
whichever is less. No sales charge will be imposed on increases in net
asset value or on shares purchased through the reinvestment of income
dividends or capital gains distributions. To minimize the sales charge,
shares not subject to any charge will be redeemed first, followed by
shares held the longest time. To calculate the amount of shares owned
and time period held, all Class B Shares purchased in any month are
considered purchased on the last day of the preceding month, and all
Class C Shares are considered purchased on the trade date.
Deferred Sales Charge you may pay to sell Class B Shares
<TABLE>
<CAPTION>
Year 1 2 3 4 5 6+
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CDSC 5% 4% 3% 2% 2% 0%
</TABLE>
Deferred Sales Charge you may pay to sell Class C Shares
<TABLE>
<CAPTION>
Year 1 2+
----------------------------------------------------------------
<S> <C> <C>
CDSC 1% 0%
</TABLE>
Your Account
- ---------------------
Opening an Account
Your financial advisor can assist you with your initial purchase as
well as all phases of your investment program. If you are opening an
account by yourself, please follow the instructions outlined below.
Phoenix-Oakhurst Income & Growth Fund 11
<PAGE>
Step 1.
Your first choice will be the initial amount you intend to invest.
Minimum initial investments:
o $25 for individual retirement accounts, or accounts that use the
systematic exchange privilege, or accounts that use the
Investo-Matic program (see below for more information on the
Investo-Matic program).
o There is no initial dollar requirement for defined contribution
plans, profit-sharing plans, or employee benefit plans. There is
also no minimum for reinvesting dividends and capital gains into
another account.
o $500 for all other accounts.
Minimum additional investments:
o $25 for any account.
o There is no minimum for defined contribution plans, profit-sharing
plans, or employee benefit plans. There is also no minimum for
reinvesting dividends and capital gains into an existing account.
Step 2.
Your second choice will be what class of shares to buy. The fund offers
three classes of shares for individual investors. Each has different
sales and distribution charges. Because all future investments in your
account will be made in the share class you choose when you open your
account, you should make your decision carefully. Your financial
advisor can help you pick the share class that makes the most sense for
your situation.
Step 3.
Your next choice will be how you want to receive any dividends and
capital gain distributions. Your options are:
o Receive both dividends and capital gain distributions in additional
shares;
o Receive dividends in additional shares and capital gains in
distributions in cash;
o Receive dividends in cash and capital gain distributions in
additional shares; or
o Receive both dividends and capital gain distributions in cash.
No interest will be paid on uncashed distribution checks.
12 Phoenix-Oakhurst Income & Growth Fund
<PAGE>
How To Buy Shares
- --------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
To Open An Account
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- ----------------------------------------------------------------------------------------------------------
Through the mail Complete a New Account Application and send it with a check payable
to the fund. Mail them to: State Street Bank, P.O. Box 8301, Boston,
MA 02266-8301.
- ----------------------------------------------------------------------------------------------------------
Through express delivery Complete a New Account Application and send it with a check payable
to the fund. Send them to: Boston Financial Data Services, Attn:
Phoenix Funds, 66 Brooks Drive, Braintree, MA 02184.
- ----------------------------------------------------------------------------------------------------------
By Federal Funds wire Call us at (800) 243-1574 (press 1, then 0).
----------------------------------------------------------------------------------------------------------
By Investo-Matic Complete the appropriate section on the application and send it with your
initial investment payable to the fund. Mail them to: State Street Bank,
P.O. Box 8301, Boston, MA 02266-8301.
- ----------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800) 243-1574 (press 1, then 0).
- ----------------------------------------------------------------------------------------------------------
</TABLE>
How to Sell Shares
- ---------------------------
You have the right to have the fund buy back shares at the net asset
value next determined after receipt of a redemption order by the fund's
Transfer Agent or an authorized agent. In the case of a Class B or
Class C Share redemption, you will be subject to the applicable
deferred sales charge, if any, for such shares. Subject to certain
restrictions, shares may be redeemed by telephone or in writing. In
addition, shares may be sold through securities dealers, brokers or
agents who may charge customary commissions or fees for their services.
The fund does not charge any redemption fees. Payment for shares
redeemed is made within seven days; however, redemption proceeds will
not be disbursed until each check used for purchases of shares has been
cleared for payment by your bank, which may take up to 15 days after
receipt of the check.
Phoenix-Oakhurst Income & Growth Fund 13
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
To Sell Shares
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- -------------------------------------------------------------------------------------------------------------
Through the mail Send a letter of instruction and any share certificates (if you hold
certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301. Be sure to include the registered owner's name, fund and
account number, number of shares or dollar value you wish to sell.
- -------------------------------------------------------------------------------------------------------------
Through express delivery Send a letter of instruction and any share certificates (if you hold
certificate shares) to: Boston Financial Data Services, Attn: Phoenix
Funds, 66 Brooks Drive, Braintree, MA 02184. Be sure to include the
registered owner's name, fund and account number.
- -------------------------------------------------------------------------------------------------------------
By telephone For sales up to $50,000, requests can be made by calling
(800) 243-1574.
- -------------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800) 243-1574 (press 1, then 0).
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Things You Should Know When Selling Shares
- ---------------------------------------------------
You may realize a taxable gain or loss (for federal income tax
purposes) if you redeem shares of the fund. The fund reserves the right
to pay large redemptions "in-kind" (in securities owned by the fund
rather than in cash). Large redemptions are those over $250,000 or 1%
of the fund's net assets. Additional documentation will be required for
redemptions by organizations, fiduciaries, or retirement plans, or if
redemption is requested by anyone but the shareholder(s) of record.
Transfers between broker-dealer "street" accounts are governed by the
accepting broker-dealer. Questions regarding this type of transfer
should be directed to your financial advisor. Redemption requests will
not be honored until all required documents in proper form have been
received. To avoid delay in redemption or transfer, shareholders having
questions about specific requirements should contact the fund's
Transfer Agent at (800) 243-1574.
Redemptions by Mail
> If you are selling shares held individually, jointly, or as custodian
under the Uniform Gifts to Minors Act or Uniform Transfers to Minors
Act.
Send a clear letter of instructions if all of these apply:
o The proceeds do not exceed $50,000.
o The proceeds are payable to the registered owner at the address on
record.
Send a clear letter of instructions with a signature guarantee when
any of these apply:
o You are selling more than $50,000 worth of shares.
14 Phoenix-Oakhurst Income & Growth Fund
<PAGE>
o The name or address on the account has changed within the last 60
days.
o You want the proceeds to go to a different name or address than on
the account.
> If you are selling shares held in a corporate or fiduciary account,
please contact the fund's Transfer Agent at (800) 243-1574.
If required, the signature guarantee on your request must be 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.
Selling Shares by Telephone
The Transfer Agent will use reasonable procedures to confirm that
telephone instructions are genuine. Address and bank account
information are verified, redemption instructions are taped, and all
redemptions are confirmed in writing.
The individual investor bears the risk from instructions given by an
unauthorized third party that the Transfer Agent reasonably believed to
be genuine.
The Transfer Agent may modify or terminate the telephone redemption
privilege at any time with 60 days notice to shareholders.
During times of drastic economic or market changes, telephone
redemptions may be difficult to make or temporarily suspended.
Account Policies
- -------------------------
Account Reinstatement Privilege
For 180 days after you sell your Class A, B or C Shares, you can
purchase Class A Shares of any fund at net asset value, with no sales
charge, by reinvesting all or part of your proceeds, but not more. Send
your written request to State Street Bank, P.O. Box 8301, Boston, MA
02266-8301. You can call us at (800) 243-1574 for more information.
Please remember, a redemption and reinvestment are considered to be a
sale and purchase for tax-reporting purposes. Class B shareholders who
have had the contingent deferred sales charge waived because they are
in the Systematic Withdrawal Program are not eligible for this
reinstatement privilege.
Phoenix-Oakhurst Income & Growth Fund 15
<PAGE>
Redemption of Small Accounts
Due to the high cost of maintaining small accounts, if your account
balance is less than $200, you may receive a notice requesting you to
bring the balance up to $200 within 60 days. If you do not, the shares
in the account will be sold at net asset value, and a check will be
mailed to the address of record.
Exchange Privileges
You should read the prospectus carefully before deciding to make an
exchange. You can obtain a prospectus from your financial advisor or by
calling us at (800) 243-4361 or accessing our Web site at
www.phoenixinvestments.com.
o You may exchange shares for another fund in the same class of
shares; e.g., Class A for Class A.
o Exchanges may be made by phone (800) 243-1574 or by mail (State
Street Bank, P.O. Box 8301, Boston, MA 02266-8301).
o The amount of the exchange must be equal to or greater than the
minimum initial investment required.
o The exchange of shares is treated as a sale and purchase for
federal income tax purposes.
o Because excessive trading can hurt fund performance and harm other
shareholders, the Fund reserves the right to temporarily or
permanently end exchange privileges or reject an order from anyone
who appears to be attempting to time the market, including
investors who request more than one exchange in any 30-day period.
The fund's underwriter has entered into agreements with certain
market timing firms permitting them to exchange by telephone. These
privileges are limited, and the fund distributor has the right to
reject or suspend them.
Retirement Plans
Shares of the fund may be used as investments under the following
qualified prototype retirement plans: traditional IRA, rollover IRA,
SEP-IRA, SIMPLE IRA, Roth IRA, 401(k) plans, profit-sharing, money
purchase pension plans, and 403(b) plans. For more information, call
(800) 243-4361.
Investor Services
- --------------------------
Investo-Matic is a systematic investment plan that allows you to have a
specified amount automatically deducted from your checking or savings
account and then deposited into your mutual fund account. Just complete
the Investo-Matic Section on the application and include a voided
check.
16 Phoenix-Oakhurst Income & Growth Fund
<PAGE>
Systematic Exchange allows you to automatically move money from one
Phoenix Fund to another on a monthly, quarterly, semiannual or annual
basis. Shares of one Phoenix Fund will be exchanged for shares of the
same class of another fund at the interval you select. To sign up, just
complete the Systematic Exchange Section on the application.
Telephone Exchange lets you exchange shares of one fund for the same
class of shares in another fund, using our customer service telephone
service. See the Telephone Exchange Section on the application.
Systematic Withdrawal Program allows you to periodically redeem a
portion of your account on a predetermined monthly, quarterly,
semiannual, or annual basis. Sufficient shares will be redeemed on the
15th of the month at the closing net asset value so that the payment is
made about the 20th of the month. The program also provides for
redemptions on or about the 10th, 15th, or 25th with proceeds directed
through Automated Clearing House (ACH) to your bank. The minimum
withdrawal is $25, and minimum account balance requirements continue.
Shareholders in the program must own fund shares worth at least $5,000.
Tax Status of Distributions
- ------------------------------------
The fund plans to make distributions from net investment income
quarterly and to distribute net realized capital gains, if any, at
least annually. Distributions of short-term capital gains and net
investment income are taxable to shareholders as ordinary income.
Long-term capital gains, if any, distributed to shareholders and which
are designated by the fund as capital gains distributions, are taxable
to shareholders as long-term capital gain distributions regardless of
the length of time you have owned your shares.
Unless you elect to receive distributions in cash, dividends and
capital gain distributions are paid in additional shares. All
distributions, cash or additional shares, are subject to federal income
tax and may be subject to state, local and other taxes.
Phoenix-Oakhurst Income & Growth Fund 17
<PAGE>
Financial Highlights
- -----------------------------
These tables are intended to help you understand the fund's financial
performance over the past five years. Class C Shares are a new class of
shares and as such have no financial performance to report as of the
effective date of this prospectus. Certain information reflects
financial results for a single fund share. The total returns in the
tables represent the rate that an investor would have earned or lost on
an investment in the fund (assuming reinvestment of all dividends and
distributions). This information has been audited by
PricewaterhouseCoopers LLP, independent accountants. Their report,
together with the fund's financial statements, are included in the
fund's most recent Annual Report, which is available upon request.
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------
Year Ended April 30,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.20 $9.86 $10.08 $ 8.88 $9.33
Income from investment operations:
Net investment income 0.36 0.38 0.40 0.44 0.46
Net realized and unrealized gain (loss) 0.29 1.63 0.66 1.22 0.03
-------- ------ ------ ------ -----
Total from investment operations 0.65 2.01 1.06 1.66 0.49
-------- ------ ------ ------ -----
Less distributions:
Dividends from net investment income (0.38) (0.39) (0.40) (0.42) (0.45)
Dividends from net realized gains (0.76) (1.28) (0.88) (0.04) (0.33)
In excess of accumulated net realized gains (0.03) -- -- -- (0.16)
-------- ------ ------ ------ -----
Total distributions (1.17) (1.67) (1.28) (0.46) (0.94)
-------- ------ ------ ------ -----
Change in net asset value (0.52) 0.34 (0.22) 1.20 (0.45)
-------- ------ ------ ------ -----
Net asset value, end of period $9.68 $10.20 $ 9.86 $10.08 $8.88
======== ====== ====== ====== =====
Total return(1) 6.97% 21.87% 10.93% 19.01% 5.95%
Ratios/supplemental data:
Net assets, end of period (thousands) $565,276 $459,992 $451,439 $493,454 $490,225
Ratio to average net assets of:
Expenses 1.17%(2) 1.13% 1.18% 1.18% 1.16%
Net investment income 3.64% 3.61% 3.82% 4.39% 5.07%
Portfolio turnover 68% 155% 111% 107% 90%
</TABLE>
- ----------------
(1) Maximum sales charge is not reflected in total return calculation.
(2) For the year ended April 30, 1999, the ratio of operating expenses to
average net assets excludes the effects of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
18 Phoenix-Oakhurst Income & Growth Fund
<PAGE>
Financial Highlights (continued)
- -----------------------------------------
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------------------
Year Ended April 30,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.22 $ 9.87 $10.09 $ 8.88 $9.32
Income from investment operations:
Net investment income 0.29 0.30 0.31 0.36 0.39
Net realized and unrealized gain (loss) 0.29 1.64 0.67 1.23 0.04
-------- -------- -------- -------- --------
Total from investment operations 0.58 1.94 0.98 1.59 0.43
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.32) (0.31) (0.32) (0.34) (0.38)
Dividends from net realized gains (0.76) (1.28) (0.88) (0.04) (0.33)
In excess of accumulated net realized gains (0.03) -- -- -- (0.16)
-------- -------- -------- -------- --------
Total distributions (1.11) (1.59) (1.20) (0.38) (0.87)
-------- -------- -------- -------- --------
Change in net asset value (0.53) 0.35 (0.22) 1.21 (0.44)
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.69 $10.22 $ 9.87 $10.09 $8.88
======== ======== ======== ======== ========
Total return(1) 6.18% 21.03% 10.05% 18.14% 5.23%
Ratios/supplemental data:
Net assets, end of period (thousands) $310,783 $361,876 $370,929 $396,169 $386,515
Ratio to average net assets of:
Expenses 1.92%(2) 1.88% 1.93% 1.93% 1.91%
Net investment income 2.92% 2.86% 3.06% 3.64% 4.32%
Portfolio turnover 68% 155% 111% 107% 90%
</TABLE>
- ----------------
(1) Maximum sales charge is not reflected in total return calculation.
(2) For the year ended April 30, 1999, the ratio of operating expenses to
average net assets excludes the effects of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
Phoenix-Oakhurst Income & Growth Fund 19
<PAGE>
Additional Information
- -------------------------------
Statement of Additional Information
The fund has filed a Statement of Additional Information about the fund, dated
August 27, 1999 with the Securities and Exchange Commission. The Statement
contains more detailed information about the fund. It is incorporated into this
prospectus by reference and is legally part of the prospectus. You may obtain a
free copy of the Statement:
o by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow Blvd.,
P.O. Box 2200, Enfield, Connecticut 06083-2200 or
o by calling (800) 243-4361.
You may also obtain information about the fund from the Securities and Exchange
Commission:
o through its internet site (http://www.sec.gov),
o by visiting its Public Reference Room in Washington, DC or
o by writing to its Public Reference Section, Washington, DC 20549-6009 (a fee
may be charged).
Information about the operation of the Public Reference Room may be obtained
by calling (800) SEC-0330.
Shareholder Reports
The fund semiannually mails to its shareholders detailed reports containing
information about the fund's investments. The fund's Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the fund's performance from May 1 through April 30. You
may request a free copy of the fund's Annual and Semiannual Reports:
o by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow Blvd.,
P.O. Box 2200, Enfield, Connecticut 06083-2200 or
o by calling (800) 243-4361.
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunication Device (TTY): (800) 243-1926
SEC File Nos. 33-6930 and 811-4728
[recycle logo] Printed on recycled paper using soybean ink
20 Phoenix-Oakhurst Income & Growth Fund
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Phoenix Equity Planning Corporation
PO Box 2200
Enfield CT 06083-2200
[PHOENIX LOGO]
PHOENIX
INVESTMENT PARTNERS
- --------------------------
PRSRT STD
U.S. Postage
PAID
Springfield, MA
Permit No. 444
- --------------------------
PXP 693 (8/99)
<PAGE>
PHOENIX-OAKHURST INCOME & GROWTH FUND
101 Munson Street
Greenfield, Massachusetts 01301
Statement of Additional Information
August 27, 1999
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix-Oakhurst Income & Growth Fund (the "Fund"), dated August 27, 1999, 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 ............ 1
INVESTMENT RESTRICTIONS ....................... 1
INVESTMENT TECHNIQUES ......................... 2
PERFORMANCE INFORMATION ....................... 7
PORTFOLIO TURNOVER ............................ 8
PORTFOLIO TRANSACTIONS AND BROKERAGE .......... 8
SERVICES OF THE ADVISER ....................... 10
NET ASSET VALUE ............................... 10
HOW TO BUY SHARES ............................. 11
ALTERNATIVE PURCHASE ARRANGEMENTS ............. 11
INVESTOR ACCOUNT SERVICES ..................... 14
HOW TO REDEEM SHARES .......................... 15
DIVIDENDS, DISTRIBUTIONS AND TAXES ............ 16
TAX SHELTERED RETIREMENT PLANS ................ 17
THE DISTRIBUTOR ............................... 18
DISTRIBUTION PLANS ............................ 19
MANAGEMENT OF THE FUND ........................ 21
ADDITIONAL INFORMATION ........................ 27
APPENDIX ...................................... 29
</TABLE>
Customer Service--(800) 243-1574
Marketing--(800) 243-4361
Telephone Orders--(800) 367-5877
Telecommunication Device (TTY)--(800) 243-1926
PXP 693B (8/99)
<PAGE>
THE FUND
Phoenix-Oakhurst Income & Growth Fund (the "Fund") is an open-end
diversified management investment company which was organized under
Massachusetts law in 1986 as a business trust. 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 primary 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
The Fund may utilize the following practices or techniques in pursuing its
investment objectives.
