As filed with the Securities and Exchange Commission on August 27, 1996
Registration Nos. 33-6931
811-4727
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 17 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 18
(Check appropriate box or boxes)
____________
Phoenix Strategic Equity Series Fund
(Exact Name of Registrant as Specified in Charter)
____________
101 Munson Street, Greenfield, Massachusetts
01301
(Address of Principal Executive Offices)
(Zip Code)
c/o Phoenix Equity Planning Corporation--Shareholder Services
(800) 243-1574
(Registrant's Telephone Number, including Area Code)
____________
Philip R. McLoughlin
Vice Chairman and Chief Executive Officer
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115-0479
(name and address of Agent for Service)
____________
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate
box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on August 28 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite number of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940. A
Rule 24f-2 Notice for the fiscal year ended on April 30, 1996 was filed by
Registrant with the Commission on June 27, 1996.
==========================================================================
<PAGE>
This Registration Statement contains two prospectuses and two Statements of
Additional Information.
These are identified as Version A and B of each.
PHOENIX STRATEGIC EQUITY SERIES FUND
[VERSION A]
Cross Reference Sheet Pursuant to Rule 495
Under the Securities Act of 1993
PART A
Information Required in Prospectus
Item Number Prospectus Caption
- ------------------------------ ---------------------------------------------
1. Cover Page Cover Page
2. Synopsis Introduction; Fund Expenses
3. Condensed Financial
Information Financial Highlights
4. General Description of Cover Page; Introduction; Investment
Registrant Objective and Policies; Additional Information
5. Management of the Fund Management of the Fund
6. Capital Stock and Other Dividends, Distributions and Taxes; Net
Securities Asset Value; How to Buy Shares; Additional
Information
7. Purchase of Securities How to Buy Shares; Alternative Sales
Being Offered Arrangements; Distribution Plans; Net Asset
Value; Investor Accounts and Services
Available
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceeding Not Applicable
PART B
Information Required in Statement of Additional Information
Item Number Statement of Additional Information Caption
- ------------------------------ -------------------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Cover Page; General Information
History
13. Investment Objectives Cover Page; Investment Objective;
and Policies Investment Policies; Investment Restrictions
14. Management of the Fund Services of the Adviser; Trustees and
Officers; Other Information
15. Control Persons and Not Applicable
Principal Holders of
Securities
16. Investment Advisory and Services of the Adviser
Other Services
17. Brokerage Allocation Portfolio Transactions and Brokerage
18. Capital Stock and Other Net Asset Value; How to Buy Shares
Securities
19. Purchase, Redemption How to Buy Shares; Exchange Privileges;
and Pricing of Redemption of Shares; Net Asset Value
Securities
Being Offered
20. Tax Status Dividends, Distributions and Taxes
21. Underwriter The Distributor
22. Calculations of Performance Information
Performance Data
23. Financial Statements Financial Statements
<PAGE>
PHOENIX
FUNDS
PROSPECTUS
AUGUST 28, 1996
Phoenix Strategic Equity Series Funds
(arrowt) EQUITY
OPPORTUNITIES
FUND
(arrow) STRATEGIC THEME
FUND
(arrow) SMALL CAP FUND
MUTUAL FUNDS, ANNUITIES AND INSURANCE PRODUCTS ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED BY ANY BANK, NOR ARE THEY INSURED BY THE FDIC; THEY ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNTS
INVESTED.
[Phoenix Duff & Phelps Logo]
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
August 28, 1996
Phoenix Strategic Equity Series Fund (the "Fund") is an open-end
management investment company whose shares are offered in three series. Each
series represents an investment in a separate diversified fund with its own
investment objectives and policies designed to meet its specific investment
goals. There can be no assurance that any Series will achieve its objective.
Phoenix Equity Opportunities Fund ("Equity Opportunities Series") seeks as
its investment objective long-term growth of capital from investment in a
diversified group of stocks or securities convertible into stocks. This
Series intends to invest in stock of all types and is not restricted as to
any specific industry. Any income derived from investments will be
incidental.
Phoenix Strategic Theme Fund ("Theme Series") seeks as its investment
objective long-term appreciation of capital. This Series seeks to identify
securities benefiting from long-term trends present in the United States and
abroad. The Series intends to invest primarily in common stocks believed by
the Adviser to have substantial potential for capital growth. Since many
trends may be early in their development and no history of industry growth
patterns is available, securities owned may present a high degree of risk.
Phoenix Small Cap Fund ("Small Cap Series") seeks as its investment
objective long-term growth of capital by investing in a diversified portfolio
of securities, primarily common stock, of relatively small companies which
the Adviser believes have long-term investment potential. Companies are
selected by the Adviser on the basis of their long-term potential for
expanding their revenue, profit and earnings per share base through a variety
of methods including the growth of existing products, introduction of new
products, improved operating efficiencies, market share gains, penetration of
new markets or acquisitions. Current income is not a factor in the selection
of securities. The Series is intended to provide an opportunity for investors
who are not ordinarily in a position to perform the specialized type of
research or analysis involved in investing in small and emerging growth
companies. The Series is currently closed to new investors.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. No dealer, salesperson or
any other person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as
having been authorized by the Fund, Adviser or Distributor. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any
of the securities offered hereby in any state in which, or to any person to
whom, it is unlawful to make such offer. Neither the delivery of this
Prospectus nor any sale hereunder shall, under any circumstances, create any
implication that information herein is correct at any time subsequent to its
date. Investors should read and retain this Prospectus for future reference.
Additional information about the Fund is contained in the Statement of
Additional Information, dated August 28, 1996, which has been filed with the
Securities and Exchange Commission (the "Commission") and is available upon
request at no charge by calling (800) 243-4361 or by writing to Phoenix
Equity Planning Corporation at 100 Bright Meadow Boulevard, P.O. Box 2200,
Enfield, Connecticut 06083-2200. The Statement of Additional Information is
incorporated herein by reference.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union, or affiliated entity, and are not
federally insured or otherwise protected by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board, or any other agency, and
involve investment risk, including possible loss of principal.
=============================================================================
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
=============================================================================
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS/EXCHANGES: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY) (800) 243-1926
<PAGE>
TABLE OF CONTENTS
Page
-------
INTRODUCTION 3
FUND EXPENSES 4
FINANCIAL HIGHLIGHTS 6
PERFORMANCE INFORMATION 8
INVESTMENT OBJECTIVE AND POLICIES 8
Equity Opportunities Series 9
Theme Series 9
Small Cap Series (Currently closed to new investors) 10
INVESTMENT TECHNIQUES AND RELATED RISKS 10
INVESTMENT RESTRICTIONS 15
PORTFOLIO TURNOVER 15
MANAGEMENT OF THE FUND 15
DISTRIBUTION PLANS 17
HOW TO BUY SHARES 18
INVESTOR ACCOUNTS AND SERVICES AVAILABLE 22
NET ASSET VALUE 25
HOW TO REDEEM SHARES 25
DIVIDENDS, DISTRIBUTIONS AND TAXES 26
ADDITIONAL INFORMATION 27
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of
Phoenix Strategic Equity Series Fund (the "Fund"). The Fund is a diversified,
open-end management investment company established as a Massachusetts
business trust. Shares of the Fund are divided into three series. This
Prospectus offers shares of the Equity Opportunities Series, Theme Series and
Small Cap Series currently offered by the Fund (the "Series"). Each Series
has a different investment objective, and is designed to meet different
investment needs.
The Investment Advisers
The investment adviser for the Theme Series and Small Cap Series is
Phoenix Investment Counsel, Inc. ("PIC" or the "Adviser"). National
Securities & Research Corporation ("National") (PIC and National are
sometimes collectively referred to as the "Adviser") is the investment
adviser of the Equity Opportunities Series. Each Adviser is a subsidiary of
Phoenix Duff & Phelps Corporation and prior to November 1, 1995, were
indirect subsidiaries of Phoenix Home Life Mutual Insurance Company. See
"Management of the Fund" for a description of the Investment Advisory
Agreements, management fees and each Adviser's undertaking to reimburse the
Fund for certain expenses.
Distributor and Distribution Plans
Phoenix Equity Planning Corporation ("Equity Planning" or Distributor"),
serves as national distributor of the Fund's shares. See "Distribution Plans"
and the Statement of Additional Information. Equity Planning also acts as
financial agent of the Fund and as such receives a quarterly fee based on the
average of the aggregate daily net asset values of the Fund at an annual rate
of $300 per $1 million. Equity Planning also serves as the Fund's transfer
agent.
The Fund has adopted distribution plans pursuant to Rule 12b-1 under the
Investment Company Act of 1940 as amended (the "1940 Act") for all classes of
all Series. Pursuant to the distribution plan adopted for Class A Shares, the
Fund shall reimburse the Distributor up to a maximum annual rate of 0.30% of
the Fund's average daily Class A Share net assets of a Series for
distribution expenditures incurred in connection with the sale and promotion
of Class A Shares of a Series and for furnishing shareholder services.
Although the Class A Plan provides for a 0.30% distribution fee, the
Distributor has voluntarily agreed to limit the Rule 12b-1 fee charged to
Class A Shares of a Series to 0.25% for the 1997 fiscal year. Pursuant to the
distribution plan adopted for Class B Shares of a Series, the Fund shall
reimburse the Distributor up to a maximum annual rate of 1.00% of the Fund's
average daily Class B Share net assets of a Series for distribution
expenditures incurred in connection with the sale and promotion of Class B
Shares of a Series and for furnishing shareholder services. See "Distribution
Plans."
Purchase of Shares
The Fund offers two classes of shares of each Series which may be
purchased at a price equal to their net asset value per share, plus a sales
charge which, at the election of the purchaser, may be imposed (i) at the
time of the purchase (the "Class A Shares") or (ii) on a contingent deferred
basis (the "Class B Shares"). Completed application for the purchase of
shares should be mailed to the Phoenix Funds, c/o State Street Bank and Trust
Company, P.O. Box 8301, Boston, MA 02266-8301.
Class A Shares are offered to the public at the next determined net asset
value after receipt of the order by State Street Bank and Trust Company plus
a maximum sales charge of 4.75% of the offering price (4.99% of the amount
invested) on single purchases of less than $50,000. The sales charge for
Class A Shares is reduced on a graduated scale on single purchases of $50,000
or more and subject to other conditions stated below. See "How to Buy
Shares," "How to Obtain Reduced Sales Charges on Class A Shares" and "Net
Asset Value."
Class B Shares are offered to the public at the next determined net asset
value after receipt of an order by State Street Bank and Trust Company, with
no sales charge. Class B Shares are subject to a sales charge if they are
redeemed within five years of purchase. See "How to Buy Shares" and "Deferred
Sales Charge Alternative--Class B Shares."
Shares of each Class represent an identical interest in the investment
portfolio of a Series and have the same rights, except that Class B Shares
bear the cost of the higher distribution fees which cause the Class B Shares
to have a higher expense ratio and to pay lower dividends than Class A
Shares. See "How to Buy Shares."
Minimum Initial and Subsequent Investments
The minimum initial investment is $500 ($25 if using the bank draft
investment program designated "Investo-Matic") and the minimum subsequent
investment is $25. Exceptions to the minimum and subsequent investment
amounts are available under certain circumstances. See "How to Buy Shares."
Redemption Price
Class A Shares of a Series may be redeemed at any time at the net asset
value per share next computed after receipt of a redemption request by Equity
Planning, the Fund's transfer agent. Class B shareholders redeeming shares
within five years of the date of purchase will normally be assessed a
contingent deferred sales charge. See "How to Redeem Shares."
3
<PAGE>
Risk Factors
There can be no assurances that any Series will achieve its investment
objectives. As a result of each Series' substantial investment in the stock
market, the net asset values of Fund shares will fluctuate in response to
changes in market and economic conditions, as well as the financial condition
and prospects of issuers in which each Series invests.
The Theme Series utilizes an approach to equity investing which attempts to
identify and exploit investment opportunities ahead of other investors.
Investments based upon this type of strategic theme identification may not
positively correlate with movements in the stock market as a whole. Pursuing
investments in similar or related industries may also increase overall risk.
Small capitalization companies typically are subject to a greater degree of
change in earnings and business prospects than are larger, more established
companies. In addition, securities of small capitalization companies are
traded in lower volume than those issued by larger companies and are more
volatile than those of larger companies. Accordingly, the Small Cap Series
may be subject to greater investment risk than that assumed by mutual funds
investing in a broader range of equities. See "Investment Objectives and
Policies."
FUND EXPENSES
The following table illustrates all fees and expenses a shareholder will
incur. The expenses and fees set forth in the table are based on the fiscal
year ended April 30, 1996. The expenses and fees for the Theme Series and
Small Cap Series have been pro-rated to reflect a full year of operations.
<TABLE>
<CAPTION>
Theme
Equity Opportunities Series Series
-------------------------------------------
Class A Class B Class A
Shares Shares Shares
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on 4.75% None 4.75%
Purchases (as a percentage of
offering price)
Maximum Sales Load Imposed on None None None
Reinvested Dividends
Deferred Sales Load (as a None 5% during the first None
percentage of original year, decreasing 1%
purchase price or redemption annually to 2% during
proceeds, as applicable) the fourth and fifth
years; thereafter
decreasing to 0% after
the fifth year
Redemption Fee None None None
Exchange Fee None None None
Annual Fund Operating Expenses
(as a percentage of average
net assets for the fiscal year
ended April 30, 1996)
Management Fees
Advisory Fees 0.70% 0.70% 0.75%
12b-1 Fees 0.25% 1.00% 0.25%
(after waiver) (a)
Other Expenses (After 0.30% 0.30% 0.40%
Expense Reimbursement) (b)
Total Fund Operating Expenses 1.25% 2.00% 1.40%
</TABLE>
<TABLE>
<CAPTION>
Theme
Series Small Cap Series
------------------- --------------------------------
Class B Class A Class B
Shares Shares Shares
<S> <C> <C> <C>
Shareholder
Transaction
Expenses
Maximum Sales Load None 4.75% None
Imposed on
Purchases (as a
percentage of
offering price)
Maximum Sales Load None None None
Imposed on
Reinvested
Dividends
Deferred Sales Load 5% during the None 5% during the first
(as a percentage first year, year, decreasing 1%
of original decreasing 1% annually to 2%
purchase price or annually to 2% during the fourth
redemption during the fourth and fifth years;
proceeds, as and fifth years; thereafter
applicable) thereafter decreasing to 0%
decreasing to 0% after the fifth
after the fifth year
year
Redemption Fee None None None
Exchange Fee None None None
Annual Fund Operating
Expenses
(as a percentage of
average net assets
for the fiscal year
ended April 30,
1996)
Management Fees
Advisory Fees 0.75% 0.75% 0.75%
12b-1 Fees 1.00% 0.25% 1.00%
(after waiver) (a)
Other Expenses 0.40%(b) 0.50%(c) 0.50% (c)
(After Expense
Reimbursement)
Total Fund Operating 2.15% 1.50% 2.25%
Expenses
</TABLE>
(a) "Rule 12b-1 Fees" represent an asset based sales charge that, for a
long term shareholder, may be higher than the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc. ("NASD").
While the Class A Share Distribution Plans continue to provide for a 0.30%
distribution fee, the Distributor has voluntarily agreed to limit the fee to
0.25% for the 1997 fiscal year. Rule 12b-1 fees would have been .30% absent
Distributor's waiver. Rule 12b-1 Fees stated for Class B Shares include a
Service Fee. See "Distribution Plans."
(b) Phoenix Investment Counsel, Inc. has agreed to reimburse the Theme
Series' operating expenses other than Management Fees and Rule 12b-1 Fees
related to Class A and Class B Shares for the amount, if any, by which such
operating expenses for the fiscal year ended April 30, 1997 exceed .40% of
the average net assets of such Series. The total operating expenses for Class
A and Class B Shares of this Series would have been 2.08% and 2.83%,
respectively absent reimbursement.
(c) Phoenix Investment Counsel, Inc. has agreed to reimburse the Small Cap
Series' operating expenses other than Management Fees and Rule 12b-1 Fees
related to Class A and Class B Shares for the amount, if any, by which such
operating expenses for the 1997 fiscal year ended April 30, exceed .50% of
the average net assets of such Series. The total operating expenses for Class
A and Class B Shares of this Series would have been 1.80% and 2.55%,
respectively absent reimbursement.
4
<PAGE>
<TABLE>
<CAPTION>
Cumulative Expenses
Paid for the Period
Example* 1 year 3 years 5 years 10 years
- ---------------------------------------------------- ------ ------- ------- ---------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a
hypothetical $1,000 investment assuming (1) a 5%
annual return and (2) redemption at the end of
each time period.
Equity Opportunities Series (Class A Shares) $60 $ 85 $113 $191
Equity Opportunities Series (Class B Shares) $70 $ 93 $128 $213
Theme Series (Class A Shares) $61 $ 90 120 207
Theme Series (Class B Shares) $72 $ 97 135 229
Small Cap Series (Class A Shares) $62 $ 93 125 218
Small Cap Series (Class B Shares) $73 $100 140 240
An investor would pay the following expenses on the
same $1,000 investment assuming no redemption at
the end of each period:
Equity Opportunities Series (Class A Shares) $60 $ 85 $113 $191
Equity Opportunities Series (Class B Shares) $20 $ 63 $108 $213
Theme Series (Class A Shares) $61 $ 90 120 207
Theme Series (Class B Shares) $22 $ 67 115 229
Small Cap Series (Class A Shares) $62 $ 93 125 218
Small Cap Series (Class B Shares) $23 $ 70 120 240
</TABLE>
*The purpose of the table above is to help the investor understand the
various costs and expenses that the investor will bear directly or
indirectly. The Example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown. See
"Management of the Fund", "Distribution Plans" and "How to Buy Shares."
5
<PAGE>
FINANCIAL HIGHLIGHTS
The following table sets forth certain financial information for the
respective fiscal years of the Fund. The financial information has been
audited by Price Waterhouse LLP, independent accountants. Financial
statements and notes thereto are incorporated by reference in the Statement
of Additional Information. The Statement of Additional Information and the
Fund's most recent Annual Report (containing the report of independent
accountants and additional information relating to Fund performance) are
available at no charge upon request by calling (800) 243-4361.
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
Phoenix Equity Opportunities Series
<TABLE>
<CAPTION>
Class A
------------------------------------
Year Ended April 30
1996 1995 1994
------------- -------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period $7.40 $7.31 $9.64
Income from investment operations
Net investment income (loss) (0.04)(4) 0.04 0.05
Net realized and unrealized gain 2.34 0.58 0.57
----------- ------- --------
Total from investment operations 2.30 0.62 0.62
----------- ------- --------
Less distributions
Dividends from net investment income -- (0.05) (0.05)
Distributions from net realized gains (0.89) (0.48) (2.90)
----------- ------- --------
Total distributions (0.89) (0.53) (2.95)
----------- ------- --------
Change in net asset value 1.41 0.09 (2.33)
----------- ------- --------
Net asset value, end of period $8.81 $7.40 $7.31
=========== ======= ========
Total return(1) 32.86% 9.16% 4.99%
Ratios/supplemental data:
Net assets, end of period (thousands) $213,600 $179,666 $186,037
Ratio to average net assets of:
Expenses 1.25% 1.32% 1.26%
Net investment income (loss) (0.53)% 0.60% 0.57%
Portfolio turnover 302% 358% 167%
Average commission rate paid $0.0600 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class A
------------------------------------------
Year Ended April 30
1993 1992 1991 1990
------- ------- ------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $8.59 $8.36 $7.61 $8.31
Income from investment operations
Net investment income (loss) 0.06 0.11 0.17 0.25
Net realized and unrealized gain 1.34 0.71 0.74 0.38
------- ------- ------- --------
Total from investment operations 1.40 0.82 0.91 0.63
------- ------- ------- --------
Less distributions
Dividends from net investment income (0.06) (0.12) (0.16) (0.27)
Distributions from net realized gains (0.29) (0.47) -- (1.06)
------- ------- ------- --------
Total distributions (0.35) (0.59) (0.16) (1.33)
------- ------- ------- --------
Change in net asset value 1.05 0.23 0.75 (0.70)
------- ------- ------- --------
Net asset value, end of period $9.64 $8.59 $8.36 $7.61
======= ======= ======= ========
Total return(1) 16.50% 10.30% 12.16% 7.08%
Ratios/supplemental data:
Net assets, end of period (thousands) $215,570 $204,792 $213,147 $210,667
Ratio to average net assets of:
Expenses 1.35% 1.36% 1.41% 1.09%
Net investment income (loss) 0.67% 1.29% 2.19% 2.88%
Portfolio turnover 31% 73% 95% 49%
Average commission rate paid N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
------------------------------ -----------------------
From
Year Inception
Year Ended April 30 Ended 7/19/94 to
1989 1988 1987 4/30/96 4/30/95
-------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.52 $9.72 $11.15 $7.39 $7.28
Income from investment operations
Net investment income (loss) 0.29 0.27 0.37 (0.10)(4) 0.00
Net realized and unrealized gain 1.17 (0.24) 0.67 2.33 0.59
Total from investment operations 1.46 0.03 1.04 2.23 0.59
Less distributions
Dividends from net investment income (0.30) (0.29) (0.44) -- --
Distributions from net realized gains (0.37) (1.94) (2.03) (0.89) (0.48)
Total distributions (0.67) (2.23) (2.47) (0.89) (0.48)
Change in net asset value 0.79 (2.20) (1.43) 1.34 0.11
Net asset value, end of period $8.31 $7.52 $9.72 $8.73 $7.39
Total return(1) 20.52% (1.72)% 10.92% 31.92% 8.69%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $230,066 $218,749 $262,459 $1,348 $525
Ratio to average net assets of:
Expenses 0.89% 0.74% 0.98% 2.06% 2.15%(2)
Net investment income (loss) 3.75% 3.35% 3.56% (1.18)% (0.06)%(2)
Portfolio turnover 59% 91% 142% 302% 358%
Average commission rate paid N/A N/A N/A $0.0600 N/A
</TABLE>
(1) Maximum sales charge is not reflected in total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using the average number of shares outstanding during the period
6
<PAGE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
Phoenix Strategic Theme Fund Series
Class A Class B
---------------- -----------------
From Inception From Inception
10/16/95 to 10/16/95 to
4/30/96 4/30/96
---------------- -----------------
Net asset value, beginning of period $ 10.00 $ 10.00
Income from investment operations
Net investment income (loss) (0.00)(1)(5) (0.06)(1)(5)
Net realized and unrealized gain 2.39 2.40
-------------- ---------------
Total from investment operations 2.39 2.34
-------------- ---------------
Less distributions
Dividends from net investment income -- --
Distributions from net realized gains -- --
Tax return of capital (0.02) (0.01)
-------------- ---------------
Total distributions (0.02) (0.01)
-------------- ---------------
Change in net asset value 2.37 2.33
-------------- ---------------
Net asset value, end of period $ 12.37 $ 12.33
============== ===============
Total return(2) 23.89%(4) 23.41%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $33,393 $11,920
Ratio to average net assets of:
Expenses 1.40%(3) 2.16%(3)
Net investment income (loss) (0.09)%(3) (1.06)%(3)
Portfolio turnover 175%(4) 175%(4)
Average commission rate paid $0.0663 $0.0663
(1) Includes reimbursement of operating expenses by investment advisor of
$0.04 and $0.04, respectively.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
Phoenix Small Cap Fund Series
Class A Class B
---------------- -----------------
From Inception From Inception
10/16/95 to 10/16/95 to
4/30/96 4/30/96
---------------- -----------------
Net asset value, beginning of period $10.00 $10.00
Income from investment operations
Net investment income (loss) (0.04)(1) (5) (0.09)(1)(5)
Net realized and unrealized gain 6.79 6.77
-------------- ---------------
Total from investment operations 6.75 6.68
-------------- ---------------
Less distributions
Dividends from net investment income -- --
In excess of net investment income (0.01) --
-------------- ---------------
Total distributions (0.01) --
-------------- ---------------
Change in net asset value 6.74 6.68
-------------- ---------------
Net asset value, end of period $16.74 $16.68
============== ===============
Total return(2) 67.48%(4) 66.80%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $98,372 $45,168
Ratio to average net assets of:
Expenses 1.50%(3) 2.26%(3)
Net investment income (loss) (0.53)%(3) (1.44)%(3)
Portfolio turnover 103%(4) 103%(4)
Average commission rate paid $0.0657 $0.0657
(1) Includes reimbursement of operating expenses by investment advisor of
$0.02 and $0.02, respectively.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
7
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PERFORMANCE INFORMATION
The Fund may, from time to time, include its yield and total return in
advertisements or reports to shareholders or prospective investors. Both
yield and total return figures are computed separately for Class A and Class
B Shares of a Series in accordance with formulas specified by the Securities
and Exchange Commission and are based on historical earnings and are not
intended to indicate future performance.
The yield of the Series will be computed by dividing the Series' net
investment income over a 30-day period by an average value of invested assets
(using the average number of shares entitled to receive dividends and the
maximum offering price per share at the end of the period), all in accordance
with applicable regulatory requirements. Such amount will be compounded for
six months and then annualized for a twelve-month period to derive the
Series' yield.
Standardized quotations of average annual total return for Class A and
Class B Shares of a Series will be expressed in terms of the average annual
compound rate of return of a hypothetical investment in either Class A or
Class B Shares of a Series over a period of 1, 5 and 10 years (or up to the
life of the class of shares of a Series). Standardized total return
quotations reflect the deduction of a proportional share of each class's
expenses (on an annual basis), deduction of the maximum initial sales load in
the case of Class A Shares and the maximum contingent deferred sales charge
applicable to a complete redemption of the investment in the case of Class B
Shares, and assume that all dividends and distributions on Class A and Class
B Shares are reinvested when paid. It is expected that the performance of
Class A Shares will be better than that of Class B Shares as a result of
lower distribution fees paid by Class A Shares. The Fund may also quote
supplementally a rate of total return over different periods of time by means
of aggregate, average, and year-by-year or other types of total return
figures. In addition, the Fund may from time to time publish materials citing
historical volatility for shares of any Series.
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 a Series' 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 a Series against certain widely acknowledged outside
standards or indices for stock and bond market performance, such as the
Standard & Poor's 500 Stock Index (the "S&P 500"), Dow Jones Industrial
Average, Europe Australia Far East Index (EAFE), Consumer's Price Index,
Shearson Lehman Corporate Index and Shearson Lehman T-Bond Index. The S&P 500
is a commonly quoted market value-weighted and unmanaged index showing the
changes in the aggregate market value of 500 common stocks relative to the
base period 1941-43. The S&P 500 is composed almost entirely of common stocks
of companies listed on the New York Stock Exchange, although the common
stocks of a few companies listed on the American Stock Exchange or traded
over the counter are included. The 500 companies represented include 400
industrial, 60 transportation and 40 financial services concerns. The S&P 500
represents about 80% of the market value of all issues traded on the New York
Stock Exchange.
Advertisements, sale literature and other communications may contain
information about any Series or Adviser's current investment strategies and
management style. Current strategies and style may change to allow any Series
to respond quickly to changing market and economic conditions. From time to
time the Fund may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Fund may
separate its cumulative and average annual returns into income and capital
gains components; or cite separately as a return figure the equity or bond
portion of a portfolio; or compare a Series' equity or bond return figure to
well-known indices of market performance, including, but not limited to: the
S&P 500 Index, Dow Jones Industrial Average, First Boston High Yield Index
and Salomon Brothers Corporate and Government Bond Indices.
Performance information for a Series reflects only the performance of a
hypothetical investment in Class A or Class B Shares of that Series during
the particular time period in which the calculations are based. Performance
information should be considered in light of the Series' investment
objectives and policies, characteristics and quality of its portfolio, and
the market conditions during the given time period, and should not be
considered as a representation of what may be achieved in the future. For a
description of the methods used to determine total return for each Series,
see the Statement of Additional Information.
The Fund's Annual Report, available upon request and without charge,
contains a discussion of the performance of each Series and a comparison of
that performance to a securities market index.
INVESTMENT OBJECTIVES
AND POLICIES
Each Series has a different investment objective and is designed to meet
different investment needs. The differences in objectives and policies among
the three Series can be expected to affect the investment return of each
Series and the degree of market and financial risk to which each Series is
8
<PAGE>
subject. The investment objective of each Series is deemed to be a
fundamental policy which may not be changed without the approval of a vote of
a majority of the outstanding shares of that Series. Except as noted below, a
Series' investment policies are not deemed to be fundamental and, therefore,
may be changed without shareholder approval. Since certain risks are inherent
in the ownership of any security, there can be no assurance that a Series
will achieve its investment objective.
Equity Opportunities Series
The investment objective of the Equity Opportunities Series is long-term
growth of capital from investment in a diversified group of stocks or
securities convertible into stocks. Any income derived from investments will
be incidental. The Series' investment objective is a fundamental policy which
may not be changed without the approval of the holders of a majority of the
outstanding shares of the Series.
At least 65% of the Series' total assets are, under normal circumstances,
invested in stocks. The Series may invest in stocks of all types and, subject
to investment restrictions, is not restricted as to any particular industry
in its investments. It is generally not the policy of the Series to purchase
securities for trading purposes, although there may be a limited number of
short-term transactions. The Series will not invest in cash or cash
equivalents in an amount equal to or exceeding 10% of total net assets,
unless the Adviser deems it necessary to exceed this limit for temporary
defensive purposes in response to adverse economic or market conditions.
During adverse economic or market conditions, any part of the Series' assets
may be held in cash or money market instruments including U.S. Government
obligations maturing within one year from the date of purchase when the
Adviser deems a temporary defensive position to be prudent. However, when the
Series' assets are in cash or cash equivalents, it is not investing in
securities selected to meet the Series' investment objective.
Risk Considerations
Investments in common stocks for capital appreciation are subject to the
risks of changing economic and market conditions which may affect the
profitability and financial conditions of the companies in whose securities
the Series is invested and the Adviser's ability to anticipate those changes.
Since investments normally will consist primarily of securities considered
to have appreciation potential, the assets of the Series may be considered to
be subject to greater risks than would be involved if the Series invested in
securities which do not have such potential.
Additional discussion regarding risks involved in investing in the Series
are described in the "Investment Techniques and Related Risks" section below.
Theme Series
The Theme Series seeks as its investment objective long term appreciation
of capital through investing in securities of companies that the Adviser
believes are particularly well positioned to benefit from cultural,
demographic, regulatory, social or technological changes worldwide. Examples
of thematic investing would include having invested in oil and gas
exploration companies during the energy shortage years of the late 1970's,
having invested in companies which benefited from lower inflation trends
during the early 1980's, or having invested in companies acquiring cellular
franchises in the late 1980's, and technology companies during the 1990's.
The Adviser will not concentrate its investments in specific industries in
amounts greater than 25% of the assets of the Series in any particular
"industry(ies)" or group(s) of "industries" without shareholder approval. In
determining when and whether to invest in particular industries, the Adviser
will establish strategic (major changes affecting markets for prolonged
periods) and tactical (focused, short-term) investment themes. Investment
themes shall generally reflect trends which appear likely to drive stocks
with similar technologies and products or which embody broad social,
economic, political and technological considerations; offer substantial
appreciation potential; present a visionary idea or creative solution; and
exhibit some independence from economic cycles. The Adviser may change
investment themes once it has determined that an investment theme has become
saturated or fully exploited. The Adviser may pursue one or more investment
themes at any time.
The Adviser will seek to identify companies which, in addition to being
considered well positioned to benefit from investment themes identified, are
also believed to possess attributes such as, but not limited to, good
financial resources, satisfactory return on capital, enhanced industry
position and superior management skills.
The Theme Series may also invest in preferred stocks, investment grade
bonds (Moody's Investors Service, Inc. rating Baa or higher or Standard &
Poor's Ratings Group rating BBB or higher), convertible preferred stocks and
convertible debentures if in the judgment of the Adviser the investment would
further its investment objective. The Series may also engage in certain
options transactions and enter into financial futures contracts and related
options for hedging purposes. The Series may also invest up to 35% of its
assets in the securities of foreign issuers. See "Investment Techniques and
Related Risks." Each security held will be monitored to determine whether it
is contributing to the basic objective of long-term appreciation of capital.
For temporary defensive purposes (as when market conditions for growth
stocks are adverse), investments may be made in fixed income securities with
or without warrants or conversion features. In addition, for such temporary
defensive purposes, the Series may pursue a policy of retaining cash or
investing part or all of its assets in cash equivalents. When the Series'
assets are held in cash or cash equivalents, it is not investing in
securities intended to meet the Series' investment objective.
Risk Considerations
To the extent that the Series invests in a single investment theme, it may
be more susceptible to adverse economic, political or regulatory developments
than would be the case if it invested in a broader spectrum of themes. In
addition, the Series' investments in common stocks of companies with
9
<PAGE>
limited operating history may result in higher volatility in returns.
Further, the successful effectuation of the thematic investment strategy used
by the Adviser is dependent upon the Adviser's ability to anticipate emerging
market trends, exploit such investment opportunities and to thereafter divest
of such securities upon saturation. No assurances can be given that the
investment strategies utilized will positively correlate with any or all such
marketplace trends or that other, possibly more profitable investment trends
will not be missed.
The Series commenced operations on October 16, 1995 based upon an initial
capitalization of $10 million. The ability of the Series to raise additional
capital for investment purposes may directly effect the spectrum of portfolio
holdings and performance.
Additional discussion regarding risks involved in investing in the Series
are described in the "Investment Techniques and Related Risks" section below.
Small Cap Series
The investment objective of the Small Cap Series is long-term growth of
capital from investment in a diversified group of stocks or securities
convertible into stocks. Any income derived from investments will be
incidental. Under normal circumstances, at least 65% of the Series' total
assets will be invested in stocks of companies with a total market
capitalization of $500 million or less at the time of acquisition. Up to 25%
of the Series' total assets may be invested in small capitalization foreign
issuers. The Series is currently closed to new investors.
Companies are selected on the basis of the Adviser's assessment of their
long-term potential to grow rapidly through a variety of factors including
the expansion of existing product lines, introduction of new products,
geographic expansion, market share gains, improved operating efficiency,
unexploited themes, or acquisitions. The Adviser seeks those small and
emerging companies which can show significant and sustained increases in
earnings over an extended period of time. Based on the Adviser's strict sell
discipline, however, stocks of companies which fail to meet the Adviser's
expectations will be sold. A strong financial structure and strong
fundamental prospects will be sought, but given the limited operating history
of smaller companies, in certain situations some of the above factors will
not be available or remain to be proven. Full development of these companies
frequently takes time and, for this reason, the Series should be considered
as a long-term investment and not as a vehicle for seeking short-term
profits.
The Series may invest in stocks of all types and, subject to investment
restrictions limiting concentration, is not restricted as to industry in its
investments. During adverse economic or market conditions, any part of the
Series' assets may be held in cash or money market instruments including U.S.
Government obligations maturing within one year from the date of purchase
when the Adviser deems a temporary defensive position to be prudent. However,
when the Series' assets are held in cash or cash equivalents, it is not
investing in securities intended to meet the Series' investment objective.
Risk Considerations
Smaller capitalization companies are often companies with limited
operating history as a public company or companies within industries which
have recently emerged due to cultural, economic, regulatory or technological
developments. Given the limited operating history and rapidly changing
fundamental prospects, investment returns from smaller capitalization
companies are highly volatile. Smaller companies may at times find their
ability to raise capital impaired by their size or lack of operating history.
