As filed with the Securities and Exchange Commission on August 20, 1997
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 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 25 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 26 [X]
(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)
-------------
Thomas N. Steenburg
Vice President, Counsel and Secretary
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, 1997 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, 1997 was filed by
Registrant with the Commission on June 27, 1997.
================================================================================
<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
<TABLE>
<CAPTION>
Item Number Prospectus Caption
- ----------- -------------------
<S> <C> <C>
1. Cover Page ................................. Cover Page
2. Synopsis ................................. Introduction; Fund Expenses
3. Condensed Financial Information ............ Financial Highlights
4. General Description of Registrant ......... Cover Page; Introduction; Investment Objectives
and Policies; Additional Information
5. Management of the Fund ..................... Management of the Fund
6. Capital Stock and Other Securities ......... Dividends, Distributions and Taxes; Net Asset Value;
How to Buy Shares; Additional Information
7. Purchase of Securities Being Offered ...... How to Buy Shares; Distribution Plans; Net Asset
Value; Investor Account Services
8. Redemption or Repurchase .................. How to Redeem Shares
9. Pending Legal Proceeding .................. Not Applicable
</TABLE>
PART B
Information Required in Statement of Additional Information
<TABLE>
<CAPTION>
Item Number Statement of Additional Information Caption
- ----------- -------------------------------------------
<S> <C> <C>
10. Cover Page ............................................. Cover Page
11. Table of Contents .................................... Table of Contents
12. General Information and History ........................ Cover Page; General Information
13. Investment Objectives and Policies ..................... Cover Page; Investment Objectives; Investment
Policies; Investment Restrictions
14. Management of the Fund ................................. Services of the Adviser; Trustees and Officers; Other
Information
15. Control Persons and Principal Holders of Securities ... Not Applicable
16. Investment Advisory and Other Services ............... Services of the Advisers
17. Brokerage Allocation ................................. Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities ..................... Net Asset Value; How to Buy Shares
19. Purchase, Redemption and Pricing of Securities How to Buy Shares; Investor Account Services;
Being Offered .......................................... Redemption of Shares; Net Asset Value
20. Tax Status ............................................. Dividends, Distributions and Taxes
21. Underwriter .......................................... The Distributor
22. Calculations of Performance Data ..................... Performance Information
23. Financial Statements ................................. Financial Statements
</TABLE>
The following pages from Post-Effective Amendment No. 24 to the Registration
Statement on Form N-1A filed with the Securities and Exchange Commission on
February 21, 1997 are incorporated herein by reference thereto:
Part A
Version B Cross Reference pages to items required by Rule 495(a)
Version B Prospectus pages 1 through 24.
Part B
Version B Statement of Additional Information pages 1 through 23
April 30, 1996 Annual Report
<PAGE>
[FRONT COVER]
P H O E N I X
FUNDS
PROSPECTUS
AUGUST 28, 1997
Phoenix Strategic Equity Series Fund
o Equity
Opportunities
Fund
o Strategic Theme
Fund
o Small Cap Fund
[LOGOTYPE] PHOENIX
DUFF & PHELPS
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
August 28, 1997
Phoenix Strategic Equity Series Fund (the "Fund") is an open-end
management investment company whose shares are offered in four series, three of
which are offered in this Prospectus. 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.
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, 1997, 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: (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 OBJECTIVES AND POLICIES .................................... 8
Equity Opportunities Series ....................................... 9
Small Cap Series ................................................... 9
Theme Series ...................................................... 10
INVESTMENT TECHNIQUES AND RELATED RISKS .............................. 10
INVESTMENT RESTRICTIONS ............................................. 15
MANAGEMENT OF THE FUND ................................................ 15
DISTRIBUTION PLANS ................................................... 16
HOW TO BUY SHARES ................................................... 18
INVESTOR ACCOUNT SERVICES ............................................. 22
NET ASSET VALUE ...................................................... 23
HOW TO REDEEM SHARES ................................................ 24
DIVIDENDS, DISTRIBUTIONS AND TAXES .................................... 25
ADDITIONAL INFORMATION ................................................ 26
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 four series, three of which are
described in this Prospectus. 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 indirect subsidiaries of Phoenix Home Life Mutual
Insurance Company. See "Management of the Fund" for a description of the
Investment Advisory Agreements and management fees.
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 fee. Equity Planning also
serves as the Fund's transfer agent. See "The Custodian and 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 1998 fiscal year. Pursuant to the distribution plan adopted for
Class B Shares, the Fund shall reimburse the Distributor up to a maximum annual
rate of 1.00% of the Fund's average daily Class B Share net assets 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.
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 applications for the purchase of shares
should be mailed to the Phoenix Funds, c/o State Street Bank and Trust Company,
P.O. Box 8301, Boston, MA 02266-8301.
Class A Shares are offered to the public at the next determined net asset
value after receipt of the order by State Street Bank and Trust Company plus a
maximum sales charge of 4.75% of the offering price (4.99% of the amount
invested) on single purchases of less than $50,000. The sales charge for Class
A Shares is reduced on a graduated scale on single purchases of $50,000 or more
and subject to other conditions stated below. See "How to Buy Shares," "How to
Obtain Reduced Sales Charges on Class A Shares" and "Net Asset Value."
Class B Shares are offered to the public at the next determined net asset
value after receipt of an order by State Street Bank and Trust Company, with no
sales charge. Class B Shares are subject to a sales charge if they are redeemed
within five years of purchase. See "How to Buy Shares" and "Deferred Sales
Charge Alternative--Class B Shares."
Shares of each Class represent an identical interest in the investment
portfolio of 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, 1997.
<TABLE>
<CAPTION>
Equity Opportunities Series
------------------------------------------
Class A Class B
Shares Shares
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.75% None
Maximum Sales Load Imposed on Reinvested
Dividends None None
Deferred Sales Load (as a percentage of original None 5% during the first year,
purchase price or redemption proceeds, decreasing 1% annually to 2%
as applicable) during the fourth and fifth
years; decreasing to 0% after
the fifth year
Redemption Fee None None
Exchange Fee None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees
Advisory Fees 0.70% 0.70%
12b-1 Fees (after waiver) (a) 0.25% 1.00%
Other Expenses 0.28% 0.28%
------ ------
Total Fund Operating Expenses 1.23% 1.98%
====== ======
<CAPTION>
Small Cap Series
--------------------------------------------
Class A Class B
Shares Shares
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.75% None
Maximum Sales Load Imposed on Reinvested
Dividends None None
Deferred Sales Load (as a percentage of original None 5% during the first year,
purchase price or redemption proceeds, decreasing 1% annually to 2%
as applicable) during the fourth and fifth
years; decreasing to 0% after
the fifth year
Redemption Fee None None
Exchange Fee None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees
Advisory Fees 0.75% 0.75%
12b-1 Fees (after waiver) (a) 0.25% 1.00%
Other Expenses 0.37% 0.37%
------ -----
Total Fund Operating Expenses 1.37% 2.12%
====== =====
</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 1998 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."