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 the Adviser to present minimum
credit risk in accordance with guidelines approved by the Fund's Trustees. The
Adviser 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
value of the underlying securites 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. The
Fund may invest up to 10% of its net assets 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 securites 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. When 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 securites 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. The Fund may purchase
the securities of issuers from various countries, including countries commonly
referred to as "emerging markets." 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
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potential restrictions on the flow of international capital. Additionally,
dividends payable on foreign securities may be subject to foreign taxes withheld
prior to distribution. Foreign securities often trade with less frequency and
volume than domestic securities and therefore may exhibit greater price
volatility. Changes in foreign exchange rates will affect the value of those
securities which are denominated or quoted in currencies other than the U.S.
dollar. Many of the foreign securities held by the Fund will not be registered
with, nor the issuers thereof be subject to the reporting requirements of, the
U.S. Securities and Exchange Commission. 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.
Certain foreign countries are less stable politically than the United
States. The possibility exists that certain foreign governments may adopt
policies providing for expropriation or nationalization of assets, confiscatory
taxation, currency blockage or limitations on the use or removal of monies or
other assets of an investment company. Finally, the Fund may encounter
difficulty in obtaining and enforcing judgments against issuers of foreign
securities. The economies of developing countries generally are heavily
dependent upon international trade and, accordingly, have been and may continue
to be adversely affected by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. These economies also have
been and may continue to be adversely affected by economic conditions in the
countries with which they trade.
Certain emerging market countries are either comparatively underdeveloped
or are in the process of becoming developed and may consequently be economically
based on a relatively few or closely interdependent industries. A high
proportion of the securities of many emerging market issuers may also be held by
a limited number of large investors trading significant blocks of securities.
While the Adviser will strive to be sensitive to publicize reversals of economic
conditions, political unrest and adverse changes in trading status,
unanticipated political and social developments may affect the values of the
Fund's investments in such countries and the availability of additional
investments in such countries.
When 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 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.
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 Commission. Such
securities may offer higher
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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 Commission, 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 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 (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 Commission
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.
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 pledged account with its Custodian, any asset, including
equity securities, as long as the asset is liquid, unencumbered and marked to
market daily 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
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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 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.
Mortgage-Related and Other Asset-Backed Securities
Mortgage Pass-Through Securities. These are interests in pools of mortgage
loans, assembled and issued by various governmental, government-related, and
private organizations. Unlike other forms of debt securities, which normally
provide for periodic payment of interest in fixed amounts with principal
payments at maturity or specified call dates, these securities provide a monthly
payment consisting of both interest and principal payments. In effect, these
payments are a "pass-through" of the monthly payments made by the borrowers on
their residential or commercial mortgage loans, net of any fees paid to the
issuer or guarantor of such securities. Additional payments are caused by
repayments of principal resulting from the sale of the underlying property,
refinancing or foreclosure, net of fees or costs. "Modified pass-through"
securities (such as securities issued by the Government National Mortgage
Association ("GNMA")) entitle the holder to receive all interest and principal
payments owed on the mortgage pool, net of certain fees, at the scheduled
payment dates regardless of whether or not the mortgagor actually makes the
payment.
The principal governmental guarantor of mortgage-related securities is
GNMA. GNMA is a wholly owned United States Government corporation within the
Department of Housing and Urban Development. GNMA is authorized to guarantee,
with the full faith and credit of the United States Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA (such as savings and loan institutions, commercial banks and mortgage
bankers) and backed by pools of Federal Housing Administration insured or
Veterans Administration guaranteed mortgages.
Government-related guarantors whose obligations are not backed by the full
faith and credit of the United States Government include the Federal National
Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation
("FHLMC"). FNMA is a government-sponsored corporation owned entirely by private
stockholders. It is subject to general regulation by the Secretary of Housing
and Urban Development. FNMA purchases conventional (i.e., not insured or
guaranteed by any government agency) residential mortgages from a list of
approved seller/servicers which include state and federally chartered savings
and loan associations, mutual savings banks, commercial banks and credit unions
and mortgage bankers. FHLMC is a government-sponsored corporation formerly owned
by the twelve Federal Home Loan Banks and now owned entirely by private
stockholders. FHLMC issues Participation Certificates ("Pcs") that represent
interests in conventional mortgages from FHLMC's national portfolio. FNMA and
FHLMC guarantee the timely payment of interest and ultimate collection of
principal on securities they issue, but their guarantees are not backed by the
full faith and credit of the United States Government.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. Such issuers may,
in addition, be the originators and/or servicers of the underlying mortgage
loans as well as the guarantors of the mortgage-related securities. Pools
created by such non-governmental issuers generally offer a higher rate of
interest than government and government-related pools because there are no
direct or indirect government or agency guarantees of payments for such
securities. However, timely payment of interest and principal of these pools may
be supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance and letters of credit. The insurance and
guarantees are issued by governmental entities, private insurers and the
mortgage poolers. Such insurance and guarantees and the creditworthiness of the
issuers thereof will be considered in determining whether a mortgage-related
security meets the Fund's investment quality standards. There can be no
assurance that the private insurers or guarantors can meet their obligations
under the insurance policies or guarantee arrangements. The Fund may buy
mortgage-related securities without insurance or guarantees if, through an
examination of the loan experience and practices of the originator/servicers and
poolers, the Adviser determines that the securities meet the Fund's quality
standards. Securities issued by certain private organizations may not be readily
marketable.
Mortgage-backed securities that are issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, are not subject to the Fund's
industry concentration restrictions, set forth above under "Investment
Restrictions," by virtue of the exclusion from the test available to all U.S.
Government securities. The Fund will take the position that privately-issued
mortgage-related securities do not represent interests in any particular
"industry" or group of industries. The assets underlying such securities may be
represented by a portfolio of residential or commercial mortgages (including
both whole mortgage loans and mortgage
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participation interests) or portfolios of mortgage pass-through securities
issued or guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a
mortgage-related security may in turn be insured or guaranteed by the Federal
Housing Administration or the Department of Veterans Affairs. In the case of
private issue mortgage-related securities whose underlying assets are neither
U.S. Government securities nor U.S. Government-insured mortgages, to the extent
that real properties securing such assets may be located in the same
geographical region, the security may be subject to a greater risk of default
than other comparable securities in the event of adverse economic, political or
business developments that may affect such region and, ultimately, the ability
of residential homeowners to make payments of principal and interest on the
underlying mortgages.
Collateralized Mortgage Obligations (CMOs). A CMO is similar to a bond in
that interest and prepaid principal is paid, in most cases, semiannually. CMOs
may be collateralized by whole mortgage loans or by portfolios of mortgage
pass-through securities guaranteed by entities such as GNMA, FHLMC, or FNMA, and
their income streams.
CMOs are typically structured in multiple classes, each bearing a different
stated maturity. Actual maturity and average life will depend upon the
prepayment experience of the collateral. CMOs provide for a modified form of
call protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity classes typically receive principal only after the first class
has been retired. An investor may be partially guarded against a sooner than
desired return of principal because of the sequential payments.
FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having
different maturity dates and are secured by the pledge of a pool of conventional
mortgage loans purchased by FHLMC. Unlike FHLMC Pcs, payments of principal and
interest on the CMOs are made semiannually rather than monthly. The amount of
principal payable on each semiannual payment date is determined in accordance
with FHLMC's mandatory sinking fund schedule. Sinking fund payments in the CMOs
are allocated to the retirement of the individual classes of bonds in the order
of their stated maturities. Payments of principal on the mortgage loans in the
collateral pool in excess of the amount of FHLMC's minimum sinking fund
obligation for any payment date are paid to the holders of the CMOs as
additional sinking-fund payments. Because of the "pass-through" nature of all
principal payments received on the collateral pool in excess of FHLMC's minimum
sinking fund requirement, the rate at which principal of the CMOs is actually
repaid is likely to be such that each class of bonds will be retired in advance
of its scheduled maturity date. If collection of principal (including
prepayments) on the mortgage loans during any semiannual payment period is not
sufficient to meet FHLMC's minimum sinking fund obligation on the next sinking
fund payment date, FHLMC agrees to make up the deficiency from its general
funds.
CMO Residuals. CMO residuals are derivative mortgage securities issued by
agencies or instrumentalities of the U.S. Government or by private originators
of, or investors in, mortgage loans. As described above, the cash flow generated
by the mortgage assets underlying a series of CMOs is applied first to make
required payments of principal and interest on the CMOs and second to pay the
related administrative expenses of the issuer. The "residual" in a CMO structure
generally represents the interest in any excess cash flow remaining after making
the foregoing payments. Each payment of such excess cash flow to a holder of the
related CMO residual represents income and/or a return of capital. The amount of
residual cash flow resulting from a CMO will depend on, among other things, the
characteristics of the mortgage assets, the coupon rate of each class of CMO,
prevailing interest rates, the amount of administrative expenses and, in
particular, the prepayment experience on the mortgage assets. In addition, if a
series of a CMO includes a class that bears interest at an adjustable rate, the
yield to maturity on the related CMO residual will also be extremely sensitive
to changes in the level of the index upon which interest rate adjustments are
based. As described below with respect to stripped mortgage-backed securities,
in certain circumstances the Fund may fail to recoup fully its initial
investment in a CMO residual.
CMO residuals are generally purchased and sold by institutional investors
through several investment banking firms acting as brokers or dealers. The CMO
residual market has only very recently developed and CMO residuals currently may
not have the liquidity of other more established securities trading in other
markets. CMO residuals may be subject to certain restrictions on
transferability, may be deemed "illiquid," and may be subject to the Fund's
limitations on investment in illiquid securities.
Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities
("SMBS") are derivative multi-class mortgage securities. They may be issued by
agencies or instrumentalities of the U.S. Government, or by private originators
of, or investors in, mortgage loans. SMBS are usually structured with two
classes that receive different proportions of the interest and principal
distributions on a pool of mortgage assets. A common type of SMBS will have one
class receiving some of the interest and most of the principal from the mortgage
assets, while the other class will receive most of the interest and the
remainder 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 security 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 the
Fund's yield to maturity from these securities. 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 even if the
security is in one of the highest rating categories.
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Although SMBS are purchased and sold by institutional investors through
several investment banking firms acting as brokers or dealers, these securities
were only recently developed. As a result, established trading markets have not
yet developed and, accordingly, these securities may be deemed "illiquid" and
subject to the Fund's limitations on investment in illiquid securities.
The Fund may invest in other mortgage-related securities with features
similar to those described above, to the extent consistent with the Fund's
investment objectives and policies.
Other Asset-Backed Securities. Through trusts and other special purpose
entities, various types of securities based on financial assets other than
mortgage loans are increasingly available, in both pass-through structures
similar to mortgage pass-through securities described above and in other
structures more like CMOs. As with mortgage-related securities, these
asset-backed securities are often backed by a pool of financial assets
representing the obligations of a number of different parties. They often
include credit-enhancement features similar to mortgage-related securities.
Financial assets on which these securities are based include automobile
receivables; credit card receivables; loans to finance boats, recreational
vehicles, and mobile homes; computer, copier, railcar, and medical equipment
leases; and trade, healthcare, and franchise receivables. In general, the
obligations supporting these asset-backed securities are of shorter maturities
than mortgage loans and are less likely to experience substantial prepayments.
However, obligations such as credit card receivables are generally unsecured and
the obligors are often entitled to protection under a number of state and
federal consumer credit laws granting, among other things, rights to set off
certain amounts owed on the credit cards, thus reducing the balance due. Other
obligations that are secured, such as automobile receivables, may present
issuers with difficulties in perfecting and executing on the security interests,
particularly where the issuer allows the servicers of the receivables to retain
possession of the underlying obligations, thus increasing the risk that
recoveries on defaulted obligations may not be adequate to support payments on
the securities.
The Adviser expects additional assets will be "securitized" in the future.
The Fund may invest in any such instruments or variations on them to the extent
consistent with the Fund's investment objectives and policies.
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, sales literature or reports to shareholders or prospective
investors. Performance information in advertisements and sales literature may be
expressed as a yield of a class and as a total return of any class of the Fund.
Standardized quotations of average annual total return for Class A, Class B
or Class C shares will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in either Class A, Class B or Class
C 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 and Class C shares, and assume that all dividends and distributions
are on Class A, Class B and Class C shares reinvested when paid.
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 Composite Stock Price Index (the
"S&P 500"), Dow Jones Industrial Average, Europe Australia Far East Index
(EAFE), Consumer Price Index, Lehman Brothers Corporate Index and Lehman
Brothers T-Bond Index.
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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, Dow Jones Industrial Average, CS 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+1)6-1]
[---- ]
[cx d ]
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, 1999, the yield of the Class A Shares and
Class B Shares was 2.88% and 2.21%, respectively.
For the 1, 5 and 10 year periods ended April 30, 1999, the average annual
total return of the Class A Shares was 1.89%, 11.67% and 11.13%, respectively.
For the 1 and 5 year periods ended April 30, 1999, and since inception (January
3, 1992), for Class B Shares, the average annual total return was 2.54%, 11.95%
and 10.75%, 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
aggregate cumulative total return for the period commencing September 7, 1940
and ending April 30, 1999 was 36,225.01%. Class B aggregate cumulative total
return for the period commencing with the offering of the Class B Shares on
January 3, 1992 and ending April 30, 1999 was 106.61%.
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
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 TURNOVER
Portfolio turnover is calculated by dividing the lesser of purchases or
sales of portfolio securities during the fiscal year by the monthly average of
the value of the Fund's securities (excluding from the computation all
securities, including options, with maturities at the time of acquisition of one
year or less). A high rate of portfolio turnover generally involves
correspondingly greater brokerage commission expenses, which must be borne
directly by the Fund. Turnover rates may vary greatly from year to year as well
as within a particular year and may also be affected by cash requirements for
redemptions of Fund shares and by requirements which enable the Fund to receive
certain favorable tax treatment (see "Dividends, Distributions and Taxes").
Historical annual rates of portfolio turnover for the Fund are set forth in the
prospectus under the heading "Financial Highlights."
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
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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.
The Fund has adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to lower
commission costs on a per-share and per-dollar basis. According to the bunching
procedures, the Adviser shall aggregate transactions unless it believes in its
sole discretion that such aggregation is inconsistent with its duty to seek best
execution (which shall include the duty to seek best price) for the Fund. No
advisory account of the Adviser is to be favored over any other account and each
account that participates in an aggregated order is expected to participate at
the average share price for all transactions of the Adviser in that security on
a given business day, with all transaction costs shared pro rata based on the
Fund's participation in the transaction. If the aggregated order is filled in
its entirety, it shall be allocated among the Adviser's accounts in accordance
with the allocation order, and if the order it partially filled, it shall be
allocated pro rata based on the allocation order. Notwithstanding the foregoing,
the order may be allocated on a basis different from that specified in the
allocation order if all accounts of the Adviser whose orders are allocated
receive fair and equitable treatment and the reason for such different
allocation is explained in writing and is approved in writing by the Adviser's
compliance officer as soon as practicable after the opening of the markets or
the trading day following the day on which the order is executed. If an
aggregated order is partially filled and allocated on a basis different from
that specified in the allocation order, no account that is benefited by such
different allocation may intentionally and knowingly effect any purchase or sale
for a reasonable period following the execution of the aggregated order that
would result in it receiving or selling more shares than the amount of shares it
would have received or sold had the aggregated order been completely filled. The
Trustees will annually review these procedures or as frequently as shall appear
appropriate.
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.
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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, 1997, 1998 and 1999, brokerage
commissions paid by the Fund totaled $1,778,732, $1,276,897 and $578,805,
respectively. In the fiscal year ended April 30, 1999, W. S. Griffith & Co.,
Inc., a broker-dealer subsidiary of Phoenix Home Life, received $750, or .13% of
total brokerage commissions paid by the Trust in fund-related commissions
attributed to a clearing arrangement with an unaffiliated broker-dealer. Total
brokerage commissions paid during the fiscal year ended April 30, 1999 included
brokerage commissions of $305,151 on portfolio transactions aggregating
$214,270,180 executed by brokers who provided research and other statistical and
factual information.
SERVICES OF THE ADVISER
The investment adviser to the Fund is Phoenix Investment Counsel, Inc.
("PIC" or "Adviser"), which is located at 56 Prospect Street, Hartford,
Connecticut 06115-0480. PIC also acts as the investment adviser for 14 other
mutual funds, as subadviser to three mutual funds, and as adviser to
institutional clients. PIC has acted as an investment adviser for over sixty
years. PIC was originally organized in 1932 as John P. Chase, Inc. As of
December 31, 1998, PIC had approximately $23.9 billion in assets under
management. Philip R. McLoughlin, a Director and officer of the Fund, is a
director of PIC. All other executive officers of the Fund are officers of PIC.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning" or "Distributor"), a subsidiary of Phoenix
Investment Partners, Ltd. ("PXP"). PXP is a New York Stock Exchange traded
company that provides investment management and related services to
institutional investors, corporations and individuals through operating
subsidiaries. Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life")
of Hartford, Connecticut is a majority shareholder of PXP. Phoenix Home Life is
in the business of writing ordinary and group life and health insurance and
annuities. Its principal offices are located at One American Row, Hartford,
Connecticut 06115-2520. Equity Planning, a mutual fund distributor, acts as the
national distributor of the Fund's shares and as Financial Agent of the Fund.
The principal office of Equity Planning is located at 100 Bright Meadow
Boulevard, Enfield, Connecticut 06082.
PXP is a publicly-traded independent registered investment advisory firm
and has served investors for over 70 years. It manages over $59.5 billion in
assets (as of June 30, 1999) through its investment partners: Aberdeen Fund
Managers, Inc. (Aberdeen) in Aberdeen, London, Singapore and Fort Lauderdale;
Duff & Phelps Investment Management Co. (Duff & Phelps) in Chicago and
Cleveland; Roger Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca
Capital Management LLC (Seneca) in San Francisco; Zweig/Glaser Advisers (Zweig)
in New York; and Phoenix Investment Counsel, Inc. (Goodwin, Hollister, and
Oakhurst divisions) in Hartford, Sarasota and Scotts Valley, CA, respectively.
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 Distributor 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 1997, 1998 and 1999, the net
management fees paid by the Fund to the Adviser were $5,982,415, $5,877,607 and
$5,907,808, respectively.
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. Effective June 1,
1998, National Securities & Research Corporation ("National") assigned its
investment advisory agreement to PIC and PIC now serves as the Adviser for the
Fund. National and PIC are both subsidiaries of PXP. 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. 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 the Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor
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Day, Thanksgiving Day and Christmas Day. Since the Fund does not price
securities on weekends or United States national holidays, the net asset value
of the Fund's foreign assets may be significantly affected on days when the
investor has no access to the Fund. The net asset value per share of the Fund is
determined by adding the values of all securities and other assets of the Fund,
subtracting liabilities, and dividing by the total number of outstanding shares
of the Fund. Assets and liabilities are determined in accordance with generally
accepted accounting principles and applicable rules and regulations of the
Securities and Exchange Commission. The total liability allocated to a class,
plus that class's distribution plan fees and any other expenses allocated solely
to that class, are deducted from the proportionate interest of such class in the
assets of the Fund, and the resulting amount of each is divided by the number of
shares of that class outstanding to produce the net asset value per share.