Product lines are often less diversified and subject to competitive threats.
Smaller capitalization stocks are subject to varying patterns of trading
volume creating points in time when the securities are illiquid.
Other factors influencing the performance and volatility of small
capitalization stocks include industry developments within major markets,
major economic trends and developments and general market movements in both
the equity and fixed income markets.
Investment in equity securities of foreign small capitalization companies
may involve special risks, particularly from political and economic
developments abroad and differences between foreign and U.S. regulatory
systems. Foreign small capitalization companies may be less liquid and their
prices more volatile than comparable domestic securities issuers.
The Series commenced operations on October 16, 1995 based upon an initial
capitalization of $5 million. The ability of the Series to raise additional
capital for investment purposes may directly effect the spectrum of portfolio
holdings and performance.
Additional discussion regarding risks involved in investing in the Series
are described in the "Investment Techniques and Related Risks" section
below.
INVESTMENT TECHNIQUES
AND RELATED RISKS
Investing in Convertible Securities
Each Series may invest in convertible securities. A convertible security
is a bond, debenture, note, preferred stock or other security that may be
converted into or exchanged for a prescribed amount of common stock of the
same or a different issuer within a particular period of time at a specified
price or formula. A convertible security entitles the holder to receive
interest generally paid or accrued on debt or the dividend paid on preferred
stock until the convertible security matures or is redeemed, converted or
exchanged. Convertible securities have several unique investment
characteristics such as (1) higher yields than common stocks, but lower
yields than comparable nonconvertible securities, (2) a lesser degree of
fluctuation in value than the underlying stock since they have fixed income
characteristics, and (3) the potential for capital appreciation if the market
price of the underlying common stock increases. Up to 5% of each of these
Series' assets may be invested in convertible securities that are rated below
investment grade (commonly referred to as "junk" securities).
10
<PAGE>
Such securities present greater credit and market risks than investment grade
securities. A convertible security might be subject to redemption at the
option of the issuer at a price established in the convertible security's
governing instrument. If a convertible security held by a Series is called
for redemption, the Series may be required to permit the issuer to redeem the
security, convert it into the underlying common stock or sell it to a third
party.
Writing Covered Options
Each Series may, from time to time, write covered call option contracts as
a means of increasing the yield on the Series' portfolio and also as a means
or providing limited protection against decreases in the market value of the
Series' portfolio. Options are technically forms of "derivatives" in that
their value is dependent upon fluctuations in the value of other securities.
Such contracts will be written on securities in which the Series has
authority to invest and on securities indices listed on an organized national
securities exchange. The aggregate value of the securities underlying such
call options will be limited to not more than 25% of the net assets of the
Series.
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 call option is "covered" if,
throughout the life of the option, (1) the Series owns the optioned
securities, (2) the Series maintains in a segregated account with its
Custodian, cash or cash equivalents or U.S. Government securities with a
value sufficient to meet its obligations under the call, or (3) if the Series
owns an offsetting call option. The premium paid to the writer is the
consideration for undertaking the obligations under the option contract. The
writer forgoes the opportunity to profit from any increase in the market
price of the underlying security above the exercise price except insofar as
the premium represents such a profit. The Series will write only call option
contracts when it is believed that the total return to the Series can be
increased through such premiums consistent with the Series' investment
objective.
The Series may also write covered call options on securities indices.
Through the writing of call index options the Series 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 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 Series. 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 Series may purchase options to close out a position (i.e., enter into
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 Series' portfolio, the Series will 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 Series may wish to purchase a call option to hedge its
portfolio against an 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 Series may be invested in the purchase of put and call options,
including index options.
Purchasing Call and Put Options, Warrants and Stock Rights
Each Series may invest up to an aggregate of 5% of its total assets in
exchange-traded or over-the-counter call and put options on securities and
securities indices and foreign currencies. Purchases of such options may be
made for the purpose of hedging against changes in the market value of the
underlying securities or foreign currencies or if in the opinion of the
Adviser, a hedging transaction is consistent with such Series' investment
objectives. These Series may sell a call option or a put option which it has
previously purchased prior to the purchase (in the case of a call) or the
sale (in the case of a put) of the underlying security or foreign currency.
Any such sale would result in a net gain or loss depending on whether the
amount received on the sale is more or less than the premium and other
transaction costs paid on the call or put which is sold. Purchasing a call or
put option involves the risk that these Series may lose the premium it paid
plus transaction costs.
Warrants and stock rights are almost identical to call options in their
nature, use and effect except that they are issued by the issuer of the
underlying security, rather than an option writer, and they generally have
longer expiration dates than call options. A Series using this investment
technique may invest up to 5% of its net assets in warrants and stock rights,
but no more than 2% of its net assets in warrants and stock rights not listed
on the New York Stock Exchange or the American Stock Exchange.
Over-the-Counter ("OTC") Options. OTC options differ from exchange-traded
options in several respects. They are transacted directly with dealers and
not with a clearing corporation, and there is a risk of non-performance by
the dealer. However, the premium is paid in advance by the dealer. OTC
options are available for a greater variety of securities, and in a wider
range of expiration dates and exercise prices, than exchange-traded options.
Since there is no exchange, pricing is normally done by reference to
information from a market maker, which information is carefully monitored or
caused to be monitored by the Adviser and verified in appropriate cases.
11
<PAGE>
A writer or purchaser of a put or call option can terminate it voluntarily
only by entering into a closing transaction. In the case of OTC options,
there can be no assurance that a continuous liquid secondary market will
exist for any particular option at any specific time. Consequently, these
Series may be able to realize the value of an OTC option it has purchased
only by exercising its OTC option or entering into a closing sale transaction
with the dealer that issued it. Similarly, when a Series writes an OTC
option, it generally can close out that option prior to its expiration only
by entering into a closing purchase transaction with the dealer to which such
Series originally wrote the option. If a covered call option writer cannot
effect a closing transaction, it cannot sell the underlying security or
foreign currency until the option expires or the option is exercised.
Therefore, the writer of a covered OTC call option may not be able to sell an
underlying security even though it might otherwise be advantageous to do so.
Likewise, the writer of a secured OTC put option may be unable to sell the
securities pledged to secure the put for other investment purposes while it
is obligated as a put writer. Similarly, a purchaser of an OTC put or call
option might also find it difficult to terminate its position on a timely
basis in the absence of a secondary market.
Financial Futures and Related Options. Each Series may enter into
financial futures contracts and related options as a hedge against
anticipated changes in the market value of the Series' portfolio securities
or securities which it intends to purchase or in the exchange rate of foreign
currencies. Hedging is the initiation of an offsetting position in the
futures market which is intended to minimize the risk associated with a
position's underlying securities in the cash market. Investment techniques
related to financial futures and options are summarized below and are
described more fully in the Statement of Additional Information.
Financial futures contracts consist of interest rate futures contracts,
foreign currency futures contracts and securities index futures contracts. An
interest rate futures contract obligates the seller of the contract to
deliver, and the purchaser to take delivery of, the interest rate securities
called for in the contract at a specified future time and a specified price.
A foreign currency futures contract obligates the seller of the contract to
deliver, and the purchaser to take delivery of, the foreign currency called
for in the contract at a specified future time and at a specified price. See
"Foreign Currency Transactions". A securities index assigns relative values
to the securities included in the index, and the index fluctuates with
changes in the market values of the securities so included. A securities
index futures contract is a bilateral agreement pursuant to which two parties
agree to take or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the index value at the close of
the last trading day of the contract and the price at which the futures
contract is originally struck. An option on a financial futures contract
gives the purchaser the right to assume a position in the contract (a long
position if the option is a call and a short position if the option is a put)
at a specified exercise price at any time during the period of the option.
The Series may purchase and sell financial futures contracts which are
traded on a recognized exchange or board of trade and may purchase
exchange- or board-traded put and call options on financial futures contracts
and may enter into financial futures contracts on foreign currencies.
The Series will engage in transactions in financial futures contracts and
related options only for hedging purposes and not for speculation. In
addition, the Series will not purchase or sell any financial futures contract
or related option if, immediately thereafter, the sum of the cash or U.S.
Treasury bills committed with respect to such Series' existing futures and
related options positions and the premiums paid for related options would
exceed 5% of the market value of such Series' total assets. At the time of
purchase of a futures contract or a call option on a futures contract, an
amount of cash, U.S. Government securities or other appropriate high-grade
debt obligations equal to the market value of the futures contract minus such
Series' initial margin deposit with respect thereto, will be deposited in a
segregated account with the Fund's custodian bank to fully collateralize the
position and thereby ensure that it is not leveraged. The extent to which a
Series may enter into financial futures contracts and related options may
also be limited by requirements of the Internal Revenue Code for
qualification as a regulated investment company.
Engaging in transactions in financial futures contracts involves certain
risks, such as the possibility of an imperfect correlation between futures
market prices and cash market prices and the possibility that the Adviser
could be incorrect in its expectation as to the direction or extent of
various interest rate movements or foreign currency exchange rates, in which
case the return might have been greater had hedging not taken place. There is
also the risk that a liquid secondary market may not exist, and the loss from
investing in futures contracts is potentially unlimited because such Series
may be unable to close its position. The risk in purchasing an option on a
financial futures contract is potentially unlimited. Also, there may be
circumstances when the purchase of an option on a financial futures contract
could result in a loss while the purchase or sale of the contract would not
have resulted in a loss.
Repurchase Agreements
Each Series may invest in repurchase agreements, either for temporary
defensive purposes necessitated by adverse market conditions or to generate
income from its excess cash balances, provided that no more than 10% of the
total assets may be invested in the aggregate in repurchase agreements having
maturities of more than seven days. A repurchase agreement is an agreement
under which a Series acquires a money market instrument (generally a security
issued by the U.S. Government or an agency thereof, a banker's acceptance or
a certificate of deposit) from a commercial bank, a broker or a dealer,
subject to resale to the seller at an agreed upon price and date (normally
the next business day). The resale price reflects an agreed upon interest
rate effective for the period the instrument is held by such Series and is
unrelated to the interest rate on the underlying instrument. A repurchase
12
<PAGE>
agreement acquired by such Series will always be fully collateralized by the
underlying instrument, which will be marked to market every business day. The
underlying instrument will be held for such Series' account by the Funds'
custodian bank until repurchased.
The use of repurchase agreements involves certain risks such as default by
or the insolvency of the other party to the repurchase agreement. Repurchase
agreements will be entered into only with commercial banks, brokers and
dealers considered by the Adviser to be creditworthy.
Lending Portfolio Securities
In order to increase the return on its investment, each Series may each
lend its portfolio securities to broker-dealers and other financial
institutions in amounts up to 33% of the market or other fair value of its
net assets. Loans of portfolio securities will always be fully collateralized
and will be made only to borrowers considered by the Adviser to be
credit-worthy. Lending portfolio securities involves risk of delay in the
recovery of the loaned securities and in some cases the loss of rights in the
collateral should the borrower fail financially. See the Statement of
Additional Information.
Foreign Currency Transactions
The value of the assets of a Series as measured in United States dollars
may be affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations, and may incur costs in
connection with conversions between various currencies. A Series may conduct
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or through
forward contracts to purchase or sell foreign currencies. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at
the time of the contract. These contracts are traded directly between
currency traders (usually large commercial banks) and their customers. At the
time of the purchase of a forward foreign currency exchange contract, an
amount of cash, U.S. Government securities or other appropriate high-grade
debt obligations equal to the market value of the contract, minus the Series'
initial margin deposit with respect thereto, will be deposited in a
segregated account with the Series' custodian bank to collateralize fully the
position and thereby ensure that it is not leveraged.
When a Series enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may want to establish the
United States dollar cost or proceeds, as the case may be. By entering into a
forward contract in United States dollars for the purchase or sale of the
amount of foreign currency involved in the underlying security transaction,
it is able to protect itself against a possible loss between trade and
settlement dates resulting from an adverse change in the relationship between
the United States dollar and such foreign currency. However, this tends to
limit potential gains which might result from a positive change in such
currency relationships. Utilizing this investment technique may also hedge
the foreign currency exchange rate risk by engaging in currency financial
futures and options transactions.
When the Adviser believes that the currency of a particular foreign
country may suffer a substantial decline against the United States dollar, it
may enter into a forward contract to sell an amount of foreign currency
approximating the value of some or all of the Series' portfolio securities
denominated in such foreign currency. The forecasting of short-term currency
market movement is extremely difficult and whether such a short-term hedging
strategy will be successful is highly uncertain.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a contract. Accordingly, it may be necessary
to purchase additional currency on the spot market (and bear the expense of
such purchase) if the market value of the security is less than the amount of
foreign currency the Series is obligated to deliver when a decision is made
to sell the security and make delivery of the foreign currency in settlement
of a forward contract. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency the
Series is obligated to deliver.
If the Series utilizing this investment technique retain the portfolio
security and engage in an offsetting transaction, the Series will incur a
gain or a loss (as described below) to the extent that there has been
movement in forward contract prices. If the Series engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell
the foreign currency. Should forward prices decline during the period between
the Series' entering into a forward contract for the sale of a foreign
currency and the date it enters into an offsetting contract for the purchase
of the foreign currency, the Series would realize gains to the extent the
price of the currency it has agreed to sell exceeds the price of the currency
it has agreed to purchase. Should forward prices increase, the Series would
suffer a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell. Although
such contracts tend to minimize the risk of loss due to a decline in the
value of the hedged currency, they also tend to limit any potential gain
which might result should the value of such currency increase. A Series using
this investment technique will have to convert its holdings of foreign
currencies into United States dollars from time to time. Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference (the "spread") between the prices at which they are
buying and selling various currencies.
Investing in Foreign Securities
Each Series may invest up to 25% of its total asset value (provided
however, the Theme Series may invest up to 35% of its total net asset value)
in the securities of foreign issuers. Each Series may invest in a broad range
of foreign securities including equity, debt and convertible securities and
foreign government securities. While the Series may purchase the
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securities of issuers from various countries, it is anticipated that its
foreign investments will be primarily in securities of issuers from the major
industrialized nations such as the United Kingdom, France, Canada, Germany
and Japan. Each Series 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. investment or exchange control
regulations, political instability which could affect U.S. investments in
foreign countries, and potential restrictions on the flow of international
capital. Additionally, dividends payable on foreign securities may be subject
to foreign taxes withheld prior to distribution. Foreign securities often
trade with less frequency and volume than domestic securities and therefore
may exhibit greater price volatility, and changes in foreign exchange rates
will affect the value of those securities which are denominated or quoted in
currencies other than the U.S. dollar. Many of the foreign securities held by
each Series will not be registered with the Securities and Exchange
Commission ("SEC") and the issuers thereof will not be subject to the SEC's
reporting requirements. Accordingly, there may be less publicly available
information about the securities and about the foreign company or government
issuing them than is available about a domestic company or government entity.
Moreover, individual foreign economies may differ favorably or unfavorably
from the United States economy in such respects as growth of Gross National
Product, rate of inflation, capital reinvestment, resource self-sufficiency
and balance of payment positions.
In investing in securities denominated in foreign currencies, the Series
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 Series' 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 Series 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
Series and which may not be recoverable by the Series or its investors.
The Series 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 Series 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 Series' portfolio may be affected by such trading on
days when a shareholder has no access to the Series.
Investment income received by the Series from sources within foreign
countries may be subject to foreign income taxes withheld at the source. If a
Series should have more than 50% of the value of its assets invested in
securities of foreign corporations at the close of its taxable year, the
Series may elect to pass through to its shareholders their proportionate
shares of foreign income taxes paid. Investors are urged to consult their tax
attorney with respect to specific questions regarding foreign, federal, state
or local taxes.
Leverage
The Theme Series and Small Cap Series may from time to time increase their
ownership of securities holdings above the amounts otherwise possible by
borrowing from banks at fixed amounts of interest and investing the borrowed
funds. The Fund will borrow only from banks, and only if immediately after
such borrowing the value of the assets of the Series (including the amount
borrowed) less its liabilities (not including any borrowings) is at least
three times the amount of funds borrowed for investment purposes. The effect
of this provision is to permit the Fund to borrow up to 33-1/3% of the net
assets of such Series, not including the proceeds of any such borrowings.
However, the amount of the borrowings will be dependent upon the availability
and cost of credit from time to time. If, due to market fluctuations or other
reasons, the value of such Series' assets computed as provided above become
less than three times the amount of the borrowings for investment purposes,
the Fund, within three business days, is required to reduce bank debt to the
extent necessary to meet the required 300% asset coverage.
Interest on money borrowed will be an expense of those Series with respect
to which the borrowing has been made. Because such expense would not
otherwise be incurred, the net investment income of such Series is not
expected to be as high as it otherwise would be during periods when
borrowings for investment purposes are substantial.
Bank borrowings for investment purposes must be obtained on an unsecured
basis. Any such borrowing must also be made subject to an agreement by the
lender that any recourse is limited to the assets of such Series with respect
to which the borrowing has been made.
Any investment gains made with the additional monies borrowed in excess of
interest paid will cause the net asset
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value of such Series' shares to rise faster than would otherwise be the case.
On the other hand, if the investment performance of the additional securities
purchased fails to cover their cost (including any interest paid on the
monies borrowed) to such Series, the net asset value of the Series will
decrease faster than would otherwise be the case.
Private Placements and Rule 144A Securities
Each Series may purchase securities which have been privately issued and
are subject to legal restrictions on resale or which are issued to qualified
institutional investors under special rules adopted by the SEC. Such
securities may offer higher yields than comparable publicly traded
securities. Such securities ordinarily can be sold by these Series in
secondary market transactions to certain qualified investors pursuant to
rules established by the SEC, in privately negotiated transactions to a
limited number of purchasers or in a public offering made pursuant to an
effective registration statement under the Securities Act of 1933 ( 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 (and the possible decline in value of the securities during such period)
and may involve the payment of underwriting commissions. In some instances,
these Series may have to bear certain costs of registration in order to sell
such shares publicly. Except in the case of securities sold to qualifying
institutional investors under special rules adopted by the SEC for which the
Trustees of these Series determine the secondary market is liquid, Rule 144A
securities will be considered illiquid. Trustees of these Series may
determine the secondary market is liquid based upon the following factors
which will be reviewed periodically as required pursuant to procedures
adopted by these Series: the number of dealers willing to purchase or sell
the security; the frequency of trades; dealer undertakings to make a market
in the security, and the nature of the security and its market. Investing in
Rule 144A Securities could have the effect of increasing the level of these
Series' illiquidity to the extent that qualified institutional buyers become,
for a time, uninterested in purchasing these securities. Each Series may
invest up to 15% of its net assets in illiquid securities.
INVESTMENT RESTRICTIONS
The investment restrictions to which each Series is subject, together with
the investment objectives of the Series, are fundamental policies of the Fund
which may not be changed as to any Series without the approval of such
Series' shareholders. Among the more significant restrictions, each Series
may not (i) invest more than 5% of its total assets in securities issued or
guaranteed by any one issuer (except for U.S. Government obligations; any
foreign government, its agencies and instrumentalities) or (ii) purchase more
than 10% of the outstanding voting securities or more than 10% of the
securities of any class of any one issuer.
A detailed description of each Series' investment restrictions is
contained in the Statement of Additional Information.
PORTFOLIO TURNOVER
Each Series pays brokerage commissions for purchases and sales of
portfolio securities. A high rate of portfolio turnover involves a
correspondingly greater amount of brokerage commissions and other costs which
must be borne directly by a Series and thus indirectly by its shareholders.
It may also result in the realization of larger amounts of short-term capital
gains, which are taxable to shareholders as ordinary income.
The rate of portfolio turnover is not a limiting factor when the Adviser
deems changes appropriate. Although the portfolio turnover rate of all of the
Series cannot be accurately predicted, it is anticipated that the annual
turnover rate of the Equity Opportunities, Theme and Small Cap Series will
likely not exceed 400%, 100%-175% and 150%-200%, respectively. Although
securities for the Series are not purchased for the short-term, the Adviser's
strict sell discipline may result in rates of portfolio turnover equivalent
to those identified by the SEC as appropriate for capital appreciation funds
with substantial short-term trading. The Adviser's approach dictates that
underperforming securities and securities not consistent with prevailing
themes will be sold. Portfolio turnover rate is calculated by dividing the
lesser of purchases or sales of portfolio securities during the fiscal year
by the monthly average of the value of the Series' securities (excluding
short-term securities). The turnover rate may vary greatly from year to year
and may be affected by cash requirements for redemptions of shares of a
Series and by compliance with provisions of the Internal Revenue Code,
relieving investment companies which distribute substantially all of their
net income from federal income taxation on the amounts distributed. The 1995
and 1996 rates of portfolio turnover for each of the Series are set forth
under "Financial Highlights." For more information regarding the consequences
relating to a high portfolio turnover rate, see "Portfolio Transactions and
Brokerage" and "Dividends, Distributions and Taxes" in the Statement of
Additional Information.
MANAGEMENT OF THE FUND
The Fund is a mutual fund technically known as an open-end management
company. The Trustees of the Trust are responsible for the overall
supervision of the Fund and perform the various duties imposed on Trustees by
the 1940 Act and Massachusetts business trust law.
The Advisers
The investment adviser to the Theme Series and Small Cap Series is Phoenix
Investment Counsel, Inc. ("PIC"), which is located at 56 Prospect Street,
Hartford, Connecticut 06115-0480. All of the outstanding stock of PIC is
owned by Phoenix Equity Planning Corporation ("Equity Planning" or
"Distributor"), a subsidiary of Phoenix Duff & Phelps Corporation of Chicago,
Illinois. Prior to November 1, 1995 PIC and Equity Planning were indirect,
wholly-owned subsidiaries of Phoenix Home Life Mutual Insurance Company
("Phoenix Home Life") of Hartford.
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Connecticut. Phoenix Home Life is a majority shareholder of Phoenix Duff &
Phelps Corporation. 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. In addition to
the Theme and Small Cap Series, PIC also serves as investment adviser to
Phoenix Series Fund, Phoenix Multi-Portfolio Fund (other than the Real Estate
Securities Portfolio), Phoenix Total Return Fund, Inc. and The Phoenix Edge
Series Fund (other than the Real Estate Securities Series) and as sub-adviser
to investment portfolios of JNL Series Trust, Chubb America Fund, Inc.,
SunAmerica Series Trust and American Skandia Trust. PIC was originally
organized in 1932 as John Chase, Inc. As of December 31, 1995, PIC had
approximately $18.48 billion in assets under management.
For managing or directing the management of the investments of the Theme
and Small Cap Series, PIC is entitled to a fee, payable monthly, at the
following annual rates based upon the aggregate net asset values of the
following Series:
1st $1-2 $2+
Series Billion Billion Billion
- ---------- ------- ------- --------
Theme 0.75% 0.70% 0.65%
Small Cap 0.75% 0.70% 0.65%
The total advisory fee of 0.75% of the aggregate net assets of the Theme
and Small Cap Series is greater than that for most mutual funds; however, the
Board of Trustees of the Fund believe that it is similar to fees charged by
other mutual funds whose investment objectives are similar to those of the
Theme and Small Cap Series. The ratio of the management fees to average net
assets for the fiscal period ended April 30, 1996 for the Theme Series and
Small Cap Series was .75%.
The investment adviser to the Equity Opportunities Series is National
Securities & Research Corporation ("National"), which is also located at 56
Prospect Street, Hartford, CT 06115-0480. National is a direct subsidiary of
Phoenix Duff & Phelps Corporation. National also acts as the investment
adviser or manager for Phoenix Multi-Sector Short Term Bond Fund, Phoenix
California Tax Exempt Bonds, Inc., Phoenix Income and Growth Fund, Phoenix
Multi-Sector Fixed Income Fund, Inc. and the Phoenix Worldwide Opportunities
Fund. National has acted as an investment adviser for over sixty years. As of
December 31, 1995, National had approximately $1.7 billion in assets under
management.
As compensation for its services, National receives a fee, which is
accrued daily against the value of the Equity Opportunities Series' net
assets and is paid monthly by the Fund. The fee is computed at an annual rate
of .70% of the Series' average daily net assets of up to $1 billion, .65% of
the Series' average daily net assets from $1 billion to $2 billion and .60%
of the Series' average daily net assets in excess of $2 billion. The ratio of
the management fees to average net assets for the fiscal year ended April 30,
1996 for the Equity Opportunities Series was .70%.
Phoenix Investment Counsel, Inc. has agreed to reimburse the Theme Series'
operating expenses other than Management Fees and Rule 12b-1 Fees related to
Class A and Class B Shares for the amount, if any, by which such operating
expenses for the fiscal year ended April 30, 1997 exceed .40% of the average
net assets of such Series. The total operating expenses for Class A and Class
B Shares of this Series were 1.08% and 1.08%, respectively, absent
reimbursement for the year ended April 30, 1996. PIC has also agreed to
reimburse the Small Cap Series' operating expenses other than Management Fees
and Rule 12b-1 Fees related to Class A and Class B Shares for the amount, if
any, by which such operating expenses for the fiscal year ended April 30,
1997 exceed .50% of the average net assets of such Series. The total
operating expenses for Class A and Class B Shares of this Series was 0.80%
and 0.80%, respectively, absent reimbursement for the year ended April 30,
1996.
The Portfolio Managers
Equity Opportunities Series
Mr. Michael K. Arends serves as Portfolio Manager of the Equity
Opportunities Series and as such is primarily responsible for the day to day
management of the Series' investments. Mr. Arends has served in this capacity
since September 2, 1994. Mr. Arends is a Vice President of PIC and National
and is also a Vice President of the Phoenix Series Fund. During 1989 to 1994,
Mr. Arends served as Co-Portfolio Manager for various Kemper Funds, the
Kemper Investment Portfolio-Growth Fund, Kemper Growth Fund and Kemper
Retirement Fund Series.
Theme Series and Small Cap Series
Mr. William J. Newman serves as Portfolio Manager of the Theme Series and
Small Cap Series and as such is primarily responsible for the day to day
management of each Series. Mr. Newman joined Phoenix Home Life in April 1995
as Chief Investment Strategist and Managing Director for Phoenix Investments.
Mr. Newman is also Executive Vice President of PIC and Senior Vice President
of National, Equity Planning, The Phoenix Edge Series Fund, Phoenix
Multi-Portfolio Fund, Phoenix Income and Growth Fund, Phoenix Series Fund,
Phoenix Total Return Fund, Inc., Phoenix Worldwide Opportunities Fund and
Phoenix Duff & Phelps Institutional Mutual Funds. Mr. Newman was Chief
Investment Strategist for Kidder Peabody in New York from May, 1993 to
December, 1994. He was Managing Director at Bankers Trust from March, 1991 to
May, 1993.
The Financial Agent
Equity Planning also acts as financial agent of the Fund and, as such,
performs administrative, bookkeeping and pricing functions for the Fund.
Equity Planning receives a quarterly fee based on the average of the
aggregate daily net asset values of the Fund at the annual rate of $300 per
$1 million. For its services during the Fund's fiscal year ended April 30,
1996, Equity Planning received $71,572 or .03% of average net assets.
The Custodian and Transfer Agent
The custodian of the assets of the Fund is State Street Bank and Trust
Company, P.O. Box 351, Boston, Massachusetts 02101 (the "Custodian").
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Pursuant to a Transfer Agent and Service Agreement with the Phoenix Funds,
Equity Planning acts as transfer agent for the Fund (the "Transfer Agent")
for which it is paid $14.95 plus out of pocket expenses for each designated
shareholder account. The Transfer Agent engages sub-agents to perform certain
shareholder servicing functions for which such agents are paid a fee by
Equity Planning.
Brokerage Commissions
Although the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. prohibit its members from seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such Rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Fund.
DISTRIBUTION PLANS
The offices of Equity Planning, the national distributor of the Fund's
shares, are located at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. Philip R. McLoughlin is a Trustee and President of
the Fund and a director and officer of Equity Planning. David R. Pepin, a
Director and officer of Equity Planning, is an officer of the Fund. Michael
E. Haylon, a director of Equity Planning, is an officer of the fund. G.
Jeffrey Bohne, James M. Dolan, Nancy G. Curtiss, William R. Moyer, William J.
Newman, Leonard J. Saltiel and Thomas N. Steenburg are officers of the Fund
and officers of Equity Planning.
Equity Planning and the Fund have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Fund shares sold subject to an initial sales charge and those
sold subject to a contingent deferred sales charge. The Fund has granted
Equity Planning the exclusive right to purchase from the Fund and resell, as
agent, shares needed to fill unconditional orders for Fund shares. Equity
Planning may sell Fund shares through its registered representatives or
through securities dealers with whom it has sales agreements. Equity Planning
may also sell Fund shares pursuant to sales agreements entered into with
banks or bank-affiliated securities brokers who, acting as agent for their
customers, place orders for Fund shares with Equity Planning. Although the
Glass-Steagall Act prohibits banks and bank affiliates from engaging in the
business of underwriting, distributing or selling securities (including
mutual fund shares), banking regulators have not indicated that such
institutions are prohibited from purchasing mutual fund shares upon the order
and for the account of their customers. If, because of changes in law or
regulations, or because of new interpretations of existing law, it is
determined that agency transactions of banks or bank-affiliated securities
brokers are not permitted under the Glass-Steagall Act, the Trustees will
consider what action, if any, is appropriate. It is not anticipated that
termination of sales agreements with banks or bank-affiliated securities
brokers would result in a loss to their customers or a change in the net
asset value per share of a Series of the Fund.
The sale of Fund shares through a securities broker affiliated with a
particular bank is not expected to preclude the Fund from borrowing from such
bank or from availing itself of custodial or transfer agency services offered
by such bank.
The Trustees have adopted separate distribution plans under Rule 12b-1 of
the 1940 Act for each class of shares of each Series of the Fund (the "Class
A Plan", the "Class B Plan", and collectively the "Plans"). The Plans permit
the Fund to reimburse the Distributor for expenses incurred in connection
with the sale and promotion of Fund shares and the furnishing of shareholder
services. A 12b-1 fee paid by one Series may be used to finance distribution
of the shares of another series based on the number of shareholder accounts
within the Fund. Pursuant to the Class A Plan, the Fund may reimburse the
Distributor for actual expenses of the Distributor up to 0.30% annually for
the average daily net assets of the Fund's Class A Shares. However, the
Distributor has voluntarily agreed to limit the maximum amount of
reimbursement under the Class A Plan for fiscal year 1997 to 0.25% annually
of the average daily net assets of the Fund's Class A Shares. Under the Class
B Plan, the Fund may reimburse the Distributor monthly for actual expenses of
the Distributor up to 1.00% annually of the average daily net assets of the
Fund's Class B Shares.
Expenditures incurred under the Plans may consist of: (i) commissions to
sales personnel for selling shares of the Fund (including underwriting
commissions and finance charges related to the payment of commissions for
sales of Class B Shares); (ii) compensation, sales incentives and payments to
sales, marketing and service personnel; (iii) payments to broker-dealers and
other financial institutions which have entered into agreements with the
Distributor for services rendered in connection with the sale and
distribution of shares of the Fund; (iv) payment of expenses incurred in
sales and promotional activities, including 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; (vii) such
other similar services that the Trustees determine are reasonably calculated
to result in the sale of shares of the Fund, provided, however that a portion
of such amount paid to the Distributor, which portion shall be equal to or
less than 0.25% annually of the average daily net assets of the Fund, may be
paid for reimbursing the costs of providing services to shareholders,
including assistance in connection with inquiries related to shareholder
accounts (the "Service Fee"). From the Service Fee the Distributor expects to
pay a quarterly fee to qualifying broker/ dealer firms, as compensation for
providing personal services to shareholders and/or maintaining 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
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<PAGE>
balance will serve as compensation for personal and account maintenance
services furnished by the Distributor.
In order to receive payments under the Plans, participants must meet such
qualifications as are to be established in the sole discretion of the
Distributor, such as services to the Fund's shareholders; or services
providing the Fund with more efficient methods of offering shares to groups
of clients; members or prospects of a participant; or services permitting
bulking of purchases or sales, or transmission of such purchases or sales by
computerized tape or other electronic equipment; or other batch processing.
Under the Class A Plan, reimbursement or payment of expenses may not be
made unless such payment or reimbursement occurs prior to the earliest of (a)
the last day of the one-year period commencing on the last day of the
calendar quarter during which the specific service or activity was performed,
or (b) the last day of the one-year period commencing on the last day of the
calendar quarter during which payment for the service or activity was made by
a third party on behalf of the Fund. The Class B Plan, however, does not
limit the reimbursement of distribution related expenses to expenses incurred
in specified time periods.
For the fiscal year ended April 30, 1996, the Fund paid $571,764 under the
Class A Plan and $98,689 under the Class B Plan. The fees were used to
compensate unaffiliated broker-dealers for servicing shareholder's accounts,
compensating sales personnel and reimbursing the Distributor for commission
expenses and expenses related to preparation of the marketing material. On a
quarterly basis, the Fund's Trustees review a report on expenditures under
each Plan and the purposes for which expenditures were made. The Trustees
conduct an additional, more extensive review annually in determining whether
each Plan will be continued. By its terms, continuation of each Plan from
year to year is contingent on annual approval by a majority of the Fund's
Trustees and by a majority of the Directors who are not "interested persons"
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the operation of either Plan or any related agreements (the "Plan
Trustees"). Each Plan provides that it may not be amended to increase
materially the costs which the Fund may bear without approval of the
applicable class of shareholders of the affected Series of the Fund and that
other material amendments must be approved by a majority of the Plan Trustees
by vote cast in person at a meeting called for the purpose of considering
such amendments. Each Plan further provides that while it is in effect, the
selection and nomination of Trustees who are not "interested persons" shall
be committed to the discretion of the Trustees who are not "interested
persons". Each Plan may be terminated at any time by vote of a majority of
the Plan Trustees or a majority of the applicable class of outstanding shares
of the Fund.
The Trustees have concluded that there is a reasonable likelihood that the
Plans will benefit each Series and all classes of shareholders. The Class A
Plan was approved by Class A shareholders of the Equity Opportunities Series
at a special meeting of shareholders held on April 30, 1993. The Class B Plan
was adopted by the Trustees (including a majority of independent Trustees) on
May 25, 1994.
The National Association of Securities Dealers ("NASD") regards certain
distribution fees as asset-based sales charges subject to NASD sales load
limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend either or both Plans.
HOW TO BUY SHARES
The minimum initial purchase is $500, and the minimum subsequent
investment is $25. Both the minimum initial and subsequent investment amounts
are $25 for investments pursuant to the "Investo-Matic" plan, a bank draft
investing program administered by Equity Planning, or pursuant to the
Systematic Exchange Privilege (see Statement of Additional Information).
Completed applications for the purchase of shares should be mailed to the
Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301.
Each class of shares of a Series represents an interest in the same
portfolio of investments of the Series, has the same rights, and is identical
to the other in all respects, except that Class B Shares bear the expenses of
the deferred sales arrangement and any expenses (including the higher
distribution services fee and any incremental transfer agency costs)
resulting from such sales arrangement. Each class has exclusive voting rights
with respect to provisions of the Rule 12b-1 distribution plan pursuant to
which its distribution services fee is paid and each class has different
exchange privileges. Only the Class B Shares are subject to a conversion
feature. The net income attributable to Class B Shares and the dividends paid
on Class B Shares will be reduced by the amount of the higher distribution
services fee and incremental expenses associated with such distribution
services fee; likewise, the net asset value of the Class B Shares will be
reduced by such amount to the extent the Series has undistributed net
income.