4
<PAGE>
Theme Series
-------------------------------------
Class A Class B
Shares Shares
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.75% None
Maximum Sales Load Imposed on Reinvested
Dividends None None
Deferred Sales Load (as a percentage of None 5% during the first year,
original purchase price or redemption decreasing 1% annually
proceeds, as applicable) to 2% during the fourth
and fifth years;
decreasing to 0%
after the fifth year
Redemption Fee None None
Exchange Fee None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees
Advisory Fees 0.75% 0.75%
12b-1 Fees (after waiver) (a) 0.25% 1.00%
Other Expenses 0.40% 0.40%
------ -----
Total Fund Operating Expenses 1.40% 2.15%
===== =====
- -----------
(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 1998 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."
<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) $59 $85 $112 $189
Equity Opportunities Series (Class B Shares) $60 $82 $107 $211
Small Cap Series (Class A Shares) $61 $89 $119 $204
Small Cap Series (Class B Shares) $62 $86 $114 $226
Theme Series (Class A Shares) $61 $90 $120 $207
Theme Series (Class B Shares) $62 $87 $115 $229
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) $59 $85 $112 $189
Equity Opportunities Series (Class B Shares) $20 $62 $107 $211
Small Cap Series (Class A Shares) $61 $89 $119 $204
Small Cap Series (Class B Shares) $22 $66 $114 $226
Theme Series (Class A Shares) $61 $90 $120 $207
Theme Series (Class B Shares) $22 $67 $115 $229
</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. Class B Share figures
assume conversion to Class A Shares after eight years. 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 each
Series by class of shares for the Fund. The financial information has been
audited by Price Waterhouse LLP, independent accountants. Their opinion and the
Fund's 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 Fund
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------------
Year Ended April 30,
1997 1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $8.81 $7.40 $7.31 $9.64 $8.59 $8.36 $7.61
Income from investment operations
Net investment income (loss) ............... (0.03)(4) (0.04)(4) 0.04 0.05 0.06 0.11 0.17
Net realized and unrealized gain (loss) ... (0.90) 2.34 0.58 0.57 1.34 0.71 0.74
----- ----- ----- ------ ----- ----- -----
Total from investment operations ......... (0.93) 2.30 0.62 0.62 1.40 0.82 0.91
----- ----- ----- ------ ----- ----- -----
Less distributions
Dividends from net investment income ...... -- -- (0.05) (0.05) (0.06) (0.12) (0.16)
Distributions from net realized gains ...... (0.94) (0.89) (0.48) (2.90) (0.29) (0.47) --
In excess of accumulated net realized gains (0.05) -- -- -- -- -- --
----- ----- ----- ------ ----- ----- -----
Total distributions ..................... (0.99) (0.89) (0.53) (2.95) (0.35) (0.59) (0.16)
----- ----- ----- ------ ----- ----- -----
Change in net asset value .................. (1.92) 1.41 0.09 (2.33) 1.05 0.23 0.75
----- ----- ----- ------ ----- ----- -----
Net asset value, end of period ............ $6.89 $8.81 $7.40 $7.31 $ 9.64 $8.59 $8.36
===== ===== ====== ====== ===== ===== =====
Total return(1) ........................... (12.19)% 32.86% 9.16% 4.99% 16.50% 10.30% 12.16%
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $163,396 $213,600 $179,666 $186,037 $215,570 $204,792 $213,147
Ratio to average net assets of:
Expenses ................................. 1.23% 1.25% 1.32% 1.26% 1.35% 1.36% 1.41%
Net investment income (loss) ............... (0.39)% (0.53)% 0.60% 0.57% 0.67% 1.29% 2.19%
Portfolio turnover ........................ 412% 302% 358% 167% 31% 73% 95%
Average commission rate paid(5) ............ $0.0543 $0.0600 N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------
Class A From
--------------------------------------- Inception
Year Ended April 30, Year Ended April 30, 7/19/94 to
1990 1989 1988 1997 1996 4/30/95
------------ ---------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $8.31 $7.52 $9.72 $8.73 $7.39 $7.28
Income from investment operations
Net investment income (loss) ............... 0.25 0.29 0.27 (0.09)(4) (0.10)(4) 0.00
Net realized and unrealized gain (loss) ... 0.38 1.17 (0.24) (0.88) 2.33 0.59
----- ----- ------ ----- ----- -----
Total from investment operations ......... 0.63 1.46 0.03 (0.97) 2.23 0.59
----- ----- ------ ----- ----- -----
Less distributions
Dividends from net investment income ...... (0.27) (0.30) (0.29) -- -- --
Distributions from net realized gains ...... (1.06) (0.37) (1.94) (0.94) (0.89) (0.48)
In excess of accumulated net realized gains -- -- -- (0.05) -- --
----- ----- ------ ----- ----- -----
Total distributions ..................... (1.33) (0.67) (2.23) (0.99) (0.89) (0.48)
----- ----- ------ ----- ----- -----
Change in net asset value .................. (0.70) 0.79 (2.20) (1.96) 1.34 0.11
----- ----- ------ ----- ----- -----
Net asset value, end of period ............ $7.61 $8.31 $7.52 $6.77 $8.73 $7.39
===== ===== ====== ===== ===== =====
Total return(1) ........................... 7.08% 20.52% (1.72)% (12.79)% 31.92% 8.69%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $210,667 $230,066 $218,749 $1,666 $1,348 $525
Ratio to average net assets of:
Expenses ................................. 1.09% 0.89% 0.74% 1.98% 2.06% 2.15%(2)
Net investment income (loss) ............... 2.88% 3.75% 3.35% (1.15)% (1.18)% (0.06)%(2
Portfolio turnover ........................ 49% 59% 91% 412% 302% 358%
Average commission rate paid(5) ............ N/A N/A N/A $0.0543 $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
(5) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
6
<PAGE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
- --------------------------------------------------------------------------------
Phoenix Small Cap Fund
<TABLE>
<CAPTION>
Class A Class B
----------------------------- ---------------------------
From Inception From Inception
Year Ended 10/16/95 to Year Ended 10/16/95 to
4/30/97 4/30/96 4/30/97 4/30/96
---------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............... $16.74 $10.00 $16.68 $10.00
Income from investment operations
Net investment income (loss) ..................... (0.05)(5) (0.04)(1)(5) (0.17)(5) (0.09)(1)(5)
Net realized and unrealized gain (loss) ......... (2.53) 6.79 (2.50) 6.77
------ ---- ----- -----
Total from investment operations ............... (2.58) 6.75 (2.67) 6.68
------ ---- ----- -----
Less distributions
Dividends from net investment income ............ -- -- -- --
Dividends from net realized gains ............... (0.02) -- (0.02) --
In excess of net investment income ............... -- (0.01) -- --
In excess of accumulated net realized gains ...... (0.01) -- (0.01) --
------ ---- ----- -----
Total distributions .............................. (0.03) (0.01) (0.03) --
------ ---- ----- -----
Change in net asset value ........................ (2.61) 6.74 (2.70) 6.68
------ ---- ----- -----
Net asset value, end of period ..................... $14.13 $16.74 $13.98 $16.68
====== ==== ===== =====
Total return(2) .................................... (15.43)% 67.48%(4) (16.03)% 66.80%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) ............... $155,089 $98,372 $97,647 $45,168
Ratio to average net assets of:
Expenses .......................................... 1.37% 1.50% (3) 2.12% 2.26%(3)
Net investment income (loss) ..................... (0.28)% (0.53)%(3) (1.03)% (1.44)%(3)
Portfolio turnover ................................. 325% 103%(4) 325% 103%(4)
Average commission rate paid(6) .................. $ 0.0540 $0.0657 $0.0540 $0.0657
</TABLE>
- -----------
(1) Includes reimbursement of operating expenses by investment adviser 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.