A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world, the
calculation of net asset value may not take place for the Fund if it invests in
foreign securities contemporaneously with the determination of the prices of the
majority of the portfolio securities of the Fund. All assets and liabilities
initially expressed in foreign currency values will be converted into United
States dollar values at the mean between the bid and ask quotations of such
currencies against United States dollars as last quoted by any recognized
dealer. If an event were to occur after the value of an investment was so
established but before the net asset value per share was determined, which was
likely to materially change the net asset value, then the instrument would be
valued using fair value considerations by the Trustees or their delegates. If at
any time the Fund has investments where market quotations are not readily
available, such investments are valued at the fair value thereof as determined
in good faith by the Trustees although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent
investment is $25. However, both the minimum initial and subsequent investment
amounts are $25 for investments pursuant to the "Investo-Matic" plan, a bank
draft investing program administered by Distributor, or pursuant to the
Systematic Exchange privilege or for an individual retirement account (IRA). In
addition, there are no subsequent investment minimum amounts in connection with
the reinvestment of dividend or capital gain distributions. Completed
applications for the purchase of shares should be mailed to: Phoenix Funds, c/o
State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301.
The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Fund's net asset value next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
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").
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Fund, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the Fund,
the accumulated continuing distribution and services fees and contingent
deferred sales charges on Class B shares would be less than the initial sales
charge and accumulated distribution plan fees on Class A shares purchased at the
same time.
Dividends paid by the Fund, if any, with respect to Class of Shares will be
calculated in the same manner at the same time on the same day, except that fees
such as higher distribution and services fees and any incremental transfer
agency costs relating to each Class of shares will be borne exclusively by that
class. See "Dividends, Distributions and Taxes."
Class A Shares
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed. Class A
Shares are subject to ongoing distribution and services fees at an annual rate
of 0.25% of the Fund's aggregate average daily net assets attributable to the
Class A Shares. In addition, certain purchases of Class A Shares qualify for
reduced initial sales charges.
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.
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Class B Shares are subject to ongoing distribution and services fees at an
aggregate annual rate of up to 1.00% of the Fund's aggregate average daily net
assets attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment is
made. The higher ongoing distribution and services fees 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. The purpose of the conversion feature is to relieve the holders of
the Class B Shares that have been outstanding for a period of time sufficient
for the adviser and the Distributor to have been compensated for distribution
expenses related to the Class B Shares from most of the burden of such
distribution related expenses.
Class B Shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and services fees. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge.
For purposes of conversion to Class A Shares, 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 Share dividends in the sub-account will also convert to
Class A Shares.
Class C Shares
Class C Shares are purchased without an initial sales charge but are
subject to a deferred sales charge if redeemed within one year of purchase. The
deferred sales charge may be waived in connection with certain qualifying
redemptions. Shares issued in conjunction with the automatic reinvestment of
income distributions and capital gain distributions are not subject to any sales
charges. Class C Shares are subject to an ongoing distribution and services fee
at an aggregate annual rate of up to 1.00% of the Fund's aggregate average daily
net assets attributable to Class C Shares.
Class A Shares--Reduced Initial Sales Charges
Investors choosing Class A Shares may be entitled to reduced sales charges.
The ways in which sales charges may be avoided or reduced are described below.
Qualified Purchasers. If you fall within any one of the following
categories, you will not have to pay a sales charge on your purchase of Class A
Shares: (1) trustee, director or officer of the Phoenix Funds, the
Phoenix-Engemann Funds, Phoenix-Seneca Funds or any other mutual fund advised,
subadvised or distributed by the Adviser, Distributor or any of their corporate
affiliates (an "Affiliated Phoenix Fund"); (2) any director or officer, or any
full-time employee or sales representative (for at least 90 days) of the Adviser
or Distributor; (3) registered representatives and employees of securities
dealers with whom Distributor has sales agreements; (4) any qualified retirement
plan exclusively for persons described above; (5) any officer, director or
employee of a corporate affiliate of the Adviser or Distributor; (6) any spouse,
child, parent, grandparent, brother or sister of any person named in (1), (2),
(3) or (5) above; (7) employee benefit plans for employees of the Adviser,
Distributor and/or their corporate affiliates; (8) any employee or agent who
retires from Phoenix Home Life, Distributor and/or their corporate affiliates;
(9) any account held in the name of a qualified employee benefit plan, endowment
fund or foundation if, on the date of the initial investment, the plan, fund or
foundation has assets of $10,000,000 or more or at least 100 eligible employees;
(10) any person with a direct rollover transfer of shares from an established
Phoenix Fund or any other Affiliated 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, department,
authority or similar agency prohibited by law from paying a sales charge; (13)
any fully matriculated student in any U.S. service academy; (14) any unallocated
account held by a third party administrator, registered investment adviser, Fund
company, or bank Fund 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 or any other Affiliated Phoenix Fund if, in connection
with the purchases or redemption of the redeemed shares, the investor paid a
prior sales charge provided such investor supplies verification that the
redemption occurred within 90 days of the Phoenix Fund purchase and that a sales
charge was paid; (16) any deferred compensation plan established for the benefit
of any Phoenix Fund or any other Affiliated Phoenix Fund trustee or director;
provided that sales to persons listed in (1) through (16) above are made upon
the written assurance of the purchaser that the purchase is made for investment
purposes and that the shares so acquired will not be resold except to the Fund;
(17) purchasers of Class A Shares bought through investment advisers and
financial planners who charge an advisory, consulting or other fee for their
services and buy shares for their own accounts or the accounts of their clients;
(18) retirement plans and deferred compensation plans and trusts used to fund
those plans (including, for example, plans qualified or created under sections
401(a), 403(b) or 457 of the Internal Revenue Code), and "rabbi trusts" that buy
shares for their own accounts, in each case if those purchases are made through
a broker or agent or other financial intermediary that has made special
arrangements with the Distributor for such purchases; or (19) 401(k)
participants in the Merrill Lynch Daily K Plan (the "Plan")
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if the Plan has at least $3 million in assets or 500 or more eligible employees;
or (20) clients of investment advisors or financial planners who buy shares for
their own accounts but only if their accounts are linked to a master account of
their investment advisor or financial planner on the books and records of the
broker, agent or financial intermediary with which the Distributor has made such
special arrangements (each of the investors described in (17) through (20) may
be charged a fee by the broker, agent or financial intermediary for purchasing
shares).
Combination Purchase Privilege. Your purchase of any class of shares of
this or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 403(b) plans
for the same employer; (d) multiple accounts (up to 200) under a qualified
employee benefit plan or administered by a third party administrator; or (e)
trust companies, bank trust departments, registered investment advisers, and
similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority and
which are held in a fiduciary, agency, custodial or similar capacity, provided
all shares are held of record in the name, or nominee name, of the entity
placing the order.
An "Affiliated Phoenix Fund" means any other mutual fund advised,
subadvised or distributed by the Adviser or Distributor or any corporate
affiliate of either or both the Adviser and Distributor provided such other
mutual fund extends reciprocal privileges to shareholders of the Phoenix Fund.
Letter of Intent. If you sign a Letter of Intent, your purchase of any
class of shares of this or any other Affiliated Phoenix Fund (other than Phoenix
Money Market Fund Series Class A Shares), if made by the same person within a
13-month period, will be added together to determine whether you are entitled to
an immediate reduction in sales charges. Sales charges are reduced based on the
overall amount you indicate that you will buy under the Letter of Intent. The
Letter of Intent is a mutually non-binding arrangement between you and the
Distributor. Since the Distributor doesn't know whether you will ultimately
fulfill the Letter of Intent, shares worth 5% of the amount of each purchase
will be set aside until you fulfill the Letter of Intent. When you buy enough
shares to fulfill the Letter of Intent, these shares will no longer be
restricted. If, on the other hand, you do not satisfy the Letter of Intent, or
otherwise wish to sell any restricted shares, you will be given the choice of
either buying enough shares to fulfill the Letter of Intent or paying the
difference between any sales charge you previously paid and the otherwise
applicable sales charge based on the intended aggregate purchases described in
the Letter of Intent. You will be given 20 days to make this decision. If you do
not exercise either election, the Distributor will automatically redeem the
number of your restricted shares needed to make up the deficiency in sales
charges received. The Distributor will redeem restricted Class A Shares before
Class C or B Shares, respectively. Oldest shares will be redeemed before selling
newer shares. Any remaining shares will then be deposited to your account.
Right of Accumulation. Your purchase of any class of shares of this or any
other Affiliated Phoenix Fund, if made over time by the same person may be added
together to determine whether the combined sum entitles you to a prospective
reduction in sales charges. You must provide certain account information to the
Distributor to exercise this right.
Associations. Certain groups or associations may be treated as a "person"
and qualify for reduced Class A Share sales charges. The group or association
must: (1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge; (3)
work through an investment dealer; or (4) not be a group whose sole reason for
existing is to consist of members who are credit card holders of a particular
company, policyholders of an insurance company, customers of a bank or a
broker-dealer or clients of an investment adviser.
Class B and Class C Shares--Waiver of Sales Charges
The CDSC is waived on redemptions of shares if the redemption is made (a)
within one year of death (i) of the sole shareholder on an individual account,
(ii) of a joint tenant where the surviving joint tenant is the deceased's
spouse, or (iii) of the beneficiary of a Uniform Gifts to Minors Act (UGMA),
Uniform Transfers to Minors Act (UTMA) or other custodial account; (b) within
one year of disability, as defined in Code Section 72(m)(7); (c) as a mandatory
distribution upon reaching age 701/2 under any retirement plan qualified under
Code Sections 401, 408 or 403(b) or resulting from the tax-free return of an
excess contribution to an IRA; (d) by 401(k) plans using an approved participant
tracking system for participant hardships, death, disability or normal
retirement, and loans which are subsequently repaid; (e) from the Merrill Lynch
Daily K Plan ("Plan") invested in Class B Shares, in which such shares the
Distributor has not paid the dealer the Class B sales commission; (f) based on
the exercise of exchange privileges among Class B Shares of this or any other
Affiliated Phoenix Fund; (g) based on any direct rollover transfer of shares
from an established Affiliated Phoenix Fund qualified plan into an Affiliated
Phoenix Fund IRA by participants terminating from the qualified plan; and (h)
based on the systematic withdrawal program. If, as described in condition (a)
above, an account is transferred to an account registered in the name of a
deceased's estate, the CDSC will be waived on any redemption from the estate
account occurring within one year of the death. If the Class B Shares are not
redeemed within one year of the death, they will remain subject to the
applicable CDSC.
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Automatic Conversion of Class B Shares
Class B Shares will automatically convert to Class A Shares of the same
Portfolio eight years after they are purchased. Conversion will be on the basis
of the then prevailing net asset value of Class A and B Shares. There is no
sales load, fee or other charge for this feature. Class B Shares acquired
through dividend or distribution reinvestments will be converted into Class A
Shares at the same time that other Class B Shares are converted based on the
proportion that the reinvested shares bear to purchased Class B Shares. The
conversion feature is subject to the continuing availability of an opinion of
counsel or a ruling of the Internal Revenue Service that the assessment of the
higher distribution fees and associated costs with respect to Class B Shares
does not result in any dividends or distributions constituting "preferential
dividends" under the Code, and that the conversion of shares does not constitute
a taxable event under federal income tax law. If the conversion feature is
suspended, Class B Shares would continue to be subject to the higher
distribution fee for an indefinite period. Even if the Fund was unable to obtain
such assurances, it might continue to make distributions if doing so would
assist in complying with its general practice of distributing sufficient income
to reduce or eliminate federal taxes otherwise payable by the Fund.
INVESTOR ACCOUNT SERVICES
The Fund offers accumulation plans, withdrawal plans and reinvestment and
exchange privileges. Certain privileges may not be available in connection with
all classes. In most cases, changes to account services may be accomplished over
the phone. Inquiries regarding policies and procedures relating to shareholder
account services should be directed to Shareholder Services at (800) 243-1574.
Exchanges
Under certain circumstances, shares of any Affiliated Phoenix Fund may be
exchanged for shares of the same Class of another Affiliated Phoenix Fund on the
basis of the relative net asset values per share at the time of the exchange.
Exchanges are subject to the minimum initial investment requirement of the
designated Series Fund, except if made in connection with the Systematic
Exchange privilege. Shareholders may exchange shares held in book-entry form for
an equivalent number (value) of the same class of shares of any other Affiliated
Phoenix Fund, if currently offered. 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 exchanges with share classes that
carry a contingent deferred sales charge, the CDSC schedule of original shares
purchased continues to apply. The exchange of shares is treated as a sale and
purchase for federal income tax purposes (see also "Dividends, Distributions and
Taxes").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Affiliated Phoenix Fund automatically on a
monthly, quarterly, semi-annual or annual basis or may cancel this privilege at
any time. If you maintain an account balance of at least $5,000, or $2,000 for
tax qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that shares be
automatically exchanged at predetermined intervals for shares of the same class
of another Affiliated Phoenix Fund. This requirement does not apply to Phoenix
"Self Security" program participants. Systematic exchanges will be executed upon
the close of business on the 10th day of each month or the next succeeding
business day. Systematic exchange forms are available from the Distributor.
Dividend Reinvestment Across Accounts
If you maintain an account balance of at least $5,000, or $2,000 for tax
qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that any dividends
and distributions paid with respect to shares in that account be automatically
reinvested in a single account of one of the other Affiliated Phoenix Funds at
net asset value. You should obtain a current prospectus and consider the
objectives and policies of each fund carefully before directing dividends and
distributions to another fund. Reinvestment election forms and prospectuses are
available from Equity Planning. Distributions may also be mailed to a second
payee and/or address. Requests for directing distributions to an alternate payee
must be made in writing with a signature guarantee of the registered owner(s).
To be effective with respect to a particular dividend or distribution,
notification of the new distribution option must be received by the Transfer
Agent at least three days prior to the record date of such dividend or
distribution. If all shares in your account are repurchased or redeemed or
transferred between the record date and the payment date of a dividend or
distribution, you will receive cash for the dividend or distribution regardless
of the distribution option selected.
Invest-By-Phone
This expedited investment service allows you to make an investment in an
account by requesting a transfer of funds from the balance of your bank account.
Once a request is phoned in, the Transfer Agent will initiate the transaction by
wiring a request for monies to your commercial bank, savings bank or credit
union via Automated Clearing House (ACH). Your bank, which must be an ACH
member, will in turn forward the monies to the Transfer Agent for credit to your
account. ACH is a computer based clearing and settlement operation established
for the exchange of electronic transactions among participating depository
institutions. This service may also be used to sell shares of the Fund and
direct proceeds of sale through ACH to your bank account.
14
<PAGE>
To establish this service, please complete the Invest-by-Phone Application
and attach a voided check. Upon the Transfer Agent's acceptance of the
authorization form (usually within two weeks) you may call toll free (800)
367-5877 prior to 3:00 PM (eastern time) to place your purchase request.
Instructions as to the account number and amount to be invested must be
communicated to the Transfer Agent. The Transfer Agent will then contact your
bank via ACH with appropriate instructions. The purchase is normally credited to
your account the day following receipt of the verbal instructions. The Fund may
delay the mailing of a check for redemption proceeds of Fund shares purchased
with a check or via Invest-by-Phone service until the Fund has assured itself
that good payment has been collected for the purchase of the shares, which may
take up to 15 days after receipt of the check.
The Fund and the Transfer Agent reserve the right to modify or terminate
the Invest-by-Phone service for any reason or to institute charges for
maintaining an Invest-by-Phone account.
Systematic Withdrawal Program
The Systematic Withdrawal Program allows you to periodically redeem a
portion of your account on a predetermined monthly, quarterly, semiannual or
annual basis. A sufficient number of full and fractional shares will be redeemed
so that the designated payment is made on or about the 20th day of the month.
Shares are tendered for redemption by the Transfer Agent, as agent for the
shareowner, on or about the 15th of the month at the closing net asset value on
the date of redemption. The Systematic Withdrawal Program also provides for
redemptions to be tendered on or about the 10th, 15th or 25th of the month with
proceeds to be directed through Automated Clearing House (ACH) to your bank
account. In addition to the limitations stated below, withdrawals may not be
less than $25 and minimum account balance requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Fund worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. The purchase
of shares while participating in the withdrawal program will ordinarily be
disadvantageous to the Class A Shares investor since a sales charge will be paid
by the investor on the purchase of Class A Shares at the same time as other
shares are being redeemed. For this reason, investors in Class A Shares may not
participate in an automatic investment program while participating in the
Systematic Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any applicable
contingent deferred sales charge on all shares redeemed. Accordingly, the
purchase of Class B Shares will generally not be suitable for an investor who
anticipates withdrawing sums in excess of the above limits shortly after the
purchase.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the 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 after receipt of the
check. Redemptions by Class B shareholders will be subject to the applicable
deferred sales charge, if any. See the Fund's current Prospectus for further
information.
The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Fund's net asset value next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
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.
Redemptions by Class B and Class C shareholders will be subject to the
applicable deferred sales charge, if any.
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.
15
<PAGE>
By Mail
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written request
to Equity Planning that the Fund redeem the shares. See the Fund's current
Prospectus for more information.
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.
Redemption in Kind
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. However, the Fund has
elected to pay in cash all requests for redemption by any shareholder of record,
limited in respect to each shareholder during any 90-day period to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of such
period. This election has been made pursuant to Rule 18f-1 under the Investment
Act of 1940 and is irrevocable while the Rule is in effect unless the Securities
and Exchange Commission, by order, permits the withdrawal thereof. In case of a
redemption in kind, securities delivered in payment for shares would be readily
marketable and valued at the same value assigned to them in computing the net
asset value per share of the Fund. A shareholder receiving such securities would
incur brokerage costs when selling the securities.
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 and (b) 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.
The Code imposes 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 and payable
to shareholders of record on a specified date in such a month 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.
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<PAGE>
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 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.
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.
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
regarding specific questions as to federal, foreign, state or local taxes.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Roth IRA,
401(k), Profit-Sharing, Money Purchase Pension Plans and 403(b) Retirement
Plans. Write or call Equity Planning (800) 243-4361 for further information
about the plans.
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<PAGE>
Merrill Lynch Daily K Plan
Class A Shares of a Fund are made available to Merrill Lynch Daily K Plan
(the "Plan") participants at NAV without an initial sales charge if:
(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in broker/dealer
funds not advised or managed by Merrill Lynch Asset Management L.P. ("MLAM")
that are made available pursuant to a Service Agreement between Merrill Lynch
and the fund's principal underwriter or distributor and in funds advised or
managed by MLAM (collectively, the "Applicable Investments");
(ii) the Plan is recordkept on a daily valuation basis by an independent
recordkeeper whose services are provided through a contract or alliance
arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs the
Merrill Lynch Recordkeeping Service Agreement, the Plan has $3 million or more
in assets, excluding money market funds, invested in Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by a
Merrill Lynch plan conversion manager, on the date the Plan Sponsor signs the
Merrill Lynch Recordkeeping Service Agreement.