Subsequent investments for the purchase of full and fractional shares in
amounts of $25 or more may be made through an investment dealer or by sending
a check to Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box
8301, Boston, MA 02266-8301. Share certificates representing any number of
full shares will be issued only on request, and subject to certain
conditions. A fee may be incurred by the shareholder for a lost or stolen
share certificate. Sales personnel of broker-dealers distributing the Fund's
shares may receive differing compensation for selling Class A and Class B
Shares.
The Fund offers combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange
privileges. Certain privileges may not be available in connection with Class
B Shares. Shares of the Fund or shares of any other Phoenix Fund (except
Phoenix Multi-Sector Short Term Bond Fund Class A Shares held less
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than 6 months and Phoenix Money Market Fund Series Class A Shares), may be
exchanged for shares of the same class on the basis of the relative net asset
values per share at the time of the exchange. Exchanges are subject to the
minimum initial investment requirement of the designated Phoenix Fund, except
if made in connection with the Systematic Exchange privilege. Shareholders
may exchange shares held in book-entry form for an equivalent number (value)
of the same class of shares from any other Phoenix Fund. On Class B Share
exchanges, the contingent deferred sales charge schedule of the original
shares purchased is not taken and continues to apply.
Alternative Sales Arrangements
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Fund, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the
Fund, the accumulated continuing distribution fee and contingent deferred
sales charges on Class B Shares prior to conversion would be less than the
initial sales charge and accumulated distribution fee on Class A Shares
purchased at the same time, and to what extent such differential would be
offset by the higher yield of Class A Shares. In this regard, Class A Shares
will be more beneficial to the investor who qualifies for certain reduced
initial sales charges. The Distributor intends to limit sales of Class B
Shares sold to any shareholder to a maximum total value of $250,000. Class B
Shares sold to unallocated qualified employer sponsored plans will be limited
to a maximum total value of $1,000,000.
Class B Shares sold to allocated qualified employer sponsored plans,
including 401(k) plans, will be limited to a maximum total value of $250,000
for each participant. The Distributor reserves the right to decline the sale
of Class B Shares to allocated qualified employer sponsored plans not
utilizing an approved participant tracking system. In addition, Class B
Shares will not be sold to any qualified employee benefit plan, endowment
fund or foundation if, on the date of the initial investment, the plan, fund
or foundation has assets of $10,000,000 or more or at least 100 participant
employees. Class B Shares will also not be sold to investors who have reached
the age of 85 because of such persons' expected distribution requirements.
Class A Shares are subject to a lower distribution service fee and,
accordingly, pay correspondingly higher dividends per share. However, because
initial sales charges are deducted at the time of purchase, such investors
would not have all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced initial
sales charges who expect to maintain their investment for an extended period
of time might consider purchasing Class A Shares because the accumulated
continuing distribution charges on Class B Shares may exceed the initial
sales charge on Class A Shares during the life of the investment. Again,
however, such investors must weigh this consideration against the fact that,
because of such initial sales charge, not all their funds will be invested
initially. However, other investors might determine that it would be more
advantageous to purchase Class B Shares to have all their funds invested
initially, although remaining subject to higher continuing distribution
charges and, for a five-year period, being subject to a contingent deferred
sales charge.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A Shares is the net asset value plus a
sales charge, as set forth below. Offering prices become effective at the
close of the general trading session of the New York Stock Exchange. Orders
received by dealers prior to such time are confirmed at the offering price
effective at that time, provided the order is received by the Distributor
prior to its close of business.
The sales charge varies with the size of the purchase and reduced charges
apply to the aggregate of purchases of the Fund made at one time by "any
person," which term includes an individual, an individual and his/her spouse
and their children under the age of 21, or a trustee or other fiduciary
purchasing shares for a single trust, estate or fiduciary account although
more than one beneficiary is involved.
Class A Shares of the Fund are offered to the public at the net asset
value next computed after the purchase order is received by State Street Bank
and Trust Company, plus a maximum sales charge of 4.75% of the offering price
(4.99% of the amount invested) on single purchases of less than $50,000. The
sales charge is reduced on a graduated scale on single purchases of $50,000
or more as shown below.
Sales Charge Sales Charge Dealer Discount
Amount of as Percentage as Percentage or Agency Fee
Transaction of Offering of Amount as Percentage of
at Offering Price Price Invested Offering Price*
--------------------- -------------- -------------- ------------------
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under
$100,000 4.50% 4.71% 4.00%
$100,000 but under
$250,000 3.50% 3.63% 3.00%
$250,000 but under
$500,000 3.00% 3.09% 2.75%
$500,000 but under
$1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None None**
*Equity Planning will sponsor sales contests, training and educational
meetings and provide to all qualifying dealers, from its own profits and
resources, additional compensation in the form of trips, merchandise or
expense reimbursement. Brokers and dealers other than Equity Planning may
also make customary additional charges for their services in effecting
purchases, if they notify the Fund of their intention to do so. Equity
Planning shall also pay service and retention fees, from its own profits and
resources, to qualified wholesalers in connection with sales of shares of
Phoenix Funds (exclusive of Class A Shares of Phoenix Money Market Series) by
registered financial institutions and related third party marketers.
**In connection with Class A Share purchases (or subsequent purchases in any
amount) by accounts held in the name of qualified employee benefit plans with
at least 100 eligible
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employees, Equity Planning may pay broker/dealers, from its own resources, an
amount equal to 1% on the first $3 million of purchases, 0.50% on the next $3
million, plus 0.25% on the amount in excess of $6 million.
In connection with Class A Share purchases of $1,000,000 or more (or
subsequent purchases in any amount), excluding purchases by qualified
employee benefit plans as described above, Equity Planning may pay
broker-dealers, from its own profits and resources, a percentage of the net
asset value of any shares sold as set forth below:
Purchase Amount Payment to Broker/Dealer
--------------------------- ---------------------------
$1,000,000 to $3,000,000 1%
$3,000,001 to $6,000,000 0.50 of 1%
$6,000,001 or more 0.25 of 1%
If part or all of such investment, including investments by qualified
employee benefit plans, is subsequently redeemed within one year of the
investment date, the broker-dealer will refund to the Distributor such
amounts paid with respect to the investment.
How to Obtain Reduced Sales Charges On Class A Shares
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
Qualified Purchasers. No sales charge will be imposed on sales of shares
to: (1) any Phoenix Fund trustee, director or officer; (2) any director or
officer, or any full-time employee or sales representative (who has acted as
such for at least 90 days) of the Adviser or employees of Equity Planning;
(3) registered representatives and employees of securities dealers with whom
Equity Planning has sales agreements; (4) any qualified retirement plan
exclusively for persons described above; (5) any officer, director or
employee of a corporate affiliate of the Adviser or Equity Planning; (6) any
spouse, child, parent, grandparent, brother or sister of any person named in
(1), (2), (3) or (5) above; (7) employee benefit plans for employees of the
Adviser, Equity Planning and/or their corporate affiliates; (8) any employee
or agent who retires from Phoenix Home Life or Equity Planning; (9) any
account held in the name of a qualified employee benefit plan, endowment fund
or foundation if, on the date of initial investment, the plan, fund or
foundation has assets of $10,000,000 or more or at least 100 eligible
employees; (10) any person with a direct rollover transfer of shares from an
established Phoenix Fund qualified plan; (11) any Phoenix Home Life separate
account which funds group annuity contracts offered to qualified employee
benefit plans; (12) any state, county, city, instrumentality, department,
authority or agency prohibited by law from paying a sales charge; (13) any
fully matriculated student in a U.S. service academy; (14) any unallocated
accounts held by a third party administrator, registered investment adviser,
trust company, or bank trust department which exercises discretionary
authority and holds the account in a fiduciary, agency, custodial or similar
capacity if in the aggregate such accounts held by such entity equal or
exceed $1,000,000; (15) any person who is investing redemption proceeds from
investment companies other than the Phoenix Funds if, in connection with the
purchases or redemption of the redeemed shares, the investor paid a prior
sales charge provided such investor supplies verification that the redemption
occurred within 90 days of the Phoenix Fund purchase and that a sales charge
was paid; or (16) any accounts established by financial institutions,
broker-dealers or registered investment advisers for which an account
management fee or transaction fee is charged and, provided such entity has
entered into an agreement with the Distributor for such program; provided
that sales made to persons listed in (1) through (15) above are made upon the
written assurance that the purchase is made for investment purposes and that
the shares so acquired will not be resold except to the Fund.
Shares issued pursuant to the automatic reinvestment of income dividends
or capital gains distributions are not subject to any sales charges. The Fund
receives the entire net asset value of its Class A Shares sold to investors.
The Distributor's commission is the sales charge shown above less any
applicable discount or commission "re-allowed" to selected dealers and
agents. The Distributor will re-allow discounts to selected dealers and
agents in the amounts indicated in the table above. In this regard, the
Distributor may elect to re-allow the entire sales charge to selected dealers
and agents for all sales with respect to which orders are placed with the
Distributor. A selected dealer who receives re-allowance in excess of 90% of
such a sales charge may be deemed to be an "underwriter" under the Securities
Act of 1933.
Combination Purchase Privilege. Purchases, either singly or in any
combination, of shares of the Fund or shares of any other Phoenix Fund
(including Class B Shares and excluding Money Market Fund Series Class A
Shares), if made at a single time by a single purchaser, will be combined for
the purpose of determining whether the total dollar amount of such purchases
entitles the purchaser to a reduced sales charge on any such purchases of
Class A shares. Each purchase of Class A Shares will then be made at the
public offering price, as described in the then current Prospectus relating
to such shares, which at the time of such purchase is applicable to a single
transaction of the total dollar amount of all such purchases. The term
"single purchaser" includes an individual, or an individual, his spouse and
their children under the age of majority purchasing for his or their own
account (including an IRA account) including his or their own trust, commonly
known as a living trust; a trustee or other fiduciary purchasing for a single
trust, estate or single fiduciary account, although more than one beneficiary
is involved; multiple trusts or 403(b) plans for the same employer; multiple
accounts (up to 200) under a qualified employee benefit plan or administered
by a third party administrator; or trust companies, bank trust departments,
registered investment advisers, and similar entities placing orders or
providing administrative services with respect to funds over which they
exercise discretionary investment authority and which are held
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<PAGE>
in a fiduciary, agency, custodial or similar capacity, provided all shares
are held in record in the name, or nominee name, of the entity placing the
order.
Letter of Intent. Class A Shares or shares of any other Phoenix Fund
(including Class B Shares and excluding Money Market Fund Series Class A
Shares) may be purchased by a "single purchaser" (as defined above) within a
period of thirteen months pursuant to a Letter of Intent, in the form
provided by Equity Planning, stating the investor's intention to invest in
such shares during such period an amount which, together with the value (at
their maximum offering prices on the date of the Letter) of the Class A
Shares of the Fund or Class A or Class B Shares of any other Phoenix Fund
then owned by such investor, equals a specified dollar amount. Each purchase
of shares made pursuant to a Letter of Intent will be made at the public
offering price, as described in the then current Prospectus relating to such
shares, which at the time of purchase is applicable to a single transaction
of the total dollar amount specified in the Letter of Intent.
An investor's Letter of Intent is not a binding commitment of the investor
to purchase or a binding obligation of the Fund or Equity Planning to sell a
specified dollar amount of shares qualifying for a reduced sales charge.
Accordingly, out of his initial purchase (and subsequent purchases if
necessary), 5% of the dollar amount of purchases required to complete his
investment (valued at the purchase price thereof) is held in escrow in the
form of shares registered in the investor's name until he completes his
investment, at which time escrowed shares are deposited to his account. If
the investor does not complete his investment and does not within 20 days
after written request by Equity Planning or his dealer pay the difference
between the sales charge on the dollar amount specified in his Letter of
Intent and the sales charge on the dollar amount of actual purchases, the
difference will be realized through the redemption of an appropriate number
of the escrowed shares and any remaining escrowed shares will be deposited to
his account.
Right of Accumulation. "Single purchasers" (as defined above) may also
qualify for reduced sales charges based on the combined value of purchases of
either class of shares of the Fund, or any other Phoenix Fund, made over
time. Reduced sales charges are offered to investors whose shares, in the
aggregate, are valued (i.e., the dollar amount of such purchases plus the
then current value (at the public offering price as described in the then
current prospectus relating to such shares) of shares of all Phoenix Funds
owned) in excess of the threshold amounts described in the Section entitled
"Initial Sales Charge Alternative--Class A Shares." To use this option, the
investor must supply sufficient information as to account registrations and
account numbers to permit verification that one or more of his purchases
qualifies for a reduced sales charge.
Associations. A group or association may be treated as a "single
purchaser" and qualify for reduced initial sales charges under the
Combination Purchase Privilege and Right of Accumulation if the group or
association (1) has been in existence for at least six months; (2) has a
legitimate purpose other than to purchase mutual fund shares at a reduced
sales charge; (3) gives its endorsements or authorization to the investment
program to facilitate solicitation of the membership by the investment
dealer, thus effecting economies of sales effort; and (4) is not a group
whose sole organizational nexus is that the members are credit card holders
of a company, policyholders of an insurance company, customers of a bank or a
broker-dealer or clients of an investment adviser.
Deferred Sales Charge Alternative--Class B Shares
Investors choosing the deferred sales charge alternative purchase Class B
Shares at net asset value per share without the imposition of a sales charge
at the time of purchase. The Class B Shares are being sold without an initial
sales charge, but are subject to a sales charge if redeemed within five years
of purchase.
Proceeds from the contingent deferred sales charge are paid to the
Distributor and are used in whole or in part by the Distributor to defray the
expenses of the Distributor related to providing distribution-related
services to the Fund in connection with the sale of the Class B Shares, such
as the payment of compensation to selected dealers and agents. The
combination of the contingent deferred sales charge and the distribution fee
facilitates the ability of the Fund to sell the Class B Shares without a
sales charge being deducted at the time of purchase.
Contingent Deferred Sales Charge. Class B Shares which are redeemed within
five years of purchase will be subject to a contingent deferred sales charge
at the rates set forth below charged as a percentage of the dollar amount
subject thereto. The charge will be assessed on an amount equal to the lesser
of the current market value or the cost of the shares being redeemed.
Accordingly, no sales charge will be imposed on increases in net asset value
above the initial purchase price. In addition, no charge will be assessed on
shares derived from reinvestment of dividends or capital gains
distributions.
The Distributor intends to pay investment dealers a sales commission of 4%
of the sale price of Class B Shares sold by such dealers, subject to future
amendment or termination. The Distributor will retain all or a portion of the
continuing distribution fee assessed to Class B shareholders and will receive
the entire amount of the contingent deferred sales charge paid by
shareholders on the redemption of shares to finance the 4% commission plus
interest and related marketing expenses.
The amount of the contingent deferred sales charges, if any, will vary
depending on the number of years from the time of payment for the purchase of
Class B Shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment for
the purchases of shares, all payments during a month will be aggregated and
deemed to have been made on the last day of the previous month.
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<PAGE>
Contingent Deferred
Sales Charge as
a Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
- ---------------------- ---------------------
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 2%
Sixth 0%
In determining whether a contingent deferred sales charge is applicable to
a redemption, it will be assumed that any Class A Shares are being redeemed
first. Class B Shares held for over 5 years and shares acquired pursuant to
reinvestment of dividends or distributions are redeemed next. Any Class B
Shares held longest during the 5 year period are redeemed next unless the
shareholder directs otherwise. The charge will not be applied to dollar
amounts representing an increase in the net asset value since the time of
purchase.
To provide an example, assume in 1990, an investor purchased 100 Class B
Shares. In 1993, the investor purchased another 100 Class B Shares at $12 per
share. In 1995, the investor purchased 100 Class A Shares. Assume that in
1996, the investor owns 225 Class B Shares (15 Class B Shares resulting from
dividend reinvestment and distributions upon the Class B Shares purchased in
1990 and 10 Class B Shares resulting from dividend reinvestment and
distributions upon the Class B Shares purchased in 1993) as well as 100 Class
A Shares. If the investor wished to then redeem 300 shares and had not
specified a preference in redeeming shares; first, 100 Class A Shares would
be redeemed without charge. Second, 115 Class B Shares purchased in 1990
(including 15 shares issued as a result of dividend reinvestment and
distributions) would be redeemed next without charge. Finally, 85 Class B
Shares purchased in 1993 would be redeemed resulting in a deferred sales
charge of $27 [75 shares (85 shares minus 10 shares resulting from dividend
reinvestment) X $12 (lesser of original price or current market value) X 3%
(applicable rate in the third year after purchase)].
The contingent deferred sales charge is waived on redemptions of shares
(a) if redemption is made within one year of death (i) of the sole
shareholder on an individual account, (ii) of a joint tenant where the
surviving joint tenant is the deceased's spouse, or (iii) of the beneficiary
of a Uniform Gifts to Minors Act (UGMA), Uniform Transfers to Minors Act
(UTMA) or other custodial account; (b) if redemption is made within one year
of disability, as defined in Section 72(m)(7) of the Code; (c) in connection
with mandatory distributions upon reaching age 70-1/2 under any retirement
plan qualified under Sections 401, 408 or 403(b) of the Code or any
redemption resulting from the tax-free return of an excess contribution to an
IRA; (d) in connection with redemptions by 401(k) plans using an approved
participant tracking system for: participant hardships, death, disability or
normal retirement, and loans which are subsequently repaid; (e) in connection
with the exercise of certain exchange privileges among Class B Shares of the
Fund and Class B Shares of other Phoenix Funds; (f) in connection with any
direct rollover transfer of shares from an established Phoenix Fund qualified
plan into a Phoenix Fund IRA by participants terminating from the qualifying
plan; and (g) in accordance with the terms specified under the Systematic
Withdrawal Program. If, upon the occurrence of a death as outlined above, the
account is transferred to an account registered in the name of the deceased's
estate, the contingent deferred sales charge will be waived on any redemption
from the estate account occurring within one year of the death. If the Class
B Shares are not redeemed within one year of the death, they will remain
Class B Shares and be subject to the applicable contingent deferred sales
charge when redeemed.
Class B Shares of the Fund will automatically convert to Class A Shares
without a sales charge at the relative net asset values of each of the
classes after eight years from the acquisition of the Class B Shares, and as
a result, will thereafter be subject to the lower distribution fee under the
Class A Plan. Such conversion will be on the basis of the relative net asset
value of the two classes without the imposition of any sales load, fee or
other charge. The purpose of the conversion feature is to relieve the holders
of Class B Shares that have been outstanding for a period of time sufficient
for the Distributor to have been compensated for distribution-related
expenses from the burden of such distribution related expenses.
For purposes of conversion to Class A Shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares
in a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) are converted to Class A Shares, an
equal pro rata portion of the Class B Shares in the sub-account will also be
converted to Class A Shares.
The conversion of Class B Shares to Class A Shares is subject to the
continuing availability of an opinion of counsel or a ruling from the
Internal Revenue Service ("IRS") to the effect that the conversion of shares
does not constitute a taxable event under federal income tax law. If the Fund
were unable to obtain such assurances, it might make additional distributions
if doing so would assist in complying with the Fund's general practice of
distributing sufficient income to reduce or eliminate U.S. federal taxes. The
conversion of Class B Shares to Class A Shares may be suspended if such an
opinion or ruling is no longer available. In that event, no further
conversions of Class B Shares would occur, and shares might continue to be
subject to the higher distribution fee for an indefinite period which may
extend beyond the period ending six years after the end of the month in which
affected Class B Shares were purchased.
INVESTOR ACCOUNTS AND
SERVICES AVAILABLE
An account will be opened for the investor after the investor makes an
initial investment. Shares purchased will be held in
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<PAGE>
the shareholder's account by the Transfer Agent which will forward a
statement each time there is a change in the number of shares in the account.
At any time, a shareholder may request that a certificate be issued, subject
to certain conditions, representing any number of full shares held in his or
her account.
The Fund mails periodic reports to its shareholders. In order to reduce the
volume of mail, to the extent possible, only one copy of most Fund reports
will be mailed to households for multiple accounts with the same surname at
the same household address. Please contact Equity Planning to request
additional copies of shareholder reports.
Shareholder inquiries should be directed to the Fund at (800) 243-1574.
Bank Draft Investing Program (Investo-Matic Plan)
By completing the Investo-Matic Section of the New Account Application, a
shareholder may authorize the bank named in the form to draw $25 or more from
his/her personal checking account on or about the 15th day of the month, to
be used to purchase additional shares for his account. The amount the
shareholder designates will be made available, in form payable to the order
of Equity Planning, to the Transfer Agent by the bank on the date the bank
draws on his/her account and will be used to purchase shares at the
applicable offering price. The shareholder or his or her registered
representative may, by telephone or written notice, cancel or change the
dollar amount being invested pursuant to the Investo-Matic Plan unless the
shareholder has notified the Fund or Transfer Agent that his or her
registered representative shall not have this authority.
Distribution Option
The Fund currently declares all income dividends and all capital gain
distributions, if any, payable in shares of the Fund at net asset value or,
at the option of the shareholder, in cash. By exercising the distribution
option, a shareholder may elect to: (1) receive both dividends and capital
gain distributions in additional shares; (2) receive dividends in cash and
capital gain distributions in additional shares; or (3) receive both
dividends and capital gain distributions in cash. If a shareholder elects to
receive dividends and/or distributions in cash and the check cannot be
delivered or remains uncashed by the shareholder due to an invalid address,
then the dividend and/or distribution will be reinvested after the Transfer
Agent has been informed that the proceeds are undeliverable. Additional
shares will be purchased for the shareholder's account at the then current
net asset value. Shareholders who maintain an account balance of at least
$5,000, or $2,000 for tax qualified retirement benefit plans (calculated on
the basis of the net asset value of the shares held in a single account), may
direct that any dividends and distributions paid with respect to shares in
that account be automatically reinvested in a single account of one of the
other Phoenix Funds at net asset value. Shareholders should obtain a current
prospectus and consider the objectives and policies of each such Fund
carefully before directing dividends and distributions to the other Fund.
Reinvestment election forms and prospectuses are available from Equity
Planning. Distributions may also be mailed to a second payee and/or address.
Dividends and capital gain distributions received in shares are taxable to
the shareholder and credited to the shareholder's account in full and
fractional shares and are computed at the closing net asset value on the next
business day after the record date. A distribution option may be changed at
any time by notifying Customer Service by telephone at 800-243-1574 or
sending a letter signed by the registered owner(s) of the account. Requests
for directing distributions to an alternate payee must be made in writing
with a signature guarantee of the registered owner(s). To be effective with
respect to a particular dividend or distribution, notification of the new
distribution option must be received by the Transfer Agent at least three
days prior to the record date of such dividend or distribution. If all shares
in the shareholder's account are repurchased or redeemed or transferred
between the record date and the payment date of a dividend or distribution,
he/she will receive cash for the dividend or distribution regardless of the
distribution option selected.
Systematic Withdrawal Program
The Systematic Withdrawal Program allows shareholders to periodically
redeem a portion of their account on a predetermined monthly or quarterly,
semiannual or annual basis. A sufficient number of full and fractional shares
shall therefore be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the
month at the closing net asset value on the date of redemption. The
Systematic Withdrawal Program also provides for redemptions to be tendered on
or about the 10th, 15th or 25th of the month with proceeds to be directed
through Automated Clearing House (ACH) to the shareholder's bank account. In
addition to the limitations stated below, withdrawals may not be less than
$25 and minimum account balance requirements shall continue to apply. See
"Redemption of Small Accounts."
Class A shareholders participating in the Systematic Withdrawal Program
must own shares of the Fund worth $5,000 or more, as determined by the
then-current net asset value per share.
To participate in the Systematic Withdrawal Program, Class B shareholders
must initially own shares of the Fund worth $5,000 or more and elect to have
all dividends reinvested in additional Class B Shares of the Fund. Through
the Program, Class B shareholders may withdraw up to 1% of their aggregate
net investments (purchases, at initial value, to date net of non-Program
redemptions) each month; or up to 3% of their aggregate net investments each
quarter without incurring otherwise applicable contingent deferred sales
charges.
The purchase of shares while participating in the withdrawal program will
ordinarily be disadvantageous to the Class A Shares investor since a sales
charge will be paid by the investor on the purchase 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.
23
<PAGE>
Class B shareholders redeeming more shares than the percentage permitted
by the withdrawal program shall be subject to any applicable contingent
deferred sales charge. Accordingly, the purchase of Class B Shares will
generally not be suitable for an investor who anticipates withdrawing sums in
excess of the above limits shortly after purchase.
Tax-Sheltered Retirement Plans
Shares of the Fund are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, Profit-Sharing and
Money Purchase Pension Plans which can be adopted by self-employed persons
("Keogh") and by corporations, and 403(b) Retirement Plans. Write or call
Equity Planning (800) 243-4361 for further information about the plans.
Exchange Privileges
Shareholders may exchange Class A or Class B Shares held in book-entry
form for shares of the same class of other Phoenix Funds (except Phoenix
Multi-Sector Short Term Bond Fund Class A Shares held less than 6 months and
Class A Shares of Phoenix Money Market Series), provided the following
conditions are met: (1) the shares that will be acquired in the exchange (the
"Acquired Shares") are available for sale in the shareholder's state of
residence; (2) the Acquired Shares are the same class as the shares to be
surrendered (the "Exchanged Shares"); (3) the Acquired Shares will be
registered to the same shareholder account as the Exchanged Shares; (4) the
account value of the Fund whose shares are to be acquired must equal or
exceed the minimum initial investment amount required by that Fund after the
exchange is implemented; and (5) if a shareholder has elected not to utilize
the Telephone Exchange Privilege (see below), a properly executed exchange
request must be received by the Phoenix Funds, c/o State Street Bank and
Trust Company.
Subject to the above requirements for an exchange, a shareholder or
his/her registered representative may, by telephone or written notice, elect
to have Class A or Class B Shares of the Fund exchanged for the same class of
shares of another Phoenix Fund automatically on a monthly, quarterly,
semi-annual or annual basis or may cancel the privilege ("Systematic
Exchange").
Shareholders who maintain an account balance in the Fund of at least
$5,000, or $2,000 for tax qualified retirement benefit plans (calculated on
the basis of the net asset value of the shares held in a single account), may
direct that shares of the Fund be automatically exchanged at predetermined
intervals for shares of the same class of another Phoenix Fund. If the
shareholder is participating in the Self Security program offered by Phoenix
Home Life, it is not necessary to maintain the above account balances in
order to use the Systematic Exchange privilege.
Such exchanges will be executed upon the close of business on the 10th of
a month and if the 10th falls on a holiday or weekend, then at the close of
business on the next succeeding business day. The minimum initial and
subsequent amount that may be exchanged under the Systematic Exchange is $25.
Systematic Exchange forms are available from Equity Planning.
Exchanges will be based upon each Series' net asset value per share next
computed following receipt of a properly executed exchange request, without
sales charge. On Class B share exchanges, the contingent deferred sales
charge schedule of the original shares purchased continues to apply.
The exchange of shares from one fund or Series to another is treated as a
sale of the Exchanged Shares and a purchase of the Acquired Shares for
Federal income tax purposes. The shareholder may, therefore, realize a
taxable gain or loss. See "Dividends, Distributions and Taxes" for
information concerning the Federal income tax treatment of a disposition of
shares.
It is the policy of the Adviser to discourage frequent trading by
shareholders among the Series and other Phoenix Funds in response to market
fluctuations. The Fund reserves the right to refuse exchange purchases by any
person or broker/dealer if, in the Fund's or Adviser's opinion, the exchange
would adversely affect the Series' ability to invest according to its
investment objectives and policies, or otherwise adversely affect the Fund
and its shareholders. The Fund reserves the right to terminate or modify its
exchange privileges at any time upon giving prominent notice to shareholders
at least 60 days in advance.
Each Phoenix Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the prospectus of the fund
into which the exchange is to be made before any exchange requests are made.
Telephone Exchanges
Telephone Exchange Privileges are only available in states where the
shares to be acquired may be legally sold. Unless a shareholder elects in
writing not to participate in the Telephone Exchange Privilege, shares for
which certificates have not been issued may be exchanged by calling (800)
367-5877 provided that the exchange is made between accounts with identical
registrations. Under the Telephone Exchange Privilege, telephone exchange
orders may also be entered on behalf of the shareholder by his or her legal
representative.
The Fund and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. In addition to requiring
identical registrations on both accounts, the Transfer Agent will require
address verification and will record telephone instructions on tape. All
exchanges will be confirmed in writing with the shareholder. To the extent
that procedures reasonably designed to prevent unauthorized telephone
exchanges are not followed, the Fund and/or the Transfer Agent may be liable
for following telephone instructions for exchange transactions that prove to
be fraudulent. Broker/dealers other than Equity Planning have agreed to bear
the risk of any loss resulting from any unauthorized telephone exchange
instruction from the firm or its registered representatives. However, the
shareholder would bear the risk of loss resulting from instructions entered
by an unauthorized third party that the Fund and/or the Transfer Agent
reasonably believe to be genuine. The Telephone Exchange Privilege may be
modified or terminated at any time on 60 days' notice to shareholders. In
addition, during times of drastic economic or market changes, the Telephone
Exchange
24
<PAGE>
Privilege may be difficult to exercise or may be suspended temporarily. In
such event, an exchange may be effected by following the procedure outlined
for tendering shares represented by certificate(s).
If a shareholder elects not to use the Telephone Exchange Privilege or if
the shares being exchanged are represented by a certificate or certificates,
in order to exchange shares the shareholder must submit a written request to
Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301. If the shares are being exchanged between accounts
that are not registered identically, the signature on such request must be
guaranteed by an eligible guarantor institution as defined by the Fund's
transfer agent in accordance with its signature guarantee procedures.
Currently such procedures generally permit guarantees by banks, broker
dealers, credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations. Any outstanding
certificate or certificates for the tendered shares must be duly endorsed and
submitted.
Purchase and withdrawal plans and reinvestment and exchange privileges are
described more fully in the Statement of Additional Information. For further
information, call Equity Planning at (800) 243-1574.
NET ASSET VALUE
The net asset value per share of each Series is determined as of the close
of regular trading of the New York Stock Exchange (the "Exchange") on days
when the Exchange is open for trading.
Net asset value per share of a Series is determined by dividing the value
of the Series' net assets--the value of its assets less its liabilities--by
the total number of its outstanding shares. 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 fee
and any other expenses allocated solely to that class, are deducted from the
proportionate interest of such class in the assets of the Series, 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.
In determining the value of a Series' assets, the securities for which
market quotations are readily available are valued at market value. Debt
securities (other than short-term obligations) including those for which
market quotations are not readily available are normally valued on the basis
of valuations provided by a pricing service approved by the Trustees when
such prices are believed to reflect the fair value of such securities.
Securities listed or traded on a national securities exchange or in the
over-the-counter market are valued at the last sale price or, if there has
been no recent sale, at the last bid price, except for the Equity Opportunity
Series which uses the mean if there has been no sale. Securities which are
primarily traded on foreign securities exchanges are generally valued at the
preceding closing values of such securities on their respective exchanges. 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 market for such
security by the Trustees or their delegates. Short-term obligations maturing
in less than sixty days are valued at amortized cost, which the Board has
determined approximates market. 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 any Series which
invests in foreign securities contemporaneously with the determination of the
prices of the majority of the portfolio securities of such Series. All assets
and liabilities initially expressed in foreign currency values will be
converted into United States dollar values at the mean between the bid and
offered quotations of such currencies against United States dollars as last
quoted by any recognized dealer. If an event were to occur after the value of
an investment was so established but before the net asset value per share was
determined, which was likely to materially change the net asset value, then
the instrument would be valued using fair value considerations by the
Trustees or their delegates. If at any time a Series has other investments,
such investments are valued at the fair value thereof as determined in good
faith by the Trustees although the actual calculations may be made by persons
acting pursuant to the direction of the Trustees.
HOW TO REDEEM SHARES
Shareholders have the right to have the Fund buy back shares at the net
asset value next determined after receipt of a redemption request and any
other required documentation in proper form by Phoenix Funds, c/o State
Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301 (see "Net
Asset Value"). In the case of Class B Share redemptions, investors will be
subject to the applicable deferred sales charge, if any, for such shares (see
"Deferred Sales Charge Alternative--Class B Shares", above). To redeem, any
outstanding share certificates in proper form for transfer must be received
by Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301. To be in proper form to redeem shares, the signature
of the shareholder(s) on the certificate or stock power must be signed
exactly as registered, including any fiduciary title, on a written
instruction letter, certificate, or accompanying stock power, such signatures
being guaranteed by an eligible guarantor institution as determined in
accordance with the standards and procedures established by the Transfer
Agent (please contact the Fund at (800) 243-1574 with any questions regarding
eligible guarantors).
If no certificate has been issued, the Transfer Agent requires a written
request with signature guarantee. The Transfer Agent may waive the signature
guarantee requirement in the case of shares registered in the names of
individuals singly, jointly, or as custodian under the Uniform Gifts to
Minors Act, if the proceeds do not exceed $50,000, and the proceeds are
payable to the registered owner(s) at the address of record. Such requests
must be signed by each person in whose name the account is registered. In
addition, a shareholder may sell shares back to the Fund through securities
dealers who may
25
<PAGE>
charge customary commissions for their services. The redemption price in such
case will be the price as of the close of the general trading session of the
New York Stock Exchange on that day, provided the order is received by the
dealer prior thereto, and is transmitted to the Distributor prior to the
close of its business. No charge is made by the Fund on redemptions, but
shares tendered through investment dealers may be subject to a service charge
by such dealers. Payment for shares redeemed is made within seven days;
provided, however, that redemption proceeds will not be disbursed until each
check used for purchase of shares has been cleared for payment by the
investor's bank, which may take up to 15 days after receipt of the check.
Additional documentation may be required for redemptions by corporations,
partnership or other organizations, executors, administrators, trustees,
custodians, guardians, or from IRAs or other retirement plans, or if
redemption is requested by anyone but the shareholder(s) of record. To avoid
delay in redemption or transfer, shareholders having questions about specific
requirements should contact the Fund at (800) 243-1574. Redemption requests
will not be honored until all required documents in proper form have been
received.
Telephone Redemptions
Unless a shareholder elects in writing not to participate in the Telephone
Redemption Privilege, shares for which certificates have not been issued may
be redeemed by telephoning (800) 367-5877 and telephone redemptions will also
be accepted on behalf of the shareholder from his or her registered
representative.
The Fund and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. Address and bank account
information will be verified, the telephone redemption instructions will be
recorded on tape, and all redemptions will be confirmed in writing to the
shareholder. If there has been an address change within the past 60 days, a
telephone redemption will not be authorized. To the extent that procedures
reasonably designed to prevent unauthorized telephone redemptions are not
followed, the Fund and/or the Transfer Agent may be liable for following
telephone instructions for redemption transactions that prove to be
fraudulent. Broker/ dealers other than Equity Planning have agreed to bear
the risk of any loss resulting from any unauthorized redemption exchange
instruction from the firm or its registered representatives. However, the
shareholder would bear the risk of loss resulting from instructions entered
by an unauthorized third party that the Fund and/or the Transfer Agent
reasonably believe to be genuine. The Telephone Redemption Privilege may be
modified or terminated at any time on 60 days' notice to shareholders. In
addition, during times of drastic economic or market changes, the Telephone
Redemption Privilege may be difficult to exercise and a shareholder should
submit a written redemption request, as described above.