(6) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
Phoenix Strategic Theme Fund
<TABLE>
<CAPTION>
Class A Class B
-------------------------- -------------------------
From Inception From Inception
Year Ended 10/16/95 to Year ended 10/16/95 to
4/30/97 4/30/96 4/30/97 4/30/96
---------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............... $12.37 $10.00 $12.33 $10.00
Income from investment operations(7)
Net investment income (loss) ..................... 0.06(5) (0.00)(1)(5) (0.03)(5) (0.06)(1)(5)
Net realized and unrealized gain (loss) ......... (0.38) 2.39 (0.38) 2.40
------ ----- ------ -----
Total from investment operations ............... (0.32) 2.39 (0.41) 2.34
------ ----- ------ -----
Less distributions
Dividends from net investment income ............ (0.01) -- -- --
In excess of accumulated net realized gains ...... (0.01) -- (0.01) --
Tax return of capital ........................... -- (0.02) -- (0.01)
------ ----- ------ -----
Total distributions .............................. (0.02) (0.02) (0.01) (0.01)
------ ----- ------ -----
Change in net asset value ........................ (0.34) 2.37 (0.42) 2.33
------ ----- ------ -----
Net asset value, end of period ..................... $ 12.03 $12.37 $11.91 $12.33
====== ===== ====== =====
Total return(2) .................................... (2.57)% 23.89%(4) (3.31)% 23.41%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) ............... $77,827 $33,393 $49,843 $11,920
Ratio to average net assets of:
Expenses .......................................... 1.40% 1.40%(3) 2.15% 2.16%(3)
Net investment income (loss) ..................... 0.49% (0.09)%(3) (0.23)% (1.06)%(3)
Portfolio turnover ................................. 532% 175%(4) 532% 175%(4)
Average commission rate paid(6) .................. $0.0590 $0.0663 $0.0590 $0.0663
</TABLE>
- -----------
(1) Includes reimbursement of operating expenses by investment adviser 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.
(6) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
(7) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from
anticipated results depending on the timing of share purchases and
redemptions.
7
<PAGE>
PERFORMANCE INFORMATION
The Fund may, from time to time, include its yield and total return in
advertisements, sales literature or reports to shareholders or prospective
investors. Both yield and total return figures are computed separately for each
Class of 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 a 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 each Class of
Shares of a Series will be expressed in terms of the average annual compound
rate of return of a hypothetical investment in such Class of Shares of a Series
over a period of 1, 5 and 10 years (or up to the life of the 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
each Class of Shares are reinvested when paid. 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 Composite Stock Price Index (the "S&P 500"), Standard & Poor's 400 MidCap
Index (the "S&P 400"), Dow Jones Industrial Average, Russell 2000 Index,
Russell 2000 Growth Index, Europe Australia Far East Index (EAFE), Consumer
Price Index, Lehman Brothers Corporate Index and Lehman Brothers T-Bond Index.
The S&P 500 is a commonly quoted measure of stock market performance and
represents common stocks of companies of varying sizes segmented across 90
different industries which are listed on the New York Stock Exchange, the
American Stock Exchange and traded over the NASDAQ National Market System.
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, Dow Jones Industrial Average, CS 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 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
8
<PAGE>
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.
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 $1 billion or less at
the time of acquisition. Up to 25% of the Series' total assets may be invested
in small capitalization foreign issuers.
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.
Additional discussion regarding risks involved in investing in the Series
are described in the "Investment Techniques and Related Risks" section below.
9
<PAGE>
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 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.
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). 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
10
<PAGE>
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.
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
11
<PAGE>
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.
A 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.
A Series will engage in transactions in financial futures contracts and
related options only for hedging purposes and not for speculation. In addition,
a 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, any asset, including equity
securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily, equal to the market value of the
futures contract minus such Series' initial margin deposit with respect
thereto, will be deposited in a pledged 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 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
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<PAGE>
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, any asset, including
equity securities and non-investment grade debt so long as the asset is liquid,
unencumbered and marked to market daily, equal to the market value of the
contract, minus the Series' initial margin deposit with respect thereto, will
be deposited in a pledged 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 retains the portfolio
security and engages 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 assets (provided however,
the Theme Series may invest up to 35% of its total assets) 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. 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.
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<PAGE>
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 331/3% 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 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
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<PAGE>
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.
MANAGEMENT OF THE FUND
The Fund is a mutual fund technically known as an open-end management
investment 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. 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, 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 Duff & Phelps Institutional Mutual Funds (other than
Enhanced Reserves Portfolio and Real Estate Equity Securities Portfolio),
Phoenix Strategic Allocation Fund, Inc. and The Phoenix Edge Series Fund (other
than the Real Estate Securities Series and Aberdeen New Asia Series) and as
sub-adviser to investment portfolios of Chubb America Fund, Inc. and SunAmerica
Series Trust. PIC was originally organized in 1932 as John Chase, Inc. As of
April 30, 1997, PIC had approximately $17.96 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:
<TABLE>
<CAPTION>
1st $1-2 $2+
Series Billion Billion Billion
- ----------- --------- --------- --------
<S> <C> <C> <C>
Theme 0.75% 0.70% 0.65%
Small Cap 0.75% 0.70% 0.65%
</TABLE>
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, 1997 for the Theme Series and
Small Cap Series was 0.75%.
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 April 30, 1997,
National had approximately $1.6 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 0.70%
of the Series' average daily net assets of up to $1 billion, 0.65% of
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<PAGE>
the Series' average daily net assets from $1 billion to $2 billion and 0.60% 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, 1997
for the Equity Opportunities Series was 0.70%.