Alternatively, Class B Shares of a Fund are made available to Plan
participants at NAV without a CDSC if the Plan conforms with the requirements
for eligibility set forth in (i) through (iii) above but either does not meet
the $3 million asset threshold or does not have 500 or more eligible employees.
Plans recordkept on a daily basis by Merrill Lynch or an independent
recordkeeper under a contract with Merrill Lynch that are currently investing in
Class B Shares of a Fund convert to Class A Shares once the Plan has reached $5
million invested in Applicable Investments, or after the normal holding period
of seven years from the initial date of purchase.
THE DISTRIBUTOR
Pursuant to an Underwriting Agreement with the Fund, Phoenix Equity
Planning Corporation (the "Distributor"), an indirect less than wholly-owned
subsidiary of Phoenix Home Life and an affiliate of PIC, serves as distributor
for the Fund. The address of the Distributor is P.O. Box 2200, 100 Bright Meadow
Blvd., Enfield, Connecticut 06083-2200. As such, the Distributor conducts a
continuous offering pursuant to a "best efforts" arrangement requiring the
Distributor to take and pay for only such securities as may be sold to the
public. During the fiscal years 1997, 1998 and 1999, purchasers of the Fund
shares paid aggregate sales charges of $1,478,251, $1,204,486 and $754,398,
respectively, of which the principal Distributor of the Fund received net
commissions of $1,028,526, $859,920 and $452,708, respectively, for its
services, the balance being paid to dealers. For the fiscal year ended April 30,
1999, the Distributor received net commission of $38,121 for Class A Shares and
deferred sales charges of $414,587 for Class B Shares. The fees were used to
compensate sales and services persons for selling shares of the Fund and for
providing services to shareholders. In addition, the fees were used to
compensate the Distributor 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 Distributor, 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 Plans or in any related agreements. The Underwriting Agreement
will terminate automatically in the event of its assignment.
Dealer Concessions
Dealers with whom the Distributor has entered into sales agreements
received a discount or commission as set forth below:
<TABLE>
<CAPTION>
Amount of
Transaction Sales Charge as a percentage of Sales Charge as a percentage of Dealer Discount
at Offering Price Offering Price Amount Invested Percentage of Offering Price
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Under $50,000 4.75% 4.99% 4.25%
$50,000 but under $100,000 4.50 4.71 4.00
$100,000 but under $250,000 3.50 3.63 3.00
$250,000 but under $500,000 3.00 3.09 2.75
$500,000 but under $1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sales price of
Class C Shares sold by such dealers. This sales commission will not be paid to
dealers for sales of Class B or Class C Shares purchased by 401(k) participants
of the Merrill Lynch Daily K Plan (the "Plan") due to waiver of the CDSC for
these Plan participants' purchases.
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<PAGE>
Your broker, dealer or investment adviser may also charge you additional
commissions or fees for their services in selling shares to you provided they
notify the Distributor of their intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Funds and/or for providing other shareholder services. Such fees are in addition
to the sales commissions referenced above and may be based upon the amount of
sales of fund shares by a dealer; the provision of assistance in marketing of
fund shares; access to sales personnel and information dissemination services;
provision of recordkeeping and administrative services to qualified employee
benefit plans; and other criteria as established by the Distributor. Depending
on the nature of the services, these fees may be paid either from the Funds
through distribution fees, service fees or transfer agent fees or, in some
cases, the Distributor may pay certain fees from its own profits and resources.
From its own profits and resources, the Distributor does intend to: (a) sponsor
training and educational meetings and provide additional compensation to
qualifying dealers in the form of trips, merchandise or expense reimbursements;
(b) from time to time pay special incentive and retention fees to qualified
wholesalers, registered financial institutions and third party marketers; (c)
pay broker/dealers an amount equal to 1% of the first $3 million of Class A
Share purchases by an account held in the name of a qualified employee benefit
plan with at least 100 eligible employees, 0.50% on the next $3 million, plus
0.25% on the amount in excess of $6 million; and (d) excluding purchases as
described in (c) above, pay broker/dealers an amount equal to 1% of the amount
of Class A Shares sold above $1 million but under $3 million, 0.50% on the next
$3 million, plus 0.25% on the amount in excess of $6 million. If part or all of
such investment, including investments by qualified employee benefit plans, is
subsequently redeemed within one year of the investment date, the broker-dealer
will refund to the Distributor such amounts paid with respect to the investment.
In addition, the Distributor may pay the entire applicable sales charge on
purchases of Class A Shares to selected dealers and agents. From its own profits
and resources, the Distributor intends to pay the following additional
compensation to Merrill Lynch, Pierce, Fenner & Smith, Inc.: 0.25% on sales of
Class A and B shares, 0.10% on sales of Class C shares, 0.10% on sales of Class
A shares sold at net asset value, and 0.10% annually on the average daily net
asset value of fund shares on which Merrill Lynch is broker of record and which
such shares exceed the amount of assets on which Merrill Lynch is broker of
record as of July 1, 1999. Any dealer who receives more than 90% of a sales
charge may be deemed to be an "underwriter" under the Securities Act of 1933.
Equity Planning reserves the right to discontinue or alter such fee payment
plans at any time.
Administrative Services
Equity Planning also acts as financial agent of the Fund and as such
performs administrative, bookkeeping and pricing functions for the Fund. For its
services as financial agent, Equity Planning will be paid a fee equal to the sum
of (1) the documented cost of fund accounting and related services provided by
PFPC, Inc., as subagent, to the financial agent, plus (2) the documented cost to
the financial agent to provide financial reporting and tax services and
oversight of the subagent's performance. The current fee schedule of PFPC, Inc.
is based upon the average of the aggregate daily net asset values of the Fund,
at the following incremental annual rates.
<TABLE>
<S> <C>
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .015%
Greater than $1 billion .0125%
</TABLE>
Percentage rates are applied to the aggregate daily net asset values of the
Fund. PFPC, Inc. also charges minimum fees and additional fees for each
additional class of fund shares. Equity Planning retains PFPC, Inc. as subagent
for each of the funds for which Equity Planning serves as financial agent. PFPC,
Inc. agreed to a modified fee structure and waived certain charges. Because
PFPC, Inc.'s arrangement would have favored smaller funds over larger funds,
Equity Planning reallocates PFPC, Inc.'s overall asset-based charges among all
funds for which it serves as financial agent on the basis of the relative net
assets of each fund. As a result, the PFPC, Inc. charges to the Fund are
expected to be slightly less than the amount that would be found through direct
application of the table illustrated above. For its services during the Fund's
fiscal year ended April 30, 1999, Equity Planning received $368,649.
DISTRIBUTION PLANS
The Fund has adopted separate amended and restated 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," the "Class C Plan," and collectively the "Plans").
The Plans permit the Fund to reimburse the Distributor for expenses incurred in
connection with activities intended to promote the sale of Fund shares and to
pay for the furnishing of shareholder services. Pursuant to the Class B and
Class C Plans, the Fund may reimburse the Distributor monthly for actual expense
of the Distributor up to 0.75% of the average daily net assets of the Fund's
Class B and Class C shares, respectively. In addition, the Fund will pay the
Distributor 0.25% annually of the average daily net assets of the Fund for
providing services to the shareholders, including assistance in connection with
inquiries related to shareholder accounts (the "Service Fee").
19
<PAGE>
Expenditures under the Plans shall consist of: (i) commissions to sales
personnel for selling shares of the Fund (including distribution fees and
financing expenses incurred in connection with the payment of commissions); (ii)
compensation, sales incentives and payments to sales, marketing and service
personnel; (iii) payments to broker-dealers and other financial institutions
which have entered into agreements with the Distributor in the form of the
Dealer Agreement for Phoenix Funds for services rendered in connection with the
sale and distribution of shares of the 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.
From the Service Fee, the Distributor expects to pay a quarterly fee to
qualifying broker-dealer firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such firms. This fee will not exceed on an annual basis 0.25% of the average
annual net asset value of such shares, and will be in addition to sales charges
on 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. The Distributor also pays to dealers as additional compensation
with respect to Class C Shares 0.75% of the average annual net asset value of
that Class.
From its own resources or pursuant to the Plan, and subject to the dealers'
prior approval, the Distributor may provide additional compensation to
registered representatives of dealers in the form of travel expenses, meals, and
lodging associated with training and educational meetings sponsored by the
Distributor. The Distributor may also provide gifts amounting in value to less
than $100, and occasional meals or entertainment, to registered representatives
of dealers. Any such travel expenses, meals, lodging, gifts or entertainment
paid will not be preconditioned upon the registered representatives' or dealers'
achievement of a sales target. The Distributor may, from time to time, reallow
the entire portion of the sales charge on Class A Shares 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.
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 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.
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. The Class B and Class C Plans,
however, do not limit the reimbursement of distribution related expenses to
expenses incurred in specific time periods. If the Plans are terminated in
accordance with their terms, the obligations of the Fund to make payments to the
Distributor 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, 1999, the Fund paid Rule 12b-1 Fees in
the amount of $4,583,971 of which the Distributor received $2,875,843,
unaffiliated broker-dealers received $1,618,072 and W.S. Griffith & Co., Inc.,
an affiliate, received $90,056. The Rule 12b-1 payments for the fiscal year
ended April 30, 1999 were used for (1) compensation of dealers, $3,945,338, (2)
compensation to sales personnel, $328,605, (3) advertising, $133,858, (4)
printing and mailing prospectuses to other than current shareholders, $13,676,
(5) service costs, $106,604 and (6) other costs, $55,890. The Distributor's
expenses from selling and servicing Class B Shares may be more than the payments
received from contingent deferred sales charges collected on redeemed shares and
from the Fund under the Class B Plan. Those expenses may be carried over and
paid in future years. At April 30, 1999, the end of the last Plan year,
Distributor had incurred unreimbursed expenses under the Class B Plan of
$462,082 (equal to 0.05% of the Fund's net assets) which have been carried over
into the present Class B Plan year.
No interested person of the Fund and no Director who is not an interested
person of the Fund, as that term is defined in the Investment Company Act of
1940, had any direct or indirect financial interest in the operation of the
Plan.
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
Trustees have concluded that there is a reasonable likelihood that each Plan
will benefit the Fund and each affected Class of shareholders.
20
<PAGE>
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 provide
that while 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
relevant class of the Fund.
The National Association of Securities Dealers, Inc. (the "NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution plan fees or amend the Plans.
MANAGEMENT OF THE FUND
The Fund is an open-end management investment company known as a mutual
fund. The Trustees of the Fund ("Trustees") are responsible for the overall
supervision of the Fund and perform the various duties imposed on Directors by
the Investment Company Act of 1940 and Massachusetts business trust law.
Trustees and Officers
The following table sets 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 56 Prospect Street, Hartford, Connecticut, 06115.
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
Robert Chesek (65) Trustee Trustee/Director (1981-present) and Chairman (1989-1994),
49 Old Post Road Phoenix Funds. Trustee, Phoenix-Aberdeen Series Fund and
Wethersfield, CT 06109 Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present). Director (1981-1994) and Chairman (1992-1994),
Phoenix Investment Counsel, Inc. Vice President, Common
Stock, Phoenix Home Life Mutual Insurance Company (1980-
1994).
E. Virgil Conway (70) Trustee Chairman, Metropolitan Transportation Authority (1992-
9 Rittenhouse Road present). Trustee/Director, Consolidated Edison Company of
Bronxville, NY 10708 New York, Inc. (1970-present), Pace University (1978-
present), Atlantic Mutual Insurance Company (1974-present),
HRE Properties (1989-present), Greater New York Councils,
Boy Scouts of America (1985-present), Union Pacific Corp.
(1978-present), Blackrock Freddie Mac Mortgage Securities
Fund (Advisory Director) (1990-present), Centennial Insurance
Company (1974-present), Josiah Macy, Jr., Foundation (1975-
present), The Harlem Youth Development Foundation (1987-
present) (Chairman, 1998-present), Accuhealth (1994-present),
Trism, Inc. (1994-present), Realty Foundation of New York
(1972-present), New York Housing Partnership Development
Corp. (Chairman) (1981-present) and Academy of Political
Science (Vice Chairman) (1985-present). Director/Trustee,
Phoenix Funds (1993-present). Trustee, Phoenix-Aberdeen
Series Fund and Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present). Director, Duff & Phelps Utilities Tax-
Free Income Inc. and Duff & Phelps Utility and Corporate
Bond Trust Inc. (1995-present). Member, Audit Committee of
the City of New York (1981-1996). Advisory Director,
Blackrock Fannie Mae Mortgage Securities Fund (1989-1996)
and Fund Directions (1993-1998). Chairman, Financial
Accounting Standards Advisory Council (1992-1995).
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
Harry Dalzell-Payne (70) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
330 East 39th Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Apartment 29G Institutional Mutual Funds (1996-present). Director, Duff &
New York, NY 10016 Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present). Director,
Farragut Mortgage Co., Inc. (1991-1994). Formerly a Major
General of the British Army.
*Francis E. Jeffries (68) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
6585 Nicholas Blvd. Phoenix-Aberdeen Series Inc. and Phoenix Duff & Phelps
Apt. 1601 Institutional Mutual Funds (1996-present). Director, Duff &
Naples, FL 33963 Phelps Utilities Income Inc. (1987-present), Duff & Phelps
Utilities Tax-Free Income Inc. (1991-present) and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1993-present).
Director, The Empire District Electric Company (1984-
present). Director (1989-1997), Chairman of the Board (1993-
1997), President (1989-1993), and Chief Executive Officer
(1989-1995), Phoenix Investment Partners, Ltd.
Leroy Keith, Jr. (60) Trustee Chairman and Chief Executive Officer, Carson Products Company
Chairman and Chief (1995-present). Director/Trustee, Phoenix Funds (1980-present).
Executive Officer Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Carson Products Company Phelps Institutional Mutual Funds (1996-present). Director,
64 Ross Road Equifax Corp. (1991-present) and Evergreen International Fund,
Savannah, GA 30750 Inc. (1989-present). Trustee, Evergreen Liquid Trust, Evergreen
Tax Exempt Trust, Evergreen Tax Free Fund, Master Reserves
Tax Free Trust, and Master Reserves Trust. President, Morehouse
College (1987-1994). Chairman and Chief Executive Officer,
Keith Ventures (1992-1994).
*Philip R. McLoughlin (52) Trustee and Chairman (1997-present), Director (1995-present), Vice
President Chairman (1995-1997) and Chief Executive Officer, (1995-
present), Phoenix Investment Partners, Ltd. Director (1994-
present) and Executive Vice President, Investments (1988-
present), Phoenix Home Life Mutual Insurance Company.
Director/Trustee and President, Phoenix Funds (1989-present).
Trustee and President, Phoenix-Aberdeen Series Fund and
Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present). Director, Duff & Phelps Utilities Tax-Free Income
Inc. (1995-present) and Duff & Phelps Utility and Corporate
Bond Trust Inc. (1995-present). Director (1983-present) and
Chairman (1995-present), Phoenix Investment Counsel, Inc.
Director (1984-present) and President (1990-present), Phoenix
Equity Planning Corporation. PXRE Corporation (Delaware)
(1985-present) and World Trust Fund (1991-present). Director
and Executive Vice President, Phoenix Life and Annuity
Company (1996-present). Director and Executive Vice
President, PHL Variable Insurance Company (1995-present).
Director, Phoenix Charter Oak Trust Company (1996-present).
Director and Vice President, PM Holdings, Inc. (1985-
present). Director and President, Phoenix Securities Group,
Inc. (1993-1995). Director (1992-present) and President
(1992-1994), W.S. Griffith & Co., Inc. Director, Townsend
Financial Advisers, Inc. (1992-present), Director PHL
Associates, Inc. (1995-present).
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
Everett L. Morris (71) 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-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director, Duff &
Phelps Utilities Tax-Free Income Inc. (1991-present) and Duff
& Phelps Utility and Corporate Bond Trust Inc. (1993-present).
*James M. Oates (53) Trustee Chairman, IBEX Capital Markets, Inc. (formerly IBEX Capital
Managing Director Markets LLC) (1997-present). Managing Director, Wydown
The Wydown Group Group (1994-present). Director, Phoenix Investment Partners,
IBEX Capital Markets, Inc. Ltd. (1995-present). Director/Trustee, Phoenix Funds (1987-
60 State Street present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Suite 950 Duff & Phelps Institutional Mutual Funds (1996-present).
Boston, MA 02109 Director, AIB Govett Funds (1991-present), Blue Cross and
Blue Shield of New Hampshire (1994-present), Investors
Financial Service Corporation (1995-present), Investors Bank
& Trust Corporation (1995-present), Plymouth Rubber Co.
(1995-present), Stifel Financial (1996-present), Command
Systems, Inc. (1998-present) and Connecticut River Bancorp
(1998-present). Vice Chairman Massachusetts Housing
Partnership (1998-present). Member, Chief Executives
Organization (1996-present). Director (1984-1994), President
(1984-1994) and Chief Executive Officer (1986-1994),
Neworld Bank.
*Calvin J. Pedersen (57) Trustee Director (1986-present), President (1993-present) and
Phoenix Investment Executive Vice President (1992-1993), Phoenix Investment
Partners, Ltd. Partners, Ltd. Director/Trustee, Phoenix Funds (1995-present).
55 East Monroe Street Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Suite 3600 Phelps Institutional Mutual Funds (1996-present). President
Chicago, IL 60603 and Chief Executive Officer, Duff & Phelps Utilities Tax-Free
Income Inc. (1995-present), Duff & Phelps Utilities Income
Inc. (1994-present) and Duff & Phelps Utility and Corporate
Bond Trust Inc. (1995-present).
Herbert Roth, Jr. (70) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present). Director, Boston
Sherborn, MA 01770 Edison Company (1978-present), Landauer, Inc. (medical
services) (1970-present), Tech Ops./Sevcon, Inc. (electronic
controllers) (1987-present), and Mark IV Industries
(diversified manufacturer) (1985-present). Member, Directors
Advisory Council, Phoenix Home Life Mutual Insurance
Company (1998-present). Director, Phoenix Home Life Mutual
Insurance Company (1972-1998), and Key Energy Group (oil
rig service) (1988-1994).
Richard E. Segerson (53) Trustee Managing Director, Northway Management Company (1998-
102 Valley Road present), Director/Trustee, Phoenix Funds (1993-present).
New Canaan, CT 07840 Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present). Managing
Director, Mullin Associates (1993-1998).
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
Lowell P. Weicker, Jr. (68) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Greenwich, CT 06830 Institutional Mutual Funds (1996-present). Director, UST Inc.
(1995-present), HPSC Inc. (1995-present), and Compuware
(1996-present) and Burroughs Wellcome Fund (1996-present).
Visiting Professor, University of Virginia (1997-present).
Director, Duty Free International, Inc. (1997) Chairman,
Dresing, Lierman, Weicker (1995-1996). Governor of the State
of Connecticut (1991-1995).