If the amount of the redemption is over $500, the proceeds will be wired
to the shareholder's designated U.S. commercial bank account. If the amount
of the redemption is less than $500, the proceeds will be sent by check to
the address of record on the shareholder's account.
Telephone redemption requests must be received by the Transfer Agent by
the close of trading on the New York Stock Exchange on any day when the
Transfer Agent is open for business. Requests made after that time or on a
day when the Transfer Agent is not open for business cannot be accepted by
the Transfer Agent. The proceeds of a telephone redemption will normally be
sent on the first business day following receipt of the redemption request.
However, with respect to the telephone redemption of shares purchased by
check, such requests will only be effected after the Fund has assured itself
that good payment has been collected for the purchase of shares, which may
take up to 15 days. This expedited redemption privilege is not available to
HR-10, IRA and 403(b)(7) Plans.
Reinvestment Privilege
Shareholders have a privilege of using redemption proceeds to purchase
Class A Shares of any Phoenix Fund with no sales charge (at the net asset
value next determined after the request for reinvestment is made). For
Federal income tax purposes, a redemption and reinvestment will be treated as
a sale and purchase of shares. Special rules may apply in computing the
amount of gain or loss in these situations. (See "Dividends, Distributions
and Taxes" for information on the Federal income tax treatment of a
disposition of shares.) A written request for reinvestment must be received
by the Distributor within 180 days of the redemption, accompanied by payment
for the shares (not in excess of the redemption value). Class B shareholders
who have had the contingent deferred sales charge waived through
participation in the Systematic Withdrawal Program are not eligible to use
the reinstatement privilege.
Redemption of Small Accounts
Due to the relatively high cost of maintaining small accounts, the Fund
reserves the right to redeem, at net asset value, the shares of any
shareholder whose account has a value, due to redemptions, of less than $200.
Before the Fund redeems these shares, the shareholder will be given notice
that the value of the shares in the account is less than the minimum amount
and will be allowed 30 days to make an additional investment in an amount
which will increase the value of the account to at least $200.
A shareholder should contact his/her broker/dealer if he/she wishes to
transfer shares from an existing broker/dealer street name account to a
street name account with another broker/ dealer. The Fund has no specific
procedures governing such account transfers.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
Each Series is treated as a separate entity for Federal income tax
purposes. Each Series intends to elect to be treated as a regulated
investment company ("RIC") and qualify annually as such under Subchapter M of
the Internal Revenue Code (the "Code"). The Trustees believe that each Series
qualified as a RIC for its most recent fiscal year. In addition, each Series
intends to distribute annually to shareholders all or substantially all of
its net investment income and net
26
<PAGE>
realized capital gains, after utilization of any capital loss carryover. As a
result, each series will not be subject to Federal income tax on the net
investment income and net capital gains that it distributes. The discussion
below is based upon the assumption that each Series will qualify as a RIC.
Each Series intends to make distributions from net investment income
semi-annually, and intends to distribute net realized capital gains, if any,
on an annual basis.
Each Series will be subject to a nondeductible 4% excise tax if it fails
to meet certain calendar year distribution requirements. In order to prevent
imposition of the excise tax, it may be necessary for the Fund to make
distributions more frequently than described in the previous paragraph.
Unless a shareholder elects to receive distributions in cash, dividends
and capital gain distributions will be paid in additional shares of the
Series credited at the net asset value per share on the ex-date. Dividends
and distributions, whether received in cash or in additional shares of a
Series, generally are subject to Federal income tax and may be subject to
state, local, and other taxes. Shareholders will be notified annually about
the amount and character of distributions made to them by a Series.
Long-term capital gains, if any, distributed to shareholders and which are
designated by a Series as capital gain distributions, are taxable to
shareholders as long-term capital gain distributions regardless of the length
of time shares of the Series have been held by the shareholder. Distributions
of short-term capital gains and net investment income, if any, are taxable to
shareholders as ordinary income.
Dividends and distributions generally will be taxable to shareholders in
the taxable year in which they are received. However, dividends and
distributions declared by a Series in October, November or December of any
calendar year, with a record date in such a month, and paid during the
following January, will be treated as if they were paid by the Fund and
received by shareholders on December 31 of the calendar year in which they
were declared.
A redemption or other disposition (including an exchange) of shares of a
Series generally will result in the recognition of a taxable gain or loss,
which will be a long- or short-term capital gain or loss (assuming the shares
were a capital asset in the hands of the shareholder), depending upon a
shareholder's holding period for his or her shares. A capital loss realized
on a disposition of a Series shares held six months or less will be treated
as a long-term capital loss to the extent of capital gain dividends received
with respect to such shares. In addition, if shares of a Series are disposed
of at a loss and are replaced (either through purchases or through
reinvestment of dividends) within a period commencing thirty days before and
ending thirty days after the disposition of such shares, the realized loss
will be disallowed and appropriate adjustments to the tax basis of the new
shares will be made. In addition, special rules may apply to determine the
amount of gain or loss realized on any exchange.
The foregoing is only a summary of some of the important tax
considerations generally affecting each Series and their shareholders. In
addition to the Federal income tax consequences described above, which are
applicable to any investment in the Series, there may be state or local tax
considerations, and estate tax considerations, applicable to the
circumstances of a particular investor. Also, legislation may be enacted in
the future that could affect the tax consequences described above. Investors
are urged to consult their attorneys or tax advisers regarding specific
questions as to Federal, foreign, state or local taxes. Foreign shareholders
may be subject to U.S. Federal income tax rules that differ from those
described above. For more information regarding distributions and taxes, see
"Dividends, Distributions and Taxes" in the Statement of Additional
Information.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS regulations, the Fund may be required to withhold 31% of
all reportable payments including any taxable dividends, capital gain
distributions or share redemption proceeds for any account which does not
have a taxpayer identification number or social security number and certain
required certifications.
The Fund reserves the right to refuse to open an account for any person
failing to provide a taxpayer identification number along with the required
certifications.
Each Series will send to its shareholders, within 31 days after the end of
the calendar year, information which is required by the Internal Revenue
Service for preparing federal income tax returns.
Investors are urged to consult their attorney or tax adviser regarding
specific questions as to Federal, foreign, state or local taxes.
ADDITIONAL INFORMATION
Organization of the Fund
The Fund was organized under Massachusetts law in 1986 as a business
trust. On August 29, 1986, the Fund purchased all of the assets and assumed
all of the liabilities of the Stock Series of National Securities Funds.
National Securities Funds, as such, had been in existence since 1940. The
Fund continued the business of the Stock Series under the name "National
Stock Fund." The Trustees subsequently voted to change the name of the Fund
to "Phoenix Equity Opportunities Fund" to reflect the purchase of the Adviser
by Phoenix Home Life and the affiliation with other Phoenix Funds. On May 24,
1995, the Trustees again changed the name of the Fund to "Phoenix Strategic
Equity Series 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
27
<PAGE>
series or class. At the date of this Prospectus, there are three series of the
Fund, each of 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, the Trustees will continue to hold office and appoint
successor Trustees. Shares do not have cumulative voting rights and the
holders of more than 50% of the shares of the Fund voting for the election of
Trustees can elect all of the Trustees of the Fund if they choose to do so
and in such event the holders of the remaining shares would not be able to
elect any Trustees. Shareholders are entitled to redeem their shares as set
forth under "How to Redeem Shares".
The Declaration of Trust establishing the Fund, dated June 25, 1986 (a
copy of which, together with all amendments thereto, is on file in the office
of the Secretary of the Commonwealth of Massachusetts), provides that the
Fund's name refers to the Trustees under the Declaration of Trust
collectively as Trustees, but not as individuals or personally; and no
Trustee, shareholder, officer, employee or agent of the Fund shall be held to
any personal liability, nor shall 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.
Registration Statement
This Prospectus omits certain information included in the Statement of
Additional Information and Part C of the Registration Statement filed with
the Securities and Exchange Commission under the Securities Act of 1933 and
the 1940 Act. A copy of the Registration Statement may be obtained from the
Securities and Exchange Commission in Washington, D.C.
28
<PAGE>
BACKUP WITHHOLDING INFORMATION
Step 1. Please make sure that the social security number or taxpayer
identification number (TIN) which appears on the Application complies
with the following guidelines:
<TABLE>
<CAPTION>
Account Type Give Social Security Number or Tax Identification Number of:
<S> <C>
Individual Individual
Joint (or Joint Tenant) Owner who will be paying tax
Uniform Gifts to Minors Minor
Legal Guardian Ward, Minor or Incompetent
Sole Proprietor Owner of Business (also provide owner's name)
Trust, Estate, Pension Plan Trust Trust, Estate, Pension Plan Trust (not personal TIN of fiduciary)
Corporation, Partnership,
Other Organization Corporation, Partnership, Other Organization
Broker/Nominee Broker/Nominee
</TABLE>
Step 2. If you do not have a TIN, you must obtain Form SS-5 (Application for
Social Security Number) or Form SS-4 (Application for Employer
Identification Number) from your local Social Security or IRS office
and apply for one. Write "Applied For" in the space on the
application.
Step 3. If you are one of the entities listed below, you are exempt from
backup withholding.
(bullet) A corporation
(bullet) Financial institution
(bullet) Section 501(a) exempt organization (IRA, Corporate
Retirement Plan, 403(b), Keogh)
(bullet) United States or any agency or instrumentality thereof
(bullet) A State, the District of Columbia, a possession of the
United States, or any subdivision or instrumentality thereof
(bullet) International organization or any agency or instrumentality
thereof
(bullet) Registered dealer in securities or commodities registered in
the U.S. or a possession of the U.S.
(bullet) Real estate investment trust
(bullet) Common trust fund operated by a bank under section 584(a)
(bullet) An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1)
(bullet) Regulated Investment Company
If you are in doubt as to whether you are exempt, please contact the Internal
Revenue Service.
Step 4. IRS Penalties--If you do not supply us with your TIN, you will be
subject to an IRS $50 penalty unless your failure is due to
reasonable cause and not willful neglect. If you fail to report
interest, dividend or patronage dividend income on your federal
income tax return, you will be treated as negligent and subject to an
IRS 5% penalty tax on any resulting underpayment of tax unless there
is clear and convincing evidence to the contrary. If you falsify
information on this form or make any other false statement resulting
in no backup withholding on an account which should be subject to a
backup withholding, you may be subject to an IRS $500 penalty and
certain criminal penalties including fines and imprisonment.
This Prospectus sets forth concisely the information about the Phoenix
Strategic Equity Series Fund (the "Fund") which you should know before
investing. Please read it carefully and retain it for future reference.
Phoenix Strategic Equity Series Fund has filed with the Securities and
Exchange Commission a Statement of Additional Information about the Fund,
dated August 28, 1996. The Statement contains more detailed information about
the Fund and is incorporated into this Prospectus by reference. You may
obtain a free copy of the Statement by writing the Fund c/o Phoenix Equity
Planning Corporation, 100 Bright Meadow, P.O. Box 2200, Enfield, Connecticut
06083-2200 or by calling (800) 243-4361.
Financial information relating to the Fund is contained in the Annual Report
to Shareholders for the year ended April 30, 1996 and is incorporated into
the Statement of Additional Information by reference.
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[BACK COVER]
Phoenix Strategic Equity Series Fund
P.O. Box 2200
Enfield, CT 06083-2200
[Phoenix double-diamond logo] Phoenix Duff & Phelps
PDP 690 (8/96)
Bulk Rate Mail
U.S. Postage
PAID
Springfield, MA
Permit No. 444
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
101 Munson Street
Greenfield, MA 01301
Statement of Additional Information
August 28, 1996
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix Strategic Equity Series Fund (the "Fund"), dated August 28, 1996, and
should be read in conjunction with it. The Fund's Prospectus may be obtained
by calling Phoenix Equity Planning Corporation ("Equity Planning") at (800)
243-4361 or by writing to Equity Planning at 100 Bright Meadow Boulevard,
P.O. Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
PAGE
THE FUND (1) 1
INVESTMENT OBJECTIVES AND POLICIES (8) 1
INVESTMENT RESTRICTIONS (15) 1
PERFORMANCE INFORMATION (8) 8
PORTFOLIO TRANSACTIONS AND BROKERAGE 9
SERVICES OF THE ADVISERS (15) 10
NET ASSET VALUE (25) 11
HOW TO BUY SHARES (18) 11
ALTERNATIVE PURCHASE ARRANGEMENTS (19) 12
EXCHANGE PRIVILEGES (24) 13
REDEMPTION OF SHARES (25) 13
DIVIDENDS, DISTRIBUTIONS AND TAXES (27) 14
TAX SHELTERED RETIREMENT PLANS (27) 15
THE DISTRIBUTOR (17) 15
PLANS OF DISTRIBUTION (17) 15
TRUSTEES AND OFFICERS 17
ADVISORY BOARD 23
OTHER INFORMATION 23
Numbers appearing in parentheses correspond to related disclosures in the
Fund's Prospectus.
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders/Exchanges: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PDP731 (8/96)
<PAGE>
THE FUND
Phoenix Strategic Equity Series Fund is a diversified open-end management
investment company which was organized under Massachusetts law in 1986 as a
business trust. The Fund's Prospectus describes the investment objectives of
the Phoenix Equity Opportunities Fund (the "Equity Opportunities Series"),
the Phoenix Strategic Theme Fund ( the "Theme Series"), and the Phoenix Small
Cap Fund (the "Small Cap Series"). The Equity Opportunities Series, Theme
Series and Small Cap Series are sometimes collectively referred to as the
"Series". The following discussion supplements the description of these
Series' and Policies investment policies and investment techniques in the
Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
As discussed in the Prospectus, the investment objective of each Series is
deemed to be a fundamental policy which may not be changed without the
approval of the holders of a majority of the outstanding shares of each
Series. Investment restrictions described in this Statement of Additional
Information are fundamental policies of each Series and may not be changed as
to any Series without the approval of such Series' shareholders. There is no
assurance that any Series will meet its investment objective.
INVESTMENT RESTRICTIONS
Fundamental Policies
The following investment restrictions constitute fundamental policies of
each Series (unless otherwise indicated) which may be changed only upon
approval by the holders of a majority of the outstanding shares of each
Series' shareholders. No Series may:
1. Borrow money, except that the Theme Series and Small Cap Series may
borrow money for investment purposes, provided that any such borrowing for
investment purposes with respect to such Series is (a) authorized by the
Trustees prior to any public distribution of the shares of such Series or
is authorized by the shareholders of such Series thereafter, (b) is
limited to 33-1/3% of the value of the total assets (taken at market
value) of such Series, and (c) is subject to an agreement by the lender
that any recourse is limited to the assets of that Series with respect to
which the borrowing has been made;
2. Underwrite the securities of others;
3. Deal in real estate (including real estate limited partnerships)
except that any Series may purchase marketable securities of companies
that deal in real estate or interests therein including real estate
investment trusts;
4. Deal in commodities or commodities contracts;
5. Make loans to other persons except that any Series may lend portfolio
securities (up to 33% 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 total assets of a Series 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 such Series
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 for the Equity Opportunities Series unless (a)
the issuer or its predecessor has had a three year record of continuous
operation during which it published balance sheets and income statements,
(b) at the end of its last fiscal year, the issuer or its predecessor
reported gross receipts of $1,000,000 and (c) the issuer or its
predecessor had an operating profit for at least one fiscal year of the
five years immediately preceding;
15. 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
16. Make an investment for the purpose of exercising control or
management.
1
<PAGE>
Other Policies
The following investment restrictions do not constitute fundamental
policies and may be changed without shareholder approval. No Series may:
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 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 security of an issuer if the Fund officers,
Trustees or Adviser, who individually own beneficially more than 1/2 of 1% of
such issuer, together own more than 5% of such issuer's securities.
3. Invest in interests in oil, gas or other mineral exploration
development programs or leases.
4. Invest more than 5% of a Series' total assets in warrants and stock
rights, valued at the lower of cost or market, or more than 2% of its assets
in warrants and stock rights that are not listed on the New York Stock
Exchange or American Stock Exchange.
Investment Techniques
Repurchase Agreements. Repurchase Agreements are agreements by which the
Series purchases a security and obtains a simultaneous commitment from the
seller (a member bank of the Federal Reserve System or, to the extent
permitted by the Investment Company Act of 1940, a recognized securities
dealer) that the seller will repurchase the security at an agreed upon price
and date. The resale price is in excess of the purchase price and reflects an
agreed upon market rate unrelated to the coupon rate on the purchased
security.
A repurchase transaction is usually accomplished either by crediting the
amount of securities purchased to the account of the custodian of the Series
maintained in a central depository of book-entry system or by physical
delivery of the securities to the Series' custodian in return for delivery of
the purchase price to the seller. Repurchase transactions are intended to be
short-term transactions with the seller repurchasing the securities, usually
within seven days.
Even though repurchase transactions usually do not impose market risks on
the purchasing Series, if the seller of the repurchase agreement defaults and
does not repurchase the underlying securities, the Series might incur a loss
if the value of the underlying securities declines, and disposition costs may
be incurred in connection with liquidating the underlying securities. In
addition, if bankruptcy proceedings are commenced regarding the seller,
realization upon the underlying securities may be delayed or limited, and a
loss may be incurred if the underlying securities decline in value.
Securities and Index Options. All Series may write covered call options
and purchase call and put options. Options and the related risks are
summarized below.
Writing and Purchasing Options. Call options written by a Series normally
will have expiration dates between three and nine months from the date
written. During the option period a Series may be assigned an exercise
notice by the broker-dealer through which the call option was sold,
requiring the Series to deliver the underlying security (or cash in the
case of securities index calls) against payment of the exercise price.
This obligation is terminated upon the expiration of the option period or
at such earlier time as the Series effects a closing purchase transaction.
A closing purchase transaction cannot be effected with respect to an
option once the Series has received an exercise notice.
The exercise price of a call option written by a Series may be below,
equal to or above the current market value of the underlying security or
securities index at the time the option is written.
A multiplier for an index option performs a function similar to the unit
of trading for an option on an individual security. It determines the
total dollar value per contract of each point between the exercise price
of the option and the current level of the underlying index. A multiplier
of 100 means that a one-point difference will yield $100. Options on
different indices may have different multipliers.
Securities indices for which options are currently traded include the
Standard & Poor's 100 and 500 Composite Stock Price Indices,
Computer/Business Equipment Index, Major Market Index, Amex Market Value
Index, Computer Technology Index, Oil and Gas Index, NYSE Options Index,
Gaming/Hotel Index, Telephone Index, Transportation Index, Technology
Index, and Gold/Silver Index. A Series may write call options and purchase
call and put options on any other indices traded on a recognized exchange.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option written by a Series to prevent an
underlying security from being called, or to enable a Series to write
another call option with either a different exercise price or expiration
date or both. A Series may realize a net gain or loss from a closing
purchase transaction depending upon whether the amount of the premium
received on the call option is more or less than the cost of effecting the
closing purchase transaction. If a call option written by a Series expires
unexercised, a Series will realize a gain in the amount of the premium on
the option less the commission paid.
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The option activities of a Series may increase its portfolio turnover
rate and the amount of brokerage commissions paid. A Series will pay a
commission each time it purchases or sells a security in connection with
the exercise of an option. These commissions may be higher than those
which would apply to purchases and sales of securities directly.
Limitations on Options. A Series may write call options only if they are
covered and if they remain covered so long as a Series is obligated as a
writer. If a Series writes a call option on an individual security, a
Series will own the underlying security at all times during the option
period. A Series will write call options on indices only to hedge in an
economically appropriate way portfolio securities which are not otherwise
hedged with options or financial futures contracts. Call options on
securities indices written by a Series will be "covered" by identifying
the specific portfolio securities being hedged.
To secure the obligation to deliver the underlying security, the writer
of a covered call option on an individual security is required to deposit
the underlying security or other assets in escrow with the broker in
accordance with clearing corporation and exchange rules. In the case of an
index call option written by a Series, a Series will be required to
deposit qualified securities. A "qualified security" is a security against
which a Series has not written a call option and which has not been hedged
by a Series by the sale of a financial futures contract. If at the close
of business on any day the market value of the qualified securities falls
below 100% of the current index value times the multiplier times the
number of contracts, a Series will deposit an amount of cash or liquid
assets equal in value to the difference. In addition, when a Series writes
a call on an index which is "in-the-money" at the time the call is
written, a Series will segregate with its custodian bank cash or liquid
assets equal in value to the amount by which the call is "in-the-money"
times the multiplier times the number of contracts. Any amount segregated
may be applied to a Series' obligation to segregate additional amounts in
the event that the market value of the qualified securities falls below
100% of the current index value times the multiplier times the number of
contracts.
A Series may invest up to 5% of its total assets in exchange-traded or
over-the-counter call and put options. A Series may sell a call option or
a put option which it has previously purchased prior to the purchase (in
the case of a call) or the sale (in the case of a put) of the underlying
security. Any such sale of a call option or a put option would result in a
net gain or loss, depending on whether the amount received on the sale is
more or less than the premium and other transaction costs paid.
In connection with a Series qualifying as a regulated investment company
under the Internal Revenue Code, other restrictions on a Series' ability
to enter into option transactions may apply from time to time. See
"Taxes."
Risks Relating to Options. During the option period, the writer of a call
option has, in return for the premium received on the option, given up the
opportunity for capital appreciation above the exercise price should the
market price of the underlying security increase, but has retained the
risk of loss should the price of the underlying security decline. The
writer has no control over the time when it may be required to fulfill its
obligation as a writer of the option.
The risk of purchasing a call option or a put option is that a Series may
lose the premium it paid plus transaction costs. If a Series does not
exercise the option and is unable to close out the position prior to
expiration of the option, it will lose its entire investment.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. Although a Series will
write and purchase options only when the Adviser believes that a liquid
secondary market will exist for options of the same series, there can be
no assurance that a liquid secondary market will exist for a particular
option at a particular time and that a Series, if it so desires, can close
out its position by effecting a closing transaction. If the writer of a
covered call option is unable to effect a closing purchase transaction, it
cannot sell the underlying security until the option expires or the option
is exercised. Accordingly, a covered call writer may not be able to sell
the underlying security at a time when it might otherwise be advantageous
to do so.
Possible reasons for the absence of a liquid secondary market on an
exchange include: (i) insufficient trading interest in certain options;
(ii) restrictions on transactions imposed by an exchange; (iii) trading
halts, suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities; (iv)
inadequacy of the facilities of an exchange or the clearing corporation to
handle trading volume; and (v) a decision by one or more exchanges to
discontinue the trading of options or impose restrictions on orders.
Each exchange has established limitations governing the maximum number of
call options, whether or not covered, which may be written by a single
investor acting alone or in concert with others (regardless of whether
such options are written on the same or different exchanges or are held or
written on one or more accounts or through one or more brokers). An
exchange may order the liquidation of positions found to be in violation
of these limits and it may impose other sanctions or restrictions. The
Adviser believes that the position limits established by the exchanges
will not have any adverse impact upon a Series or all of the Series, in
the aggregate.
Risks of Options on Indices. Because the value of an index option depends
upon movements in the level of the index rather than movements in the
price of a particular security, whether a Series will realize a gain or
loss on the purchase or sale of an option on an index depends upon
movements in the level of prices in the market generally or in an industry
or market
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segment rather than upon movements in the price of an individual security.
Accordingly, successful use by a Series of options on indices will be
subject to the Adviser's ability to predict correctly movements in the
direction of the market generally or in the direction of a particular
industry. This requires different skills and techniques than predicting
changes in the prices of individual securities.
Index prices may be distorted if trading of certain securities included
in the index is interrupted. Trading in index options also may be
interrupted in certain circumstances, such as if trading were halted in a
substantial number of securities included in the index. If this occurred,
a Series would not be able to close out options which it had written or
purchased and, if restrictions on exercise were imposed, might be unable
to exercise an option it purchased, which would result in substantial
losses to a Series. However, it is the Fund's policy to write or purchase
options only on indices which include a sufficient number of securities so
that the likelihood of a trading halt in the index is minimized.
Because the exercise of an index option is settled in cash, an index call
writer cannot determine the amount of its settlement obligation in advance
and, unlike call writing on portfolio securities, cannot provide in
advance for its potential settlement obligation by holding the underlying
securities. Consequently, a Series will write call options on indices only
subject to the limitations described above.
Price movements in securities in a Series' portfolio will not correlate
perfectly with movements in the level of the index and, therefore, a
Series bears the risk that the price of the securities held by the Series
may not increase as much as the level of the index. In this event, the
Series would bear a loss on the call which would not be completely offset
by movements in the prices of a Series' portfolio securities. It is also
possible that the index may rise when the value of a Series' portfolio
securities does not. If this occurred, the Series would experience a loss
on the call which would not be offset by an increase in the value of its
portfolio and might also experience a loss in the market value of
portfolio securities.
Unless a Series has other liquid assets which are sufficient to satisfy
the exercise of a call on an index, a Series will be required to liquidate
portfolio securities in order to satisfy the exercise. Because an exercise
must be settled within hours after receiving the notice of exercise, if a
Series fails to anticipate an exercise, to the extent permissible, it may
have to borrow from a bank pending settlement of the sale of securities in
its portfolio and pay interest on such borrowing.
When a Series has written a call on an index, there is also a risk that
the market may decline between the time a Series has the call exercised
against it, at a price which is fixed as of the closing level of the index
on the date of exercise, and the time a Series is able to sell securities
in its portfolio. As with options on portfolio securities, a Series will
not learn that a call has been exercised until the day following the
exercise date but, unlike a call on a portfolio security where a Series
would be able to deliver the underlying security in settlement, a Series
may have to sell part of its portfolio securities in order to make
settlement in cash, and the price of such securities might decline before
they could be sold.
If a Series exercises a put option on an index which it has purchased
before final determination of the closing index value for that day, it
runs the risk that the level of the underlying index may change before
closing. If this change causes the exercised option to fall
"out-of-the-money" a Series will be required to pay the difference between
the closing index value and the exercise price of the option (multiplied
by the applicable multiplier) to the assigned writer. Although a Series
may be able to minimize this risk by withholding exercise instructions
until just before the daily cutoff time or by selling rather than
exercising an option when the index level is close to the exercise price,
it may not be possible to eliminate this risk entirely because the cutoff
times for index options may be earlier than those fixed for other types of
options and may occur before definitive closing index values are
announced.
Financial Futures Contracts and Related Options. Each Series may use
financial futures contracts and related options to hedge against changes in
the market value of its portfolio securities or securities which it intends
to purchase. Hedging is accomplished when an investor takes a position in the
futures market opposite to his cash market position. There are two types of
hedges--long (or buying) and short (or selling) hedges. Historically, prices
in the futures market have tended to move in concert with cash market prices,
and prices in the futures market have maintained a fairly predictable
relationship to prices in the cash market. Thus, a decline in the market
value of securities in a Series' portfolio may be protected against to a
considerable extent by gains realized on futures contracts sales. Similarly,
it is possible to protect against an increase in the market price of
securities which a Series may wish to purchase in the future by purchasing
futures contracts.
These Series may purchase or sell any financial futures contracts which
are traded on a recognized exchange or board of trade. Financial futures
contracts consist of interest rate futures contracts and securities index
futures contracts. A public market presently exists in interest rate futures
contracts covering long-term U.S. Treasury bonds, U.S. Treasury notes,
three-month U.S. Treasury bills and GNMA certificates. Securities index
futures contracts are currently traded with respect to the Standard & Poor's
500 Composite Stock Price Index and such other broad-based stock market
indices as the New York Stock Exchange Composite Stock Index and the Value
Line Composite Stock Price Index. A clearing corporation associated with the
exchange or board of trade on which a financial futures contract trades
assumes responsibility for the completion of transactions and also guarantees
that open futures contracts will be performed.
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In contrast to the situation when such Series purchases or sell a
security, no security is delivered or received by these Series upon the
purchase or sale of a financial futures contract. Initially, these Series
will be required to deposit in a segregated account with its custodian bank
an amount of cash, U.S. Treasury bills or liquid high grade debt obligations.
This amount is known as initial margin and is in the nature of a performance
bond or good faith deposit on the contract. The current initial margin
deposit required per contract is approximately 5% of the contract amount.
Brokers may establish deposit requirements higher than this minimum.
Subsequent payments, called variation margin, will be made to and from the
account on a daily basis as the price of the futures contract fluctuates.
This process is known as marking to market.
The writer of an option on a futures contract is required to deposit
margin pursuant to requirements similar to those applicable to futures
contracts. Upon exercise of an option on a futures contract, the delivery of
the futures position by the writer of the option to the holder of the option
will be accompanied by delivery of the accumulated balance in the writer's
margin account. This amount will be equal to the amount by which the market
price of the futures contract at the time of exercise exceeds, in the case of
a call, or is less than, in the case of a put, the exercise price of the
option on the futures contract.
Although financial futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery.
Closing out is accomplished by effecting an offsetting transaction. A futures
contract sale is closed out by effecting a futures contract purchase for the
same aggregate amount of securities and the same delivery date. If the sale
price exceeds the offsetting purchase price, the seller immediately would be
paid the difference and would realize a gain. If the offsetting purchase
price exceeds the sale price, the seller immediately would pay the difference
and would realize a loss. Similarly, a futures contract purchase is closed
out by effecting a futures contract sale for the same securities and the same
delivery date. If the offsetting sale price exceeds the purchase price, the
purchaser would realize a gain, whereas if the purchase price exceeds the
offsetting sale price, the purchaser would realize a loss.
Such Series will pay commissions on financial futures contracts and
related options transactions. These commissions may be higher than those
which would apply to purchases and sales of securities directly.
Limitations on Futures Contracts and Related Options. A Series may not
engage in transactions in financial futures contracts or related options for
speculative purposes but only as a hedge against anticipated changes in the
market value of its portfolio securities or securities which it intends to
purchase. A Series may not purchase or sell financial futures contracts or
related options if, immediately thereafter, the sum of the amount of initial
margin deposits on that Series' existing futures and related options
positions and the premiums paid for related options would exceed 5% of the
market value of that Series' total assets after taking into account
unrealized profits and losses on any such contracts. At the time of purchase
of a futures contract or a call option on a futures contract, an amount of
cash, U.S. Government securities or other appropriate high-grade debt
obligations equal to the market value of the futures contract minus a Series'
initial margin deposit with respect thereto will be deposited in a segregated
account with the Fund's custodian bank to collateralize fully the position
and thereby ensure that it is not leveraged.
The extent to which a Series may enter into financial futures contracts
and related options also may be limited by the requirements of the Internal
Revenue Code for qualifications as a regulated investment company. See
"Taxes."
Risks Relating to Futures Contracts and Related Options. Positions in
futures contracts and related options may be closed out only on an exchange
which provides a secondary market for such contracts or options. A Series
will enter into an option or futures position only if there appears to be a
liquid secondary market. However, there can be no assurance that a liquid
secondary market will exist for any particular option or futures contract at
any specific time. Thus, it may not be possible to close out a futures or
related option position. In the case of a futures position, in the event of
adverse price movements a Series would continue to be required to make daily
margin payments. In this situation, if a Series has insufficient cash to meet
daily margin requirements it may have to sell portfolio securities at a time
when it may be disadvantageous to do so. In addition, a Series may be
required to take or make delivery of the securities underlying the futures
contracts it holds. The inability to close out futures positions also could
have an adverse impact on a Series' ability to hedge its portfolio
effectively.
There are several risks in connection with the use of futures contracts as
a hedging device. While hedging can provide protection against an adverse
movement in market prices, it can also preclude a hedger's opportunity to
benefit from a favorable market movement. In addition, investing in futures
contracts and options on futures contracts will cause a Series to incur
additional brokerage commissions and may cause an increase in a Series'
portfolio turnover rate.
The successful use of futures contracts and related options also depends
on the ability of the Adviser to forecast correctly the direction and extent
of market movements within a given time frame. To the extent market prices
remain stable during the period a futures contract or option is held by a
Series or such prices move in a direction opposite to that anticipated, a
Series may realize a loss on the hedging transaction which is not offset by
an increase in the value of its portfolio securities. As a result, a Series'
return for the period may be less than if is had not engaged in the hedging
transaction.
Utilization of futures contracts by a Series involves the risk of
imperfect correlation in movements in the price of futures contracts and
movements in the price of the securities which are being hedged. If the price
of the futures contract moves more or less than the price of the securities
being hedged, a Series will experience a gain or loss which will not be
completely offset by movements
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in the price of the securities. It is possible that, where a Series has sold
futures contracts to hedge its portfolio against decline in the market, the
market may advance and the value of securities held in a Series' portfolio
may decline. If this occurred, a Series would lose money on the futures
contract and would also experience a decline in value in its portfolio
securities. Where futures are purchased to hedge against a possible increase
in the prices of securities before a Series is able to invest its cash (or
cash equivalents) in securities (or options) in an orderly fashion, it is
possible that the market may decline; if a Series then determines not to
invest in securities (or options) at that time because of concern as to
possible further market decline or for other reasons, a Series will realize a
loss on the futures that would not be offset by a reduction in the price of
the securities purchased.
The market prices of futures contracts may be affected if participants in
the futures market also elect to close out their contracts through
off-setting transactions rather than to meet margin deposit requirements. In
such case, distortions in the normal relationship between the cash and
futures markets could result. Price distortions could also result if
investors in futures contracts opt to make or take delivery of the underlying
securities rather than to engage in closing transactions due to the resultant
reduction in the liquidity of the futures market. In addition, due to the
fact that, from the point of view of speculators, the deposit requirements in
the futures markets are less onerous than margin requirements in the cash
market, increased participation by speculators in the futures market could
cause temporary price distortions. Due to the possibility of price
distortions in the futures market and because of the imperfect correlation
between movements in the prices of securities and movements in the prices of
futures contracts, a correct forecast of market trends may still not result
in a successful hedging transaction.
Compared to the purchase or sale of futures contracts, the purchase of put
or call options on futures contracts involves less potential risk for a
Series because the maximum amount at risk is the premium paid for the options
plus transaction costs. However, there may be circumstances when the purchase
of an option on a futures contract would result in a loss to a Series while
the purchase or sale of the futures contract would not have resulted in a
loss, such as when there is no movement in the price of the underlying
securities.
Leverage. The Fund may from time to time increase the Theme Series' and
Small Cap Series' ownership of securities holdings above the amounts
otherwise possible by borrowing from banks at fixed amounts of interest and
investing the borrowed funds. These Series will borrow only from banks, and
only if immediately after such borrowing the value of the assets of these
Series (including the amount borrowed) less its liabilities (not including
any borrowings) is at least three times the amount of funds borrowed for
investment purposes. The effect of this provision is to permit the Fund to
borrow up to 33-1/3% of the net assets of these Series, not including the
proceeds of any such borrowings. However, the amount of the borrowings will
be dependent upon the availability and cost of credit from time to time. If,
due to market fluctuations or other reasons, the value of such Series' assets
computed as provided above becomes at any time less than three times the
amount of the borrowings for investment purposes, these Series, within three
business days, is required to reduce bank debt to the extent necessary to
meet the required 300% asset coverage.
Interest on money borrowed will be an expense of these Series with respect
to which the borrowing has been made. Because such expense would not
otherwise be incurred, the net investment income of such Series is not
expected to be as high as it otherwise would be during periods when
borrowings for investment purposes are substantial.