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 1994. Mr. Arends is a Managing Director, Equities, of PIC and
National and is also a Vice President of the Fund and 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 and Chief Investment Strategist of PIC
and of National. He is a Senior Vice President of The Phoenix Edge Series Fund,
Phoenix Multi-Portfolio Fund, Phoenix Income and Growth Fund, Phoenix Series
Fund, Phoenix Strategic Allocation Fund, Inc., Phoenix Worldwide Opportunities
Fund, Phoenix-Aberdeen Series 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. As
compensation, Equity Planning is entitled to a fee, payable monthly and based
upon (a) the average of the aggregate daily net asset values of each Series, at
the following incremental annual rates:
<TABLE>
<S> <C>
First $100 million .05%
$100 million to $300 million .04%
$300 million through $500 million .03%
Greater than $500 million .015%
</TABLE>
(b) a minimum fee of $50,000 for each Series; and (c) an annual fee of
$12,000 for each class of shares beyond one. For its services during the Fund's
fiscal year ended April 30, 1997, Equity Planning received $211,223 or .04% of
average net assets.
The Custodian and Transfer Agent
The custodian of the assets of the Fund is State Street Bank and Trust
Company, P.O. Box 351, Boston, Massachusetts 02101 (the "Custodian").
Pursuant to a Transfer Agent and Service Agreement with the Phoenix Funds,
Equity Planning acts as transfer agent for the Fund (the "Transfer Agent") for
which it is paid $14.95 plus out of pocket expenses for each designated
shareholder account. The Transfer Agent engages sub-agents to perform certain
shareholder servicing functions for which such agents are paid a fee by Equity
Planning.
Brokerage Commissions
Although the Conduct Rules 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, Nancy
G. Curtiss, William E. Keen, III, William R. Moyer, 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
principal, 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
16
<PAGE>
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. 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 1998 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 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, 1997, the Fund paid the Distributor
$1,084,114 under the Class A Plan and $1,325,489 under the Class B Plan. The
fees were used to compensate broker-dealers for servicing shareholder's
accounts, including $87,100 paid to W.S. Griffith & Co., Inc., an affiliate,
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
17
<PAGE>
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 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
18
<PAGE>
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.
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Discount
Amount of as Percentage as Percentage or Agency Fee
Transaction of Offering of Amount as Percentage of
at Offering Price Price Invested Offering Price*
- -------------------- --------------- --------------- -----------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under
$100,000 4.50% 4.71% 4.00%
$100,000 but under
$250,000 3.50% 3.63% 3.00%
$250,000 but under
$500,000 3.00% 3.09% 2.75%
$500,000 but under
$1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None None**
</TABLE>
- ---------
*Equity Planning will sponsor sales contests, training and educational meetings
and provide to all qualifying dealers, from its own profits and resources,
additional compensation in the form of trips, merchandise or expense
reimbursement. Brokers and dealers other than Equity Planning may also make
customary additional charges for their services in effecting purchases, if they
notify the Fund of their intention to do so. Equity Planning shall also pay
service and retention fees, from its own profits and resources, to qualified
wholesalers in connection with 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 employees, Equity Planning may pay broker/dealers, from
its own resources, an amount equal to 1% on the first $3 million of purchases,
0.50% on the next $3 million, plus 0.25% on the amount in excess of $6 million.
In connection with Class A Share purchases of $1,000,000 or more (or subsequent
purchases in any amount), excluding purchases by qualified employee benefit
plans as described above, Equity Planning may pay broker-dealers, from its own
profits and resources, a percentage of the net asset value of any shares sold
as set forth below:
<TABLE>
<CAPTION>
Purchase Amount Payment to Broker/Dealer
- -------------------------- -------------------------
<S> <C>
$1,000,000 to $3,000,000 1%
$3,000,001 to $6,000,000 0.50 of 1%
$6,000,001 or more 0.25 of 1%
</TABLE>
If part or all of such investment, including investments by qualified
employee benefit plans, is subsequently redeemed within one year of the
investment date, the broker-dealer will refund to the Distributor such amounts
paid with respect to the investment.
How to Obtain Reduced Sales Charges On Class A Shares
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
Qualified Purchasers. No sales charge will be imposed on sales of shares
to: (1) any Phoenix Fund trustee, director or officer; (2) any director or
officer, or any full-time employee or sales representative (who has acted as
such for at least 90 days) of the Adviser or 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
19
<PAGE>
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.
In addition, Class A shares purchased by the following investors are not
subject to any Class A sales charge: (1) investment advisors and financial
planners who charge an advisory, consulting or other fee for their services and
buy shares for their own accounts or the accounts of their clients, and (2)
retirement plans and deferred compensation plans and trusts used to fund those
plans (including, for example, plans qualified or created under sections
401(a), 403(b) or 457 of the Internal Revenue Code), and "rabbi trusts" that
buy shares for their own accounts, in each case if those purchases are made
through a broker or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; (3) clients of such
investment advisors or financial planners who buy shares for their own accounts
may also purchase shares without sales charge but only if their accounts are
linked to a master account of their investment advisor or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of these investors may
be charged a fee by the broker, agent or financial intermediary for purchasing
shares).
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 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
20
<PAGE>
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.
<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge as
a Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
- --------------------- ---------------------
<S> <C>
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 2%
Sixth 0%
</TABLE>
In determining whether a contingent deferred sales charge is applicable to
a redemption, it will be assumed that any Class A Shares are being redeemed
first. Class B Shares held for over 5 years and shares acquired pursuant to
reinvestment of dividends or distributions are redeemed next. Any Class B
Shares held longest during the 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
21
<PAGE>
within one year of disability, as defined in Section 72(m)(7) of the Code; (c)
in connection with mandatory distributions upon reaching age 701/2 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, Class B 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 (i) the assessment of the higher
distribution fees and transfer agency costs with respect to Class B Shares does
not result in any dividends or distributions constituting "preferential
dividends" under the Code, and (ii) that the conversion of shares does not
constitute a taxable event under federal income tax law. 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 eight
years after the end of the month in which affected Class B Shares were
purchased. 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.
INVESTOR ACCOUNT SERVICES
The Fund mails periodic statements and reports to shareholders. In order
to reduce the volume and cost of mailings, 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 toll free at (800)
243-4361.
In most cases, changes to any shareholder account may be accomplished by
calling Shareholder Services at (800) 243-1574. More information relating to
the shareholder account services can be found in the Fund's Statement of
Additional Information ("SAI").
Bank Draft Investing Program (Investo-Matic Plan). By completing the
Investo-Matic Section of the New Account Application, you may authorize the
bank named in the form to draw $25 or more from your personal checking or
savings account to be used to purchase additional shares for your account. The
amount you designate will be made available, in form payable to the order of
the Transfer Agent, by the bank on the date the bank draws on your account and
will be used to purchase shares at the applicable offering price.