Michael E. Haylon (41) Executive Director and Executive Vice President-Investments, Phoenix
Vice Investment Partners, Ltd. (1995-present). Executive Vice
President President, Phoenix Funds (1993-present) and Phoenix-
Aberdeen Series Fund (1996-present). Executive Vice
President (1997-present), Vice President (1996-1997),
Phoenix Duff & Phelps Institutional Mutual Funds. Director
(1994-present), President (1995-present), Executive Vice
President (1994-1995), Vice President (1991-1994), Phoenix
Investment Counsel, Inc. Director, Phoenix Equity Planning
Corporation (1995-present). Senior Vice President, Securities
Investments, Phoenix Home Life Mutual Insurance Company
(1993-1995). Various other positions with Phoenix Home Life
Mutual Insurance Company (1990-1993).
John F. Sharry (47) Executive President, Retail Division (1999-present), Executive Vice
Vice President, Retail Division (1997-1999), Phoenix Investment
President Partners, Ltd. Managing Director, Retail Distribution, Phoenix
Equity Planning Corporation (1995-present). Executive Vice
President, Phoenix Funds (1998-present) and Phoenix-
Aberdeen Series Funds (1998-present). Managing Director,
Director and National Sales Manager, Putnam Mutual Funds
(1992-1995).
James D. Wehr (42) Senior Vice Senior Vice President, (1998-present), Managing Director,
President Fixed Income (1996-1998), Vice President (1991-1996), Phoenix
Investment Counsel, Inc. Senior Vice President, (1998-
present), Senior Vice President (1997-present), Vice President
(1988-1997), Phoenix Multi-Portfolio Fund; Senior Vice
President (1997-present), Vice President (1990-1997), Phoenix
Series Fund; Senior Vice President (1997-present), Vice
President (1991-1997), The Phoenix Edge Series Fund; Senior
Vice President (1997-present), Vice President (1993-1997),
Phoenix-Goodwin California Tax Exempt Bonds, Inc., and Senior
Vice President (1997-present), Vice President (1996-1997),
Phoenix Duff & Phelps Institutional Mutual Funds. Senior Vice
President (1997-present), Phoenix Multi-Sector Fixed Income
Fund, Inc., Phoenix Multi-Sector Short Term Bond Fund, Phoenix
Income and Growth Fund and Phoenix Strategic Allocation Fund,
Inc. Managing Director, Public Fixed Income, Phoenix Home Life
Insurance Company (1991-1995).
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
Steven L. Colton (40) Vice Managing Director, Value Equities, Phoenix Investment
President Counsel, Inc. (1997-present). Vice President, The Phoenix
Edge Series Fund, Phoenix Series Fund (1997-present) and
Phoenix-Oakhurst Income & Growth Fund (1998-present).
Vice President/Senior Portfolio Manager, American Century
Investment Management (1987-1997). Portfolio Manager,
American Century/Benham Income & Growth Fund (1990-
1997). Portfolio Manager, American Century/Benham Equity
Growth Fund (1991-1996). Portfolio Manager, American
Century/Benham Utilities Income Fund (1993-1997).
Christopher J. Kelleher (44) Vice Managing Director, Fixed Income (1996-present), Vice
President President (1991-1996), Phoenix Investment Counsel, Inc. Vice
President, Phoenix Series Fund (1989-present), The Phoenix
Edge Series Fund (1989-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present), Phoenix Income
and Growth Fund (1998-present) and Phoenix Strategic
Allocation Fund (1998-present). Portfolio Manager, Public
Bonds, Phoenix Home Life Insurance Company (1991-1995).
William R. Moyer (54) Vice Executive Vice President and Chief Financial Officer (1999-
100 Bright Meadow Blvd. President present), Senior Vice President and Chief Financial Officer,
P. O. Box 2200 (1995-1999), Phoenix Investment Partners, Ltd. Director (1998-
Enfield, CT 06083-2200 present), Senior Vice President, Finance (1990-present), Chief
Financial Officer (1996-present), and Treasurer (1994-1996 and
1998-present), Phoenix Equity Planning Corporation. Director
(1998-present), Senior Vice President (1990-present), Chief
Financial Officer (1996-present) and Treasurer (1994-present),
Phoenix Investment Counsel, Inc. Senior Vice President and
Chief Financial Officer, Duff & Phelps Investment Management
Co. (1996-present). Vice President, Phoenix Funds (1990-
present), Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present) and Phoenix-Aberdeen Series Fund (1996-
present). Vice President, Investment Products Finance, Phoenix
Home Life Mutual Insurance Company (1990-1995). Senior Vice
President and Chief Financial Officer, W. S. Griffith & Co., Inc.
(1992-1995) and Townsend Financial Advisers, Inc. (1993-1995).
Leonard J. Saltiel (45) Vice Managing Director, Operations and Service (1996-present),
President Senior Vice President (1994-1996), Phoenix Equity Planning
Corporation. Vice President, Phoenix Funds (1994-present),
Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present) and Phoenix-Aberdeen Series Fund (1996-present). Vice
President, Investment Operations, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions with Phoenix
Home Life Mutual Insurance Company (1987-1994).
Nancy G. Curtiss (46) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer
(1996-present), Phoenix Equity Planning Corporation. Treasurer,
Phoenix Funds (1994-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present) and Phoenix-Aberdeen
Series Fund (1996-present). Second Vice President and
Treasurer, Fund Accounting, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions with Phoenix
Home Life Mutual Insurance Company (1987-1994).
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupation(s)
Name, Address and Age With the Fund During the Past 5 Years
- --------------------- ------------- -----------------------
<S> <C> <C>
G. Jeffrey Bohne (50) Secretary Vice President and General Manager, Phoenix Home Life
101 Munson St. Mutual Insurance Co. (1993-present). Vice President, Mutual
Greenfield, MA 03101 Fund Customer Service (1996-present), Vice President,
Transfer Agent Operations (1993-1996), Phoenix Equity
Planning Corporation. Secretary/Clerk, Phoenix Funds (1993-
present), Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present) and Phoenix-Aberdeen Series Fund (1996-
present). Vice President, Home Life of New York Insurance
Company (1984-1992).
</TABLE>
- -----------
*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, 1999,
the Trustees received aggregate remuneration of $13,474. 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 $40,000 and a fee of $2,500 per joint meeting of
the Boards. Each Trustee who serves on the Audit Committee receives a retainer
at the annual rate of $2,000 and a fee of $2,000 per joint Audit Committee
meeting attended. Each Trustee who serves on the Nominating Committee receives a
retainer at the annual rate of $1,000 and a fee of $1,000 per joint Nominating
Committee meeting attended. Each Trustee who serves on the Executive Committee
and who is not an interested person of the Fund receives a retainer at the
annual rate of $2,000 and $2,000 per joint Executive Committee meeting attended.
The function of the Executive Committee is to serve as a contract review,
compliance review and performance review delegate of the full Board of Trustees.
Costs are allocated equally to each of the Series and Funds within the Fund
Complex. The foregoing fees do not include the reimbursement of expenses
incurred in connection with meeting attendance. Officers and employees of the
Adviser who are interested persons are compensated for their services by the
Adviser and receive no compensation from the Fund.
For the Fund's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
Total
Compensation
Pension or From Fund and
Aggregate Retirement Benefits Estimated Fund Complex
Compensation Accrued as Part Annual Benefits (14 Funds)
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
---- --------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Robert Chesek $1,132* $65,000
E. Virgil Conway+ $1,566 $87,750
Harry Dalzell-Payne+ $1,399 None None $78,750
for any for any
Trustee Trustee
Francis E. Jeffries $1,150* $65,500
Leroy Keith, Jr. $1,190 $67,500
Philip R. McLoughlin+ $ 0 $ 0
Everett L. Morris+ $1,358 $77,750
James M. Oates+ $1,358 $76,750
Calvin J. Pedersen $ 0 $ 0
Herbert Roth, Jr.+ $1,607 $88,750
Richard E. Segerson $1,358* $76,500
Lowell P. Weicker, Jr. $1,358 $75,500
</TABLE>
- -----------
*This compensation (and the earnings thereon) will be deferred pursuant to the
Directors' Deferred Compensation Plan. At April 30, 1999, the total amount of
deferred compensation (including interest and other accumulation earned on the
original amounts deferred) accrued for Messrs. Chesek, Jeffries, Morris, Roth
and Segerson was $29,601, $176,390, $155,408, $151,539 and $16,816,
respectively. At present, by agreement among the Fund, the Distributor and the
electing director, director fees that are deferred are paid by the Fund to the
Distributor. The liability for the deferred compensation obligation appears
only as a liability of the Distributor.
+Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
On July 28, 1999, the Trustees and officers as a group owned less than 1%
of the outstanding shares of the Fund.
26
<PAGE>
Principal Shareholders
The following table sets forth information as of July 28, 1999 with respect
to each person who owns of record, or is known by the Fund to own of record, or
beneficially own 5% or more of any Class of the Fund's equity securities.
<TABLE>
<CAPTION>
Name of Shareholder Class Number of Shares Percent of Class
- ----------------------- --------- ------------------ -----------------
<S> <C> <C> <C>
Merrill Lynch Pierce Class B 3,218,793.6060 10.64%
Fenner & Smith
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
</TABLE>
ADDITIONAL INFORMATION
Capital Stock
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 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 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 former adviser by Phoenix Home Life and the affiliation with the other
Phoenix Funds. On August 25, 1999, the Trustees voted to change the name of the
fund to "Phoenix-Oakhurst Income & Growth Fund."
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 Statement of
Additional Information, 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 perso0nally; and no Trustee, shareholder, officer,
employee or agent of the Fund shall be held to any personal liability, nor shall
resort 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.
27
<PAGE>
Financial Statements
The Financial Statements for the fiscal year ended April 30, 1999 appearing
in the Fund's 1999 Annual Report to Shareholders, are incorporated herein by
reference.
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, and is available without
charge upon request.
Independent Accountants
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, has been
selected as the independent accountants for the Fund. PricewaterhouseCoopers LLP
audits the Fund's annual financial statements and expresses an opinion thereon.
Custodian and Transfer Agent
State Street Bank and Trust Company ("State Street"), P.O. Box 351, Boston,
MA 02101, serves as custodian of the Fund's assets. Equity Planning, 100 Bright
Meadow Boulevard, P.O. Box 2200, Enfield, CT 06083-2200, acts as Transfer Agent
for the Fund (the "Transfer Agent"). As compensation, Equity Planning receives a
fee equivalent to $17.95 for each designated shareholder account plus
out-of-pocket expenses. Transfer Agent fees are also utilized to offset costs
and fees paid to subtransfer agents employed by Equity Planning. State Street
Bank and Trust Company serves as a subtransfer agent pursuant to a Subtransfer
Agency Agreement.
28
<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.
Moody's Investors Service, Inc.
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protective nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Note: Those bonds in the Aa, A and Baa groups which Moody's believes
possess the strongest investment attributes are designated by the symbols Aa1,
A1 and Baa1.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safe guarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal and
interest.
29
<PAGE>
INVESTMENTS AT APRIL 30, 1999
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- -------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--5.2%
U.S. TREASURY BONDS--0.5%
U.S. Treasury Bonds 5.25%, 11/15/28............... AAA $ 4,720 $ 4,364,550
U.S. TREASURY NOTES -- 4.7%
U.S. Treasury Notes 5.375%, 1/31/00(g)............ AAA 16,750 16,813,533
U.S. Treasury Notes 5.50%, 3/31/00................ AAA 15,500 15,586,501
U.S. Treasury Notes 4.50%, 9/30/00................ AAA 5,090 5,052,149
U.S. Treasury Notes 4.625%, 11/30/00.............. AAA 2,500 2,483,247
U.S. Treasury Notes 5%, 2/28/01................... AAA 600 599,027
U.S. Treasury Notes 4.75%, 2/15/04................ AAA 450 441,000
-------------
40,975,457
-------------
- -----------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES
(IDENTIFIED COST $45,457,009) 45,340,007
- -----------------------------------------------------------------------------------------
AGENCY MORTGAGE-BACKED SECURITIES--3.5%
GNMA 6.50%, '23-'28............................... AAA 30,722 30,652,499
- -----------------------------------------------------------------------------------------
TOTAL AGENCY MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $30,055,938) 30,652,499
- -----------------------------------------------------------------------------------------
MUNICIPAL BONDS--9.5%
CALIFORNIA--4.4%
Fresno County Pension Obligation Taxable 6.21%,
8/15/06........................................... AAA 5,600 5,565,000
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- -------------
<S> <C> <C> <C>
CALIFORNIA--CONTINUED
Kern County Pension Obligation Revenue Taxable
7.26%, 8/15/14.................................... AAA $ 4,500 $ 4,770,000
Long Beach Pension Obligation Taxable 6.87%,
9/1/06............................................ AAA 3,000 3,097,500
Los Angeles County Public Works Lease Revenue PJ
V-B 5.125%, 12/1/29............................... AAA 2,560 2,550,400
Oakland Pension Obligation Taxable
Revenue Series A 6.91%, 12/15/07.................. AAA 1,885 1,955,687
Oakland Pension Obligation Taxable Revenue Series
A 6.95%, 12/15/08................................. AAA 3,650 3,805,125
Orange County Pension Obligation Revenue Taxable
Series A 7.62%, 9/1/08............................ AAA 4,520 4,915,500
Sacramento County Pension Funding Revenue Taxable
Series A 6.625%, 8/15/06.......................... AAA 3,400 3,459,500
San Bernardino County Pension Obligation Revenue
Taxable 6.87%, 8/1/08............................. AAA 1,335 1,381,725
San Bernardino County Pension Obligation Revenue
Taxable 6.94%, 8/1/09............................. AAA 3,625 3,770,000
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Phoenix Income and Growth Fund
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- -------------
<S> <C> <C> <C>
CALIFORNIA--CONTINUED
Sonoma County Pension Obligation Revenue Taxable
6.625%, 6/1/13.................................... AAA $ 1,700 $ 1,706,375
Ventura County Pension Obligation Taxable 6.54%,
11/1/05........................................... AAA 1,325 1,348,187
-------------
38,324,999
-------------
FLORIDA--0.3%
Tampa Solid Waste System Revenue Taxable Series A
6.23%, 10/1/05.................................... Aaa(c) 2,820 2,823,525
ILLINOIS--0.4%
Illinois Educational Facilities Authority-Loyola
University Revenue Taxable Series A 7.84%,
7/1/24............................................ AAA 3,410 3,623,125
MASSACHUSETTS--0.3%
Massachusetts State Port Authority
Revenue Taxable Series C 6.05%, 7/1/02............ AA- 1,575 1,584,844
Massachusetts State Water Resources Authority
Revenue Series D 5%, 8/1/24....................... AAA 1,320 1,277,100
-------------
2,861,944
-------------
NEW YORK--1.7%
Long Island Power Authority Electrical Systems
Revenue Series A 5.50%, 12/1/10................... AAA 1,850 2,014,188
Metropolitan Transportation Authority Series A 5%,
4/1/23............................................ AAA 5,500 5,396,875
New York State General Obligation Taxable Series C
6.40%, 3/1/08..................................... AAA 7,460 7,478,650
-------------
14,889,713
-------------
PENNSYLVANIA--1.1%
Philadelphia Authority For Industrial Development
Pension Funding Retirement Systems Revenue Taxable
Series A 5.69%, 4/15/07........................... AAA 3,000 2,880,000
Philadelphia Authority For Industrial Development
Pension Funding Retirement Systems Revenue Taxable
Series A 5.79%, 4/15/09........................... AAA 3,020 2,884,100
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- -------------
<S> <C> <C> <C>
PENNSYLVANIA--CONTINUED
Pittsburgh Pension Obligation Taxable Series C
6.50%, 3/1/17..................................... AAA $ 4,250 $ 4,143,750
-------------
9,907,850
-------------
TEXAS--1.3%
Dallas-Fort Worth International Airport Revenue
Taxable 6.40%, 11/1/06............................ AAA 4,415 4,437,075
Dallas-Fort Worth International Airport Revenue
Taxable 6.40%, 11/1/07............................ AAA 1,200 1,204,500
Houston Water & Sewer System Revenue Refunding,
Jr. Lien, Series D 5%, 12/1/25.................... AAA 2,560 2,476,800
Texas Taxable Veterans Limited Series B 6.05%,
12/1/02........................................... AA 3,000 3,026,250
-------------
11,144,625
-------------
- -----------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(IDENTIFIED COST $82,760,728) 83,575,781
- -----------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--3.0%
Associates Manufactured Housing Pass Through 97-2,
A6 7.075%, 3/15/28................................ AAA 1,500 1,514,766
Capita Equipment Receivables Trust 97-1, B 6.45%,
8/15/02........................................... A+ 3,500 3,509,380
Discover Card Master Trust I 98-6, A 5.85%,
1/17/06........................................... AAA 1,250 1,249,887
Fleetwood Credit Corp. Grantor Trust 96-B, A
6.90%, 3/15/12.................................... AAA 1,227 1,236,480
Ford Credit Auto Owner Trust 98-C, B 6.06%,
2/15/03........................................... A 4,000 3,986,760
Green Tree Financial Corp. 96-2, M1 7.60%,
4/15/27........................................... AA- 3,325 3,456,090
Premier Auto Trust 98-3, B 6.14%, 9/8/04.......... A+ 2,500 2,531,421
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Phoenix Income and Growth Fund
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- -------------
<S> <C> <C> <C>
Triangle Funding Ltd. 98-2A, 3 144A 6.85%,
10/15/04(b)(d).................................... BBB $ 6,000 $ 5,973,750
Wachovia Credit Card Master Trust 99-1, A 5.081%,
8/15/06(d)........................................ AAA 2,500 2,499,219
- -----------------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(IDENTIFIED COST $25,858,591) 25,957,753
- -----------------------------------------------------------------------------------------
CORPORATE BONDS--7.5%
BANKS (MAJOR REGIONAL)--0.4%
U.S. Bank of Minnesota N.A. 6.30%, 7/15/08........ A 1,500 1,485,000
Wachovia Corp. 5.625%, 12/15/08................... A+ 2,500 2,365,625
-------------
3,850,625
-------------
BROADCASTING (TELEVISION, RADIO & CABLE)--0.7%
CSC Holdings, Inc. 7.625%, 7/15/18................ BB+ 3,000 3,018,750
Turner Broadcasting System, Inc. 8.375%, 7/1/13... BBB 3,000 3,431,250
-------------
6,450,000