Bank borrowings for investment purposes must be obtained on an unsecured
basis. Any such borrowing must also be made subject to an agreement by the
lender that any recourse is limited to the assets of the Series with respect
to which the borrowing has been made.
Any investment gains made with the additional monies borrowed in excess of
interest paid will cause the net asset value of these Series' shares to rise
faster than would otherwise be the case. On the other hand, if the investment
performance of the additional securities purchased fails to cover their cost
(including any interest paid on the monies borrowed) to these Series, the net
asset value of these Series will decrease faster than would otherwise be the
case.
Foreign Securities. Each of the Series may purchase foreign securities,
including those issued by foreign branches of U.S. banks. In any event, such
investments in foreign securities will be limited to 25% of the total net
asset value of each Series (provided, however, the Theme Series may invest up
to 35% of its total asset value in the securities of foreign issuers).
Investments in foreign securities, particularly those of non-governmental
issuers, involve considerations which are not ordinarily associated with
investing in domestic issues. These considerations include changes in
currency rates, currency exchange control regulations, the possibility of
expropriation, the unavailability of financial information, the difficulty of
interpreting financial information prepared under foreign securities markets,
the impact of political, social or diplomatic developments, difficulties in
invoking legal process abroad and the difficulty of assessing economic trends
in foreign countries.
The Fund may use a foreign custodian in connection with its purchases of
foreign securities and may maintain cash and cash equivalents in the care of
a foreign custodian. The amount of cash or cash equivalents maintained in the
care of eligible foreign custodians will be limited to an amount reasonably
necessary to effect the Fund's foreign securities transactions. The use of a
foreign custodian invokes considerations which are not ordinarily associated
with domestic custodians. These considerations include the possibility of
expropriations, restricted access to books and records of the foreign
custodian, inability to recover assets that are lost while under the control
of the foreign custodian, and the impact of political, social or diplomatic
developments.
Lower Rated Convertible Securities. Convertible securities which are not
rated in the four highest categories, in which a Series may invest, are
predominantly speculative with respect to the issuer's capacity to repay
principal and interest and may include issues on which the issuer defaults.
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Lending Portfolio Securities. In order to increase its return on
investments, the Theme Series and Small Cap Series may make loans of its
portfolio securities, as long as the market value of the loaned securities
does not exceed 33% of the market or other fair value of that Series' net
assets. Loans of portfolio securities will always be fully collateralized by
cash, U.S. Government Securities or other high quality debt securities at no
less than 100% of the market value of the loaned securities (as marked to
market daily) and made only to borrowers considered by the Adviser to be
creditworthy. Lending portfolio securities involves a risk of delay in the
recovery of the loaned securities and possibly the loss of the collateral if
the borrower fails financially.
Foreign Currency Transactions
The Series (each a "Foreign Currency Portfolio") may engage in foreign
currency transactions. The following is a description of these transactions:
Forward Foreign Currency Exchange Contracts. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days ("Term")
from the date of the contract agreed upon by the parties, at a price set
at the time of the contract. These contracts are traded directly between
currency traders (usually large commercial banks) and their customers.
No Series intends to enter into such forward contracts if it would have
more than 15% of the value of its total assets committed to such contracts
on a regular or continuous basis. No Series will enter into such forward
contracts or maintain a net exposure in such contracts where it would be
obligated to deliver an amount of foreign currency in excess of the value
of its portfolio securities and other assets denominated in that currency.
PIC believes that it is important to have the flexibility to enter into
such forward contracts when it determines that to do so is in the best
interests of a Series. The Fund's custodian bank will segregate cash or
liquid high quality debt securities in an amount not less than the value
of a Foreign Currency Portfolio's total assets committed to forward
foreign currency exchange contracts entered into for the purchase of a
foreign currency. If the value of the securities segregated declines,
additional cash or securities will be added so that the segregated amount
is not less than the amount of the Foreign Currency Portfolio's
commitments with respect to such contracts. Generally, neither Foreign
Currency Portfolio enters into a forward contract with a term longer than
one year.
Foreign Currency Options. A foreign currency option provides the option
buyer with the right to buy or sell a stated amount of foreign currency at
the exercise price at a specified date or during the option period. A call
option gives its owner the right, but not the obligation, to buy the
currency, while a put option gives its owner the right, but not the
obligation, to sell the currency. The option seller (writer) is obligated
to fulfill the terms of the option sold if it is exercised. However,
either seller or buyer may close its position during the option period for
such options any time prior to expiration.
A call rises in value if the underlying currency appreciates. Conversely,
a put rises in value if the underlying currency depreciates. While
purchasing a foreign currency option can protect a Foreign Currency
Portfolio against an adverse movement in the value of a foreign currency,
it does not limit the gain which might result from a favorable movement in
the value of such currency. For example, if a Foreign Currency Portfolio
were holding securities denominated in an appreciating foreign currency
and had purchased a foreign currency put to hedge against a decline in the
value of the currency, it would not have to exercise its put. Similarly,
if a Foreign Currency Portfolio had entered into a contract to purchase a
security denominated in a foreign currency and had purchased a foreign
currency call to hedge against a rise in the value of the currency but
instead the currency had depreciated in value between the date of purchase
and the settlement date, the Foreign Currency Portfolio would not have to
exercise its call but could acquire in the spot market the amount of
foreign currency needed for settlement.
Foreign Currency Futures Transactions. Each Foreign Currency Portfolio
may use foreign currency futures contracts and options on such futures
contracts. Through the purchase or sale of such contracts, a Foreign
Currency Portfolio may be able to achieve many of the same objectives
attainable through the use of foreign currency forward contracts, but more
effectively and possibly at a lower cost.
Unlike forward foreign currency exchange contracts, foreign currency
futures contracts and options on foreign currency futures contracts are
standardized as to amount and delivery period and are traded on boards of
trade and commodities exchanges. It is anticipated that such contracts may
provide greater liquidity and lower cost than forward foreign currency
exchange contracts.
Regulatory Restrictions. To the extent required to comply with Securities
and Exchange Commission Release No. IC-10666, when purchasing a futures
contract or writing a put option, each Foreign Currency Portfolio will
maintain in a segregated account cash or liquid high-grade debt securities
equal to the value of such contracts.
To the extent required to comply with Commodity Futures Trading
Commission Regulation 4.5 and thereby avoid "commodity pool operator"
status, a Foreign Currency Portfolio will not enter into a futures
contract or purchase an option thereon if immediately thereafter the
initial margin deposits for futures contracts (including foreign currency
and all other futures contracts) held by the Foreign Currency Portfolio
plus premiums paid by it for open options on futures would exceed 5% of
the Foreign Currency Portfolio's total assets. Neither Foreign Currency
Portfolio will engage in transactions in financial futures contracts or
options thereon for speculation, but only to attempt to hedge against
changes in market conditions affecting the values of securities which the
Series holds or intends to purchase. When futures contracts or options
thereon are purchased to protect
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against a price increase on securities intended to be purchased later, it
is anticipated that at least 75% of such intended purchases will be
completed. When other futures contracts or options thereon are purchased,
the underlying value of such contracts will at all times not exceed the
sum of: (1) accrued profit on such contracts held by the broker; (2) cash
or high quality money market instruments set aside in an identifiable
manner; and (3) cash proceeds from investments due in 30 days.
Investing in SmallCap Issuers. Under normal market conditions, the Small Cap
Series expects to invest at least 65% of its total assets in equity
securities of small capitalization companies. Market capitalizations of such
issuers are determined at the time of purchase. While the issuers in which
the Series will primarily invest may offer greater opportunities for capital
appreciation than larger capitalization issuers, investments in smaller
companies may involve greater risks and thus may be considered speculative.
For example, small companies may have limited product lines, markets or
financial resources, or they may be dependent on a limited management group.
Full development of these companies takes time and, for this reason, the
Series should be considered as a long-term investment and not as a vehicle
for seeking short-term profits, nor should an investment in the Series be
considered a complete investment program. In addition, many small company
stocks trade less frequently and in smaller volume, and may be subject to
more abrupt or erratic price movements than stocks of large companies. The
securities of small companies may also be more sensitive to market changes
than the securities of large companies. These factors may result in
above-average fluctuations in the net asset value of the Series' shares. The
Series is not an appropriate investment for individual investors requiring
safety of principal or a predictable return of income from their investment.
Derivative Investments. In order to hedge various portfolio positions,
including to hedge against price movements in markets in which the Fund
anticipates increasing its exposure, the Fund may invest in certain
instruments which may be characterized as derivative investments. These
investments include various types of interest rate transactions, options and
futures. Such investments also may consist of indexed securities. Other of
such investments have no express quantitative limitations, although they may
be made solely for hedging purposes, not for speculation, and may in some
cases be limited as to the type of counter-party permitted. Interest rate
transactions involve the risk of an imperfect correlation between the index
used in the hedging transactions and that pertaining to the securities which
are the subject of such transactions. Similarly, utilization of options and
futures transactions involves the risk of imperfect correlation in movements
in the price of options and futures and movements in the price of the
securities or interest rates which are the subject of the hedge. Investments
in indexed securities, including inverse securities, subject the Fund to the
risks associated with changes in the particular indices, which may include
reduced or eliminated interest payments and losses of invested principal.
Industry Classifications. For the purposes of establishing industry
classifications for the Theme Series and Small Cap Series, the Adviser
utilizes the William O'Neil & Co., Inc. Industry Group Index. The William
O'Neil & Co., Inc. Industry Group Index is presently comprised of 197
industry classifications. Classifications are determined based on the
following broad sectors: Basic Material, Energy, Capital Equipment,
Technology, Consumer Cyclical, Retail, Consumer Staple, Health Care,
Transportation, Financial, and Utilities. Sectors are then divided into
industry groups based upon income sources and other economically relevant
criteria as determined by O'Neil & Co., Inc.
For the Equity Opportunities Series, industry classifications are
established by reference to the Directory of Companies Filing Annual Reports
published by the SEC.
PERFORMANCE INFORMATION
The Fund may, from time to time, include its total return in
advertisements or reports to shareholders or prospective investors.
Performance information in advertisements and sales literature may be
expressed as yield of a class or Series and as total return of any class or
Series.
Standardized quotations of average annual total return for Class A or
Class B Shares of a Series will be expressed in terms of the average annual
compounded rate of return for a hypothetical investment in either Class A or
Class B Shares of a Series over periods of 1, 5 and 10 years or up to the
life of the class of shares of a Series, calculated for each class separately
pursuant to the following formula: P(1 + T)n = ERV (where P = a hypothetical
initial payment of $1,000, T = the average annual total return, n = the
number of years, and ERV = the ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the period). All total return figures
reflect the deduction of a proportional share of each class's expenses (on an
annual basis), deduction of the maximum initial sales load in the case of
Class A Shares and the maximum contingent deferred sales charge applicable to
a complete redemption of the investment in the case of Class B Shares, and
assume that all dividends and distributions on Class A and Class B Shares are
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,
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Financial World, U.S. News and World Report, Standard & Poor's The Outlook,
and Personal Investor. The Fund may from time to time illustrate the benefits
of tax deferral by comparing taxable investments to investments made through
tax-deferred retirement plans. The total return may also be used to compare
the performance of the Fund against certain widely acknowledged outside
standards or indices for stock and bond market performance, such as the
Standard & Poor's 500 Stock Index (the "S&P 500"), Dow Jones Industrial
Average, Europe Australia Far East Index (EAFE), Consumer's Price Index,
Shearson Lehman Corporate Index and Shearson Lehman T-Bond Index. The S&P 500
is a commonly quoted market value-weighted and unmanaged index showing the
changes in the aggregate market value of 500 common stocks relative to the
base period 1941-43. The S&P 500 is composed almost entirely of common stocks
of companies listed on the New York Stock Exchange, although the common
stocks of a few companies listed on the American Stock Exchange or traded
over the counter are included. The 500 companies represented include 400
industrial, 60 transportation and 40 financial services concerns. The S&P 500
represents about 80% of the market value of all issues traded on the New York
Stock Exchange.
Advertisements, sales literature and other communications may contain
information about the Fund and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Fund
to respond quickly to changing market and economic conditions. From time to
time the Fund may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Fund may
separate is cumulative and average annual returns into income and capital
gains components; or cite separately as a return figure the equity or bond
portion of the Fund's portfolio; or compare the Fund's equity or bond return
future to well-known indices of market performance, including, but not
limited to: the S&P 500 Index, Dow Jones Industrial Average, First Boston
High Yield Index and Salomon Brothers Corporate and Government Bond Indices.
For Equity Opportunities Series for the 1, 5 and 10 year periods ended
April 30, 1996, the average annual total return of the Class A Shares was
26.53%, 13.25% and 11.39%, respectively. Class B average annual total return
for the 1 year period and since inception 7/19/94 to April 30, 1996 was
26.92% and 20.29%. The Theme Series' average annual return from inception
October 16, 1996 for Class A and Class B shares was 17.99% and 18.41%,
respectively. The Small Cap Series' average annual return from inception
October 16, 1996 for Class A and Class B shares was 59.50% and 61.80%,
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 Series' 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 cumulative 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 for the Equity Opportunities Series, the Class A Share's
aggregate cumulative total return quotation for the period commencing August
1, 1944 and ending April 30, 1996 was 22,805%.
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 TRANSACTIONS AND BROKERAGE
The Advisers place 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 Advisers to seek the best prices and
execution of orders and to negotiate brokerage commissions which the
Advisers' opinion are reasonable in relation to the value of the brokerage
services provided by the executing broker. Brokers who have executed orders
for the Fund are asked to quote a fair commission for their services. If the
execution is satisfactory and if the requested rate approximates rates
currently being quoted by the other brokers selected by the Advisers, the
rate is deemed by the Advisers 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 Advisers after the transaction has been
consummated. If the Advisers more than occasionally differ with the broker's
appraisal of opportunity or value, the broker would not be selected to
execute trades in the future. The Advisers believe 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 Advisers' 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
9
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funds in general including the sale of mutual funds managed and sponsored by
the Advisers. The Advisers do 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 Advisers 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 Fund and its
shareholders.
A high rate of Portfolio turnover involves a correspondingly higher amount
of brokerage commissions and other costs which must be borne directly by the
Fund and indirectly by shareholders.
During the fiscal years ended April 30, 1994, 1995 and 1996, brokerage
commissions paid by the Fund totalled $510,377, $1,545,026 and $1,208,440,
respectively. Of the total amounts paid in the fiscal years ended April 30,
1994, 1995 and 1996, $5,630, $0 and $0, respectively or 0.00%, 0.00% and
0.00%, respectively of Fund assets were paid to the former principal
underwriter in accordance and consistent with internal procedures governing
such affiliated transactions in accordance with regulatory requirements.
Commissions paid to the principal underwriter for the fiscal years ended
April 30, 1994, 1995 and 1996 totalled $0, $0 and $0, respectively.
SERVICES OF THE ADVISERS
The offices of Phoenix Investment Counsel, Inc., (PIC) and National
Securities & Research Corporation ("National") are located at 56 Prospect
Street, Hartford, Connecticut 06115. In addition to the Equity Opportunities
Series, National serves as investment adviser to Phoenix Multi-Sector Short
Term Bond Fund, Phoenix California Tax Exempt Bonds, Inc., Phoenix Income and
Growth Fund, Phoenix Multi-Sector Fixed Income Fund, Inc., and Phoenix
Worldwide Opportunities Fund. In addition to the Theme Series and the Small
Cap Series, PIC serves as investment adviser to Phoenix Edge Series Fund
(other than the Real Estate Series), Phoenix Series Fund, Phoenix
Multi-Portfolio Fund (other than the Real Estate Securities Portfolio), and
Phoenix Total Return Fund Inc.
PIC is an indirect wholly-owned subsidiary and National is a direct
subsidiary of Phoenix Duff & Phelps Corporation. Phoenix Home Life Mutual
Insurance Company ("Phoenix Home Life") owns a majority interest in Phoenix
Duff & Phelps Corporation.
Phoenix Home Life is a mutual insurance company engaged in the insurance and
investment businesses. Phoenix Home Life's principal place of business is
located at One American Row, Hartford, Connecticut, where the company manages
combined assets of approximately $13 billion through advisory accounts and
mutual funds.
The Advisers provide certain services and facilities required to carry on
the day-to-day operations of the Fund (for which they receive a management
fee) other than the costs of printing and mailing proxy materials, reports
and notices to shareholders; legal, auditing and accounting services;
regulatory filing fees and expenses of printing the Fund's registration
statements (but the Underwriter purchases such copies of the Fund's
prospectuses and reports and communications to shareholders as it may require
for sales purposes); insurance expense; association membership dues;
brokerage fees; and taxes.
Each Series will pay expenses incurred in its own operation and will also
pay a portion of the Fund's administration expenses allocated on the basis of
the asset values of the respective Series.
As compensation for its services, National receives a fee from the Equity
Opportunities Series, which is accrued daily against the value of the Series
net assets and is paid by the Series on the last day of the month. The fee is
computed at an annual rate of .70% of the Series average daily net assets of
up to $1 billion, .65% of the Series' average daily net assets from $1
billion to $2 billion, and .60% of the Series' average net assets in excess
of $2 billion. Prior to January 1, 1994, the fee was computed at the annual
rate of .75% per annum on the first $410,000,000 of the aggregate daily net
assets of the Series; .70% on the next $300,000,000; .65% on the next
$200,000,000; .60% on the next $200,000,000; .55% on the next $100,000,000;
.50% on the next $100,000,000; .45% on the next $100,000,000; .40% on the
next $100,000,000 and .375% of 1% per annum on the aggregate
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average daily net assets of the Series in excess of $1,510,000,000. For the
fiscal years 1994, 1995 and 1996 the net management fees paid by the Series
to the Adviser were $1,571,191, $1,252,747 and $1,394,239, respectively.
For managing the investments, or directing the management of the
investments of the Theme Series and the Small Cap Series, PIC is entitled to
a monthly fee at the annual rate of 0.75% of the average daily net asset
values of the Series up to $1 billion; 0.70% of such value between $1 billion
and $2 billion; and 0.65% of such value in excess of $2 billion. For the
fiscal period 1996, the combined management fee paid by the Theme Series and
Small Cap Series was $295,479.
The Adviser has agreed that if, in any fiscal year, the aggregate expenses
of the Fund, exclusive of taxes, brokerage, interest and (with the prior
consent of any necessary state securities commissions) extraordinary
expenses, but including the management fee, exceed the most restrictive
expense limitations applicable to the Fund under state securities laws or
published regulations thereunder, the Adviser will refund to the Fund the
excess over such amount. Currently, the most restrictive of such limitations
would require the Adviser to reimburse the Fund to the extent that in any
fiscal year such aggregate expenses exceed 2.5% of the first $30,000,000 of
average net assets; 2.0% of the next $70,000,000 and 1.5% of any amount of
the average net assets in excess of $100,000,000.
The Management Agreement with National was approved by the Trustees of the
Fund on March 16, 1993 and by the shareholders of the Fund on April 30, 1993.
The Management Agreement with PIC was approved by the Trustees of the Fund on
May 24, 1995. The Management Agreements shall continue in effect for
successive annual periods, provided that such continuance is specifically
approved annually by a majority of the Trustees who are not interested
persons of the parties thereto (as defined in the 1940 Act) and by either (a)
the Trustees of the Fund or (b) vote of a majority of the outstanding
securities of the Fund (as defined in the 1940 Act).
The Management Agreements may be terminated without penalty at any time by
the Trustees or by a vote of a majority of the outstanding voting securities
of the Fund upon 60 days written notice addressed to the Adviser at its
principal place of business; and by the Adviser upon 60 days written notice
addressed to the Fund at its principal place of business. The Management
Agreements will terminate automatically in the event of their "assignment" as
defined in Section 2(a)(4) of the 1940 Act.
NET ASSET VALUE
The net asset value per share of each class of shares of each Series of
the Fund is computed at the close of the general trading session of the New
York Stock Exchange (the "Exchange"). The net asset value per share of each
class of shares of each Series is computed by dividing the value of the
Fund's securities, plus any cash and other assets (including dividends and
interest accrued but not collected) less all liabilities (including accrued
expenses), by the number of shares of the applicable class of the Series
outstanding. See the Fund's current Prospectus for additional information.
HOW TO BUY SHARES
Shares may be purchased from investment dealers having sales agreements
with the Underwriter at the public offering price (the net asset value next
computed following receipt of a purchase application in proper form by State
Street Bank and Trust Company, plus the applicable sales charge). The minimum
initial investment is $500 ($25 if using the bank draft investing program
designated "Investo-Matic") and the minimum subsequent investment amount is
$25. In the case of employee payroll deduction plans, organized group plans
and other benefit programs or arrangements offered by certain dealers, the
minimum initial investment may be fixed from time to time at such lesser
amounts as the Adviser in its sole discretion may determine, and may in all
cases, be waived from time to time by the Adviser, in its sole discretion.
See the Fund's current Prospectus.
Special Purchase Rules Regarding Small Cap Series
Effective as of the close of regular trading of the New York Stock
Exchange on June 14, 1996 (the "closing"), and until otherwise determined,
the Small Cap Series (the "Series") will not accept new investment accounts
or additional investments except in accordance with the following guidelines:
1. Purchases of additional shares are permitted for all accounts existing as
of the closing. A shareholder who owned shares of the Series prior to the
closing may exchange shares from other Phoenix Funds into the Series.
These limitations in no way restrict shareholders' rights to make
redemptions from their Series accounts.
2. Participants in retirement plans that offer the Series as an investment
option shall be permitted to effect a direct rollover of their funds into
a newly opened IRA account in the Series.
3. Shareholders of the Series as of the closing may partially or completely
transfer shares in their account. A shareholder in the Series who
transfers their entire account to another person may not subsequently
purchase shares of the Series; provided however, the recipient of such
shares may add to their account subject to the provisions hereof. The
recipient of such partial account, may not purchase additional shares of
the Series.
4. A shareholder who owned shares of the Series prior to the closing may not
open additional, new accounts in the Series.
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<PAGE>
5. A shareholder who redeems all of his shares of the Series after the
closing may not exercise any reinvestment privileges to repurchase shares
of the Series.
6. The Series reserves the right in appropriate cases to restrict sales
further, or to withdraw the offering altogether, all without prior notice.
ALTERNATIVE PURCHASE ARRANGEMENTS
Each Series is authorized to offer two classes of shares. Shares may be
purchased from investment dealers at a price equal to their net asset value
per share, plus a sales charge which, at the election of the purchaser, may
be imposed either (I) at the time of the purchase (the "initial sales charge
alternative") or (ii) on a contingent deferred basis (the "deferred sales
charge alternative").
Class A Shares
An investor who elects the initial sales charge alternative acquires Class
A Shares. Class A Shares incur a sales charge when they are purchased and
enjoy the benefit of not being subject to any sales charge when they are
redeemed. Class A Shares are subject to an ongoing distribution services fee
at an annual rate of up to .30% of the Fund's aggregate average daily net
assets attributable to the Class A Shares. However, for the fiscal year 1996,
the Underwriter has voluntarily agreed to limit the distribution services fee
for Class A Shares to 0.25%. In addition, certain purchases of Class A Shares
qualify for reduced initial sales charges. See the Fund's current Prospectus.
Class B Shares
An investor who elects the deferred sales charge alternative acquires
Class B Shares. Class B Shares do not incur a sales charge when they are
purchased, but they are subject to a sales charge if they are redeemed within
five years of purchase. The deferred sales charge may be waived in connection
with certain qualifying redemptions. See the Fund's current Prospectus.
Class B Shares are subject to an ongoing distribution services fee at an
annual rate of up to 1.00% of the Fund's aggregate average daily net assets
attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment
is made. The higher ongoing distribution services fee paid by Class B Shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class
A Shares. Class B Shares will automatically convert to Class A Shares eight
years after the end of the calendar month in which the shareholder's order to
purchase was accepted, in the circumstances and subject to the qualifications
described in the Fund's Prospectus. The purpose of the conversion feature is
to relieve the holders of the Class B Shares that have been outstanding for a
period of time sufficient for the Underwriter to have been compensated for
distribution expenses related to the Class B Shares from most of the burden
of such distribution related expenses. See "Conversion Feature," on page 13.
The alternative purchase arrangement permits an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Series, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the
Series, the accumulated continuing distribution services fee and contingent
deferred sales charges on Class B Shares prior to conversion would be less
than the initial sales charge and accumulated distribution services fee on
Class A Shares purchased at the same time, and to what extent such
differential would be offset by the lower expenses attributable to Class A
Shares.
Class A Shares are subject to a lower distribution services fee and,
accordingly, pay correspondingly higher dividends, to the extent any
dividends are paid, per share. However, because initial sales charges are
deducted at the time of purchase, such investors would not have all their
funds invested initially and, therefore, would initially own fewer shares.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time might consider
purchasing Class A Shares because the accumulated continuing distribution
charges on Class B Shares may exceed the initial sales charge on Class A
Shares during the life of the investment. Again, however, such investors must
weigh this consideration against the fact that, because of such initial sales
charges, not all their funds will be invested initially. However, other
investors might determine that it would be more advantageous to purchase
Class B Shares to have all their funds invested initially, although remaining
subject to higher continuing distribution charges and, for a five-year
period, being subject to a contingent deferred sales charge.
The distribution expenses incurred by the Underwriter in connection with
the sale of the shares will be paid, in the case of Class A Shares, from the
proceeds of the initial sales charge and the ongoing distribution services
fee and, in the case of Class B Shares, from the proceeds of the ongoing
distribution services fee and the contingent deferred sales charge incurred
upon redemption within five years of purchase. Sales personnel of
broker-dealers distributing the Fund's shares may receive differing
compensation for selling Class A or Class B Shares. Investors should
understand that the purpose and function of the contingent deferred sales
charge and ongoing distribution services fee with respect to the Class B
Shares are the same as those of the initial sales charge and ongoing
distribution services fees with respect to the Class A Shares.
Dividends paid by the Series, if any, with respect to Class A and Class B
Shares will be calculated in the same manner at the same time on the same
day, except that the higher distribution services fee and any incremental
transfer agency costs relating to Class B Shares will be borne exclusively by
that class. See "Dividends, Distributions and Taxes."
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The Trustees of the Fund have determined that currently no conflict of
interest exists between the Class A and Class B Shares. On an ongoing basis,
the Trustees of the Fund, pursuant to their fiduciary duties under the 1940
Act and state laws, will seek to ensure that no such conflict arises.
Conversion Feature
Class B Shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period
ending eight years after the end of the month in which the shares were
issued. At the end of this period, Class B Shares will automatically convert
to Class A Shares and will no longer be subject to the higher distribution
services fee. Such conversion will be on the basis of the relative net asset
value of the two classes without the imposition of any sales load, fee or
other charge. The purpose of the conversion feature is to relieve the holders
of Class B Shares that have been outstanding for a period of time sufficient
for the Underwriter to have been compensated for distribution expenses
related to the Class B Shares from most of the burden of such
distribution-related expenses.
For purposes of conversion to Class A Shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares
in a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) convert to Class A, an equal pro rata
portion of the Class B Shares in the sub-account will also convert to Class A.
EXCHANGE PRIVILEGES
Subject to limitations, shareholders may exchange Class A or Class B
Shares held in book-entry form for shares of the same class of other Phoenix
Funds, provided the following conditions are met: (1) the shares that will be
acquired in the exchange (the "Acquired Shares") are available for sale in
the shareholder's state of residence; (2) the Acquired Shares are the same
class as the shares to be surrendered (the "Exchanged Shares"); (3) the
Acquired Shares will be registered to the same shareholder account as the
Exchanged Shares; (4) the account value of the Fund whose shares are to be
acquired must equal or exceed the minimum initial investment amount required
by that Fund after the exchange is implemented; and (5) if a shareholder has
elected not to utilize the Telephone Exchange Privilege (see below), a
properly executed exchange request must be received by Equity Planning. Other
restrictions affecting exchanges are described in the Prospectus of the
applicable Phoenix Fund(s).
Subject to the above requirements for an exchange, a shareholder or
his/her registered representative may, by telephone or written notice, elect
to have Class A or Class B Shares of the Fund exchanged for the same class of
shares of another Phoenix Fund automatically on a monthly, quarterly,
semi-annual or annual basis or may cancel the privilege ("Systematic
Exchange").
Shareholders who maintain an account balance in the Fund of at least
$5,000, or $2,000 for tax qualified retirement benefit plans (calculation on
the basis of the net asset value of the shares held in a single account), may
direct that shares of the Fund be automatically exchanged at predetermined
intervals for shares of the same class of another Phoenix Fund. If the
shareholder is participating in the Self Security program offered by Phoenix
Home Life, it is not necessary to maintain the above account balances in
order to use the Systematic Exchange privilege.
Such exchanges will be executed upon the close of business on the 10th of
a month and if the 10th falls on a holiday or weekend, then at the close of
business on the next succeeding business day. The minimum initial and
subsequent amount that may be exchanged under the Systematic Exchange is $25.
Systematic Exchange forms are available from Equity Planning.
Exchanges will be based upon each Fund's net asset value per share next
computed following receipt of a properly executed exchange request, without
sales charge. On Class B Share exchanges, the contingent deferred sales
charge schedule of the original shares purchased continues to apply.
The exchange of shares from one fund to another is treated as sale of the
Exchanged Shares and a purchase of the Acquired Shares for Federal income tax
purposes. The shareholder may, therefore, realize a taxable gain or loss. See
"Dividends, Distributions and Taxes" of the Prospectus for information
concerning the Federal income tax treatment of a disposition of shares. It is
the policy of the Adviser to discourage and prevent frequent trading by
shareholders among the Fund and other Phoenix Funds in response to market
fluctuations. The Fund reserves the right to terminate or modify its exchange
privileges at any time upon giving prominent notice to shareholders at least
60 days in advance.
Each Phoenix Fund has different investment objectives and policies.
Shareholders should, therefore, obtain and review the prospectus of the fund
into which the exchange is to be made before any exchange requests are made.
REDEMPTION OF SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended
and payment therefor postponed during periods when the New York Stock
Exchange is closed, other than customary weekend and holiday closings, or if
permitted by rules of the Securities and Exchange Commission, during periods
when trading on the Exchange is restricted or during any emergency which
makes it impracticable for the Fund to dispose of its securities or to
determine fairly the value of its net assets or during any other period
permitted by order of the Securities and Exchange Commission for the
protection of investors. Furthermore, the Transfer Agent will not mail
redemption proceeds until checks received for shares purchased have cleared,
which may take up to 15 days or more. See the Fund's current Prospectus for
further information.
13
<PAGE>
Redemptions by Class B shareholders will be subject to the applicable
deferred sales charge, if any.
Each shareholder account in the Fund which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the
giving of not less than 30 days written notice to the shareholder mailed to
the address of record. During the 60 day period the shareholder has the right
to add to the account to bring its value to $200 or more. See the Fund's
current Prospectus for more information.
Telephone Redemptions
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Fund's current Prospectus for
additional information.
Reinvestment Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinvestment of their investment at
net asset value. See the Fund's current Prospectus for more information and
conditions attached to this privilege.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Series is treated as a separate entity for federal income tax
purposes. Each Series intends to elect to be treated as a regulated
investment company ("RIC") and qualify annually as such under certain
provisions of the Internal Revenue Code (the "Code"). Under such provisions,
each Series 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, each Series must, among
other things, derive in each taxable year at least 90% of its gross income
from dividends, interest and gains from the sale or other disposition of
securities and derive less than 30% of its gross income each taxable year as
gains (without deduction for losses) from the sale or other disposition of
securities held for less than three months. If in any taxable year a Series
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 Series, if it does not distribute to its shareholders
during the calendar year an amount equal to 98% of the Fund's net ordinary
income, with certain adjustments, for such calendar year, plus 98% of the
Series' 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 calendar 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 a Series has
taxable income that would be subject to the excise tax, the Series 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 Series
to shareholders of record in October, November and December of any year will
be deemed to have been received by, and will be taxable to shareholders as of
December 31 of such year, provided that the dividend is actually paid by a
Series before February 1, of the following year.
The Fund's policy is to distribute to its shareholders all or
substantially all investment company taxable income as defined in the Code
and any net realized capital gains for each year and consistent therewith to
meet the distribution requirements of Part I of subchapter M of the Code.
Each Series intends to meet the other requirements of Part I of subchapter M,
including the requirements with respect to diversification of assets and
sources of income, so that each Series will pay no taxes on net investment
income and net realized capital gains distributed to shareholders. One of
these requirements as stated above is that less than 30% of a Series' gross
income must be derived from gains from the sale or other disposition of
securities and certain assets (including certain options) held for less than
three months. Accordingly, the Series may be restricted in certain
activities, including: (i) writing of options on securities which have been
held less than three months, (ii) writing of options which expire in less
than three months, and (iii) effecting closing purchase transactions with
respect to options which have been written less than three months prior to
such transactions.
Under certain circumstances, the sales charge incurred in acquiring shares
of a Series may not be taken into account in determining the gain or loss on
the disposition of those shares. This rule applies where shares of a Series
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 tax basis of the
shares disposed of all or a portion of the sales charge incurred in acquiring
those shares. This exclusion applies to the extent that the otherwise
applicable sales charge with respect to the newly acquired shares is reduced
as a result of the shareholder having incurred a sales charge initially. The
portion of the sales charge affected by this rule will be treated as a sales
charge paid for the new shares.
Distributions by a Series reduce the net asset value of the Series shares.
Should a distribution reduce the net asset value of a share below a
shareholder's cost for the shares, such a distribution nevertheless generally
would be taxable to the shareholder
14
<PAGE>
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 a Series. 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.
Transactions in options on stock indices are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by a Series
during a taxable year or held by a Series at the close of its taxable year,
will be treated as if sold for their market value, with 40% of any resulting
gain or loss treated as short-term and 60% long-term.
A high portfolio turnover rate may result in the realization of larger
amounts of short-term gains, which are taxable to shareholders as ordinary
income.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS Regulations, the Funds may be required to withhold 31% of
all reportable payments including any taxable dividends, capital gains
distributions or share redemption proceeds, for an account which does not
have a taxpayer identification number or social security number and certain
required certifications. The Fund reserves the right to refuse to open an
account for any person failing to provide a taxpayer identification number
along with the required certifications.
Each Series will furnish its shareholders, within 31 days after the end of
the calendar year, with information which is required by the Internal Revenue
Service for preparing income tax returns.
Investors are urged to consult their attorney or tax adviser regarding
specific questions as to Federal, foreign, state or local taxes.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund and other Phoenix Funds may be offered in connection
with employer-sponsored 401(k) plans. National and PIC and their affiliates
may provide administrative services to these plans and to their participants,
in addition to the services that National and PIC and their affiliates
provide to the Phoenix Funds, and may receive compensation therefor. For
information on the terms and conditions applicable to employee participation
in such plans, including information on applicable plan administrative
charges and expenses, prospective investors should consult the plan
documentation and employee enrollment information which is available from
participating employers.
THE DISTRIBUTOR
Pursuant to an Underwriting Agreement with the Fund, Phoenix Equity
Planning Corporation (the "Underwriter"), an indirect, less than wholly-owned
subsidiary of Phoenix Home Life and an affiliate of National, serves as
underwriter for the Fund. The address of the Underwriter is 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200. As such, the
Underwriter conducts a continuous offering pursuant to a "best efforts"
arrangement requiring the Underwriter to take and pay for only such
securities as may be sold to the public. During the fiscal years 1994, 1995
and 1996, purchasers of the Fund shares paid aggregate sales charges of
$38,910, $30,721 and $1,825,565, respectively, of which the principal
Underwriter for the Fund received net commissions of $5,120, $9,792 and
$206,540, respectively, for its services, the balance being paid to dealers.