Distribution Option. Each Series currently declares all income dividends
and all capital gain distributions, if any, payable in shares of the Series at
net asset value or, at your option, in cash. By exercising the distribution
option, you may elect to: (1) receive both dividends and capital gain
distributions in additional shares or (2) receive dividends in cash and capital
gain distributions in additional shares or (3) receive both dividends and
capital gain distributions in cash. If you elect to receive dividends and/or
distributions in cash and the check cannot be delivered or remains uncashed 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 in your account at the then current net
asset value. Dividends and capital gain distributions received in shares are
taxable to you and credited to your account in full and fractional shares
computed at the closing net asset value on the next business day after the
record date. No interest will accrue on amounts represented by uncashed
distribution or redemption checks.
Systematic Withdrawal Program. The Systematic Withdrawal Program allows
you to periodically redeem a portion of your account on a predetermined
monthly, quarterly, semiannual or annual basis. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are
22
<PAGE>
tendered for redemption by the Transfer Agent, as agent for the shareowner, on
or about the 15th of the month at the closing net asset value on the date of
redemption. The Systematic Withdrawal Program also provides for redemptions to
be tendered on or about the 10th, 15th or 25th of the month with proceeds to be
directed through Automated Clearing House (ACH) to your bank account. In
addition to the limitations stated below, withdrawals may not be less than $25
and minimum account balance requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Series worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. The purchase
of shares while participating in the withdrawal program will ordinarily be
disadvantageous to the Class A Shares investor since a sales charge will be
paid by the investor on the purchase of Class A Shares at the same time as
other shares are being redeemed. For this reason, investors in Class A Shares
may not participate in an automatic investment program while participating in
the Systematic Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any
applicable contingent deferred sales charge on all shares redeemed.
Accordingly, the purchase of Class B Shares will generally not be suitable for
an investor who anticipates withdrawing sums in excess of the above limits
shortly after 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, SIMPLE IRA, SIMPLE 401(k), 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
at (800) 243-4631 for further information about the plans.
Exchange Privileges
You may exchange shares of one Phoenix Fund for shares of another Phoenix
Fund without paying any fees or sales charges. On exchanges with share classes
that carry a contingent deferred sales charge, the CDSC schedule of the
original shares purchased continues to apply. Shares held in book-entry form
may be exchanged 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; (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 Phoenix Fund after the exchange is made; and (5) if you have
elected not to use the telephone exchange privilege (see below), a properly
executed exchange request must be received by the Distributor. Exchanges may be
made over the telephone or in writing and may be made at one time or
systematically over a period of time. Note, each Phoenix Fund has different
investment objectives and policies. You should read the prospectus of the
Phoenix Fund into which the exchange is to be made before making any exchanges.
This privilege may be modified or terminated at any time on 60 days' notice.
Market Timer Restrictions. Because excessive trading can hurt Fund
performance and harm shareholders, the Fund reserves the right to temporarily
or permanently terminate exchange privileges or reject any specific order from
anyone whose transactions seem to follow a timing pattern, including those who
request more than one exchange out of a fund within any 30 day period. The
Distributor has entered into agreements with certain market timer entities
permitting them to exchange their clients' shares by telephone. These
privileges are limited under those agreements. The Distributor has the right to
reject or suspend these privileges upon reasonable notice.
Telephone Exchanges. If permitted in your state and unless you waive this
privilege in writing, you or your broker may sell or exchange your shares over
the phone by calling the Distributor at (800) 243-1574. Reasonable procedures
will be used to confirm that telephone instructions are genuine. In addition to
requiring that the exchange is only made between accounts with identical
registrations, the Distributor may require address or other forms of
identification and will record telephone instructions. All exchanges will be
confirmed in writing to you. If procedures reasonably designed to prevent
unauthorized telephone exchanges are not followed, the Fund and/or Distributor
may be liable for following telephone instructions that prove to be fraudulent.
Broker/dealers other than the Distributor assume the risk of any loss resulting
from any unauthorized telephone exchange instructions from their firm or their
registered representatives. You assume the risk if the Distributor acts upon
unauthorized instructions it reasonably believes to be genuine. During times of
severe economic or market changes, this privilege may be difficult to exercise
or may be temporarily suspended. In such event, an exchange may be effected by
written request by the registered shareowner(s).
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. The net asset value per share of a Series is
determined by adding the values of all securities and other assets of the
Series, subtracting liabilities, and dividing by the total number of
outstanding shares of the Series. The total liability allocated to a class,
plus that class's distribution fee and any other expenses allocated solely to
that class, are
23
<PAGE>
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.
The Series' investments are valued at market value or, where market
quotations are not available, at fair value as determined in good faith by the
Trustees or their delegates. Foreign and domestic debt securities (other than
short-term investments) are valued on the basis of broker quotations or
valuations provided by a pricing service approved by the Trustees when such
prices are believed to reflect the fair value of such securities. Foreign and
domestic equity securities are valued at the last sale price or, if there has
been no sale that day, at the last bid price, generally. Short-term investments
having a remaining maturity of less than sixty-one days are valued at amortized
cost, which the Trustees have determined approximates market value. For further
information about security valuations, see the Statement of Additional
Information.
HOW TO REDEEM SHARES
You have the right to have the Fund buy back shares at the net asset value
next determined after receipt of a redemption order, 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. In the case of a Class B Share
redemption, you will be subject to the applicable deferred sales charge, if
any, for such shares (see "Deferred Sales Charge Alternative--Class B Shares,"
above). Subject to certain restrictions, shares may be redeemed by telephone or
in writing. In addition, shares may be sold through securities dealers, brokers
or agents who may charge customary commissions or fees for their services. The
Fund does not charge any redemption fees. Payment for shares redeemed is made
within seven days, provided that redemption proceeds will not be disbursed
until each check used for purchases of shares has been cleared for payment by
your bank, which may take up to 15 days after receipt of the check.
The requirements to redeem shares are outlined in the table below.
Additional documentation may be required for redemptions by corporations,
partnerships or other organizations, executors, administrators, trustees,
custodians, guardians, or from IRA's 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 Funds at (800) 243-1574. Redemption requests
will not be honored until all required documents in proper form have been
received.
How can I sell my Shares?
By Phone [bullet] Sales up to $50,000
[Phone symbol] [bullet] Not available on most retirement accounts
(800) 243-1574 [bullet] Requests received after 4PM will be
executed on the following business day
In Writing [bullet] Letter of instruction from the registered
[Correspondence owner including the fund and account
symbol] number and the number of shares or dollar
amount you wish to sell
[bullet] No signature guarantee is required if your
shares are registered individually, jointly,
or as custodian under the Uniform Gifts to
Minors Act or Uniform Transfers to Minors
Act, the proceeds of the redemption do not
exceed $50,000, and the proceeds are
payable to the registered owner(s) at the
address of record
Shares previously issued in certificate form cannot be redeemed until the
certificated shares have been deposited to your account.