-------------
COMMUNICATIONS EQUIPMENT--0.3%
Metromedia Fiber Network, Inc. 144A 10%,
11/15/08(b)....................................... B 2,000 2,170,000
COMPUTERS (SOFTWARE & SERVICES)--0.3%
Computer Associates International, Inc. Series B
6.375%, 4/15/05................................... A- 2,350 2,282,437
GAMING, LOTTERY & PARI-MUTUEL COMPANIES--0.7%
Harrahs Operating Co., Inc. 7.875%, 12/15/05...... BB+ 3,000 3,037,500
Station Casinos, Inc. 8.875%, 12/1/08............. B+ 2,630 2,728,625
-------------
5,766,125
-------------
HEALTH CARE (HOSPITAL MANAGEMENT)--0.6%
Tenet Healthcare Corp. 8%, 1/15/05................ BB+ 5,000 4,975,000
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--0.4%
Boston Scientific Corp. 6.625%, 3/15/05........... BBB 3,925 3,831,781
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- -------------
<S> <C> <C> <C>
LEISURE TIME (PRODUCTS)--0.3%
Bally Total Fitness Holding Corp. Series B 9.875%,
10/15/07.......................................... B- $ 2,500 $ 2,565,625
MANUFACTURING (DIVERSIFIED)--0.6%
Tyco International Group SA 6.375%, 6/15/05....... A- 4,800 4,830,000
METALS MINING--0.3%
Level 3 Communications, Inc. 9.125%, 5/1/08....... B 2,565 2,622,712
PAPER & FOREST PRODUCTS--0.6%
Buckeye Technologies, Inc. 8.50%, 12/15/05........ BB- 5,000 5,156,250
PERSONAL CARE--0.3%
Revlon Consumer Products Corp. 9%, 11/1/06........ B 2,700 2,760,750
PUBLISHING--0.1%
Charter Communications Holdings LLC 144A 8.625%,
4/1/09(b)......................................... B+ 900 924,750
REITS--0.3%
Meditrust Corp. 7.375%, 7/15/00................... BB 3,000 2,928,319
SERVICES (RENTALS)--0.3%
Budget Group, Inc. 144A 9.125%, 4/1/06(b)......... BB- 2,500 2,493,750
TELEPHONE--0.3%
Century Telephone Enterprises, Inc. Series F
6.30%, 1/15/08.................................... BBB+ 2,500 2,468,750
TEXTILES (APPAREL)--0.3%
Collins & Aikman Corp. 11.50%, 4/15/06............ B 2,500 2,681,250
TRUCKS & PARTS--0.1%
Cummins Engine Co., Inc. 6.45%, 3/1/05............ BBB+ 1,250 1,220,313
WASTE MANAGEMENT--0.6%
Allied Waste North America, Inc. Series B 7.875%,
1/1/09............................................ BB 5,425 5,330,063
- -----------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $65,228,364) 65,308,500
- -----------------------------------------------------------------------------------------
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Phoenix Income and Growth Fund
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- -------------
<S> <C> <C> <C>
NON-AGENCY MORTGAGE-BACKED
SECURITIES--14.9%
CS First Boston Mortgage Securities Corp. 97-C2,
A3 6.55%, 11/17/07................................ AAA $ 10,000 $ 10,012,500
CS First Boston Mortgage Securities Corp. 97-C2, B
6.72%, 11/17/07................................... Aa(c) 11,000 11,020,625
CS First Boston Mortgage Securities Corp. 97-SPCE,
D 144A 7.332%, 4/20/08(b)......................... BBB(c) 7,539 7,369,372
DLJ Commercial Mortgage Corp. 99-CG1, A1B 6.46%,
1/10/09........................................... Aaa(c) 2,000 2,005,000
DLJ Mortgage Acceptance Corp. 96-CF1, A1B 144A
7.58%, 2/12/06 (b)................................ AAA 4,400 4,574,625
DLJ Mortgage Acceptance Corp. 97-CF2, B2 144A
7.14%, 11/15/08(b)................................ BBB- 5,000 4,596,875
First Union Commercial Mortgage Trust 99-C1, A2
6.07%, 10/15/08................................... AAA 1,800 1,752,750
First Union-Lehman Brothers Commercial Mortgage
97-C1, B 7.43%, 4/18/07........................... Aa(c) 2,500 2,633,076
G.E. Capital Mortgage Services, Inc. 94-9, M
6.50%, 2/25/24.................................... AA 11,056 10,853,713
G.E. Capital Mortgage Services, Inc. 96-4, A5 7%,
3/25/26........................................... AAA 8,701 8,831,939
G.E. Capital Mortgage Services, Inc. 96-8, 1M
7.25%, 5/25/26.................................... AA 484 493,559
GMAC Commercial Mortgage Securities, Inc. 97-C2, B
6.703%, 12/15/07.................................. Aa(c) 7,000 6,979,070
Lehman Brothers Commercial Conduit Mortgage Trust
98-C1, A3 6.48%, 1/18/08.......................... Aaa(c) 5,000 5,043,750
Lehman Brothers Commercial Conduit Mortgage Trust
98-C4, A1B 6.21%, 10/15/08........................ AAA 5,000 4,945,286
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- -------------
<S> <C> <C> <C>
Lehman Large Loan 97-LLI, B 6.95%, 3/12/07........ AA $ 4,340 $ 4,457,716
Nationslink Funding Corp. 96-1, B 7.69%,
12/20/05.......................................... AA 1,500 1,579,219
Norwest Asset Securities Corp. 99-13, B1 6.75%,
4/25/29........................................... AA(c) 9,202 9,046,716
Prudential Home Mortgage Securities 94-15, M
6.80%, 5/25/24.................................... Aaa(c) 8,234 8,186,378
Residential Asset Securitization Trust 96-A8, A1
8%, 12/25/26...................................... AAA 136 135,505
Residential Funding Mortgage Securities I 96-S1,
A11 7.10%, 1/25/26................................ AAA 2,800 2,843,750
Residential Funding Mortgage Securities I 96-S4,
M1 7.25%, 2/25/26................................. AA 3,852 3,867,717
Residential Funding Mortgage Securities I 98-S13,
M1 6.75%, 6/25/28................................. AA(c) 4,766 4,718,700
Securitized Asset Sales, Inc. 93-J, 2B 6.808%,
11/28/23.......................................... AA(c) 9,731 9,629,338
Structured Asset Securities Corp. 95-C4, B 7%,
6/25/26........................................... AA 5,198 5,208,721
- -----------------------------------------------------------------------------------------
TOTAL NON-AGENCY MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $130,347,812) 130,785,900
- -----------------------------------------------------------------------------------------
FOREIGN GOVERNMENT SECURITIES--9.5%
ARGENTINA--1.0%
Republic of Argentina Bearer FRB 5.938%,
3/31/05(d)........................................ BB 4,152 3,695,680
Republic of Argentina 12.125%, 2/25/19............ BB 4,963 5,180,131
-------------
8,875,811
-------------
BULGARIA--0.8%
Republic of Bulgaria IAB Series PDI Euro 5.875%,
7/28/11(d)........................................ B(c) 5,000 3,390,625
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Phoenix Income and Growth Fund
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- -------------
<S> <C> <C> <C>
BULGARIA--CONTINUED
Republic of Bulgaria FLIRB Series A Bearer 2.50%,
7/28/12(d)........................................ B(c) $ 6,105 $ 3,720,234
-------------
7,110,859
-------------
COLOMBIA--0.9%
Republic of Colombia 7.625%, 2/15/07.............. BBB- 9,000 7,875,000
COSTA RICA--0.5%
Republic of Costa Rica 144A 9.335%,
5/15/09(b)(f)..................................... BB 4,685 4,641,336
CROATIA--0.7%
Croatia Series B 5.813%, 7/31/06(d)............... BBB- 3,540 2,903,161
Croatia Series A 5.813%, 7/31/10(d)............... BBB- 4,300 3,364,750
-------------
6,267,911
-------------
KOREA--0.8%
Republic of Korea 8.875%, 4/15/08................. BBB- 6,420 6,993,788
MEXICO--1.5%
United Mexican States Global Bond 11.50%,
5/15/26........................................... BB 11,000 13,076,250
PANAMA--1.4%
Republic of Panama 8.875%, 9/30/27................ BB+ 11,315 10,740,764
Republic of Panama 9.375%, 4/1/29................. BB+ 1,350 1,391,175
-------------
12,131,939
-------------
PHILIPPINES--0.8%
Republic of Philippines 8.875%, 4/15/08........... BB+ 3,900 3,987,750
Republic of Philippines 9.875% 1/15/19............ BB+ 2,750 2,853,125
-------------
6,840,875
-------------
POLAND--1.1%
Poland Bearer PDI 5%, 10/27/14(d)................. BBB- 4,225 3,916,047
Poland Registered PDI 5%, 10/27/14(d)............. BBB- 6,100 5,653,938
-------------
9,569,985
-------------
- -----------------------------------------------------------------------------------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(IDENTIFIED COST $82,403,767) 83,383,754
- -----------------------------------------------------------------------------------------
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- -------------
<S> <C> <C> <C>
FOREIGN CORPORATE BONDS--1.5%
ARGENTINA--0.4%
Compania de Radiocomunicaciones Moviles SA 144A
9.25%, 5/8/08(b).................................. BBB- $ 1,500 $ 1,447,500
Compania de Radiocomunicaciones Moviles SA 9.25%,
5/8/08............................................ BBB- 1,300 1,254,500
Telefonica de Argentina 144A 9.125%, 5/7/08(b).... BBB- 725 701,438
-------------
3,403,438
-------------
CHILE--0.3%
Compania Sud Americana de Vapores SA 7.375%,
12/8/03........................................... BBB 610 579,500
Petropower I Funding Trust 144A 7.36%,
2/15/14(b)........................................ BBB 2,349 2,184,439
-------------
2,763,939
-------------
JAPAN--0.5%
SB Treasury Co. LLC Series A 144A 9.40%,
12/29/49(b)....................................... BB+ 4,880 4,894,986
POLAND--0.3%
TPSA Finance BV 144A 7.75%, 12/10/08(b)........... BBB- 2,410 2,434,100
- -----------------------------------------------------------------------------------------
TOTAL FOREIGN CORPORATE BONDS
(IDENTIFIED COST $13,775,867) 13,496,463
- -----------------------------------------------------------------------------------------
CONVERTIBLE BONDS--9.0%
BROADCASTING (TELEVISION, RADIO & CABLE)--0.3%
Clear Channel Communications, Inc. Cv. 2.625%,
4/1/03............................................ BBB- 2,100 2,656,500
COMPUTERS (HARDWARE)--0.7%
Hewlett-Packard Co. Cv. 0%, 10/14/17.............. AA 11,000 6,407,500
ELECTRONICS (SEMICONDUCTORS)--0.2%
National Semiconductor Cv. 144A 6.50%,
10/1/02(b)........................................ Ba(c) 1,950 1,657,500
INSURANCE (PROPERTY-CASUALTY)--0.9%
Berkshire Hathaway, Inc. Cv. 1%, 12/2/01.......... Aaa(c) 3,475 7,627,625
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Phoenix Income and Growth Fund
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- -------------
<S> <C> <C> <C>
LODGING-HOTELS--0.5%
Hilton Hotels Corp. Cv. 5%, 5/15/06............... BBB- $ 4,500 $ 4,365,000
MANUFACTURING (DIVERSIFIED)--0.5%
Thermo Electron Corp. Cv. 144A 4.25%, 1/1/03(b)... A- 5,200 4,582,500
OIL & GAS (DRILLING & EQUIPMENT)--1.2%
Baker Hughes, Inc. Cv. 0%, 5/5/08................. A 2,100 1,554,000
Diamond Offshore Drilling, Inc. Cv. 3.75%,
2/15/07........................................... A- 4,950 5,321,250
Nabors Industries, Inc. Cv. 5%, 5/15/06........... BBB 3,005 3,542,144
-------------
10,417,394
-------------
PUBLISHING (NEWSPAPERS)--0.2%
Times Mirror Co. Cv. 144A 0%, 4/15/17(b).......... A 3,500 1,649,375
RETAIL (BUILDING SUPPLIES)--0.4%
Home Depot, Inc. (The) Cv. 3.25%, 10/1/01......... A+ 1,250 3,154,687
RETAIL (DRUG STORES)--0.6%
Rite Aid Corp. Cv. 144A 5.25%, 9/15/02(b)......... BBB 5,175 5,226,750
RETAIL (SPECIALTY)--0.8%
Office Depot, Inc. Cv. 0%, 11/1/08................ BBB- 3,350 2,793,062
Pep Boys - Manny, Moe & Jack (The) Cv. 0%,
9/20/11........................................... BB+ 7,775 4,091,594
-------------
6,884,656
-------------
SERVICES (ADVERTISING/MARKETING)--1.0%
Interpublic Group (The) Cv. 144A 1.80%,
9/16/04(b)........................................ NR 2,500 2,812,500
Omnicom Group, Inc. Cv. 144A 2.25%, 1/6/13(b)..... A- 4,000 6,375,000
-------------
9,187,500
-------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.3%
United States Cellular Corp. Cv. 0%, 6/15/15...... BBB- 6,000 2,902,500
TELEPHONE--0.4%
Bell Atlantic Financial Services Cv. 144A 4.25%,
9/15/05(b)........................................ A+ 3,250 3,566,875
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- -------------
<S> <C> <C> <C>
WASTE MANAGEMENT--1.0%
Waste Management, Inc. Cv. 4%, 2/1/02............. BBB $ 2,650 $ 3,620,563
Waste Management, Inc. Cv. 2%, 1/24/05............ BBB 4,710 5,275,200
-------------
8,895,763
-------------
- -----------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS
(IDENTIFIED COST $72,582,086) 79,182,125
- -----------------------------------------------------------------------------------------
FOREIGN CONVERTIBLE BONDS--1.0%
SWITZERLAND--1.0%
Novartis AG Cv. 144A 2%, 10/6/02(b)............... Aaa(c) 1,330 1,895,250
Novartis AG Cv. 2%, 10/6/02....................... Aaa(c) 1,500 2,137,500
Roche Holdings, Inc. Cv. 144A 0%, 5/6/12(b)....... NR 7,800 4,241,250
- -----------------------------------------------------------------------------------------
TOTAL FOREIGN CONVERTIBLE BONDS
(IDENTIFIED COST $7,542,531) 8,274,000
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------
<S> <C> <C>
COMMON STOCKS--35.1%
AEROSPACE/DEFENSE--0.2%
Cordant Technologies, Inc......................... 4,300 198,337
General Dynamics Corp............................. 20,000 1,405,000
-------------
1,603,337
-------------
AGRICULTURAL PRODUCTS--0.0%
Fresh Del Monte Produce, Inc.(e).................. 8,800 138,600
AIRLINES--0.0%
COMAIR Holdings, Inc.............................. 6,900 152,231
AUTOMOBILES--1.1%
Ford Motor Co..................................... 140,200 8,964,037
General Motors Corp............................... 9,300 827,119
-------------
9,791,156
-------------
BANKS (MAJOR REGIONAL)--1.5%
Bank One Corp..................................... 117,200 6,914,800
First Union Corp.................................. 22,500 1,245,937
Fleet Financial Group, Inc........................ 19,600 844,025
Mellon Bank Corp.................................. 7,400 549,912
Wells Fargo Co.................................... 78,000 3,368,625
-------------
12,923,299
-------------
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Phoenix Income and Growth Fund
<TABLE>
<CAPTION>
SHARES
--------
BANKS (MONEY CENTER)--1.3%
<S> <C> <C>
Bank of America Corp.............................. 31,100 $ 2,239,200
Chase Manhattan Corp. (The)....................... 107,400 8,887,350
-------------
11,126,550
-------------
BANKS (REGIONAL)--0.3%
City National Corp................................ 23,300 899,962
UnionBanCal Corp.................................. 55,500 1,893,937
-------------
2,793,899
-------------
BEVERAGES (ALCOHOLIC)--0.2%
Anheuser-Busch Companies, Inc..................... 29,700 2,171,813
BIOTECHNOLOGY--0.2%
Amgen, Inc.(e).................................... 29,600 1,818,550
BROADCASTING (TELEVISION, RADIO & CABLE)--0.1%
Chris-Craft Industries, Inc.(e)................... 11,124 522,828
BUILDING MATERIALS--0.0%
Owens Corning..................................... 5,300 188,812
CHEMICALS (DIVERSIFIED)--0.2%
Goodrich (B.F.) Co. (The)......................... 38,600 1,534,350
COMMUNICATIONS EQUIPMENT--1.1%
Comverse Technology, Inc.(e)...................... 11,400 731,025
Lucent Technologies, Inc.......................... 124,000 7,455,500
QUALCOMM, Inc.(e)................................. 1,700 340,000
Tellabs, Inc.(e).................................. 7,000 766,937
-------------
9,293,462
-------------
COMPUTERS (HARDWARE)--2.1%
Apple Computer, Inc.(e)........................... 29,800 1,370,800
Compaq Computer Corp.............................. 77,400 1,726,987
Dell Computer Corp.(e)............................ 60,600 2,495,962
Electronics for Imaging, Inc.(e).................. 2,500 118,281
Gateway 2000, Inc.(e)............................. 10,700 708,206
Hewlett-Packard Co................................ 41,300 3,257,537
International Business Machines Corp.............. 35,100 7,342,481
NCR Corp.(e)...................................... 12,800 524,800
Sun Microsystems, Inc.(e)......................... 16,800 1,004,850
-------------
18,549,904
-------------
COMPUTERS (NETWORKING)--0.5%
3Com Corp.(e)..................................... 12,900 337,012
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
COMPUTERS (NETWORKING)--CONTINUED
Cisco Systems, Inc.(e)............................ 34,500 $ 3,935,156
-------------
4,272,168
-------------
COMPUTERS (PERIPHERALS)--0.3%
EMC Corp.(e)...................................... 23,500 2,560,031
Seagate Technology, Inc.(e)....................... 17,400 485,025
-------------
3,045,056
-------------
COMPUTERS (SOFTWARE & SERVICES)--2.6%
America Online, Inc.(e)........................... 26,200 3,740,050
BMC Software, Inc.(e)............................. 3,600 155,025
Computer Associates International, Inc............ 26,900 1,148,294
Computer Sciences Corp.(e)........................ 9,200 547,975
Compuware Corp.(e)................................ 12,600 307,125
Microsoft Corp.(e)................................ 159,600 12,977,475
Oracle Corp.(e)................................... 44,100 1,193,456
Sterling Software, Inc.(e)........................ 22,500 465,469
Synopsys, Inc.(e)................................. 11,500 541,937
Unisys Corp.(e)................................... 49,600 1,559,300
-------------
22,636,106
-------------
CONSTRUCTION (CEMENT & AGGREGATES)--0.2%
Centex Construction Products, Inc................. 600 21,225
Lafarge Corp...................................... 11,000 371,937
Vulcan Materials Co............................... 25,300 1,208,075
-------------
1,601,237
-------------
CONSUMER FINANCE--0.1%
Countrywide Credit Industries, Inc................ 16,900 765,781
DISTRIBUTORS (FOOD & HEALTH)--0.1%
AmeriSource Health Corp. Class A(e)............... 2,400 66,450
Bergen Brunswig Corp. Class A..................... 4,500 85,500
McKesson HBOC, Inc................................ 13,500 472,500
-------------
624,450
-------------
ELECTRIC COMPANIES--2.3%
Central & South West Corp......................... 88,600 2,198,387
Consolidated Edison, Inc.......................... 45,000 2,044,687
DTE Energy Co..................................... 73,300 2,991,556
Dominion Resources, Inc........................... 28,900 1,188,512
Duke Energy Corp.................................. 13,000 728,000
FPL Group, Inc.................................... 8,800 496,100
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Phoenix Income and Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C>
ELECTRIC COMPANIES--CONTINUED
LG&E Energy Corp.................................. 69,400 $ 1,513,787
Minnesota Power, Inc.............................. 112,000 2,359,000
Texas Utilities Co................................ 27,500 1,093,125
UtiliCorp United, Inc............................. 217,400 5,312,712
-------------
19,925,866
-------------
ELECTRICAL EQUIPMENT--0.8%
General Electric Co............................... 53,300 5,623,150
Rockwell International Corp....................... 30,000 1,548,750
-------------
7,171,900
-------------
ELECTRONICS (INSTRUMENTATION)--0.1%
EG&G, Inc......................................... 23,100 721,875
ELECTRONICS (SEMICONDUCTORS)--1.1%
Intel Corp........................................ 151,400 9,263,787
Texas Instruments, Inc............................ 1,400 142,975
Vitesse Semiconductor Corp.(e).................... 9,300 430,706
-------------
9,837,468
-------------
ENGINEERING & CONSTRUCTION--0.0%
McDermott International, Inc...................... 7,800 226,200
ENTERTAINMENT--0.3%
Time Warner, Inc.................................. 18,800 1,316,000
Viacom, Inc. Class B(e)........................... 25,400 1,038,225
-------------
2,354,225
-------------
FINANCIAL (DIVERSIFIED)--2.1%
Citigroup, Inc.................................... 59,100 4,447,275
Doral Financial Corp.............................. 30,300 534,037
Fannie Mae........................................ 104,100 7,384,594
Morgan Stanley Dean Witter & Co................... 57,800 5,733,038