The fees were used to compensate sales and services person for sell shares of
the Fund and for providing services to shareholders. In addition, the fees
were used to compensate the Underwriter for sales and promotional activities.
The Underwriting Agreement may be terminated at any time on not more than
60 days written notice, without payment of a penalty, by the Underwriter, by
vote of a majority of the outstanding voting securities of the Fund, or by
vote of a majority of the Fund's Trustees who are not "interested persons" of
the Fund and who have no direct or indirect financial interest in the
operation of the Distribution Plan or in any related agreements. The
Underwriting Agreement will terminate automatically in the event of its
assignment.
Dealers with whom the Underwriter has entered into sales agreements
receive sales charges in accordance with the commission table set forth in
the Prospectus. The Underwriter may from time to time pay, from its own
resources or pursuant to the Plan of Distribution described below, a bonus or
other incentive to dealers (other than the Underwriter) which employ a
registered representative who sells a minimum dollar amount of the shares of
the Fund during a specific period of time. Such bonus or other incentive may
take the form of payment for travel expenses, including lodging, incurred in
connection with trips taken by qualifying registered representatives and
members of their families to places within or without the United States or
other bonuses such as gift certificates or the cash equivalent of such
bonuses. The Underwriter may, from time to time, reallow the entire portion
of the sales charge which it normally retains to individual selling dealers.
However, such additional reallowance generally will be made only when the
selling dealer commits to substantial marketing support such as internal
wholesaling through dedicated personnel, internal communications and mass
mailings.
PLANS OF DISTRIBUTION
The Fund has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each class of shares of each Series of the Fund (the "Class A
Plan", the "Class B Plan", and collectively the "Plans"). The Plans permit
the Fund to reimburse the
15
<PAGE>
Underwriter for expenses incurred in connection with activities intended to
promote the sale of shares of each class of shares of the Fund. For fiscal
year 1996, the Underwriter has voluntarily agreed to limit the Rule 12b-1 fee
for Class A Shares to 0.25%.
Pursuant to the Class A Plan, the Fund may reimburse the Underwriter for
actual expenses of the Underwriter up to .30% of the average daily net assets
of the Fund's Class A Shares. Under the Class B Plan, the Fund may reimburse
the Underwriter monthly for actual expense of the Underwriter up to 1.00% of
the average daily net assets of the Fund's Class B Shares. Expenditures under
the Plans shall consist of: (i) commissions to sales personnel for selling
shares of the Fund (including underwriting fees and financing expenses
incurred in connection with the sale of Class B Shares); (ii) compensation,
sales incentives and payments to sales, marketing and service personnel;
(iii) payments to broker-dealers and other financial institutions which have
entered into agreements with the Underwriter in the form of the Dealer
Agreement for Phoenix Funds for services rendered in connection with the sale
and distribution of shares of the Fund; (iv) payment of expenses incurred in
sales and promotional activities, including advertising expenditures related
to the Fund; (v) the costs of preparing and distributing promotional
materials; (vi) the cost of printing the Fund's Prospectus and Statement of
Additional Information for distribution to potential investors; and (vii)
such other similar services that the Trustees of the Fund determine are
reasonably calculated to result in the sale of shares of the Fund; provided
however, a portion of such amount paid to the Distributor, which portion
shall be equal to or less than 0.25% annually of the average daily net assets
of the Fund shares may be paid for reimbursing the costs of providing
services to the shareholders, including assistance in connection with
inquiries related to shareholder accounts (the "Service Fee").
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Underwriter,
such as services to the Fund's shareholders; or services providing the Fund
with more efficient methods of offering shares to coherent groups of clients,
members or prospects of a participant; or services permitting bulking of
purchases or sales, or transmission of such purchases or sales by
computerized tape or other electronic equipment; or other processing.
The fee received by the Underwriter under the early years of the Plans is
not likely to reimburse the Underwriter for the total distribution expenses
it will actually incur as a result of the Fund having fewer assets and the
Underwriter incurring greater promotional expenses during the start-up phase.
No amounts paid or payable by the Fund under the Plan for Class A Shares may
be used to pay for, or reimburse payment for, sales or promotional services
or activities unless such payment or reimbursement takes place prior to the
earliest of (a) the last day of the one year period commencing on the last
day of the calendar quarter during which the specific service or activity was
performed, or (b) the last day of the one year period commencing on the last
day of the calendar quarter during which payment for the services or activity
was made by a third party on behalf of the Fund. The Class B Plan, however,
does not limit the reimbursement of distribution related expenses to expenses
incurred in specified time periods. If the Plans are terminated in accordance
with their terms, the obligations of the Fund to make payments to the
Underwriter pursuant to the Plans will cease and the Fund will not be
required to make any payments past the date on which each Plan terminates.
For the fiscal year ended April 30, 1996, the Fund paid Rule 12b-1 Fees in
the amount of $670,453, of which the principal underwriter received $337,972
and unaffiliated broker-dealers received $332,481. Of this amount: (1) $585,802
represented compensation to dealers; (2) $67,164 represented compensation to
sales and shareholder services personnel and (3) $17,487 was utilized for
compensation for marketing material.
On a quarterly basis, the Fund's Trustees review a report on expenditures
under the Plans and the purposes for which expenditures were made. The
Trustees conduct an additional, more extensive review annually in determining
whether the Plans will be continued. By its terms, continuation of the Plans
from year to year is contingent on annual approval by a majority of the
Fund's Trustees and by a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the Plans or any related agreements
(the "Plan Trustees"). The Plans provide that they may not be amended to
increase materially the costs which the Fund may bear pursuant to the Plans
without approval of the shareholders of the Fund and that other material
amendments to the Plans must be approved by a majority of the Plan Trustees
by vote cast in person at a meeting called for the purpose of considering
such amendments. The Plans further provides that while it is in effect, the
selection and nomination of Trustees who are not "interested persons" shall
be committed to the discretion of the Trustees who are not "interested
persons". The Plans may be terminated at any time by vote of a majority of
the Plan Trustees or a majority of the outstanding shares of the Fund.
The National Association of Securities Dealers (the "NASD"), recently
approved certain amendments to the NASD's mutual fund maximum sales charge
rule. The amendments would, under certain circumstances, regard distribution
fees to be asset-based sales charges subject to NASD sales load limits. An
amendment to the NASD's maximum sales charge rule may require the Trustees to
amend the Plan.
16
<PAGE>
TRUSTEES AND OFFICERS
The Trustees and Officers of the Fund and their business affiliations for
the past five years are set forth below and, unless otherwise noted, the
address of each executive officer and Trustee is 56 Prospect Street,
Hartford, Connecticut, 06115-0480. On November 15, 1995, the Trustees voted
to increase the number of Trustees to fourteen and to appoint Francis E.
Jeffries, Everett L. Morris and Calvin J. Pedersen to fill the vacancies
caused by the increase. The elected and appointed Trustees and executive
officers are listed below:
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- --------------- -----------------------------------------------------------
<S> <C> <C>
C. Duane Blinn (68) Trustee Partner in the law firm of Day, Berry & Howard.
Day, Berry & Howard Director/Trustee, Phoenix Funds (1980-present). Trustee,
CityPlace Phoenix Duff & Phelps Institutional Mutual Funds
Hartford, CT 06103 (1996-present). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Robert Chesek (62) Trustee Trustee/Director, Phoenix Funds (1981-present) and Chairman
49 Old Post Road (1989-1994). Director/Trustee, the National Affiliated
Wethersfield, CT 06109 Investment Companies (until 1993). Vice President, Common
Stock, Phoenix Home Life Mutual Insurance Company
(1980-1994). Trustee, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present).
E. Virgil Conway (67) Trustee Trustee/Director, Consolidated Edison Company of New York,
9 Rittenhouse Road Inc. (1970-present), Pace University (1978-present),
Bronxville, NY 10708 Atlantic Mutual Insurance Company (1974-present), HRE
Properties (1989-present), Greater New York Councils, Boy
Scouts of America (1985-present), Union Pacific Corp.
(1978-present), Blackrock Fund for Fannie Mae Mortgage
Securities (Advisory Director) (1989-present), Blackrock
Fund for Freddie Mac Mortgage Securities (Advisory
Director) (1990-present), Centennial Insurance Company
(1974-present), Josiah Macy, Jr., Foundation
(1975-present), and The Harlem Youth Development Foundation
(1987-present). Chairman, Metropolitan Transportation
Authority (1992-present). Chairman, Audit Committee of the
City of New York (1981-present). Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Director/ Trustee, Phoenix Funds (1993-present). Trustee,
Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free
Income Inc. and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1995-present). Director, Accuhealth
(1994-present), Trism, Inc. (1994-present), Realty
Foundation of New York (1972-present) and Chairman, New
York Housing Partnership Development Corp. (1981-present).
Advisory Director, Fund Directions (1993-present).
Harry Dalzell-Payne (67) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
330 East 39th Street Phoenix Duff & Phelps Institutional Mutual Funds
Apartment 29G (1996-present). Director, Farragut Mortgage Co., Inc.
New York, NY 10022 (1991-1994). Director/Trustee, the National Affiliated
Investment Companies (1983-1993). Formerly a Major General
of the British Army.
17
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- --------------- -----------------------------------------------------------
*Francis E. Jeffries (65) Trustee Director and Chairman of the Board, Phoenix Duff & Phelps
Phoenix Duff & Phelps Corporation (1995-present). Director/Trustee, Phoenix Funds
Corporation (1995-present). Trustee, Phoenix Duff & Phelps
55 East Monroe Street Institutional Mutual Funds (1996-present), Director, Duff &
Suite 3600 Phelps Utilities Income Fund (1987-present), Duff & Phelps
Chicago, IL 60603 Utilities Tax-Free Income Inc. (1991-present), Duff &
Phelps Utility and Corporate Bond Trust, Inc.
(1993-present) and The Empire District Electric Company
(1984-present). Director (1989-1995), Chairman of the Board
(1993-1995), President (1989-1993), and Chief Executive
Officer (1989-1995), Duff & Phelps Corporation.
Leroy Keith, Jr. (57) Trustee Chairman and Chief Executive Officer, Carson Products
Chairman and Chief Executive Company (1995-present). Director/Trustee, Phoenix Funds
Officer (1980-present). Trustee, Phoenix Duff & Phelps
Carson Products Company Institutional Mutual Funds (1996-present). Director,
64 Ross Road Equifax Corp. (1991-present), and Keystone International
Savannah, GA 31405 Fund, Inc. (1989-present). Trustee, Keystone Liquid Trust,
Keystone Tax Exempt Trust, Keystone Tax Free Fund, Master
Reserves Tax Free Trust, and Master Reserves Trust.
Director/Trustee, the National Affiliated Investment
Companies (until 1993). Director, Blue Cross/Blue Shield
(1989-1993) and First Union Bank of Georgia (1989-1993).
President, Morehouse College (1987-1994). Chairman and
Chief Executive Officer, Keith Ventures (1992-1995).
*Philip R. McLoughlin (49) Trustee and Director, Vice Chairman and Chief Executive Officer,
One American Row President Phoenix Duff & Phelps Corporation (1995-present). Director
Hartford, CT 06102 (1994-present) and Executive Vice President, Investments
(1987-present), Phoenix Home Life Mutual Insurance Company.
Director/Trustee and President, Phoenix Funds
(1989-present). President and Trustee, Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present). Director
(1983-present) and Chairman (1995-present), Phoenix
Investment Counsel, Inc. Director (1984-present) and
President (1990-present), Phoenix Equity Planning
Corporation. Director, Phoenix Realty Group, Inc.
(1994-present), Phoenix Realty Advisors, Inc.
(1987-present), Phoenix Realty Investors, Inc.
(1994-present), Phoenix Realty Securities, Inc.
(1994-present), Phoenix Founders, Inc. (1981-present), PXRE
Corporation (Delaware) (1985-present), World Trust Fund
(1991-present). Director/Trustee, the National Affiliated
Investment Companies (until 1993). Director (1994-present),
Chairman (1993-1995), President and Chief Executive
Officer, (1995-present), National Securities & Research
Corporation (1993-present), and Director and President,
Phoenix Securities Group, Inc. (1993-1995). Director
(1992-present) and President (1992-1994), W.S. Griffith &
Co., Inc. and Director (1992-1995) and President
(1992-1994) Townsend Financial Advisers, Inc. Director and
Vice President, PM Holdings, Inc. (1985-present).
18
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- --------------- -----------------------------------------------------------
Everett L. Morris (68) Trustee Vice President, W.H. Reaves and Company
164 Laird Road (1993-present). Director/Trustee, Phoenix Funds
Colts Neck, N.J. 07722 (1995-present). Trustee, Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present), and Trustee,
Duff & Phelps Mutual Funds (1994-present), Director, Duff &
Phelps Utilities Tax-Free Income Inc. (1991-present), Duff
& Phelps Utility and Corporate Bond Trust Inc.
(1993-present), and Public Service Enterprise Group,
Incorporated (1986-1993). President and Chief Operating
Officer, Enterprise Diversified Holdings Incorporated
(1989-1993). Senior Executive Vice President and Chief
Financial Officer, Public Service Electric and Gas Company
(1986-1992). Director, First Fidelity Bank, N.A., N.J.
(1984-1991).
James M. Oates (50) Trustee Director, Phoenix Duff & Phelps Corporation (1995-present).
Managing Director Director/Trustee, Phoenix Funds (1987-present). Trustee,
The Wydown Group Phoenix Duff & Phelps Institutional Mutual Funds
50 Congress Street (1996-present). Director, Govett Worldwide Opportunity
Suite 1000 Funds, Inc. (1991-present), Blue Cross and Blue Shield of
Boston, MA 02109 New Hampshire (1994-present), Investors Financial Services
Corporaton (1995-present), Investors Bank & Trust
Corporation (1995-present) and Plymouth Rubber Co.
(1995-present). Director/Trustee, the National Affiliated
Investment Companies (until 1993). Director and President
(1984-1994) and Chief Executive Officer (1986-1994),
Neworld Bank.
*Calvin J. Pedersen (54) Trustee Director and President, Phoenix Duff & Phelps Corporation
Phoenix Duff & Phelps (1995-present). Director/Trustee, Phoenix Funds
Corporation (1995-present). Trustee, Phoenix Duff & Phelps
55 East Monroe Street Institutional Mutual Funds (1996-present). President and
Suite 3600 Chief Executive Officer, Duff & Phelps Utilities Tax-Free
Chicago, IL 60603 Income Inc. (1995-present), Duff & Phelps Utilities Income
Fund (1995-present), and Duff & Phelps Utility and
Corporate Bond Trust Inc. (1995-present). Trustee, Chairman
and Chief Executive Officer, Phoenix Duff & Phelps Mutual
Funds (since inception). Director (1986-1995), President
(1993-1995) and Executive Vice President (1992-1993), Duff
& Phelps Corporation.
Philip R. Reynolds (69) Trustee Director/Trustee, Phoenix Funds (1984-present). Trustee,
43 Montclair Drive Phoenix Duff & Phelps Institutional Mutual Funds
West Hartford, CT 06107 (1996-present). Director, Vestaur Securities, Inc.
(1972-present). Trustee and Treasurer, J. Walton Bissell
Foundation, Inc. (1988-present). Director/ Trustee, the
National Affiliated Investment Companies (until 1993).
19
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- --------------- -----------------------------------------------------------
Herbert Roth, Jr. (67) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix Duff & Phelps Institutional Mutual Funds
P.O. Box 909 (1996-present). Director, Boston Edison Company
Sherborn, MA 01770 (1978-present), Phoenix Home Life Mutual Insurance Company
(1972-present), Landauer, Inc. (medical services)
(1970-present), Tech Ops./Sevcon, Inc. (electronic
controllers) (1987-present), Key Energy Group (oil rig
service) (1988-1993), and Mark IV Industries (diversified
manufacturer) (1985-present). Director/Trustee, the
National Affiliated Investment Companies (until 1993).
Richard E. Segerson (50) Trustee Director/Trustee, Phoenix Funds, (1993-present). Trustee,
102 Valley Road Phoenix Duff & Phelps Institutional Mutual Funds
New Canaan, CT 06840 (1996-present). Managing Director, Mullin Associates
(1993-present). Vice President and General Manager, Coats &
Clark, Inc. (previously Tootal American, Inc.) (1991-1993).
Director/Trustee, the National Affiliated Investment
Companies (1984-1993).
Lowell P. Weicker, Jr. (65) Trustee Trustee/Director, the Phoenix Funds (1995-present).
Dresing Lierman Weicker Trustee, Phoenix Duff & Phelps Institutional Mutual Funds
6931 Arlington Road (1996-present). Chairman, Dresing, Lierman, Weicker
Suite 501 (1995-present). Director, UST Inc. (1995-present) and HPSC,
Bethesda, MD 20814 Inc. (1995-present). Governor of the State of Connecticut
(1991-1995).
Michael E. Haylon (38) Executive Vice Executive Vice President--Investments, Phoenix Duff &
President Phelps Corporation (1995-present). Executive Vice
President, Phoenix Funds (1993-present). Director
(1994-present) and President (1995-present), Executive Vice
President (1994-1995), Vice President (1991-1994), Phoenix
Investment Counsel, Inc. Director and Executive Vice
President (1994-present), Vice President (1993-1994),
National Securities & Research Corporation. Director,
Phoenix Equity Planning Corporation (1995-present). Vice
President, Phoenix Duff & Phelps Institutional Mutual Funds
(1996-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).
David R. Pepin (52) Executive Vice Executive Vice President, Phoenix Funds (1996-present).
President Executive Vice President and General Manager, Mutual Fund
Marketing and Operations, Phoenix Duff & Phelps Corporation
(1995-present). Managing Director, Phoenix-Aberdeen
International Advisors, LLC (1996-present). Director and
Executive Vice President, Phoenix Investment Counsel, Inc.
and Phoenix Equity Planning Corp. (1996-present). Various
positions with Phoenix Home Life Mutual Insurance Company
(1994-1995). Vice President and General Manager, Finance
and Health, Digital Equipment Corporation (1980-1994).
20
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- --------------- -----------------------------------------------------------
William J. Newman (57) Senior Vice Executive Vice President, Phoenix Investment Counsel, Inc.
President (1995-present). Senior Vice President, National Securities
& Research Corporation (1995-present), Phoenix Equity
Planning Corporation (1995-present), The Phoenix Edge
Series Fund (1995-present), Phoenix Multi-Portfolio Fund
(1995-present), Phoenix Income and Growth Fund
(1996-present), Phoenix Series Fund (1996-present), Phoenix
Total Return Fund, Inc. (1996-present) and Phoenix
Worldwide Opportunities Fund (1996-present). Vice
President, Common Stock and Chief Investment Strategist,
Phoenix Home Life Mutual Insurance Company (1995). Chief
Investment Strategist, Kidder, Peabody Co., Inc.
(1993-1994). Managing Director, Equities, Bankers Trust
Company (1991-1993).
Michael K. Arends (42) Vice President Vice President, Phoenix Investment Counsel, Inc., Phoenix
Series Fund, and National Securities & Research Corporation
(1994-present). Portfolio Manager, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions with
Kemper Financial Services (1983-1994).
James M. Dolan (47) Vice President Vice President and Compliance Officer (1994-present), and
100 Bright Meadow Blvd. Assistant Secretary (1981-present), Phoenix Equity Planning
P.O. Box 2200 Corporation. Vice President, Phoenix Funds (1989-present)
Enfield, CT 06083-2200 and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Vice President (1991-present), Assistant
Clerk and Assistant Secretary (1982-present), Phoenix
Investment Counsel, Inc., Vice President and Chief
Compliance Officer (1994-present), Phoenix Realty Advisors,
Inc. and Chief Compliance Officer (1995-present), Phoenix
Realty Securities, Inc. Assistant Vice President
(1993-1994), Vice President and Compliance Officer,
Assistant Secretary, National Securities & Research
Corporation (1994-present). Vice President, the National
Affiliated Investment Companies (until 1993). Various other
positions with Phoenix Equity Planning Corporation
(1978-1994).
21
<PAGE>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- --------------- -----------------------------------------------------------
William R. Moyer (52) Vice President Senior Vice President and Chief Financial Officer, Phoenix
100 Bright Meadow Blvd. Duff & Phelps Corporation (1995-present). Senior Vice
P.O. Box 2200 President, Finance (1990-present), and Treasurer
Enfield, CT 06083-2200 (1994-present), Phoenix Equity Planning Corporation and
Phoenix Investment Counsel, Inc. Vice President, Phoenix
Funds (1990-present). Vice President, the National
Affiliated Investment Companies (until 1993). Senior Vice
President, Finance, Phoenix Securities Group, Inc.
(1993-1995). Senior Vice President, Finance (1993-present),
and Treasurer (1994-present) National Securities & Research
Corporation. Senior Vice President and Chief Financial
Officer (1993-1995) and Treasurer (1994-1995), W.S.
Griffith & Co., Inc. and Townsend Financial Advisers, Inc.
Vice President, Investment Products Finance, Phoenix Home
Life Mutual Insurance Company (1990-1995).
Leonard J. Saltiel (42) Vice President Senior Vice President, Phoenix Equity Planning Corporation
(1994-present). Vice President, Phoenix Funds
(1994-present), National Securities & Research Corporation
(1994-present), and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Vice President, Investment
Operations, Phoenix Home Life Mutual Insurance Company
(1994-1995). Various positions with Home Life Insurance
Company and Phoenix Home Life Mutual Insurance Company
(1987-1994).
G. Jeffrey Bohne (48) Secretary Vice President, Transfer Agent Operations, Phoenix Equity
101 Munson Street Planning Corporation (1993-present). Secretary, the Phoenix
Greenfield, MA 01301 Funds (1993-present). Clerk, Phoenix Total Return Fund,
Inc. (1994-present), Phoenix Investment Counsel, Inc.
(1995-present), Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present). Vice President and General Manager,
Phoenix Home Life Mutual Insurance Co. (1993-1995). Vice
President, Home Life of New York Insurance Company
(1984-1992).
Nancy G. Curtiss (43) Treasurer Treasurer, Phoenix Funds (1994-present) and Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present). Vice
President, Fund Accounting, Phoenix Equity Planning
Corporation (1994-present). Second Vice President and
Treasurer, Fund Accounting, Phoenix Home Life Mutual
Insurance Company (1994-1995).Various positions with
Phoenix Home Life Mutual Insurance Company (1987-1994).
</TABLE>
*Indicates that the Trustee is an "interested person" of the Trust within the
meaning of the definition set forth in Section 2(a)(19) of the Investment
Company Act of 1940.
For services rendered to the Fund for the fiscal year ended April 30,
1996, the Trustees received aggregate remuneration of $31,275 For services on
the Boards of Directors/Trustees of the Phoenix Funds, each Trustee who is
not a full-time employee of the Adviser or any of its affiliates currently
receives a retainer at the annual rate of $36,000 and a fee of $2,000 per
joint meeting of the Boards. Each Trustee who serves on the Audit Committee
receives a retainer at the annual rate of $2,000 and a fee of $2,000 per
joint Audit Committee meeting attended. Each Trustee who serves on the
Nominating Committee receives a retainer at the annual rate of $1,000 and a
fee of $1,000 per joint Nominating Committee meeting attended. 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 $1,000 and $1,000 per
joint Executive Committee meeting attended.
22
<PAGE>
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 interested
Trustees of the Fund are compensated for their services by the Adviser and
receive no compensation from the Fund.
For the Fund's last fiscal year, the Trustees and Advisory Board 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 (10 Funds)
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
----------------------- ----------- -------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
C. Duane Blinn $2,850 $50,250
Robert Chesek $2,745 $45,750
E. Virgil Conway $3,360 $67,750
Harry Dalzell-Payne $2,790 $47,250
Francis E. Jeffries $ 0 $ 0
Leroy Keith, Jr. $2,730 None None $45,250
Philip R. McLoughlin $ 0 for any for any $ 0
Everett L. Moriss $ 990 Trustee/Advisory Trustee/Advisory $40,750
James M. Oates $3,210 Board member Board member $54,250
Calvin J. Pedersen $ 0 $ 0
Philip R. Reynolds $2,790 $47,250
Herbert Roth, Jr. $3,540 $59,250
Richard E. Segerson $3,210 $54,250
Lowell Weicker, Jr. $3,060 $49,250
</TABLE>
*This compensation (and the earnings thereon) was deferred pursuant to the
Trustees' Deferred Compensation Plan.
On April 30, 1996, the Trustees and officers of the Fund beneficially
owned less than 1% of the outstanding shares of the Fund.
OTHER INFORMATION
Independent Accountants
Price Waterhouse LLP serves as independent accountants for the Fund (the
"Accountants"). The Accountants audit the annual financial statements and
express their opinion on them.
Custodian and Transfer Agent
State Street Bank and Trust Company ("State Street"), serves as custodian
of the Fund's assets (the "Custodian") and Equity Planning acts as Transfer
Agent for the Fund (the "Transfer Agent").
Reports to Shareholders
The fiscal year of the Fund ends on April 30th. The Fund will send
financial statements to its shareholders at least semi-annually. An annual
report, containing financial statements, audited by independent accountants,
will be sent to shareholders each year, and is available without charge upon
request.
Financial Statements
The Financial Statements for the fiscal year ended April 30, 1996
appearing in the Fund's 1996 Annual Report to Shareholders, are incorporated
herein by reference.
23
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
INVESTMENTS AT APRIL 30, 1996
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
-------- ------- -------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--8.5%
U.S. Treasury Notes--5.1%
U.S. Treasury Notes 7.375%, '97 AAA $ 5,000 $ 5,100,900
U.S. Treasury Notes 5.25%, '98 AAA 5,000 4,910,350
U.S. Treasury Notes 5%, '99 AAA 19,700 19,109,000
U.S. Treasury Notes 6.375%, '01 AAA 10,000 9,970,100
U.S. Treasury Notes
5.625%, '06(h) AAA 6,700 6,210,063
U.S. Treasury Notes 6%, '26 AAA 100 88,906
----------
45,389,319
----------
Agency Mortgage-Backed Securities--3.4%
GNMA 6.50%, '23-'24 AAA 32,334 30,313,648
----------
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $76,959,686) 75,702,967
----------
MUNICIPAL BONDS--2.4%
Alabama--0.1%
Alabama Agriculture/Mechanical
Univ. 5.50%, '20 AAA 800 755,832
----------
California--1.9%
Kern County Pension Oblig.
Taxable 7.26%, '14 AAA 4,350 4,144,071
Long Beach Pension
Oblig. Taxable 6.87%, '06 AAA 3,000 2,903,850
Sacramento County 95-A
Taxable 6.625%, '06 AAA 3,400 3,245,912
San Bernardino County Oblig.
Rev Tax 6.87%, '08 AAA 1,335 1,281,333
San Bernardino County Oblig.
Rev. Tax 6.94%, '09 AAA 3,625 3,479,021
Ventura County Pension
Taxable 6.54%, '05 AAA 2,200 2,100,208
----------
17,154,395
----------
Michigan--0.2%
Michigan Public Power Agency
Sinker 5.25%, '18 AAA 2,060 1,875,939
----------
South Carolina--0.2%
South Carolina Public Service
Series C 5%, '25 AAA 2,000 1,727,680
----------
TOTAL MUNICIPAL BONDS
(Identified cost $22,436,545) 21,513,846
----------
CONVERTIBLE BONDS--12.6%
Airlines--0.3%
Continental Airlines Cv. 144A
6.75%, '06 (b) CCC 2,000 2,202,500
----------
Conglomerates--1.6%
Hanson America, Inc. Cv. 144A
2.39%, '01 (b) A+ 18,200 14,423,500
----------
Electrical Equipment--0.5%
General Signal Corp. Cv.
5.75%, '02 A- 4,000 4,270,000
----------
Entertainment, Leisure & Gaming--2.8%
Comcast Corp. Cv. 1.125%, '07 B+ $ 19,650 $ 9,481,125
Comcast Corp. Cv. SIRENS 3.375%,
'05 (e) B+ 7,500 6,862,500
IMAX Corp. Cv. 144A 5.75%, '03
(b) B- 2,000 1,985,000
Time Warner, Inc. Cv. 0%, '13 BBB- 7,500 3,150,000
Turner Broadcasting Cv. 144A 0%,
'07 (b) BB- 8,000 3,830,000
----------
25,308,625
----------
Food--1.4%
Grand Metropolitan PLC Cv. 144A
6.50%, '00 (b) A+ 10,750 12,201,250
----------
Healthcare--Diversified--0.6%
Roche Holdings, Inc. Cv. 144A 0%,
'10 (b) NR 4,000 1,765,000
Sandoz Capital BVI LTD Cv. 144A
2%, '02 (b) NR 3,500 3,736,250
----------
5,501,250
----------
Healthcare--Drugs--0.3%
Chiron Corp. Cv. 144A
1.90%, '00 (b) BBB+ 2,500 2,375,000
---------
Hospital Management & Services--0.3%
PHP Healthcare Cv. 144A 6.50%,
'02 (b) B- 500 649,375
Tenet Healthcare Cv. 6%, '05 B+ 1,500 1,627,500
----------
2,276,875
----------
Insurance--0.1%
Chubb Corp. Cv. 6%, '98 AA 1,000 1,160,000
----------
Metals & Mining--0.5%
Molten Metal Technology Cv. 144A
5.50%, '06 (b) NR 4,750 4,850,937
----------
Natural Gas--1.3%
Apache Corp. Cv. 144A 6%, '02 (b) BBB- 4,000 4,455,000
Consolidated Natural Gas Co. Cv.
7.25%, '15 A+ 5,300 5,545,125
Cross Timbers Cv. 5.25%, '03 B 1,750 1,721,563
----------
11,721,688
----------
Office & Business Equipment--0.5%
Conner Peripherals
Cv. 6.50%, '02 BB+ 4,000 4,505,000
----------
Oil--0.6%
Pogo Producing Co. Cv. 5.50%, '04 B 3,000 5,100,000
----------
REITS--0.9%
Health Care Property, Inc. Cv.
144A 6%, '00 (b) BBB 1,500 1,462,500
Liberty Property Trust Cv. 8%,
'01 B(d) 6,000 6,270,000
----------
7,732,500
----------
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
-------- ------- -------------
<S> <C> <C> <C>
Retail--Drug--0.5%
Rite Aid Corp. Cv. 0%, '06 BBB+ $ 8,500 $ 4,483,750
-----------
Telecommunications Equipment--0.4%
BBN Corp. Cv. 6%, '12 B(d) 1,650 1,773,750
United Communications Cv. 144A
2.75%, '06 (b) NR 2,000 2,025,000
-----------
3,798,750
-----------
TOTAL CONVERTIBLE BONDS
(Identified cost $109,780,584) 111,911,625
-----------
NON-CONVERTIBLE BONDS--15.3%
Auto & Truck Parts--0.5%
American Car Line Equipment
8.25%, '08 BBB- 3,994 4,150,884
-----------
Chemical--Specialty--0.3%
Borden Chemical & Plastics 9.50%,
'05 BB+ 3,000 3,022,500
-----------
Entertainment, Leisure & Gaming--1.4%
Turner Broadcasting 8.375%, '13 BB+ 3,000 2,934,180
Viacom International, 8%, '06 BB- 10,000 9,325,000
-----------
12,259,180
-----------
Hospital Management & Services--0.6%
Tenet Healthcare
Corp. 9.625%, '02 B+ 5,000 5,362,500
-----------
Lodging & Restaurants--0.6%
Host Marriott Travel Plaza, Inc.
9.50%, '05 BB- 5,000 4,862,500
-----------
Natural Gas--0.5%
Coastal Corp. 8.125%, '02 BB+ 4,000 4,177,480
-----------
Non-Agency Mortgage Backed--7.7%
Airplanes Pass Through Trust 1D
10.875%, '19 BB 1,400 1,459,500
G.E. Capital Mortgage Serv. 94-9,
M 6.50%, '24 AA 11,739 10,447,667
G.E. Capital Mortgage Serv. 96-8,
M 7.25%, '26 (g) AA 500 472,500
Green Tree Financial Corp. 96-2
M1 7.60%, '27 AA- 3,325 3,242,914
Green Tree Financial Corp. 96-3,
B1 7.70%, '27 BBB+ 2,500 2,474,219
Merrill Lynch Mortgage Inv. 96-C1
B 7.42%, '28 AA 1,910 1,867,920
Prudential Home Mortgage 94-15, M
6.80%, '24 Aa(d) 8,562 7,770,198
Residential Funding Mtg. 96-S1, L
7.10%, '26 AAA 2,800 2,612,750
Residential Funding Mtg. 96-S4,
M1 7.25%, '26 AA 2,996 2,833,048
Resolution Trust Corp. 92-C8, D
8.835%, '23 BBB- 7,752 7,815,396
Resolution Trust Corp. 94-C2, C
8%, '25 A 7,650 7,671,516
Resolution Trust Corp. 94-C1, D
8%, '26 BBB 1,591 1,570,652
Resolution Trust Corp. 95-C2, B
6.80%, '27 Aa(d) $ 6,116 $ 5,854,502
SASC 95-C1 C 7.375%, '24 A 2,500 2,401,562
SASC 95-C4, B 7%, '26 AA 5,198 4,976,803
SASC 96-CFL, C 6.525%, '28 A 1,430 1,361,181
Securitized Asset Sales, Inc.,
93-J 2B 6.8076%, '23 A(d) 4,470 4,106,588
-----------
68,938,916
-----------
Oil--0.3%
Petropower Funding 144A 7.36%,
'14 (b) BBB 2,400 2,244,648
-----------
Paper & Forest Products--0.5%
Buckeye Cellulose 8.50%, '05 BB- 5,000 4,837,500
-----------
Publishing, Broadcasting, Printing & Cable--1.2%
Continental Cablevision 144A
8.30%, '06 (b) BB+ 5,000 5,150,000
News America Holdings 10.125%,
'12 BBB 5,000 5,568,300
-----------
10,718,300
-----------
REITS--0.3%
Meditrust Corp. 7.375%, '00 BBB- 3,000 2,974,440
-----------
Textile & Apparel--1.1%
Westpoint Stevens 8.75%, '01 BB- 5,000 5,000,000
Westpoint Stevens 9.375%, '05 B+ 5,000 4,912,500
-----------
9,912,500
-----------
Tobacco--0.1%
RJR Nabisco, Inc. 8%, '01 BBB- 1,000 972,960
-----------
Truckers & Marine--0.2%
Teekay Shipping
Corp. 8.32%, '08 BB 1,645 1,570,975
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $138,441,194) 136,005,283
-----------
FOREIGN NON-CONVERTIBLE BONDS--1.2%
Paper & Forest Products--0.3%
Asia Pulp & Paper Co. Yankee
11.75%, '05 (Indonesia) BB 2,500 2,437,500
-----------
Telecommunications Equipment--0.9%
Rogers Cablesystems Ltd. 9.625%,
'02 (Canada) BB+ 8,000 8,080,000
-----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $10,532,766) 10,517,500
-----------
FOREIGN GOVERNMENT SECURITIES--3.5%
Argentina--0.8%
Republic of Argentina FRB
6.3125%, '05 (e) BB- 2,228 1,701,253
Republic of Argentina Par L-GP
5.25%, '23 (e) BB- 5,000 2,728,125
Republic of Argentina Discount
L-GL Euro 6.5625%, '23 (e) BB- 4,500 3,113,438
-----------
7,542,816
----------
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
-------- ------- -------------
<S> <C> <C> <C>
Brazil--1.0%
Republic of Brazil, interest
capitalization, Series C Euro,
8%, '14 (e) B+ $2,165 $ 1,303,520
Republic of Brazil Par Z-L Euro
5%, '24 (e) B(d) 6,500 3,420,625
Republic of Brazil
Discount Series Z-L Euro 6.50%,
'24 (e) B+ 5,750 3,892,031
-----------
8,616,176
-----------
Colombia--0.2%
Republic of Colombia Euro 9%, '97 NR 1,500 1,519,860
-----------
Mexico--0.8%
United Mexican States Discount A
6.39844%, '19 (e)(f) BB 3,750 3,007,031
United Mexican States Euro D
6.54688%, '19 (e)(f) BB 1,500 1,202,813
United Mexican States Series B
Euro 6.25%, '19 (f) BB 4,250 2,805,000
-----------
7,014,844
-----------
Philippines--0.5%
Central Bank of Philippines NMB
Euro 6.3125%, '05 (e) BB 4,500 4,286,250
-----------
Poland--0.2%
Poland Discount Euro 6.4375%, '24
(e) BBB 750 697,500
Poland Global Reg Par Euro 2.75%,
'24 (e) BBB 500 251,563
Poland PDI B 3.75%, '14 (e) BBB 1,500 1,155,000
-----------
2,104,063
-----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $30,361,232) 31,084,009
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS--9.5%
Diversified Financial Services--0.6%
Great Western Financial Corp. Cv.