Telephone Redemptions
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, telephone redemption instructions will be
recorded on tape, and all redemptions will be confirmed in writing to you. If
there has been an address change within the past 60 days, a telephone
redemption will not be authorized. To the extent that procedures reasonably
designed to prevent unauthorized telephone redemptions are not followed, the
Fund and/or the Transfer Agent may be liable for following telephone
instructions for redemption transactions that prove to be fraudulent.
Broker/dealers other than Equity Planning have agreed to bear the risk of any
loss resulting from any unauthorized telephone redemption instruction from the
firm or its registered representatives. However, you 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
or may be temporarily suspended. In such event, a redemption may be effected by
written request by following the procedure outlined above.
24
<PAGE>
Written Redemptions
If you elect not to use the telephone redemption or telephone exchange
privileges, you must submit your request in writing. If the shares are being
exchanged between accounts that are not identically registered, the signature
on such request must be guaranteed by an eligible guarantor institution as
defined by the 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.
Account Reinstatement Privilege
You have a one time privilege of using redemption proceeds from Class A
and B Shares to purchase Class A Shares of any Phoenix Fund with no sales
charge (at 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 to reinstate your account must be
received by the Transfer Agent 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 Funds
reserve 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
Funds redeem 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 60 days to make an additional investment in an amount which will
increase the value of the account to at least $200.
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 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. 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. 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.
25
<PAGE>
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 series or class. At the date of this Prospectus, there are
four 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.
26
<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:
- -------------------------------------------------------------------------------
Account Type Give Social Security Number
or Tax Identification Number of:
- -------------------------------------------------------------------------------
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 Trust, Estate, Pension Plan Trust
Plan Trust (not personal TIN of fiduciary)
- -------------------------------------------------------------------------------
Corporation, Partnership,
Other Organization Corporation, Partnership, Other Organization
- -------------------------------------------------------------------------------
Broker/Nominee Broker/Nominee
- -------------------------------------------------------------------------------
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, 1997. 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, 1997 and is incorporated into the
Statement of Additional Information by reference.
[recycle symbol] Printed on recycled paper using soybean ink
<PAGE>
[BACK COVER]
Phoenix Strategic Equity Series Fund | BULK RATE MAIL|
PO Box 2200 | U.S. POSTAGE |
Enfield CT 06083-2200 | PAID |
|SPRINGFIELD, MA|
| PERMIT NO.444 |
[LOGOTYPE] PHOENIX
DUFF & PHELPS
PDP 690 (8/97)
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
101 Munson Street
Greenfield, MA 01301
Statement of Additional Information
August 28, 1997
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, 1997, 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
INVESTMENT TECHNIQUES (10) ........................................... 2
PERFORMANCE INFORMATION (8) ........................................... 8
PORTFOLIO TRANSACTIONS AND BROKERAGE .................................. 9
SERVICES OF THE ADVISERS (15) ........................................ 10
NET ASSET VALUE (23) ................................................. 11
HOW TO BUY SHARES (18) ................................................. 12
ALTERNATIVE PURCHASE ARRANGEMENTS (18) .................................. 12
INVESTOR ACCOUNT SERVICES (22) ........................................ 13
REDEMPTION OF SHARES (24) .............................................. 14
DIVIDENDS, DISTRIBUTIONS AND TAXES (25) ............................... 14
TAX SHELTERED RETIREMENT PLANS (23) .................................. 15
THE DISTRIBUTOR (16) ................................................. 15
PLANS OF DISTRIBUTION (16) ........................................... 16
TRUSTEES AND OFFICERS ................................................. 17
OTHER INFORMATION .................................................... 24
Numbers appearing in parentheses correspond to
related disclosures in the Fund's Prospectus.
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PDP731 (8/97)
<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
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 331/3% 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' net assets in warrants and stock
rights, valued at the lower of cost or market, or more than 2% of its net
assets in warrants and stock rights that are not listed on the New York Stock
Exchange or American Stock Exchange.
INVESTMENT TECHNIQUES
The Fund may utilize the following practices or techniques in pursuing its
investment objectives.
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
2
<PAGE>
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.
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 "Dividends,
Distributions and 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.
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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 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, any asset, including equity securities and
non-investment grade debt so long as the asset is liquid, unencumbered and
marked to market daily, equal to the market value of the futures contract minus
a Series' initial margin deposit with respect thereto will be deposited in a
pledged 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
"Dividends, Distributions and 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
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the price of the securities being hedged, a Series will experience a gain or
loss which will not be completely offset by movements 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 331/3% 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 assets of each Series (provided,
however, the Theme Series may invest up to 35% of its total assets 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
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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.
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
Each Series 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. The Adviser 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 be instructed to pledge any asset,
including equity securities and non-investment grade debt so long as the asset
is liquid, unencumbered and marked to market daily, equal to the value of such
contracts. If the value of the securities pledged declines, additional cash or
securities will be added so that the pledged amount is not less than the amount
of the Series' commitments with respect to such contracts. Generally, no Series
will enter 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 Series 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 Series
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 Series 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 Series 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 Series may use foreign
currency futures contracts and options on such futures contracts. Through the
purchase or sale of such contracts, a Series 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 Series will maintain in a pledged
account any asset, including equity securities and non-investment grade debt so
long as the asset is liquid, unencumbered and marked to market daily, 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 Series
will not enter into a futures contract or purchase an option thereon if
immediately thereafter the
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initial margin deposits for futures contracts (including foreign currency and
all other futures contracts) held by the Series plus premiums paid by it for
open options on futures would exceed 5% of the Series' total assets. No Series
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
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 Small Cap 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 each Class of
Shares of a Series will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in such Class of Shares of a
Series over periods of 1, 5 and 10 years or up to the life 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 are reinvested
when paid.
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The Fund may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc.
Additionally, the Fund may compare its performance results to other investment
or savings vehicles (such as certificates of deposit) and may refer to results
published in various publications such as Changing Times, Forbes, Fortune,
Money, Barrons, Business Week and Investor's Daily, Stanger's Mutual Fund
Monitor, The Stanger Register, Stanger's Investment Adviser, The Wall Street
Journal, The New York Times, Consumer Reports, Registered Representative,
Financial Planning, Financial Services Weekly, Financial World, U.S. News and
World Report, Standard & Poor's The Outlook, and Personal Investor. The Fund
may from time to time illustrate the benefits of tax deferral by comparing
taxable investments to investments made through tax-deferred retirement plans.