-------------
18,098,944
-------------
FOODS--0.7%
Earthgrains Co. (The)............................. 31,100 658,931
General Mills, Inc................................ 15,100 1,104,188
Quaker Oats Co. (The)............................. 61,900 3,996,419
-------------
5,759,538
-------------
GAMING, LOTTERY & PARI-MUTUEL COMPANIES--0.0%
International Game Technology..................... 10,500 186,375
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
GOLD & PRECIOUS METALS MINING--0.0%
Placer Dome, Inc.................................. 27,500 $ 388,438
HEALTH CARE (DIVERSIFIED)--0.7%
Allergan, Inc..................................... 7,700 692,038
Bristol-Myers Squibb Co........................... 21,200 1,347,525
Warner-Lambert Co................................. 59,000 4,008,313
-------------
6,047,876
-------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--2.1%
Genentech, Inc.(e)................................ 24,700 2,090,238
Lilly (Eli) & Co.................................. 36,700 2,702,038
Medicis Pharmaceutical Corp. Class A(e)........... 5,300 128,856
Merck & Co., Inc.................................. 68,600 4,819,150
Pfizer, Inc....................................... 40,700 4,683,044
Pharmacia & Upjohn, Inc........................... 25,300 1,416,800
Roberts Pharmaceutical Corp.(e)................... 15,100 256,700
Schering-Plough Corp.............................. 55,800 2,695,838
-------------
18,792,664
-------------
HEALTH CARE (GENERIC AND OTHER)--0.0%
Barr Laboratories, Inc.(e)........................ 2,400 72,150
Mylan Laboratories, Inc........................... 11,000 249,563
-------------
321,713
-------------
HEALTH CARE (MANAGED CARE)--0.3%
Aetna, Inc........................................ 4,000 350,750
Humana, Inc.(e)................................... 9,400 128,075
PacifiCare Health Systems, Inc. Class B(e)........ 17,000 1,356,281
Trigon Healthcare, Inc.(e)........................ 11,300 358,775
Wellpoint Health Networks, Inc.(e)................ 10,400 730,600
-------------
2,924,481
-------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--0.1%
Baxter International, Inc......................... 12,000 756,000
HEALTH CARE (SPECIALIZED SERVICES)--0.0%
Omnicare, Inc..................................... 15,200 365,750
HOMEBUILDING--0.1%
Centex Corp....................................... 9,900 361,969
Fleetwood Enterprises, Inc........................ 11,700 288,844
Kaufman and Broad Home Corp....................... 2,900 70,506
Lennar Corp....................................... 10,700 258,806
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Phoenix Income and Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
HOMEBUILDING--CONTINUED
Pulte Corp........................................ 4,100 $ 92,763
-------------
1,072,888
-------------
HOUSEHOLD FURNISHINGS & APPLIANCES--0.1%
Maytag Corp....................................... 2,000 136,750
Whirlpool Corp.................................... 11,400 756,675
-------------
893,425
-------------
HOUSEHOLD PRODUCTS (NON-DURABLES)--0.1%
Church & Dwight Co., Inc.......................... 15,300 655,031
HOUSEWARES--0.2%
Tupperware Corp................................... 66,700 1,579,956
INSURANCE (LIFE/HEALTH)--0.4%
Lincoln National Corp............................. 40,300 3,871,319
INSURANCE (MULTI-LINE)--0.2%
American International Group, Inc................. 1,300 152,669
CIGNA Corp........................................ 5,000 435,938
Hartford Financial Services Group, Inc. (The)..... 5,000 294,688
Loews Corp........................................ 6,100 446,444
-------------
1,329,739
-------------
INSURANCE (PROPERTY-CASUALTY)--0.4%
Allstate Corp. (The).............................. 95,800 3,484,725
HCC Insurance Holdings, Inc....................... 3,200 67,600
-------------
3,552,325
-------------
INSURANCE BROKERS--0.6%
Gallagher (Arthur J.) & Co........................ 32,900 1,562,750
Marsh & McLennan Companies, Inc................... 53,100 4,065,469
-------------
5,628,219
-------------
INVESTMENT BANKING/BROKERAGE--0.3%
Lehman Brothers Holdings, Inc..................... 5,000 277,813
Merrill Lynch & Co., Inc.......................... 30,600 2,568,488
-------------
2,846,301
-------------
INVESTMENT MANAGEMENT--0.2%
Equitable Companies, Inc. (The)................... 29,300 1,972,256
IRON & STEEL--0.0%
USX-U. S. Steel Group, Inc........................ 6,600 199,650
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
LEISURE TIME (PRODUCTS)--0.1%
Brunswick Corp.................................... 3,400 $ 81,600
Polaris Industries, Inc........................... 10,800 407,025
-------------
488,625
-------------
MACHINERY (DIVERSIFIED)--0.4%
Ingersoll-Rand Co................................. 37,600 2,601,450
Tecumseh Products Co. Class A..................... 7,800 476,775
-------------
3,078,225
-------------
MANUFACTURING (DIVERSIFIED)--1.5%
Crane Co.......................................... 17,700 512,194
National Service Industries, Inc.................. 3,800 147,963
Pentair, Inc...................................... 10,200 479,400
Premark International, Inc........................ 54,900 2,021,006
Tredegar Industries, Inc.......................... 37,500 1,000,781
Tyco International Ltd............................ 39,200 3,185,000
United Technologies Corp.......................... 37,600 5,447,300
-------------
12,793,644
-------------
MANUFACTURING (SPECIALIZED)--0.1%
Briggs & Stratton Corp............................ 1,700 112,094
Teleflex, Inc..................................... 5,700 248,306
YORK International Corp........................... 13,300 548,625
-------------
909,025
-------------
NATURAL GAS--0.3%
MDU Resources Group, Inc.......................... 15,500 330,344
Sempra Energy..................................... 84,900 1,761,675
Southwest Gas Corp................................ 28,400 811,175
-------------
2,903,194
-------------
OIL & GAS (DRILLING & EQUIPMENT)--0.1%
Halliburton Co.................................... 2,200 93,775
Tidewater, Inc.................................... 4,400 116,600
Transocean Offshore, Inc.......................... 7,500 222,656
-------------
433,031
-------------
OIL & GAS (REFINING & MARKETING)--0.1%
El Paso Energy Corp............................... 6,200 227,850
Ultramar Diamond Shamrock Corp.................... 30,600 705,713
-------------
933,563
-------------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
OIL (INTERNATIONAL INTEGRATED)--0.2%
Exxon Corp........................................ 20,800 $ 1,727,700
PAPER & FOREST PRODUCTS--0.0%
Louisiana-Pacific Corp............................ 2,000 41,625
PHOTOGRAPHY/IMAGING--0.3%
Eastman Kodak Co.................................. 37,300 2,783,513
RAILROADS--0.1%
Union Pacific Corp................................ 7,600 456,000
RETAIL (BUILDING SUPPLIES)--0.4%
Home Depot, Inc. (The)............................ 41,500 2,487,406
Lowe's Companies, Inc............................. 25,500 1,345,125
-------------
3,832,531
-------------
RETAIL (COMPUTERS & ELECTRONICS)--0.1%
Best Buy Co., Inc.(e)............................. 9,800 467,950
RETAIL (DISCOUNTERS)--0.1%
Ross Stores, Inc.................................. 15,000 689,063
RETAIL (FOOD CHAINS)--0.1%
Federated Department Stores, Inc.(e).............. 15,400 718,988
RETAIL (GENERAL MERCHANDISE)--1.1%
Dayton Hudson Corp................................ 26,000 1,750,125
Kmart Corp.(e).................................... 30,200 449,225
Wal-Mart Stores, Inc.............................. 164,000 7,544,000
-------------
9,743,350
-------------
RETAIL (SPECIALTY)--0.1%
Office Depot, Inc.(e)............................. 8,300 182,600
Zale Corp.(e)..................................... 11,200 423,500
-------------
606,100
-------------
RETAIL (SPECIALTY-APPAREL)--0.1%
Gap, Inc. (The)................................... 8,100 539,156
TJX Companies, Inc. (The)......................... 23,000 766,188
-------------
1,305,344
-------------
SERVICES (ADVERTISING/MARKETING)--0.3%
Omnicom Group, Inc................................ 38,700 2,805,750
Snyder Communications, Inc.(e).................... 4,200 123,375
-------------
2,929,125
-------------
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
SERVICES (COMMERCIAL & CONSUMER)--0.4%
Cendant Corp.(e).................................. 20,900 $ 376,200
Hertz Corp. (The) Class A......................... 7,100 423,781
Metzler Group, Inc. (The)(e)...................... 2,500 69,688
Ogden Corp........................................ 22,500 580,781
Viad Corp......................................... 54,500 1,801,906
-------------
3,252,356
-------------
SERVICES (DATA PROCESSING)--0.0%
Concord EFS, Inc.(e).............................. 1,500 50,063
NOVA Corp.(e)..................................... 2,700 70,200
-------------
120,263
-------------
SERVICES (EMPLOYMENT)--0.0%
Interim Services, Inc.(e)......................... 4,300 74,713
SPECIALTY PRINTING--0.3%
Deluxe Corp....................................... 81,300 2,815,013
TELECOMMUNICATIONS (LONG DISTANCE)--1.0%
AT&T Corp......................................... 157,050 7,931,025
MCI WorldCom, Inc.(e)............................. 6,400 526,000
-------------
8,457,025
-------------
TELEPHONE--1.9%
Ameritech Corp.................................... 32,400 2,217,375
Bell Atlantic Corp................................ 6,000 345,750
BellSouth Corp.................................... 152,400 6,819,900
GTE Corp.......................................... 34,400 2,302,650
SBC Communications, Inc........................... 50,800 2,844,800
U S WEST, Inc..................................... 44,700 2,338,369
-------------
16,868,844
-------------
TEXTILES (APPAREL)--0.2%
Jones Apparel Group, Inc.(e)...................... 7,200 237,600
Tommy Hilfiger Corp.(e)........................... 3,100 216,613
V. F. Corp........................................ 27,000 1,390,500
-------------
1,844,713
-------------
TOBACCO--0.5%
Philip Morris Companies, Inc...................... 119,800 4,200,488
</TABLE>
See Notes to Financial Statements 15
<PAGE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
TRUCKS & PARTS--0.0%
PACCAR, Inc....................................... 6,100 $ 341,600
- ----------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $232,492,839) 307,849,622
- ----------------------------------------------------------------------------------------
FOREIGN COMMON STOCKS--0.5%
COMMUNICATIONS EQUIPMENT--0.2%
Nortel Networks Corp. (Canada).................... 23,200 1,581,950
OIL (DOMESTIC INTEGRATED)--0.3%
Royal Dutch Petroleum Co. NY Registered Shares
(Netherlands)..................................... 46,700 2,740,706
- ----------------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $3,605,871) 4,322,656
- ----------------------------------------------------------------------------------------
WARRANTS--0.0%
Republic of Argentina Warrants(e)................. 3,713 12,160
- ----------------------------------------------------------------------------------------
TOTAL WARRANTS
(IDENTIFIED COST $0) 12,160
- ----------------------------------------------------------------------------------------
TOTAL INVESTMENTS--100.2%
(IDENTIFIED COST $792,111,403) 878,141,220(a)
Cash and receivables, less liabilities--(0.2%) (2,082,300)
--------------
NET ASSETS--100.0% $ 876,058,920
==============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $102,574,014 and gross
depreciation of $16,599,448 for federal income tax purposes. At April 30,
1999, the aggregate cost of securities for federal income tax purposes was
$792,166,654.
(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,
1999, these securities amounted to a value of $76,413,921 or 8.7% of net
assets.
(c) As rated by Moody's, Fitch or Duff & Phelps.
(d) Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
(e) Non-income producing.
(f) When issued.
(g) All or a portion segregated as collateral.
16 See Notes to Financial Statements
<PAGE>
Phoenix Income and Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value (Identified cost
$792,111,403) $878,141,220
Receivables
Dividends and interest 7,136,809
Investment securities sold 5,519,961
Fund shares sold 156,703
Prepaid expenses 21,006
------------
Total assets 890,975,699
------------
LIABILITIES
Payables
Custodian 2,243,494
Investment securities purchased 9,234,375
Fund shares repurchased 1,564,555
Distribution fee 856,748
Investment advisory fee 509,182
Transfer agent fee 234,796
Financial agent fee 30,307
Trustees' fee 4,514
Accrued expenses 238,808
------------
Total liabilities 14,916,779
------------
NET ASSETS $876,058,920
============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $792,487,957
Undistributed net investment income 734,403
Accumulated net realized loss (3,193,257)
Net unrealized appreciation 86,029,817
------------
NET ASSETS $876,058,920
============
CLASS A
Shares of beneficial interest outstanding, $0.0001 par
value, unlimited authorization (Net Assets $565,275,700) 58,384,411
Net asset value per share $9.68
Offering price per share $9.68/(1-4.75%) $10.16
CLASS B
Shares of beneficial interest outstanding, $0.0001 par
value, unlimited authorization (Net Assets $310,783,220) 32,075,889
Net asset value and offering price per share $9.69
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $34,807,538
Dividends 5,904,477
Foreign taxes withheld (3,299)
-----------
Total investment income 40,708,716
-----------
EXPENSES
Investment advisory fee 5,907,808
Distribution fee, Class A 1,285,251
Distribution fee, Class B 3,298,720
Financial agent fee 368,649
Transfer agent 1,125,098
Printing 139,272
Registration 82,199
Custodian 71,519
Professional 39,613
Trustees 11,957
Miscellaneous 28,411
-----------
Total expenses 12,358,497
Custodian fees paid indirectly (7,467)
-----------
Net expenses 12,351,030
-----------
NET INVESTMENT INCOME 28,357,686
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 7,074,081
-----------
Net change in unrealized appreciation (depreciation) on
investments 21,127,797
Less unrealized depreciation in connection with Phoenix
Convertible Fund merger (5,042,696)
-----------
Net change in unrealized appreciation (depreciation) 26,170,493
-----------
NET GAIN ON INVESTMENTS 33,244,574
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $61,602,260
===========
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Phoenix Income and Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
4/30/99 4/30/98
------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 28,357,686 $ 27,467,229
Net realized gain (loss) 7,074,081 131,616,037
Net change in unrealized appreciation
(depreciation) 26,170,493 4,573,207
------------- -------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 61,602,260 163,656,473
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (19,397,606) (17,182,669)
Net investment income, Class B (10,518,250) (10,988,112)
Net realized gains, Class A (43,303,686) (54,265,543)
Net realized gains, Class B (24,388,234) (43,432,965)
In excess of net realized gains, Class A (1,947,627) --
In excess of net realized gains, Class B (1,096,886) --
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS (100,652,289) (125,869,289)
------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (4,894,329 and
2,818,975 shares, respectively) 49,000,837 29,110,549
Net asset value of shares issued from
Convertible Fund merger (16,132,079 shares) 156,615,165 --
Net asset value of shares issued from
reinvestment of distributions
(5,607,651 and 6,091,273 shares, respectively) 52,935,795 58,628,750
Cost of shares repurchased (13,333,886 and
9,627,226, respectively) (131,232,769) (99,772,724)
------------- -------------
Total 127,319,028 (12,033,425)
------------- -------------
CLASS B
Proceeds from sales of shares (1,583,031 and
2,189,770 shares, respectively) 15,437,928 22,255,564
Net asset value of shares issued from
Convertible Fund merger (740,793 shares) 7,207,950 --
Net asset value of shares issued from
reinvestment of distributions
(3,039,308 and 4,402,084 shares, respectively) 28,805,790 42,377,821
Cost of shares repurchased (8,694,838 and
8,764,802, respectively) (85,529,726) (90,886,654)
------------- -------------
Total (34,078,058) (26,253,269)
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE
TRANSACTIONS 93,240,970 (38,286,694)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS 54,190,941 (499,510)
NET ASSETS
Beginning of period 821,867,979 822,367,489
------------- -------------
END OF PERIOD [INCLUDING UNDISTRIBUTED NET
INVESTMENT INCOME OF
$734,403 AND $2,057,869, RESPECTIVELY] $ 876,058,920 $ 821,867,979
============= =============
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Phoenix Income and Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------
YEAR ENDED APRIL 30,
--------------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.20 $ 9.86 $ 10.08 $ 8.88 $ 9.33
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.36 0.38 0.40 0.44 0.46
Net realized and unrealized gain
(loss) 0.29 1.63 0.66 1.22 0.03
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.65 2.01 1.06 1.66 0.49
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income (0.38) (0.39) (0.40) (0.42) (0.45)
Dividends from net realized gains (0.76) (1.28) (0.88) (0.04) (0.33)
In excess of net realized gains (0.03) -- -- -- (0.16)
--------- --------- --------- --------- ---------
TOTAL DISTRIBUTIONS (1.17) (1.67) (1.28) (0.46) (0.94)
--------- --------- --------- --------- ---------
Change in net asset value (0.52) 0.34 (0.22) 1.20 (0.45)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.68 $ 10.20 $ 9.86 $ 10.08 $ 8.88
========= ========= ========= ========= =========
Total return(1) 6.97% 21.87% 10.93% 19.01% 5.95%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 565,276 $ 459,992 $ 451,439 $ 493,454 $ 490,225
RATIO TO AVERAGE NET ASSETS OF:
Expenses 1.17%(2) 1.13% 1.18% 1.18% 1.16%
Net investment income 3.64% 3.61% 3.82% 4.39% 5.07%
Portfolio turnover 68% 155% 111% 107% 90%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------------
YEAR ENDED APRIL 30,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.22 $ 9.87 $ 10.09 $ 8.88 $ 9.32
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.29 0.30 0.31 0.36 0.39
Net realized and unrealized gain
(loss) 0.29 1.64 0.67 1.23 0.04
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.58 1.94 0.98 1.59 0.43
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income (0.32) (0.31) (0.32) (0.34) (0.38)
Dividends from net realized gains (0.76) (1.28) (0.88) (0.04) (0.33)
In excess of net realized gains (0.03) -- -- -- (0.16)
--------- --------- --------- --------- ---------
TOTAL DISTRIBUTIONS (1.11) (1.59) (1.20) (0.38) (0.87)
--------- --------- --------- --------- ---------
Change in net asset value (0.53) 0.35 (0.22) 1.21 (0.44)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.69 $ 10.22 $ 9.87 $ 10.09 $ 8.88
========= ========= ========= ========= =========
Total return(1) 6.18% 21.03% 10.05% 18.14% 5.23%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 310,783 $ 361,876 $ 370,929 $ 396,169 $ 386,515
RATIO TO AVERAGE NET ASSETS OF:
Expenses 1.92%(2) 1.88% 1.93% 1.93% 1.91%
Net investment income 2.92% 2.86% 3.06% 3.64% 4.32%
Portfolio turnover 68% 155% 111% 107% 90%
</TABLE>
(1) Maximum sales charge is not reflected in the total return calculation.