Pfd. 4.375% 300 17,400
H.F. Ahmanson & Co. Cv. Pfd. 6% 60,000 3,360,000
Morgan Stanley Group
PERCS 40,000 2,135,000
-----------
5,512,400
-----------
Electrical Equipment--0.9%
Westinghouse Electric Corp. Cv. Pfd.
144A $1.30 (b) 480,000 8,100,000
-----------
Entertainment, Leisure & Gaming--0.5%
Cablevision Systems Cv. Pfd. 8.50% 165,000 4,269,375
-----------
Machinery--0.3%
Cooper Industries 6%, "Wyman notes"
(DECS) 150,000 2,587,500
-----------
Medical Products & Supplies--0.5%
U.S. Surgical Corp. $2.20 Series A, '98 125,000 4,578,125
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -------------
<S> <C> <C>
Metals & Mining--1.0%
Bethlehem Steel Cv. Pfd. 144A
$3.50 (b) 35,000 $ 1,526,875
Coeur D'Alene Cv. Pfd. 7%, '00 150,000 3,131,250
Freeport-McMoRan Copper Cv. Pfd. 5%, '02 150,000 4,256,250
-----------
8,914,375
-----------
Natural Gas--0.3%
Enron Capital Corp. Cv. Pfd. 6.25% 100,000 2,562,500
-----------
Oil--2.8%
ARCO 9% "Lyondell" 150,000 4,237,500
Occidental Petroleum Corp. 144A $3.875, Cv.
Pfd. (b) 195,000 12,090,000
Unocal Corp. 144A $3.50 Cv. Pfd. (b) 125,000 6,828,125
Valero Energy Corp. Cv. Pfd. 6.25%, '49 30,500 1,769,000
-----------
24,924,625
-----------
Oil Service & Equipment--0.3%
Noble Drilling Corp. $1.50 Cv. Pfd. 79,000 2,932,875
-----------
Paper & Forest Products--0.6%
International Paper Co. Cv. Pfd. 144A
5.25% (b) 120,000 5,520,000
-----------
REITS--0.1%
Security Capital Industrial Trust 7% Cv.
Pfd. 50,000 1,150,000
-----------
Telecommunications Equipment--0.4%
Global Star Telecom Cv. Pfd. 144A
6.50% (b) 64,000 3,008,000
-----------
Tobacco--0.6%
RJR Nabisco, Inc. 9.25% PERCS 823,500 4,941,000
-----------
Utility--Electric--0.2%
California Energy Capital Trust Cv. Pfd.
144A (b) 35,000 1,890,000
-----------
Utility--Telephone--0.4%
Sprint Corp. Cv. Pfd. DECS 8.25%, '00 84,400 3,576,450
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified cost $77,425,890) 84,467,225
-----------
PREFERRED STOCKS--3.2%
Banks--1.0%
Citicorp 8%, Pfd. 200,000 5,025,000
Fleet Financial Group, Inc. Pfd. 9.30% 150,000 3,918,750
-----------
8,943,750
-----------
Insurance--0.5%
Aon Corp. 8%, Pfd. 166,500 4,224,937
-----------
Natural Gas--0.6%
Enron Capital $2.00 Pfd. Series C 225,000 5,568,750
-----------
Publishing, Broadcasting, Printing & Cable--1.1%
News Corp. Overseas Ltd. Series A 8.625%,
Pfd. 400,000 9,900,000
-----------
TOTAL PREFERRED STOCKS
(Identified cost $29,120,575) 28,637,437
-----------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -------------
<S> <C> <C>
COMMON STOCKS--39.6%
Advertising--1.1%
Interpublic Group Companies, Inc. 100,000 $ 4,675,000
Omnicom Group, Inc. 120,000 5,205,000
-----------
9,880,000
-----------
Aerospace & Defense--0.8%
Lockheed Martin Corp. 50,000 4,031,250
Loral Space and Communications Corp. 200,000 2,875,000
-----------
6,906,250
-----------
Autos & Trucks--0.5%
General Motors Corp. 75,000 4,068,750
-----------
Banks--0.6%
Barnett Banks, Inc. 79,246 5,022,190
-----------
Beverages--1.1%
Anheuser-Busch Companies, Inc. 50,000 3,356,250
PepsiCo, Inc. 75,000 4,762,500
Seagram Ltd. 50,000 1,693,750
-----------
9,812,500
-----------
Building & Materials--0.1%
Centex Corp. 50,000 1,350,000
-----------
Chemical--0.9%
Dow Chemical Co. 60,000 5,332,500
Union Carbide Corp. 60,000 2,730,000
-----------
8,062,500
-----------
Computer Software & Services--1.6%
America Online, Inc. (c) 30,000 1,920,000
Computer Associates International, Inc. 25,000 1,834,375
Informix Corp. (c) 79,000 2,083,625
Microsoft Corp. (c) 30,000 3,401,250
Oracle Systems Corporation (c) 79,500 2,683,125
Tektronix 50,000 1,981,250
-----------
13,903,625
-----------
Conglomerates--0.5%
Litton Industries, Inc. (c) 90,000 4,083,750
-----------
Cosmetics & Soaps--0.7%
Avon Products, Inc. 20,000 1,777,500
Colgate Palmolive Co. 60,000 4,597,500
-----------
6,375,000
-----------
Diversified Financial Services--0.5%
Travelers Group, Inc. 71,000 4,366,500
-----------
Diversified Miscellaneous--1.1%
Hillenbrand Industries, Inc. 125,000 4,750,000
Pioneer Hi Bred International, Inc. 85,000 4,738,750
-----------
9,488,750
-----------
Electronics--4.1%
Perkin Elmer Corp. 670,000 36,766,250
-----------
Entertainment, Leisure & Gaming--0.3%
Cox Communications, Inc. (c) 110,000 2,255,000
Harrah's Entertainment, Inc. (c) 15,600 538,200
-----------
2,793,200
-----------
Healthcare--Diversified--0.6%
Warner-Lambert Co. 46,000 5,140,500
-----------
Healthcare--Drugs--1.0%
Lilly (Eli) & Co. 56,000 $ 3,304,000
Merck & Co., Inc. 50,000 3,025,000
Pharmacia & Upjohn, Inc. 57,000 2,180,250
-----------
8,509,250
-----------
Hospital Management & Services--0.7%
Quorum Health Group, Inc. (c) 250,000 6,343,750
-----------
Insurance--2.2%
Aetna Life & Casualty Co. 55,000 3,918,750
Allstate Corp. 85,000 3,304,375
American International Group, Inc. 30,000 2,741,250
Cigna Corp. 45,000 5,101,875
IPC Holdings, Ltd. (c) 162,000 3,179,250
PartnerRe Ltd. 35,000 988,750
-----------
19,234,250
-----------
Machinery--0.3%
Albany International Corporation 125,000 2,687,500
-----------
Medical Products & Supplies--0.9%
Baxter International, Inc. 115,000 5,088,750
Johnson & Johnson 30,000 2,775,000
-----------
7,863,750
-----------
Natural Gas--8.1%
Anadarko Petroleum Corp. 163,000 9,494,750
Apache Corp. 225,000 6,525,000
Consolidated Natural Gas Co. 379,000 17,718,250
El Paso Natural Gas Co. 124,200 4,595,400
Enron Corp. 250,000 10,062,500
Enron Oil & Gas Co. 225,000 5,962,500
Seagull Energy Corp. (c) 230,000 5,606,250
Sonat, Inc. 279,000 12,171,375
-----------
72,136,025
-----------
Office & Business Equipment--0.7%
International Business Machines Corp. 15,000 1,612,500
Storage Technology Corp. (c) 100,000 3,075,000
Sun Microsystems, Inc. (c) 30,000 1,627,500
-----------
6,315,000
-----------
Oil--3.4%
Louisiana Land & Exploration Co. 200,000 10,825,000
Noble Affiliates, Inc. 252,700 8,876,087
Union Pacific Resources Group 137,900 3,792,250
Unocal Corp. 165,000 5,300,625
Valero Energy Corp. 43,100 1,244,513
-----------
30,038,475
-----------
Oil Service & Equipment--0.6%
Diamond Offshore Drilling (c) 28,000 1,393,000
Tidewater, Inc. 100,000 4,250,000
-----------
5,643,000
-----------
Pollution Control--0.7%
WMX, Inc. 190,000 6,602,500
-----------
Publishing, Broadcasting, Printing & Cable--1.0%
Harcourt General, Inc. 100,000 4,400,000
Tele-Communications TCI Group A (c) 250,000 4,781,250
-----------
9,181,250
-----------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -------------
<S> <C> <C>
REITS--0.5%
Meditrust Corp. 96,296 $ 3,262,027
Patriot American Hospitality 55,000 1,533,125
-----------
4,795,152
-----------
Retail--0.4%
Circuit City Stores, Inc. 120,000 3,810,000
-----------
Telecommunications Equipment--0.2%
Cisco Systems, Inc. (c) 35,000 1,815,625
-----------
Tobacco--0.2%
American Brands, Inc. 50,000 2,081,250
-----------
Truckers & Marine--0.2%
Caliber System, Inc. 50,000 2,006,250
-----------
Utility--Electric--1.0%
CMS Energy Corp. 150,000 4,368,750
Illinova Corp. 85,000 2,167,500
Pinnacle West Capital Corp. 90,000 2,396,250
-----------
8,932,500
-----------
Utility--Telephone--3.0%
AT&T Corp. 130,000 7,962,500
Frontier Corp. 100,000 3,162,500
GTE Corp. 108,000 4,684,500
NYNEX Corp. 113,000 5,551,125
U.S. West Communications Group 100,000 3,275,000
U.S. West Media Group (c) 100,000 1,950,000
-----------
26,585,625
-----------
TOTAL COMMON STOCKS
(Identified cost $296,429,042) 352,600,917
-----------
FOREIGN COMMON STOCKS--2.3%
Autos & Trucks--0.3%
Nissan Motor Co. (Japan) 138,000 1,164,720
Toyota Motor Corp. (Japan) 48,000 1,095,360
-----------
2,260,080
-----------
Beverages--0.1%
Panamerican Beverages, Inc. (Mexico) 20,000 877,500
-----------
Insurance--0.4%
GCR Holdings, Ltd. (Bermuda) 40,000 1,020,000
LaSalle Re Holdings, Ltd. (Bermuda) 40,000 795,000
Mid Ocean Ltd. (Bermuda) 20,000 715,000
Renaissance Holdings, Ltd. (Bermuda) 30,000 817,500
-----------
3,347,500
-----------
Rails--0.5%
Canadian Pacific Ltd. (Canada) 235,000 $ 4,788,125
-----------
Utility--Telephone--1.0%
BCE, Inc. (Canada) 225,000 8,859,375
-----------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $18,534,192) 20,132,580
-----------
TOTAL LONG-TERM INVESTMENTS--98.1%
(Identified cost $810,021,706) 872,573,389
-----------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
-------- -----
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--2.0%
Commercial Paper--1.5%
Anheuser-Busch Cos., Inc.
5.32%, 5-1-96 A-1+ $1,300 1,300,000
ESC Securitization 5.28%,
5-2-96 A-1+ 5,000 4,999,267
General Electric Capital
Corp. 5.29%, 5-3-96 A-1+ 145 144,957
Greenwich Funding Corp.
5.30%, 5-3-96 A-1+ 250 249,926
HJ Heinz Co. 5.23%, 5-3-96 A-1 3,380 3,379,018
Exxon Imperial U.S., Inc.
5.28%, 5-7-96 A-1+ 1,175 1,173,966
Receivables Capital Corp.
5.32%, 5-28-96 A-1 2,440 2,430,265
-----------
13,677,399
-----------
Federal Agency Securities--0.5%
Federal Farm Credit Bank 5.19%, 5-7-96 4,350 4,346,237
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $18,023,636) 18,023,636
-----------
TOTAL INVESTMENTS--100.1%
(Identified cost $828,045,342) 890,597,025(a)
Cash and receivables, less liabilities--(0.1)% (974,260)
-----------
NET ASSETS--100.0% $889,622,765
===========
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $77,764,621 and gross
depreciation of $15,218,396 for income tax purposes. At April 30, 1996,
the aggregate cost of securities for federal income tax purposes was
$828,050,800.
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30,
1996, these securities amount to a value of $102,318,960 or 11.5% of net
assets.
(c) Non-income producing.
(d) As rated by Moody's, Fitch or Duff & Phelp's.
(e) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
(f) Mexico Value Recovery Euro Rights (12,326,000 shares) incorporated as a
unit.
(g) When issued.
(h) Segregated as collateral for the when issued purchase ($500,000 par).
See Notes to Financial Statements.
7
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $828,045,342) $890,597,025
Cash 3,419
Receivables
Investment securities sold 1,368,180
Fund shares sold 369,813
Dividends and interest 6,388,169
-----------
Total assets 898,726,606
-----------
Liabilities
Payables
Investment securities purchased 6,347,428
Fund shares repurchased 1,524,965
Investment advisory fee 509,598
Distribution fee 425,334
Transfer agent fee 145,938
Financial agent fee 21,840
Trustees' fee 6,567
Accrued expenses 122,171
-----------
Total liabilities 9,103,841
-----------
Net Assets $889,622,765
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $783,705,128
Undistributed net investment income 2,996,598
Accumulated net realized gain 40,369,356
Net unrealized appreciation 62,551,683
-----------
Net Assets $889,622,765
===========
Class A
Shares of beneficial interest outstanding, $.0001
par value, unlimited authorization
(Net Assets $493,453,949) 48,947,772
Net asset value per share $ 10.08
Offering price per share
$10.08/(1 - 4.75%) $ 10.58
Class B
Shares of beneficial interest outstanding, $.0001
par value, unlimited authorization
(Net Assets $396,168,816) 39,262,569
Net asset value and offering price per share $ 10.09
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
<TABLE>
<S> <C>
Investment Income
Dividends $ 16,660,537
Interest 33,040,163
----------
Total investment income 49,700,700
Expenses
Investment advisory fee 6,253,253
Distribution fee--Class A 1,247,057
Distribution fee--Class B 3,945,039
Financial agent 267,997
Transfer agent 1,429,666
Custodian 82,722
Printing 78,230
Registration 69,198
Professional 52,461
Trustees 26,567
Miscellaneous 13,354
----------
Total expenses 13,465,544
----------
Net investment income 36,235,156
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 73,897,826
Net realized gain on foreign currency transactions 663,598
Net change in unrealized appreciation
(depreciation)
on investments 41,747,703
----------
Net gain on investments 116,309,127
----------
Net increase in net assets resulting from
operations $152,544,283
==========
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
April 30, April 30,
1996 1995
----------- -------------
<S> <C> <C>
From Operations
Net investment income $ 36,235,156 $ 42,940,111
Net realized gain (loss) 74,561,424 (15,384,412)
Net change in unrealized appreciation (depreciation) 41,747,703 20,259,660
--------- -----------
Increase in net assets resulting from operations 152,544,283 47,815,359
--------- -----------
From Distributions to Shareholders
Net investment income--Class A (21,775,957) (25,024,482)
Net investment income--Class B (13,920,528) (16,394,441)
Net realized gains--Class A (1,790,547) (18,457,864)
Net realized gains--Class B (1,413,822) (14,684,720)
Distribution in excess of accumulated net realized gains--Class A -- (8,670,770)
Distribution in excess of accumulated net realized gains--Class B -- (6,812,748)
--------- -----------
Decrease in net assets from distributions to shareholders (38,900,854) (90,045,025)
--------- -----------
From Share Transactions
Class A
Proceeds from sales of shares (4,186,098 and 8,604,772 shares,
respectively) 40,001,714 77,928,546
Net asset value of shares issued from reinvestment of distributions
(1,892,290 and 4,857,806 shares, respectively) 18,094,132 41,693,221
Cost of shares repurchased (12,338,773 and 14,515,244 shares,
respectively) (118,161,444) (130,803,842)
--------- -----------
Total (60,065,598) (11,182,075)
--------- -----------
Class B
Proceeds from sales of shares (3,371,066 and 8,760,924 shares,
respectively) 32,278,099 79,839,220
Net asset value of shares issued from reinvestment of distributions
(1,165,398 and 3,254,429 shares, respectively) 11,169,191 27,882,891
Cost of shares repurchased (8,800,122 and 9,116,661 shares, respectively) (84,143,012) (81,271,548)
--------- -----------
Total (40,695,722) 26,450,563
--------- -----------
Increase (decrease) in net assets from share transactions (100,761,320) 15,268,488
--------- -----------
Net increase (decrease) in net assets 12,882,109 (26,961,178)
Net Assets
Beginning of period 876,740,656 903,701,834
--------- -----------
End of period (including undistributed net investment income of $2,996,598
and $1,821,996, respectively) $ 889,622,765 $ 876,740,656
========= ===========
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
PHOENIX INCOME AND GROWTH FUND
- -------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------
Year Ended April 30,
1996 1995 1994 1993 1992
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.88 $ 9.33 $ 9.92 $ 9.13 $ 8.48
Income from investment operations:
Net investment income 0.44 0.46 0.45 0.43(1) 0.45
Net realized and unrealized gain (loss) 1.22 0.03 (0.08) 0.88 0.88
----- ----- ----- ----- -------
Total from investment operations 1.66 0.49 0.37 1.31 1.33
----- ----- ----- ----- -------
Less distributions:
Dividends from net investment income (0.42) (0.45) (0.44) (0.44) (0.44)
Distributions from net realized gains (0.04) (0.33) (0.52) (0.08) (0.24)
Distributions in excess of accumulated net realized gains -- (0.16) -- -- --
----- ----- ----- ----- -------
Total distributions (0.46) (0.94) (0.96) (0.52) (0.68)
----- ----- ----- ----- -------
Change in net asset value 1.20 (0.45) (0.59) 0.79 0.65
----- ----- ----- ----- -------
Net asset value, end of period $ 10.08 $ 8.88 $ 9.33 $ 9.92 $ 9.13
===== ===== ===== ===== =======
Total return (2) 19.01% 5.95% 3.38% 14.78% 16.28%
Ratios/supplemental data:
Net assets, end of period (thousands) $493,454 $490,225 $524,855 $514,803 $357,366
Ratio to average net assets of:
Expenses 1.18% 1.16% 1.23% 1.33% 1.38%
Net investment income 4.39% 5.07% 4.57% 4.60% 4.99%
Portfolio turnover 107% 90% 88% 44% 32%
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------
Year Ended April 30,
From
Inception
1/3/92 to
1996 1995 1994 1993 4/30/92
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.88 $ 9.32 $ 9.92 $ 9.13 $ 8.98
Income from investment operations:
Net investment income 0.36 0.39 0.38 0.25(1) 0.08
Net realized and unrealized gain (loss) 1.23 0.04 (0.08) 1.00 0.15
----- ----- ----- ----- -------
Total from investment operations 1.59 0.43 0.30 1.25 0.23
----- ----- ----- ----- -------
Less distributions:
Dividends from net investment income (0.34) (0.38) (0.38) (0.38) (0.08)
Distributions from net realized gains (0.04) (0.33) (0.52) (0.08) --
Distributions in excess of accumulated net realized gains -- (0.16) -- -- --
----- ----- ----- ----- -------
Total distributions (0.38) (0.87) (0.90) (0.46) (0.08)
----- ----- ----- ----- -------
Change in net asset value 1.21 (0.44) (0.60) 0.79 0.15
----- ----- ----- ----- -------
Net asset value, end of period $ 10.09 $ 8.88 $ 9.32 $ 9.92 $ 9.13
===== ===== ===== ===== =======
Total return (2) 18.14% 5.23% 2.62% 14.09% 2.69(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $396,169 $386,515 $378,847 $217,432 $21,983
Ratio to average net assets of:
Expenses 1.93% 1.91% 1.91% 2.03% 2.08(3)
Net investment income 3.64% 4.32% 3.98% 3.73% 4.07(3)
Portfolio turnover 107% 90% 88% 44% 32%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized
(4) Not annualized
See Notes to Financial Statements.
10
<PAGE>
PHOENIX INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Income and Growth Fund (the "Fund") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified open-end management investment company. The Fund's
primary investment objective is to invest in a diversified group of
securities that are selected for current yield consistent with preservation
of capital. The Fund offers both Class A and Class B shares. Class A shares
are sold with a front-end sales charge of up to 4.75%. Class B shares are
sold with a contingent deferred sales charge which declines from 5% to zero
depending on the period of time the shares are held. Both classes of shares
have identical voting, dividend, liquidation and other rights and the same
terms and conditions, except that each class bears different distribution
expenses and has exclusive voting rights with respect to its distribution
plan. Income and expenses of the Fund are borne pro rata by the holders of
both classes of shares, except that each class bears distribution expenses
unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and
expenses. Actual results could differ from those estimates.
A. Security valuation:
Equity securities traded on an exchange or quoted on the over-the-counter
market are valued at the last sale price, or if there had been no sale that
day, at the last bid price. Debt securities are valued on the basis of broker
quotations or valuations provided by a pricing service which utilizes
information with respect to market transactions in comparable securities,
quotations from dealers, and various relationships between securities in
determining value. Short-term investments having a remaining maturity of less
than 61 days are valued at amortized cost which approximates market. All
other securities and assets are valued at their fair value as determined in
good faith by or under the direction of the Trustees.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign
securities, as soon as the Fund is notified. Interest income is recorded on
the accrual basis. Discounts are amortized to income using the effective
interest method. Realized gains and losses are determined on the identified
cost basis.
C. Income taxes:
It is the policy of the Fund to comply with the requirements of the
Internal Revenue Code (the "Code") applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. In addition, the Fund intends to distribute an amount
sufficient to avoid imposition of any excise tax under Section 4982 of the
Code. Therefore, no provision for federal income taxes or excise taxes has
been made.
D. Distributions to shareholders:
Distributions to shareholders are recorded on the ex-dividend date. Income
and capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non- taxable dividends, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, and
losses deferred due to wash sales and excise tax regulations. Permanent book
and tax basis differences relating to shareholder distributions will result
in reclassifications to paid in capital.
E. Foreign currency translation:
Foreign securities, other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at
the trade date. The gain or loss resulting from a change in currency exchange
rates between the trade and settlement dates of a portfolio transaction is
treated as a gain or loss on foreign currency. Likewise, the gain or loss
resulting from a change in currency exchange rates, between the date income
is accrued and paid, is treated as a gain or loss on foreign currency. The
Fund does not separate that portion of the results of operations arising from
changes in exchange rates and that portion arising from changes in the market
prices of securities.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the Investment Adviser,
National Securities and Research Corporation, an indirect majority-owned
subsidiary of Phoenix Home Life Mutual Insurance Company ("PHL"), is entitled
to a fee at an annual rate of 0.70% of the average daily net
11
<PAGE>
PHOENIX INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1996 (Continued)
assets of the Fund for the first $1.0 billion and 0.65% for the second $1.0
billion.
As Distributor of the Fund's shares, Phoenix Equity Planning Corp.
("PEPCO"), an indirect majority-owned subsidiary of PHL, has advised the Fund
that it retained net selling commissions of $71,801 for Class A shares and
deferred sales charges of $1,838,501 for Class B shares for the year ended
April 30, 1996. In addition, the Fund pays PEPCO a distribution fee at an
annual rate of 0.25% for Class A shares and 1.00% for Class B shares of the
average daily net assets of the Fund. The Distribution Plan for Class A
shares provides for fees to be paid up to a maximum on an annual basis of
0.30%; the Distributor has voluntarily agreed to limit the fee to 0.25%. The
Distributor has advised the Fund that of the total amount expensed for the
year ended April 30, 1996, $3,246,040 was earned by the Distributor and
$1,946,056 was earned by unaffiliated participants.
As Financial Agent of the Fund, PEPCO receives a fee at an annual rate of
0.03% of the average daily net assets of the Fund for bookkeeping,
administration and pricing services. PEPCO serves as the Fund's Transfer
Agent with State Street Bank and Trust Company as sub-transfer agent. For the
year ended April 30, 1996, transfer agent fees were $1,429,666 of which PEPCO
retained $519,144 which is net of fees paid to State Street.
At April 30, 1996, PHL and affiliates held 106 Class A shares and 15 Class
B shares of the Fund with a combined value of $1,216.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities, excluding short-term securities, for the
year ended April 30, 1996, aggregated $907,905,059 and $994,112,297,
including $125,496,652 and $281,602,159 of U.S. Government securities,
respectively.
4. CAPITAL LOSS CARRYOVERS
Under current tax law, capital losses realized after October 31, 1995 may be
deferred and treated as occurring on the first day of the following fiscal
year. For the year ended April 30, 1996, the Fund did not defer any losses;
however, the Fund was able to utilize losses deferred in the prior year
against current year capital gains in the amount of $30,561,080.
5. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded several
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Fund and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of April 30, 1996,
the Fund increased capital paid in on shares of beneficial interest by
$10,166, increased undistributed net investment income by $635,931 and
decreased accumulated net realized gains by $646,097.
TAX INFORMATION NOTICE (Unaudited)
For federal income tax purposes, 24.2% of the ordinary income dividends paid
by the Fund qualify for the dividends received deduction of corporate
shareholders.
This report is authorized for use by other than shareholders only when
accompanied or preceded by the delivery of a current prospectus showing the
sales charge and other material information.
12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP [LOGO]
To the Trustees and Shareholders of
Phoenix Income and Growth Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments (except for bond ratings), and the
related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the financial
position of Phoenix Income and Growth Fund (the "Fund") at April 30, 1996,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for each of the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at April 30, 1996 by
correspondence with the custodian and brokers, and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Boston, Massachusetts
June 14, 1996
13
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
PART C--OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A: Financial Highlights
Included in Part B: Financial Statements and Notes thereto, and Report
of Independent Accountants are included in the
Annual Report to Shareholders for the year ended
April 30, 1996, incorporated by reference.
(b) Exhibits:
<TABLE>
<S> <C>
1.1 Declaration of Trust of the Registrant, previously filed, and herein incorporated by reference.
1.2 Amendment to Declaration of Trust of the Registrant creating additional classes and dual distribution system,
filed with Post-Effective Amendment No. 9 on July 19, 1994.
1.3 Amendment to Declaration of Trust of the Registrant, changing name of the Trust and establishing additional Series
of the Trust, filed via Edgar with Post-Effective Amendment No. 13 on October 16, 1995.
1.4 Amendment to Declaration of Trust of the Registrant, changing the name of the Series of the Trust filed via Edgar
with Post-Effective Amendment No. 14 on April 15, 1996.
1.5 Amendment to Declaration of Trust establishing an additional Series of the Trust filed via Edgar with
Post-Effective Amendment No. 15 on May 24, 1996.
2.1 By-laws of the Registrant, previously filed, and herein incorporated by reference.
3. Not Applicable.
4.1 Reference is hereby made to Article VI of Registrant's Declaration of Trust referenced in Exhibit 1 above.
5.1 Management Agreement between Registrant and National Securities & Research Corporation dated January 1, 1994,
previously filed, and herein incorporated by reference.
5.2 Management Agreement between Registrant and Phoenix Investment Counsel, Inc. filed via Edgar with Post-Effective
Amendment No. 13 on October 16, 1995.
6.1 Underwriting Agreement between Registrant and Phoenix Equity Planning Corporation ("Equity Planning") dated May
14, 1993, previously filed, and herein incorporated by reference.
6.2 Form of Underwriting Agreement for Class B Shares between Registrant and Equity Planning filed with Post-Effective
Amendment No. 8 on May 4, 1994.
7. None.
8. Custodian Contract between Registrant and State Street Bank and Trust Company dated October 14, 1993, filed with
Post-Effective Amendment No. 8 on May 4, 1994.
9.1 Transfer Agency and Service Agreement between Registrant and Equity Planning dated June 1, 1994, filed with
Post-Effective Amendment No. 9 on July 19, 1994.
9.2 Form of Sales Agreement, filed with Post-Effective Amendment No. 9 on July 19, 1994.
10. Opinion as to legality of the shares filed via Edgar with Post-Effective Amendment No. 13 on October 16, 1995.
11. Consent of Independent Accountant.*
12. Not applicable.
13. None.
14. None.
15.1 Distribution Plan dated May 14, 1993, previously filed, and herein incorporated by reference.
15.2 Form of Distribution Plan for Class B Shares filed with Post-Effective Amendment No. 8 on May 4, 1994.
16. Schedule for computation of yield and effective yield quotations filed previously.
17. Financial Data Schedule filed herewith and reflected on Edgar as Exhibit 27.*
18.1. Rule 18f-3 Dual Distribution Plan effective November 15, 1995 filed via Edgar with Post-Effective Amendment No. 14
on April 15, 1996.
18.2. Amended and Restated Rule 18f-3 Dual Distribution Plan effective May 1, 1996 filed via Edgar herewith.*
19. Powers of Attorney as filed via Edgar with Post-Effective Amendment No. 14 on April 16, 1996.
</TABLE>
*Filed herewith.
C-1
<PAGE>
Item 25. Persons Controlled by or Under Common Control With Registrant
No person is controlled by, or under common control, with the Registrant.
Item 26. Number of Holders of Securities
As of June 30, 1996, the number of record holders of each class of
securities of the Registrant was as follows:
<TABLE>
<CAPTION>
Number of
Title of Class Record-holders
------------------------------------------------------------------- -------------
<S> <C>
Shares of Beneficial Interest--Class A (Equity Opportunities) 11,790
Shares of Beneficial Interest--Class B (Equity Opportunities) 238
Shares of Beneficial Interest--Class A (Theme) 2,786
Shares of Beneficial Interest--Class B (Theme) 1,577
Shares of Beneficial Interest--Class A (Small Cap Growth) 17,987
Shares of Beneficial Interest--Class B (Small Cap Growth) 9,080
Shares of Beneficial Interest--Class A (MicroCap) Not yet effective 0
Shares of Beneficial Interest--Class B (MicroCap) Not yet effective 0
</TABLE>
Item 27. Indemnification
Registrant's indemnification provision is set forth in Post-Effective
Amendment No. 7 filed with the Securities and Exchange Commission on June 30,
1993, and is incorporated herein by reference.
Item 28. Business and Other Connections of Investment Adviser
See "Management of the Fund" in the Prospectus and "Services of the
Advisers" and in the Statement of Additional Information which is included in
this Post-Effective Amendment.
There is set forth below information as to any other business, profession,
vocation or employment of a substantial nature in which each director or
officer of National Securities & Research Corporation is, or at any time
during the past two years has been engaged for his or her own account or in
the capacity of director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Name and Position with
National Securities &
Research Corporation Other Business, Profession, Vocation or Employment
- -------------------------------- -----------------------------------------------------------
<S> <C>
Michael E. Haylon Executive Vice President--Investments, Phoenix Duff &
Director and Executive Phelps Corporation. Executive Vice President, Phoenix
Vice President Funds. Director and President, Phoenix Investment Counsel,
Inc. Director, Phoenix Equity Planning Corporation. Vice
President, Phoenix Duff & Phelps Institutional Mutual
Funds. Senior Vice President, Securities Investments,
Phoenix Home Life Mutual Insurance Company.
Philip R. McLoughlin Director, Vice Chairman and Chief Executive Officer,
Director, Chairman, President Phoenix Duff & Phelps Corporation. Director and Executive
and Chief Executive Officer Vice President, Investments, Phoenix Home Life Mutual
Insurance Company. Director and President, Phoenix Equity
Planning Corporation. Director and Chairman, Phoenix
Investment Counsel, Inc., Trustee and President, Phoenix
Duff & Phelps Institutional Mutual Funds. Director, Phoenix
Realty Group, Inc., Phoenix Realty Advisors, Inc., Phoenix
Realty Investors, Inc., Phoenix Realty Securities, Inc.,
Phoenix Founders, Inc., and World Trust Fund; Director and
Vice President, PM Holdings, Inc. Director/Trustee/
President of the Phoenix Funds; Director, W.S. Griffith &
Co., Inc.
David R. Pepin Executive Vice President and General Manager, Mutual Fund
Director and Executive Vice Marketing and Operations, Phoenix Duff & Phelps
President Corporation. Managing Director, Phoenix-Aberdeen
International Advisors, LLC. Director and Executive Vice
President, Phoenix Investment Counsel, Inc., and Phoenix
Equity Planning Corporation. Various positions with Phoenix
Home Life Mutual Insurance Company.
C-2
<PAGE>
Name and Position with
National Securities &
Research Corporation Other Business, Profession, Vocation or Employment
- -------------------------------- -----------------------------------------------------------
William R. Moyer Director, Senior Vice President and Chief Financial
Senior Vice President, Officer, Phoenix Duff & Phelps Corporation. Senior Vice
Finance, and Treasurer President, Finance, and Treasurer, Phoenix Equity Planning
Corporation and Phoenix Investment Counsel, Inc. Vice
President, the Phoenix Funds and Phoenix Duff & Phelps
Institutional Mutual Funds. Senior Vice President, Chief
Financial Officer, and Treasurer, W.S. Griffith & Co., Inc.
Vice President, Investment Products Finance, Phoenix Home
Life Mutual Life Insurance Company.
William J. Newman Executive Vice President, Phoenix Investment Counsel, Inc.
Senior Vice President Senior Vice President, Phoenix Equity Planning Corporation,
Phoenix Strategic Equity Series Fund, The Phoenix Edge
Series Fund, Phoenix Multi-Portfolio Fund, Phoenix Income
and Growth Fund, Phoenix Series Fund, Phoenix Total Return
Fund, Inc., Phoenix Worldwide Opportunities Fund and
Phoenix Duff & Phelps Institutional Mutual Funds. Vice
President, Common Stock and Chief Investment Strategist,
Phoenix Home Life Mutual Insurance Company. Chief
Investment Strategist, Kidder, Peabody Co., Inc.