The total return may also be used to compare the performance of the Fund
against certain widely acknowledged outside standards or indices for stock and
bond market performance, such as the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500"), Standard & Poor's 400 MidCap Index ("S&P 400"),
Dow Jones Industrial Average, Russell 2000 Index, Russell 2000 Growth Index,
Europe Australia Far East Index (EAFE), Consumer Price Index, Lehman Brothers
Corporate Index and Lehman Brothers T-Bond Index.
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 its cumulative and average annual returns into income and capital
gains components; or cite separately as a return figure the equity or bond
portion of the Fund's portfolio; or compare the Fund's equity or bond return
future to well-known indices of market performance, including, but not limited
to: the S&P 500, Dow Jones Industrial Average, CS First Boston High Yield Index
and Salomon Brothers Corporate and Government Bond Indices.
For Equity Opportunities Series for the 1, 5 and 10 year periods ended
April 30, 1997, the average annual total return of the Class A Shares was
- -16.37%, 8.21% and 8.82%, respectively. Class B average annual total return for
the 1 year period and since inception 7/19/94 to April 30, 1997 was -15.89% and
7.43%. The Theme Series' 1 year average annual return and since inception
October 16, 1995 for Class A shares was -7.22% and 9.47% and, for Class B
Shares was -7.17% and 9.70%, respectively. The Small Cap Series' 1 year average
annual return and from inception October 16, 1995 for Class A shares was
- -19.42% and 21.46% and for Class B Shares was -19.38% and 22.14%, 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,
1997 was 20,020%.
The Fund also may quote annual, average annual and annualized total return
and aggregate total return performance data, for each class 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
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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 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.
The Fund has adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to
lower commission costs on a per-share and per-dollar basis. According to the
bunching procedures, the Adviser shall aggregate transactions unless it
believes in its sole discretion that such aggregation is inconsistent with its
duty to seek best execution (which shall include the duty to seek best price)
for the Fund. No advisory account of the Adviser is to be favored over any
other account and each account that participates in an aggregated order is
expected to participate at the average share price for all transactions of the
Adviser in that security on a given business day, with all transaction costs
shared pro rata based on the Fund's participation in the transaction. If the
aggregated order is filled in its entirety, it shall be allocated among the
Adviser's accounts in accordance with the allocation order, and if the order is
partially filled, it shall be allocated pro rata based on the allocation order.
Notwithstanding the foregoing, the order may be allocated on a basis different
from that specified in the allocation order if all accounts of the Adviser
whose orders are allocated receive fair and equitable treatment and the reason
for such different allocation is explained in writing and is approved in
writing by the Adviser's compliance officer as soon as practicable after the
opening of the markets on the trading day following the day on which the order
is executed. If an aggregated order is partially filled and allocated on a
basis different from that specified in the allocation order, no account that is
benefited by such different allocation may intentionally and knowingly effect
any purchase or sale for a reasonable period following the execution of the
aggregated order that would result in it receiving or selling more shares than
the amount of shares it would have received or sold had the aggregated order
been completely filled. The Trustees will annually review these procedures or
as frequently as shall appear appropriate.
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, 1995, 1996 and 1997, brokerage
commissions paid by the Fund totalled $1,545,026, $1,208,440 and $2,686,635,
respectively. Commissions paid to the principal underwriter for the fiscal
years ended April 30, 1995, 1996 and 1997 totalled $0, $0 and $0, respectively.
Brokerage commissions of $1,598,061 paid during the fiscal year ended April 30,
1997 were paid on portfolio transactions aggregating $1,077,564,987 executed by
brokers who provided research and other statistical and factual information.
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 The Phoenix Edge Series Fund (other
than the Real Estate Series and Aberdeen New Asia Series), Phoenix Series Fund,
Phoenix Multi-Portfolio Fund (other than the Real Estate Securities Portfolio),
and Phoenix Strategic Allocation 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.
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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.
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 Distributor purchases such copies of the Fund's prospectuses and reports
and communications to shareholders as it may require for sales purposes);
insurance expense; association membership dues; brokerage fees; and taxes.
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.
For the fiscal years 1995, 1996 and 1997 the net management fees paid by the
Series to the Adviser were $1,252,747, $1,394,239 and $1,408,901, 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 years
1996 and 1997, the combined management fee paid by the Theme Series and Small
Cap Series was $295,479 and $2,736,920, respectively.
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. In the event legislation were to be adopted in each
state so as to eliminate this restriction, the Fund would take such action
necessary to eliminate this expense limitation.
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 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. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. Since the Fund does not price securities on weekends or
United States national holidays, the net asset value of a Series' foreign
assets may be significantly affected on days when the investor has no access to
the Fund. The net asset value per share of a Series is determined by adding the
values of all securities and other assets of the Series, subtracting
liabilities, and dividing by the total number of outstanding shares of the
Series. 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.
A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world,
the calculation of net asset value may not take place for 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 ask
quotations of such currencies against United States dollars as last quoted by
any recognized dealer.
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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 investments where market quotations are not readily
available, such investments are valued at the fair value thereof as determined
in good faith by the Trustees although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent
investment is $25. However, both the minimum initial and subsequent investment
amounts are $25 for investments pursuant to the "Investo-Matic" plan, a bank
draft investing program administered by Distributor, or pursuant to the
Systematic Exchange privilege or for an individual retirement account (IRA). In
addition, there are no subsequent investment minimum amounts in connection with
the reinvestment of dividend or capital gain distributions. Completed
applications for the purchase of shares should be mailed to: Phoenix Funds, c/o
State Street Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301.
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.
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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."
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.
INVESTOR ACCOUNT SERVICES
The Fund offers combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange privileges
as described in the Fund's current Prospectus. Certain privileges may not be
available in connection with all classes. In most cases, changes to account
services may be accomplished over the phone. Inquiries regarding policies and
procedures relating to shareholder account services should be directed to
Shareholder Services at (800) 243-1574.
Exchanges. Under certain circumstances, shares of any Phoenix Fund may be
exchanged for shares of the same Class of another Phoenix Fund on the basis of
the relative net asset values per share at the time of the exchange. Exchanges
are subject to the minimum initial investment requirement of the designated
Fund, Series, or Portfolio, except if made in connection with the Systematic
Exchange privilege. Shareholders may exchange shares held in book-entry form
for an equivalent number (value) of the same class of shares of any other
Phoenix Fund, if currently offered. On exchanges with share classes that carry
a contingent deferred sales charge, the CDSC schedule of the original shares
purchased continues to apply. The exchange of shares is treated as a sale and
purchase for federal income tax purposes (see also "Dividends, Distributions
and Taxes").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Phoenix Fund automatically on a monthly,
quarterly, semi-annual or annual basis or may cancel this privilege at any
time. If you maintain an account balance of at least $5,000, or $2,000 for tax
qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that shares be
automatically exchanged at predetermined intervals for shares of the same class
of another Phoenix Fund. This requirement does not apply to Phoenix "Self
Security" program participants. Systematic exchanges will be executed upon the
close of business on the 10th day of each month or the next succeeding business
day. Systematic exchange forms are available from the Distributor. Exchanges
will be based upon each Fund's net asset value per share next computed after
the close of business on the 10th day of each month (or next succeeding
business day), without sales charge.