(2) For the year ended April 30, 1999, the ratio of operating expenses to
average net assets excludes the effects of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
See Notes to Financial Statements
19
<PAGE>
PHOENIX INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
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. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. SECURITY VALUATION:
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Debt securities are valued on the basis of
broker quotations or valuations provided by a pricing service which utilizes
information with respect to market transactions in comparable securities,
quotations from dealers, and various relationships between securities in
determining value. Short-term investments having a remaining maturity of 60 days
or less are valued at amortized cost which approximates market. All other
securities and assets are valued at their fair value as determined in good faith
by or under the direction of the Trustees.
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 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.
F. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS:
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains collateral for
the securities purchased. Securities purchased on a when-issued or delayed
delivery basis begin earning interest on the settlement date.
G. SECURITY LENDING:
The Fund loans securities to qualified brokers through an agreement with State
Street Bank & Trust (the Custodian). Under the terms of the agreement, the Fund
receives collateral with a market value not less than 100% of the market value
of loaned securities. Collateral is adjusted daily in connection with changes in
the market value of securities on loan. Collateral consists of cash, securities
issued or guaranteed by the U.S. Government or its agencies and the sovereign
debt of foreign countries. Interest earned on the collateral and premiums paid
by the borrower are recorded as income by the Fund net of fees charged by the
Custodian for its services in connection with this securities lending program.
Lending portfolio securities involves a risk of delay in the recovery of the
loaned securities or in the foreclosure on collateral.
20
<PAGE>
PHOENIX INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (CONTINUED)
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
Effective June 1, 1998, National Securities and Research Corporation assigned
its investment advisory agreement to Phoenix Investment Counsel, Inc. ("PIC"),
both an indirect majority-owned subsidiary of Phoenix Home Life Mutual Insurance
Company ("PHL"). PIC is entitled to a fee at an annual rate of 0.70% of the
average daily net 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 $38,121 for Class A shares and deferred
sales charges of $414,587 for Class B shares for the year ended April 30, 1999.
In addition, the Fund pays PEPCO a distribution fee at an annual rate of 0.25%
for Class A shares and reimbursed up to 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, 1999,
$2,875,843 was earned by the Distributor, $1,618,072 was paid to unaffiliated
participants and $90,056 was paid to W.S. Griffith, an indirect subsidiary of
PHL.
As Financial Agent of the Fund, PEPCO received a fee for bookkeeping,
administration, and pricing services through May 31, 1998, at an annual rate of
0.05% of average daily net assets up to $100 million, 0.04% of average daily net
assets of $100 million, to $300 million, 0.03% of average daily net assets of
$300 million through $500 million, and 0.015% of average daily net assets
greater than $500 million; a minimum fee applied. Effective June 1, 1998, PEPCO
receives a financial agent fee equal to the sum of (1) the documented cost of
fund accounting and related services provided by PFPC, Inc. (subagent to PEPCO),
plus (2) the documented cost to PEPCO to provide financial reporting, tax
services and oversight of subagent's performance. The current fee schedule of
PFPC, Inc. ranges from 0.085% to 0.0125% of the average daily net asset values
of the Fund. Certain minimum fees and fee waivers may apply.
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, 1999, transfer agent
fees were $1,125,098 of which PEPCO retained $421,918 which is net of fees paid
to State Street.
At April 30, 1999, PHL and affiliates held 159 Class A shares and 22 Class B
shares of the Fund with a combined value of $1,754.
3. PURCHASE AND SALE OF SECURITIES
During the year ended April 30, 1999, purchases and sales of investments,
excluding short-term securities and U.S. Government and agency securities,
amounted to $446,322,867 and $539,094,662, respectively. Purchases and sales of
long-term U.S. Government and agency securities amounted to $114,799,029 and
$141,428,881, respectively.
4. MERGER
On October 23, 1998, the Fund acquired all the net assets of the Phoenix
Convertible Fund Series ("Convertible Fund") pursuant to an Agreement and Plan
of Reorganization approved by fund shareholders on October 14, 1998. The
acquisition was accomplished by a tax-free exchange of 16,132,079 Class A shares
of the Fund and 740,793 Class B shares of the Fund (valued at $156,615,165 and
$7,207,950, respectively) for 9,661,762 Convertible Fund Class A shares and
446,615 Convertible Fund Class B shares outstanding on October 23, 1998. The
Convertible Fund's net assets at that date of $163,823,115, including $5,042,696
of unrealized depreciation were combined with those of the Fund. The aggregate
net assets of the Fund immediately after the merger were $908,891,194.
5. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a Fund's ability to
repatriate such amounts.
6. CAPITAL LOSS CARRYOVERS
Under current tax law, currency losses realized after October 31, 1998 may be
deferred and treated as occurring on the first day of the following fiscal year.
For the year ended April 30, 1999, the Fund deferred capital losses in the
amount of $3,138,006.
7. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded several
reclassifications in the capital 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,
1999, the Fund decreased capital paid in on shares of beneficial interest by
$85,960, increased undistributed net investment income by $234,704 and decreased
accumulated net realized gains by $148,744.
TAX INFORMATION NOTICE (UNAUDITED)
The Fund distributed $53,572,834 of long-term capital gain dividends.
This report is not authorized for distribution to prospective investors in the
Phoenix Income and Growth Fund unless preceded or accompanied by an effective
prospectus which includes information concerning the sales charge, the Fund's
record and other pertinent information.
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[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, 1999, the results of
its operations for the year then ended, 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 presented, 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, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
June 11, 1999
22
<PAGE>
PHOENIX INCOME AND GROWTH FUND
PART C--OTHER INFORMATION
Item 23. Exhibits
a.1 Declaration of Trust of the Registrant, as amended prior to 1994,
previously filed, filed via EDGAR as Exhibit 1.1 with Post-Effective
Amendment No. 14 on August 21, 1998 and herein incorporated by
reference.
a.2 Amendment to Declaration of Trust of the Registrant, dated May 24, 1994,
filed with Post-Effective Amendment No. 10 on August 25, 1994 filed via
EDGAR as Exhibit 2 with Post-Effective Amendment No. 14 on August 21,
1998 and herein incorporated by reference.
b. By-laws of the Registrant, previously filed and filed via EDGAR as
Exhibit 2 with Post-Effective Amendment No. 14 on August 21, 1998 and as
Exhibit 2, incorporated by reference.
c. Reference is made to Article VI of Registrant's Declaration of Trust, as
amended, referred to in Exhibit a.1. and a.2.
d.1 Management Agreement between Registrant and National Securities &
Research Corporation, dated May 14, 1993 and assigned to Phoenix
Investment Counsel, Inc. effective June 1, 1998, previously filed, filed
via EDGAR as Exhibit 5.1 with Post-Effective Amendment No. 14 on August
21, 1998 and herein incorporated by reference.
d.2 Amendment to Management Agreement between Registrant and National
Securities & Research Corporation, dated January 1, 1994 and assigned to
Phoenix Investment Counsel, Inc. effective June 1, 1998, filed with
Post-Effective Amendment No. 10 on August 25, 1994 filed via EDGAR as
Exhibit 5.2 with Post-Effective Amendment No. 14 on August 21, 1998 and
herein incorporated by reference.
e.1 Underwriting Agreement between Registrant and Phoenix Equity Planning
Corporation ("Equity Planning") dated November 19, 1997 filed via EDGAR
as Exhibit 6.1 with Post-Effective Amendment No. 14 on August 21, 1998
and herein incorporated by reference.
e.2 Form of Sales Agreement between Phoenix Equity Planning Corporation and
dealers filed via EDGAR as Exhibit 6.2 with Post-Effective Amendment No.
14 on August 21, 1998 and herein incorporated by reference.
e.3 Form of Supplement to Phoenix Family of Funds Sales Agreement filed via
EDGAR as Exhibit 6.3 with Post-Effective Amendment No. 14 on August 21,
1998 and herein incorporated by reference.
e.4 Form of Financial Institution Sales Contract for the Phoenix Family of
Funds filed via EDGAR as Exhibit 6.4 with Post-Effective Amendment No.
14 on August 21, 1998 and herein incorporated by reference.
f. None.
g. Custodian Contract between Registrant and State Street Bank and Trust
Company dated May 1, 1997, filed via EDGAR as Exhibit 8 with
Post-Effective Amendment No. 14 on August 21, 1998 and herein
incorporated by reference.
h.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, filed via EDGAR as Exhibit 9.1 with Post-Effective
Amendment No. 13 on August 26, 1997 and herein incorporated by
reference.
h.2 Sub-transfer Agent Agreement between Equity Planning and State Street
Bank and Trust Company dated June 1, 1994 filed via EDGAR as Exhibit 9.2
with Post-Effective Amendment No. 14 on August 21, 1998.
h.3 Amended and Restated Financial Agent Agreement between Registrant and
Phoenix Equity Planning Corporation dated November 19, 1997 and filed
via EDGAR as Exhibit 9.3 with Post-Effective Amendment No. 14 on August
21, 1998 and herein incorporated by reference.
h.4 First Amendment to Amended and Restated Financial Agent Agreement
between Registrant and Phoenix Equity Planning Corporation dated March
23, 1998 and filed via EDGAR as Exhibit 9.4 with Post-Effective
Amendment No. 14 on August 21, 1998 and herein incorporated by
reference.
h.5 Second Amendment to Amended and Restated Financial Agent Agreement
between Registrant and Phoenix Equity Planning Corporation dated July
31, 1998 and filed via EDGAR as Exhibit 9.5 with Post-Effective
Amendment No. 14 on August 21, 1998 and herein incorporated by
reference.
i. Opinion as to legality of the shares filed via EDGAR herewith.*
j. Consent of Independent Accountants filed via EDGAR herewith.*
C-1
<PAGE>
k. Not Applicable.
l. None.
m.1 Amended and Restated Distribution Plan for Class A Shares effective
August 27, 1997, filed via EDGAR as Exhibit 15.1 with Post-Effective
Amendment No. 14 on August 21, 1998 and herein incorporated by
reference.
m.2 Amended and Restated Distribution Plan for Class B Shares effective
August 27, 1997, filed via EDGAR as Exhibit 15.2 with Post-Effective
Amendment No. 14 on August 21, 1998 and herein incorporated by
reference.
n. Financial Data Schedules.
o.1. Amended and Restated Rule 18f-3 Multi-Class Distribution Plan, effective
May 1, 1997, filed via EDGAR as Exhibit 19.1 with Post-Effective
Amendment No. 14 on August 21, 1998 and herein incorporated by
reference.
o.2. First Amendment to the Amended and Restated Plan Pursuant to Rule 18f-3,
effective August 26, 1998, filed via EDGAR with Post-Effective Amendment
No. 16 on June 28, 1999, and incorporated herein by reference.
p. Powers of attorney, filed via EDGAR with Post-Effective Amendment No. 16
on June 28, 1999, and incorporated herein by reference.
- -----------
*Filed herewith.
Item 24. Persons Controlled by or Under Common Control with the Fund
No person is controlled by, or under common control, with the Fund.
Item 25. 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 26. Business and Other Connections of Investment Adviser
See "Management of the Fund" in the Prospectus and "Services of the
Adviser" and "Management of the Fund" of the Statement of Additional
Information in which is included in this Post-Effective Amendment. For
information as to the business, profession, vocation or employment of a
substantial nature of directors and officers of Phoenix Investment Counsel,
Inc., the Adviser, reference is made to the Adviser's current Form ADV (SEC
File No. 801-5995) filed under the Investment Advisers Act of 1940 and
incorporated herein by reference.
Item 29. Principal Underwriter
(a) Equity Planning also serves as the principal underwriter for the following
other registrants:
Phoenix-Aberdeen Series Fund, Phoenix-Aberdeen Worldwide Opportunities
Fund, Phoenix-Goodwin California Tax Exempt Bonds, Inc., Phoenix Duff &
Phelps Institutional Mutual Funds, Phoenix-Engemann Funds, Phoenix Equity
Series Fund, Phoenix-Euclid Funds, Phoenix-Oakhurst Income & Growth Fund,
Phoenix Investment Trust 97, Phoenix Multi-Portfolio Fund, Phoenix-Goodwin
Multi-Sector Fixed Income Fund, Inc., Phoenix-Goodwin Multi-Sector Short
Term Bond Fund, Phoenix Series Fund, Phoenix-Seneca Funds, Phoenix
Strategic Allocation Fund. Inc., Phoenix Strategic Equity Series Fund,
Phoenix-Zweig Trust, Phoenix Home Life Variable Universal Life Account,
Phoenix Home Life Variable Accumulation Account, PHL Variable Accumulation
Account, Phoenix Life and Annuity Variable Universal Life Account and PHL
Variable Separate Account MVA1.
(b) Directors and executive officers of Phoenix Equity Planning Corporation are
as follows:
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Distributor 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
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Senior Vice Vice President
100 Bright Meadow Blvd. President, Chief Financial
P.O. Box 2200 Officer and Treasurer
Enfield, CT 06083-2200
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Distributor with Registrant
- ----------------- ---------------- ---------------
<S> <C> <C>
John F. Sharry President, Retail Distribution Executive Vice President
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
Leonard J. Saltiel Managing Director, Vice President
56 Prospect Street Operations and Service
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President Secretary
101 Munson Street
P.O. Box 810
Greenfield, MA 01302-0810
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel Assistant Secretary
56 Prospect Street and Secretary
P.O. Box 150480
Hartford, CT 06115-0480
Jacqueline Porter Assistant Vice President, Assistant Treasurer
56 Prospect Street Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an affiliated
person of the Registrant or an affiliated person of such affiliated person,
directly or indirectly, from the Registrant during the Registrant's last fiscal
year.
Item 28. 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, Phoenix Investment Counsel, Inc.; Registrant's financial
agent, transfer agent and principal underwriter, Phoenix Equity Planning
Corporation; Registrant's dividend disbursing agent and custodian, State Street
Bank and Trust Company. The address of the Secretary of the Trust is 101 Munson
Street, Greenfield, Massachusetts 01301; the address of Phoenix Investment
Counsel, Inc. is 56 Prospect Street, Hartford, Connecticut 06115-2520; 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.
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment
Company Act, the Fund certifies that it meets all of the requirements for
effectiveness of this registration statement under Rule 485(b) of the
Securities Act and has duly caused this amendment to the registration statement
to be signed on its behalf by the undersigned, duly authorized, in the City of
Hartford and State of Connecticut on the 27th day of August, 1999.
PHOENIX-OAKHURST INCOME & GROWTH FUND
ATTEST: /s/ Nancy J. Engberg By: /s/ Philip R. McLoughlin
--------------------------- -------------------------------
Nancy J. Engberg Philip R. McLoughlin, President
Assistant Secretary
Pursuant to the requirements of the Securities Act, this amendment to the
registration statement has been signed below by the following persons in the
capacities indicated, on this 27th day of August, 1999:
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
Trustee
- ----------------------------
Robert Chesek*
Trustee
- ----------------------------
E. Virgil Conway*
/s/ Nancy G. Curtiss Treasurer (principal financial
- ---------------------------- and accounting officer)
Nancy G. Curtiss
Trustee
- ----------------------------
Harry Dalzell-Payne*
Trustee
- ----------------------------
Francis E. Jeffries*
Trustee
- ----------------------------
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin Trustee and President
- ---------------------------- (principal executive officer)
Philip R. McLoughlin
Trustee
- ----------------------------
Everett L. Morris*
Trustee
- ----------------------------
James M. Oates*
Trustee
- ----------------------------
Calvin J. Pedersen*
Trustee
- ----------------------------
Herbert Roth, Jr.*
Trustee
- ----------------------------
Richard E. Segerson*
Trustee
- ----------------------------
Lowell P. Weicker, Jr.*
</TABLE>
By /s/ Philip R. McLoughlin
------------------------
*Philip R. McLoughlin pursuant to powers of attorney filed previously.
S-1
[LETTERHEAD]
THE PHOENIX FUNDS
August 27, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Phoenix-Oakhurst Income & Growth Fund (the "Fund")
Post-Effective Amendment No. 16 to Registration Statement No. 33-6930
Ladies and Gentlemen:
This opinion is furnished in connection with the registration under the
Securities Act of 1933, as amended, of shares (the "Shares") of the
above-referenced Fund. In rendering this opinion, I have examined such
documents, records and matters of law as deemed necessary for purposes of this
opinion. I have assumed the genuineness of all signatures of all parties, the
authenticity of all documents submitted as originals, the correctness of all
copies and the correctness of all written or oral statements made to me.
Based upon and subject to the foregoing, it is my opinion that the
Shares that will be issued by the Fund when sold will be legally issued, fully
paid, and non-assessable.
My opinion is rendered solely in connection with the Registration
Statement on Form N-IA under which the Shares will be registered and may not be
relied upon for any other purpose without my written consent. I hereby consent
to the use of this opinion as an exhibit to such Registration Statement.
Very truly yours,
/s/ Nancy J. Engberg
--------------------
Nancy J. Engberg
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. 16 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated June 11, 1999, relating to the financial
statements and financial highlights appearing in the April 30, 1999 Annual
Report to Shareholders of the Phoenix Income and Growth Fund (currently known as
Phoenix-Oakhurst Income & Growth Fund), which are also incorporated by reference
into the Registration Statement. We also consent to the reference to us under
the heading "Financial Highlights" in the Prospectus and under the heading
"Additional Information-Independent Accountants" in the Statement of Additional
Information.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
August 27, 1999