Michael K. Arends Vice President, Phoenix Series Fund, Phoenix Strategic
Vice President Equity Series Fund, and Phoenix Investment Counsel, Inc.
Portfolio Manager, Phoenix Home Life Mutual Insurance
Company.
Curtiss O. Barrows Vice President, Phoenix Series Fund, Phoenix
Vice President Multi-Portfolio Fund, The Phoenix Edge Series Fund, and
Phoenix Investment Counsel, Inc. Portfolio Manager, Public
Bonds, Phoenix Home Life Mutual Insurance Company.
James M. Dolan Vice President, Compliance Officer and Assistant Secretary,
Vice President and Phoenix Equity Planning Corporation. Vice President,
Compliance Officer; Phoenix Funds and Phoenix Duff & Phelps Institutional
Assistant Secretary Mutual Funds. Vice President, Assistant Clerk and Assistant
Secretary, Phoenix Investment Counsel, Inc. Vice President
and Chief Compliance Officer, Phoenix Realty Advisors, Inc.
and Chief Compliance Officer, Phoenix Realty Securities,
Inc. Assistant Vice President Compliance, Phoenix Home Life
Mutual Insurance Company.
Jeanne H. Dorey Vice President, The Phoenix Edge Series Fund, Phoenix
Vice President Multi-Portfolio Fund, Phoenix Investment Counsel, Inc. and
Phoenix Worldwide Opportunities Fund. Portfolio Manager,
International, Phoenix Home Life Mutual Insurance Company.
Christopher J. Kelleher Vice President, Phoenix Series Fund, The Phoenix Edge
Vice President Series Fund, Phoenix Investment Counsel, Inc., and Phoenix
Duff & Phelps Institutional Mutual Funds. Portfolio
Manager, Public Bonds, Phoenix Home Life Mutual Insurance
Company.
C-3
<PAGE>
Name and Position with
National Securities &
Research Corporation Other Business, Profession, Vocation or Employment
- -------------------------------- -----------------------------------------------------------
Thomas S. Melvin, Jr. Vice President, Phoenix Investment Counsel, Inc., Phoenix
Vice President Multi-Portfolio Fund, and Phoenix Duff & Phelps
Institutional Mutual Funds. Portfolio Manager, Common
Stock, Phoenix Home Life Mutual Insurance Company.
Amy L. Robinson Vice President, The Phoenix Edge Series Fund, Phoenix
Vice President Series Fund, and Phoenix Investment Counsel, Inc. Managing
Director, Securities Administration, Phoenix Home Life
Mutual Insurance Company.
Elizabeth R. Sadowinski Vice President, Field and Investor Services, Phoenix Equity
Vice President Planning Corporation. Vice President, Administration,
Phoenix Duff & Phelps Corporation. Vice President, Mutual
Fund Customer Service, Phoenix Home Life Mutual Insurance
Company.
Leonard J. Saltiel Senior Vice President, Phoenix Equity Planning Corporation.
Vice President Vice President, Phoenix Funds and Phoenix Duff & Phelps
Institutional Mutual Funds. Vice President, Investment
Operations, Phoenix Home Life Mutual Insurance Company.
Dorothy J. Skaret Vice President, Phoenix Series Fund, The Phoenix Edge
Vice President Series Fund, Phoenix Investment Counsel, Inc., Phoenix
Realty Securities, Inc. and Phoenix Duff & Phelps
Institutional Mutual Funds. Director, Public Fixed Income,
Phoenix Home Life Mutual Life Insurance Company.
James D. Wehr Vice President, Phoenix Series Fund, The Phoenix Edge
Vice President Series Fund, Phoenix Multi-Portfolio Fund, Phoenix
Investment Counsel, Inc., Phoenix California Tax-Exempt
Bonds, Inc. and Phoenix Duff & Phelps Institutional Mutual
Funds. Managing Director, Public Fixed Income, Phoenix Home
Life Mutual Insurance Company.
Eugene A. Charon Controller, Phoenix Equity Planning Corporation and Phoenix
Controller Investment Counsel, Inc.
Thomas N. Steenburg Vice President, Counsel and Secretary, Phoenix Duff &
Secretary Phelps Corporation. Counsel, Phoenix Home Life Mutual
Insurance Company. Secretary, Phoenix Investment Counsel,
Inc. and Phoenix Equity Planning Corporation. Assistant
Secretary, The Phoenix Funds and Phoenix Duff & Phelps
Institutional Mutual Funds.
</TABLE>
There is set forth below information as to any other business, profession,
vocation or employment of a substantial nature in which each director or
officer of Phoenix Investment Counsel, Inc. is, or at any time during the
past two years has been, engaged for his or her own account or in the
capacity of director, officer, employee, partner or trustee.
C-4
<PAGE>
<TABLE>
<CAPTION>
Name and Position with
Phoenix Investment Counsel, Inc. Business and other connections
- ----------------------------------- ---------------------------------------------------------
<S> <C>
Michael E. Haylon Executive Vice President--Investments, Phoenix Duff &
Director and Phelps Corporation. Executive Vice President, Phoenix
President Funds. Director, Phoenix Equity Planning Corporation.
Vice President, Phoenix Duff & Phelps Institutional
Mutual Funds. Director and Executive Vice President,
National Securities & Research Corporation. Senior Vice
President, Securities Investments, Phoenix Home Life
Mutual Insurance Company.
Philip R. McLoughlin Director, Vice Chairman and Chief Executive Officer,
Director and Chairman Phoenix Duff & Phelps Corporation. Director and Executive
Vice President, Investments, Phoenix Home Life Mutual
Insurance Company. Director/Trustee/ President of the
Phoenix Funds. Director and President, Phoenix Equity
Planning Corporation. Director, President, and Chief
Executive Officer, National Securities & Research
Corporation. Trustee and President, Phoenix Duff & Phelps
Institutional Mutual Funds. Director, W.S. Griffith &
Co., Inc., Phoenix Founders, Inc., Phoenix Realty Group,
Inc., Phoenix Realty Advisors, Inc., Phoenix Realty
Investors, Inc. and Phoenix Realty Securities Inc., and
World Trust Fund. Director and Vice President, PM
Holdings, Inc.
David R. Pepin Executive Vice President and General Manager, Mutual Fund
Director and Executive Marketing and Operations, Phoenix Duff & Phelps
Vice President Corporation. Managing Director, Phoenix-Aberdeen
International Advisors, LLC. Director and Executive Vice
President, National Securities & Research Corporation and
Phoenix Equity Planning Corporation. Various positions
with Phoenix Home Life Mutual Insurance Company.
William J. Newman Senior Vice President, National Securities & Research
Executive Vice President Corporation, Phoenix Equity Planning Corporation, Phoenix
Strategic Equity Series Fund, The Phoenix Edge Series
Fund, Phoenix Multi-Portfolio Fund, Phoenix Income and
Growth Fund, Phoenix Series Fund, Phoenix Total Return
Fund, Inc., Phoenix Worldwide Opportunities Fund and
Phoenix Duff & Phelps Institutional Mutual Funds. Vice
President, Common Stock and Chief Investment Strategist,
Phoenix Home Life Mutual Insurance Company. Chief
Investment Strategist, Kidder, Peabody Co., Inc.
Paul A. Atkins Vice President, Institutional Investment Sales, Phoenix
Senior Vice President Home Life Mutual Insurance Company.
William R. Moyer Senior Vice President and Chief Financial Officer,
Senior Vice President, Phoenix Duff & Phelps Corporation. Senior Vice President,
Finance, and Treasurer Finance, and Treasurer, Phoenix Equity Planning
Corporation, and National Securities & Research
Corporation. Senior Vice President, Chief Financial
Officer and Treasurer, W.S. Griffith & Co., Inc. Vice
President, the Phoenix Funds and Phoenix Duff & Phelps
Institutional Mutual Funds. Vice President, Investment
Products Finance, Phoenix Home Life Mutual Insurance
Company.
C-5
<PAGE>
Name and Position with
Phoenix Investment Counsel, Inc. Business and other connections
- ----------------------------------- ---------------------------------------------------------
David L. Albrycht Vice President, Phoenix Multi-Sector Short Term Bond
Vice President Fund, Phoenix Multi-Portfolio Fund and Phoenix
Multi-Sector Fixed Income Fund, Inc. Portfolio Manager,
Phoenix Home Life Mutual Insurance Company.
Michael K. Arends Vice President, Phoenix Series Fund, Phoenix Strategic
Vice President Equity Series Fund and National Securities & Research
Corporation. Portfolio Manager, Phoenix Home Life Mutual
Insurance Company.
Curtiss O. Barrows Vice President, Phoenix Series Fund, The Phoenix Edge
Vice President Series Fund, Phoenix Multi-Portfolio Fund, and National
Securities & Research Corporation. Portfolio Manager,
Public Bonds, Phoenix Home LifeMutual Insurance Company.
Sandra L. Becker Managing Director, Private Placements and Venture
Vice President Capital, Phoenix Home Life Mutual Insurance Company.
Kathleen A. Bloomquist Director and Vice President, Worldwide Phoenix Limited.
Vice President Vice President, Institutional Client Relations/Service,
Phoenix Home Life Mutual Insurance Company.
James C. Bly Regional Group Pension Manager, Phoenix Home Life Mutual
Vice President Insurance Company.
Mary E. Canning Vice President, Phoenix Series Fund and The Phoenix Edge
Vice President Series Fund. Associate Portfolio Manager, Common Stock,
Phoenix Home Life Mutual Insurance Company.
Paul M. Chute Managing Director, Investment Department, Phoenix Home
Vice President Life Mutual Insurance Company.
Nelson Correa Managing Director, Private Placements, Phoenix Home Life
Vice President Mutual Insurance Company.
James M. Dolan Vice President, Compliance Officer and Assistant
Vice President, Assistant Clerk Secretary, Phoenix Equity Planning Corporation. Vice
and Assistant Secretary President, the Phoenix Funds and Phoenix Duff & Phelps
Institutional Mutual Funds. Vice President, Compliance
Officer and Assistant Secretary, National Securities &
Research Corporation. Vice President and Chief Compliance
Officer, Phoenix Realty Advisors, Inc. and Chief
Compliance Officer, Phoenix Realty Securities, Inc.
Assistant Vice President Compliance, Phoenix Home Life
Mutual Insurance Company.
Jeanne H. Dorey Vice President, The Phoenix Edge Series Fund, Phoenix
Vice President Multi-Portfolio Fund, Phoenix Worldwide Opportunities
Fund and National Securities & Research Corporation.
Portfolio Manager, International, Phoenix Home Life
Mutual Insurance Company.
John M. Hamlin Vice President, Phoenix Income and Growth Fund and
Vice President Phoenix Series Fund. Portfolio Manager, Common Stock,
Phoenix Home Life Mutual Insurance Company.
C-6
<PAGE>
Name and Position with
Phoenix Investment Counsel, Inc. Business and other connections
- ----------------------------------- ---------------------------------------------------------
Richard C. Harland Portfolio Manager, Phoenix Home Life Mutual Insurance
Vice President Company. Senior Institutional Portfolio Manager, Managing
Director, J&W Seligman & Co.
Christopher J. Kelleher Vice President, Phoenix Series Fund, The Phoenix Edge
Vice President Series Fund, Phoenix Duff & Phelps Institutional Mutual
Funds and National Securities & Research Corporation.
Portfolio Manager, Public Bonds, Phoenix Home Life Mutual
Insurance Company.
Peter S. Lannigan Vice President, Phoenix Multi-Portfolio Fund. Director,
Vice President Public Fixed Income, Phoenix Home Life Mutual Insurance
Company.
Thomas S. Melvin, Jr. Vice President, Phoenix Multi-Portfolio Fund, Phoenix
Vice President Duff & Phelps Institutional Mutual Funds and National
Securities & Research Corporation. Portfolio Manager,
Common Stock, Phoenix Home Life Mutual Insurance Company.
C. Edwin Riley, Jr. Vice President, The Phoenix Edge Series Fund, Phoenix
Vice President Total Return Fund, Inc., and Phoenix Series Fund.
Portfolio Manager, Phoenix Home Life Mutual Insurance
Company. Director of Equity Management, NationsBanc.
Amy L. Robinson Vice President, The Phoenix Edge Series Fund, Phoenix
Vice President Series Fund and National Securities & Research
Corporation. Managing Director, Securities
Administration, Phoenix Home Life Mutual Insurance
Company.
David M. Schans, C.L.U. Institutional Vice President, Phoenix Duff & Phelps
Vice President Corporation. Regional Group Pension Manager, Phoenix Home
Life Mutual Insurance Company.
Holly B. Simeon Regional Vice President, Phoenix Home Life Mutual
Vice President Insurance Company.
Dorothy J. Skaret Vice President, Phoenix Series Fund, The Phoenix Edge
Vice President Series Fund, Phoenix Duff & Phelps Institutional Mutual
Funds, National Securities & Research Corporation and
Phoenix Realty Securities, Inc. Director, Public Fixed
Income, Phoenix Home Life Mutual Insurance Company.
Rosemary T. Strekel Vice President, Private Placements, Phoenix Home Life
Vice President Mutual Insurance Company.
James D. Wehr Vice President, Phoenix Multi-Portfolio Fund, Phoenix
Vice President Series Fund, The Phoenix Edge Series Fund, Phoenix
California Tax Exempt Bonds, Inc., Phoenix Duff & Phelps
Institutional Mutual Funds and National Securities &
Research Corporation. Managing Director, Public Fixed
Income, Phoenix Home Life Mutual Insurance Company.
C-7
<PAGE>
Name and Position with
Phoenix Investment Counsel, Inc. Business and other connections
- ----------------------------------- ---------------------------------------------------------
G. Jeffrey Bohne Vice President, Transfer Agent Operations, Phoenix Equity
Clerk Planning Corporation. Secretary, the Phoenix Funds and
Phoenix Duff & Phelps Institutional Mutual Funds. Clerk,
Phoenix Total Return Fund, Inc. Vice President and
General Manager, Phoenix Home Life Mutual Insurance
Company.
Thomas N. Steenburg Secretary, Vice President and Counsel, Phoenix Duff &
Secretary Phelps Corporation. Secretary, National Securities &
Research Corporation and Phoenix Equity Planning
Corporation. Assistant Secretary, the Phoenix Funds and
Phoenix Duff & Phelps Institutional Mutual Funds.
</TABLE>
The respective principal addresses of the companies or other entities named
above are as follows:
J&W Seligman & Co. }100 Park Avenue
}New York, NY 10017
Kemper Financial Services }120 South LaSalle Street
}Chicago, IL 60603
Kidder, Peabody Co. Inc. }10 Hanover Square
}New York, NY 10005
National Securities & Research }One American Row
Corporation }Hartford, CT 06115
NationsBanc }101 South Tryon Street
}Charlotte, NC 28255
Phoenix Duff & Phelps Corporation }56 Prospect Street
}Hartford, CT 06115
Phoenix Duff & Phelps Institutional }101 Munson Street
Mutual Funds }Greenfield, MA 01301
Phoenix Equity Planning Corporation }100 Bright Meadow Boulevard
}P.O. Box 2200
}Enfield, CT 06083-2200
Phoenix Home Life Mutual Insurance }One American Row
Company }Hartford, CT 06115
Phoenix Investment Counsel, Inc. }One American Row
}Hartford, CT 06115
Phoenix Realty Advisors, Inc. }One American Row
}Hartford, CT 06115
Phoenix Realty Group, Inc. }One American Row
}Hartford, CT 06115
Phoenix Realty Investors, Inc. }One American Row
}Hartford, CT 06115
Phoenix Realty Securities, Inc. }One American Row
}Hartford, CT 06115
PM Holdings, Inc. }One American Row
}Hartford, CT 06115
The Phoenix Funds }101 Munson Street
}Greenfield, MA 01301
C-8
<PAGE>
W. S. Griffith & Co., Inc. }100 Bright Meadow Boulevard
}P.O. Box 2200
}Enfield, CT 06083-2200
World Trust Fund }KREDIETRUST
}Societe Anonyme
}11, rue Aldringen
}L-2690 Luxembourg
}R.C. Luxembourg B 10.750
Worldwide Phoenix Limited }41 Cedar House
}Hamilton HM 12, Bermuda
Item 29. Principal Underwriter
(a) See "Distribution Plans" and "How to Buy Shares" in the Prospectus and
"Distributor" and "Plans of Distribution" in the Statement of
Additional Information, both of which are included in this
Post-Effective Amendment to the Registration Statement.
(b) Directors and executive officers of Phoenix Equity Planning
Corporation are as follows:
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Underwriter with Registrant
- -------------------------- --------------------------- ---------------------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
One American Row
Hartford, CT 06115
David R. Pepin Director and Executive None
56 Prospect Street Vice President
P.O. Box 150480
Hartford, CT 06115-0480
Leonard J. Saltiel Senior Vice President Vice President
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
William R. Moyer Senior Vice President, Vice President
100 Bright Meadow Blvd. Finance, and Treasurer
P.O. Box 2200
Enfield, CT 06083-2200
William J. Newman Senior Vice President Senior Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Secretary
101 Munson Street Transfer Agent Operations
Greenfield, MA 01301
Nancy G. Curtiss Vice President, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Maris Lambergs Vice President, National None
100 Bright Meadow Blvd. Sales Manager
P.O. Box 2200
Enfield, CT 06083-2200
C-9
<PAGE>
Name and Position and Offices Position and Offices
Principal Address with Underwriter with Registrant
- -------------------------- --------------------------- ---------------------------
James M. Dolan Vice President and Vice President
100 Bright Meadow Blvd. Compliance Officer;
P.O. Box 2200 Assistant Secretary
Enfield, CT 06083-2200
Elizabeth R. Sadowinski Vice President, Field and Assistant Secretary
100 Bright Meadow Blvd. Investor Services
Enfield, CT 06083-2200
Eugene A. Charon Controller None
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
Thomas N. Steenburg Secretary Assistant Secretary
One American Row
Hartford, CT 06115
</TABLE>
(c) Equity Planning received the following commissions or other
compensation from the Registrant during the fiscal year ending April
30, 1996:
<TABLE>
<CAPTION>
Net Underwriting Compensation on
Name of Principal Discounts and Redemption and Brokerage Other
Underwriter Commissions Repurchase Commissions Compensation
------------------- ----------------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C>
Equity Planning 201,865 4,675 0 71,572
</TABLE>
Item 30. Location of Accounts and Records
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the Rules promulgated thereunder include herein
described Series' 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; 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 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders upon request and without charge.
C-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Hartford, and State of Connecticut on the 23 day of August, 1996.
PHOENIX STRATEGIC EQUITY SERIES FUND
ATTEST: /s/ Thomas N. Steenberg By: /s/ Philip R. McLoughlin
---------------------------- ------------------------------
Thomas N. Steenberg Philip R. McLoughlin
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons
in the capacities indicated, on this 23 day of August, 1996.
Signature Title
- --------------------------------------------- ------------------------
-------------------------------------
C. Duane Blinn* Trustee
-------------------------------------
Robert Chesek* Trustee
-------------------------------------
E. Virgil Conway* Trustee
------------------------------------- Treasurer (principal
Nancy G. Curtiss* financial and
accounting officer)
-------------------------------------
Harry Dalzell-Payne* Trustee
-------------------------------------
Francis E. Jeffries* Trustee
-------------------------------------
Leroy Keith, Jr.* Trustee
------------------------------------- Trustee and President
/s/ Philip R. McLoughlin
Philip R. McLoughlin
S-1(c)
<PAGE>
Signature Title
- --------------------------------------------- ------------------------
-------------------------------------
Everett L. Morris* Trustee
-------------------------------------
James M. Oates* Trustee
-------------------------------------
Calvin J. Pedersen* Trustee
-------------------------------------
Philip R. Reynolds* Trustee
-------------------------------------
Herbert Roth, Jr.* Trustee
-------------------------------------
Richard E. Segerson* Trustee
-------------------------------------
Lowell P. Weicker, Jr.* Trustee
By /s/ Philip R. McLoughlin
--------------------------------------
*Philip R. McLoughlin pursuant to powers of attorney filed herewith.
S-2(c)
EXHIBIT 11
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. 17 to the registration statement on Form N-1A (the
"Registration Statement") of our report dated June 14, 1996, relating to the
financial statements and financial highlights appearing in the April 30, 1996
Annual Report to Shareholders of the Phoenix Strategic Equity Series 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 "Independent Accountants" in the
Statement of Additional Information.
[signature Price Waterhouse LLP]
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 22, 1996
PHOENIX FUNDS
(the "Funds")
AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended ("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate classes of shares' arrangements for distribution, the
method for allocating expenses to those classes and any related conversion or
exchange privileges applicable to these classes.
Upon the original effective date of this Plan, the Funds shall offer
multiple classes of shares, as described herein, pursuant to Rule 18f-3 and this
Plan.
2. The Multi-Class Structure
The portfolios of the Funds listed on Schedule A hereto shall offer two
classes of shares, Class A and Class B ("Multi-Class Portfolios"). Shares of the
Multi-Class Portfolios shall represent an equal pro rata interest in the
respective Multi-Class Portfolio and, generally, shall have identical voting,
dividend, liquidation, and other rights, preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each
class shall have a different designation; (b) each class shall bear any Class
Expenses, as defined by Section B, below; (c) each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to its
distribution arrangement; and (d) each class shall have separate voting rights
on any matter submitted to shareholders in which the interests of one class
differ from the interests of any other class. In addition, Class A and Class B
shares shall have the features described in Sections a, b, c and d, below.
a. Distribution Plans
The Funds have adopted Distribution Plans pursuant to Rule 12b-1 with
respect to each Multi-Class Portfolio, containing substantially the following
terms:
i. Class A shares of each Multi-Class Portfolio shall
reimburse Phoenix Equity Planning Corporation (the "Distributor") for costs and
expenses incurred in connection with distribution and marketing of shares
thereof, as provided in the Class A Distribution Plan and any supplements
thereto, subject to an annual limit of 0.25%, or in some cases 0.30%, of the
average daily net assets of a Multi-Class Portfolio's Class A shares.
<PAGE>
- 2 -
ii. Class B shares of each Multi-Class Portfolio shall
reimburse the Distributor for costs and expenses incurred in connection with
distribution and marketing of shares thereof, as provided in the Class B
Distribution Plan and any supplements thereto, subject to an annual limit of
1.00% of the average daily net assets of a Multi-Class Portfolio's Class B
shares.
b. Allocation of Income and Expenses
i. General.
The gross income, realized and unrealized capital gains and
losses and expenses (other than Class Expenses, as defined below) of each
Multi-Class Portfolio shall be allocated to each class on the basis of its net
asset value relative to the net asset value of the Multi-Class Portfolio.
Expenses to be so allocated include expenses of the Funds that are not
attributable to a particular Multi-Class Portfolio or class of a Multi-Class
Portfolio but are allocated to a Multi-Class Portfolio ("Fund Expenses") and
expenses of a particular Multi-Class Portfolio that are not attributable to a
particular class of that Multi-Class Portfolio ("Portfolio Expenses"). Fund
Expenses include, but are not limited to, trustees' fees, insurance costs and
certain legal fees. Portfolio Expenses include, but are not limited to, certain
state registration fees, custodial fees, advisory fees and other expenses
relating to the management of the Multi-Class Portfolio's assets.
ii. Class Expenses.
Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (1) transfer agency fees; (2) stationery, printing,
postage, and delivery expenses relating to preparing and distributing
shareholder reports, prospectuses, and proxy statements; (3) state Blue Sky
registration fees; (4) SEC registration fees; (5) expenses of administrative
personnel and services to the extent related to another category of
class-specific expenses; (6) trustees' fees and expenses; (7) accounting
expenses, auditors' fees, litigation expenses, and legal fees and expenses; and
(8) expenses incurred in connection with shareholder meetings. Expenses
described in subsection (a) of this paragraph must be allocated to the class for
which they are incurred. All other expenses described in this paragraph may be
allocated as Class Expenses, if a Fund's President and Treasurer have
determined, subject to Board approval or ratification, which of such categories
of expenses will be treated as Class Expenses, consistent with applicable legal
principles under the 1940 Act and the Internal Revenue Code of 1986, as amended
("Code"). The difference between the Class Expenses allocated to each share of a
class during a year and the Class Expenses allocated to each share of any other
class during such year shall at all times be less than .50% of the average daily
net asset value of the class of shares with the smallest average net asset
value. The afore-described description of Class Expenses and any amendment
thereto shall be subject to the continuing availability of an opinion of counsel
or a ruling from the Internal Revenue Service to the effect that any such
allocation of expenses or the assessment of higher distribution fees and
transfer agency costs on any class of shares does not result in any dividends or
distributions constituting "preferential dividends" under the Code.
<PAGE>
- 3 -
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Fund
Expense or Portfolio Expense as applicable, and in the event a Fund Expense or
Portfolio Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 18f-3 and Board approval or
ratification.
The initial determination of expenses that will be allocated
as Class Expenses and any subsequent changes thereto as set forth in this Plan
shall be reviewed by the Board of Trustees and approved by such Board and by a
majority of the Trustees who are not "interested persons" of the Fund, as
defined in the 1940 Act ("Independent Trustees")
iii. Waivers or Reimbursements of Expenses
Expenses may be waived or reimbursed by the Fund's investment
adviser(s), its principal underwriters, or any other provider of services to a
Multi-Class Portfolio without the prior approval of the Board of Trustees.
c. Exchange Privileges
Shareholders of a Multi-Class Portfolio may exchange shares of a
particular class for shares of the same class in another Multi-Class Portfolio,
at the relative net asset values of the respective shares to be exchanged and
with no sales charge, provided the shares to be acquired in the exchange are, as
may be necessary, qualified for sale in the shareholder's state of residence and
subject to the applicable requirements, if any, as to minimum amount.
d. Conversion Feature
Class B Shares of a Multi-Class Portfolio will automatically convert to
Class A Shares of that portfolio, without sales charge, at the relative net
asset values of each such classes, not later than eight years from the
acquisition of the Class B Shares. The conversion of Class B Shares to Class A
Shares is subject to the continuing availability of an opinion of counsel or a
ruling from the Internal Revenue Service to the effect that the conversion of
shares does not constitute a taxable event under federal income tax law.
3. Board Review
a. Approval of Amended and Restated Plan
The Board of Trustees, including the Independent Trustees, at
a meeting held on August 21, 1996, approved the Amended and Restated Plan based
on a determination that the Plan, including the expense allocation, is in the
best interests of each class and Multi-Class Portfolio individually and of the
Funds.
<PAGE>
- 4 -
b. Approval of Amendments
The Plan may not be amended materially unless the Board of
Trustees, the Independent Trustees, have found that the proposed amendment,
including any proposed related expense allocation, is in the best interests of
each class and Multi-Class Portfolio individually and of the Funds.
c. Periodic Review
The Board shall review reports of expense allocations and such
other information as they request at such times, or pursuant to such schedule,
as they may determine consistent with applicable legal requirements.
4. Contracts
Any agreement related to the Multi-Class System shall require the
parties thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
5. Effective Date
The Amended and Restated Plan, having been reviewed and approved by the
Board of Trustees and the Independent Trustees, shall take effect as of the
first day of each Fund's current fiscal year.
6. Amendments
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3(b) of this
Plan.
<PAGE>
- 5 -
SCHEDULE A
PHOENIX CALIFORNIA TAX -EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND:
DIVERSIFIED INCOME PORTFOLIO
EMERGING MARKETS BOND PORTFOLIO
INTERNATIONAL PORTFOLIO
REAL ESTATE SECURITIES PORTFOLIO
SMALL CAP PORTFOLIO
TAX-EXEMPT BOND PORTFOLIO
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES
BALANCED FUND SERIES
CONVERTIBLE FUND SERIES
GROWTH FUND SERIES
HIGH YIELD FUND SERIES
MONEY MARKET FUND SERIES
U.S. GOVERNMENT SECURITIES FUND SERIES
PHOENIX TOTAL RETURN FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND
MICRO CAP FUND
STRATEGIC THEME FUND
SMALL CAP FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
c:\wpdocs\funds\2200\2286
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> PHOENIX EQUITY OPPORTUNITIES FUND CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 174811
<INVESTMENTS-AT-VALUE> 213692
<RECEIVABLES> 2133
<ASSETS-OTHER> 24
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 215849
<PAYABLE-FOR-SECURITIES> 434
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 467
<TOTAL-LIABILITIES> 901
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 165249
<SHARES-COMMON-STOCK> 24245
<SHARES-COMMON-PRIOR> 24290
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 10818
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38881
<NET-ASSETS> 214948
<DIVIDEND-INCOME> 925
<INTEREST-INCOME> 503
<OTHER-INCOME> 0
<EXPENSES-NET> (2499)
<NET-INVESTMENT-INCOME> (1071)
<REALIZED-GAINS-CURRENT> 27907
<APPREC-INCREASE-CURRENT> 29338
<NET-CHANGE-FROM-OPS> 56174
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (20540)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3092
<NUMBER-OF-SHARES-REDEEMED> (5082)
<SHARES-REINVESTED> 1944
<NET-CHANGE-IN-ASSETS> 33934
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4629
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1394
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2499
<AVERAGE-NET-ASSETS> 199177
<PER-SHARE-NAV-BEGIN> 7.40
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 2.34
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.89)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.81
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> PHOENIX EQUITY OPPORTUNITIES FUND CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 174811
<INVESTMENTS-AT-VALUE> 213692
<RECEIVABLES> 2133
<ASSETS-OTHER> 24
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 215849
<PAYABLE-FOR-SECURITIES> 434
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 467
<TOTAL-LIABILITIES> 901
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 165249
<SHARES-COMMON-STOCK> 154
<SHARES-COMMON-PRIOR> 71
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 10818
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38881
<NET-ASSETS> 214948
<DIVIDEND-INCOME> 925
<INTEREST-INCOME> 503
<OTHER-INCOME> 0
<EXPENSES-NET> (2499)
<NET-INVESTMENT-INCOME> (1071)
<REALIZED-GAINS-CURRENT> 27907
<APPREC-INCREASE-CURRENT> 29338
<NET-CHANGE-FROM-OPS> 56174
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (108)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 129
<NUMBER-OF-SHARES-REDEEMED> (59)
<SHARES-REINVESTED> 13
<NET-CHANGE-IN-ASSETS> 822
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4629
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1394
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2499
<AVERAGE-NET-ASSETS> 199177
<PER-SHARE-NAV-BEGIN> 7.39
<PER-SHARE-NII> (0.10)
<PER-SHARE-GAIN-APPREC> 2.33
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.89)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.73
<EXPENSE-RATIO> 2.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> PHOENIX STATEGIC THEME FUND CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> OCT-16-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 36418
<INVESTMENTS-AT-VALUE> 43052
<RECEIVABLES> 2543
<ASSETS-OTHER> 469
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46064
<PAYABLE-FOR-SECURITIES> 667
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 84
<TOTAL-LIABILITIES> 751
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 39055
<SHARES-COMMON-STOCK> 2699
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (376)
<ACCUM-APPREC-OR-DEPREC> 6634
<NET-ASSETS> 45313
<DIVIDEND-INCOME> 30
<INTEREST-INCOME> 137
<OTHER-INCOME> 0
<EXPENSES-NET> (203)
<NET-INVESTMENT-INCOME> (36)
<REALIZED-GAINS-CURRENT> (376)
<APPREC-INCREASE-CURRENT> 6634
<NET-CHANGE-FROM-OPS> 6222
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (26)
<NUMBER-OF-SHARES-SOLD> 2761
<NUMBER-OF-SHARES-REDEEMED> (64)
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 33393
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 99
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 292
<AVERAGE-NET-ASSETS> 24402
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 2.39
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (0.02)
<PER-SHARE-NAV-END> 12.37
<EXPENSE-RATIO> 1.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> PHOENIX STRATEGIC THEME FUND CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> OCT-16-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 36418
<INVESTMENTS-AT-VALUE> 43052
<RECEIVABLES> 2543
<ASSETS-OTHER> 469
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46064
<PAYABLE-FOR-SECURITIES> 667
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 84
<TOTAL-LIABILITIES> 751
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 39055
<SHARES-COMMON-STOCK> 967
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (376)
<ACCUM-APPREC-OR-DEPREC> 6634
<NET-ASSETS> 45313
<DIVIDEND-INCOME> 30
<INTEREST-INCOME> 137
<OTHER-INCOME> 0
<EXPENSES-NET> (203)
<NET-INVESTMENT-INCOME> (36)
<REALIZED-GAINS-CURRENT> (376)
<APPREC-INCREASE-CURRENT> 6634
<NET-CHANGE-FROM-OPS> 6222
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (2)
<NUMBER-OF-SHARES-SOLD> 993
<NUMBER-OF-SHARES-REDEEMED> (26)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 11920
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 99
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 292
<AVERAGE-NET-ASSETS> 24402
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 2.40
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (0.01)
<PER-SHARE-NAV-END> 12.33
<EXPENSE-RATIO> 2.16
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> PHOENIX SMALL CAP FUND CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> OCT-16-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 117189
<INVESTMENTS-AT-VALUE> 143166
<RECEIVABLES> 12476
<ASSETS-OTHER> 21
<OTHER-ITEMS-ASSETS> 3
<TOTAL-ASSETS> 155666
<PAYABLE-FOR-SECURITIES> 11939
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 187
<TOTAL-LIABILITIES> 12126
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117270
<SHARES-COMMON-STOCK> 5877
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 292
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 25978
<NET-ASSETS> 143540
<DIVIDEND-INCOME> 12
<INTEREST-INCOME> 232
<OTHER-INCOME> 0
<EXPENSES-NET> (442)
<NET-INVESTMENT-INCOME> (198)
<REALIZED-GAINS-CURRENT> 479
<APPREC-INCREASE-CURRENT> 25978
<NET-CHANGE-FROM-OPS> 26259
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6073
<NUMBER-OF-SHARES-REDEEMED> (197)
<SHARES-REINVESTED> 928
<NET-CHANGE-IN-ASSETS> 143540
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 197
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 521
<AVERAGE-NET-ASSETS> 38054
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 6.79
<PER-SHARE-DIVIDEND> (0.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.74
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> PHOENIX SMALL CAP FUND CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> OCT-16-1995
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 117189
<INVESTMENTS-AT-VALUE> 143166
<RECEIVABLES> 12476
<ASSETS-OTHER> 21
<OTHER-ITEMS-ASSETS> 3
<TOTAL-ASSETS> 155666
<PAYABLE-FOR-SECURITIES> 11939
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 187
<TOTAL-LIABILITIES> 12126
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117270
<SHARES-COMMON-STOCK> 2708
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 292
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 25978
<NET-ASSETS> 143540
<DIVIDEND-INCOME> 12
<INTEREST-INCOME> 232
<OTHER-INCOME> 0
<EXPENSES-NET> (442)
<NET-INVESTMENT-INCOME> (198)
<REALIZED-GAINS-CURRENT> 479
<APPREC-INCREASE-CURRENT> 25978
<NET-CHANGE-FROM-OPS> 26259
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2769
<NUMBER-OF-SHARES-REDEEMED> (61)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 197
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 521
<AVERAGE-NET-ASSETS> 38054
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.09)
<PER-SHARE-GAIN-APPREC> 6.77
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.68
<EXPENSE-RATIO> 2.26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