Dividend Reinvestment Across Accounts. If you maintain an account balance
of at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account of
one of the other Phoenix Fund at net asset value. You should obtain a current
prospectus and consider the objectives and policies of each Fund carefully
before directing dividends and distributions to another Fund. Reinvestment
election forms and prospectuses are available from Equity Planning.
Distributions may also be mailed to a second payee and/or address. Requests for
directing distributions to an alternate payee must be made in writing with a
signature guarantee of the registered owner(s). To be effective
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with respect to a particular dividend or distribution, notification of the new
distribution option must be received by the Transfer Agent at least three days
prior to the record date of such dividend or distribution. If all shares in
your account are repurchased or redeemed or transferred between the record date
and the payment date of a dividend or distribution, you will receive cash for
the dividend or distribution regardless of the distribution option selected.
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 after
receipt of the check. See the Fund's current Prospectus for further
information.
Redemptions by Class B shareholders will be subject to the applicable
deferred sales charge, if any.
Each shareholder account in the Fund which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the
giving of not less than 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.
By Mail
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written
request to Equity Planning that the Fund redeem the shares. See the Fund's
current Prospectus for more information.
Telephone 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. 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
14
<PAGE>
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.
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 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 a Distribution Agreement with the Fund, Phoenix Equity
Planning Corporation (the "Distributor"), an indirect, less than wholly-owned
subsidiary of Phoenix Home Life and an affiliate of National, serves as
Distributor for the Fund. The address of the Distributor is 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200. As such, the Distributor
conducts a continuous offering pursuant to a "best efforts" arrangement
requiring the Distributor to take and pay for only such securities as may be
sold to the public. During the fiscal years 1995, 1996 and 1997, purchasers of
the Fund shares paid aggregate sales charges of $30,721, $1,825,565 and
$4,241,930, respectively, of which the principal Distributor for the Fund
received net commissions of $9,792, $206,540 and $736,095, respectively, for
its services, the balance being paid to dealers. The fees were used to
compensate sales and service persons for selling shares of the Fund and for
providing services to shareholders. In addition, the fees were used to
compensate the Distributor for sales and promotional activities.
The Distribution Agreement may be terminated at any time on not more than
60 days written notice, without payment of a penalty, by the Distributor, by
vote of a majority of the outstanding voting securities of the Fund, or by vote
of a majority of the Fund's Trustees who are not "interested persons" of the
Fund and who have no direct or indirect financial interest in the operation of
the Distribution Plan or in any related agreements. The Distribution Agreement
will terminate automatically in the event of its assignment.
15
<PAGE>
Dealers with whom the Distributor has entered into sales agreements
receive sales charges in accordance with the commission table set forth in the
Prospectus. The Distributor 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 Distributor) 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 Distributor 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.
Equity Planning also acts as administrative agent of the Fund and as such
performs administrative, bookkeeping and pricing functions for the Fund. As
compensation for such services, effective as of January 1, 1997, Equity
Planning is entitled to a fee, payable monthly and based upon the average of
the aggregate daily net asset values of each Series, at the following
incremental annual rates:
First $100 million .05% subject to a minimum fee
$100 million to $300 million .04%
$300 million through $500 million .03%
Greater than $500 million .015%
A minimum charge of $60,000 is applicable for each Series. In addition,
Equity Planning is paid $12,000 for each class of shares beyond one. Until
December 31, 1996, Equity Planning's fee for these services was based on an
annual rate of 0.03% of each Series' aggregate daily net asset value. For its
services during the Fund's fiscal year ended April 30, 1997, Equity Planning
received $211,223.
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 Distributor for expenses incurred in connection with
activities intended to promote the sale of shares of each class of shares of
the Fund. For fiscal year 1997, the Distributor 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 Distributor for
actual expenses of the Distributor up to 0.30% 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 expense of the Distributor 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 Distributor in the form of the Dealer Agreement for
Phoenix Funds for services rendered in connection with the sale and
distribution of shares of the Fund; (iv) payment of expenses incurred in sales
and promotional activities, including advertising expenditures related to the
Fund; (v) the costs of preparing and distributing promotional materials; (vi)
the cost of printing the Fund's Prospectus and Statement of Additional
Information for distribution to potential investors; and (vii) such other
similar services that the Trustees of the Fund 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 Distributor,
such as services to the Fund's shareholders; or services providing the Fund
with more efficient methods of offering shares to coherent groups of clients,
members or prospects of a participant; or services permitting bulking of
purchases or sales, or transmission of such purchases or sales by computerized
tape or other electronic equipment; or other processing.
The fee received by the Distributor under the early years of the Plans is
not likely to reimburse the Distributor for the total distribution expenses it
will actually incur as a result of the Fund having fewer assets and the
Distributor 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
Distributor pursuant to the Plans will cease and the Fund will not be required
to make any payments past the date on which each Plan terminates.
16
<PAGE>
For the fiscal year ended April 30, 1997, the Fund paid Rule 12b-1 Fees in
the amount of $2,409,603, of which the principal underwriter received
$1,588,806, W.S. Griffith & Co., Inc., an affiliate, received $87,100 and
unaffiliated broker-dealers received $733,697. 12b-1 fees paid by the Fund
during last fiscal year were spent on: (1) advertising ($247,565); (2) printing
and mailing of prospectuses to other than current shareholders ($52,468); (3)
compensation to dealers ($5,948,830); (4) compensation to sales personnel
($524,000); (5) service costs ($133,223) and (6) other ($114,531).
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 provide that while they are in effect, the selection and nomination of
Trustees who are not "interested persons" shall be committed to the discretion
of the Trustees who are not "interested persons." The Plans may be terminated
at any time by vote of a majority of the Plan Trustees or a majority of the
outstanding shares of the relevant class of the Fund.
The National Association of Securities Dealers, Inc. (the "NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend the Plans.
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.
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ------------------------ ---------------- --------------------------------------------------------------
<S> <C> <C>
C. Duane Blinn (69)** Trustee Partner in the law firm of Day, Berry & Howard. Director/
Day, Berry & Howard Trustee, Phoenix Funds (1980-present). Trustee, Phoenix-
CityPlace Aberdeen Series Fund and Phoenix Duff & Phelps
Hartford, CT 06103 Institutional Mutual Funds (1996-present). Director/Trustee,
the National Affiliated Investment Companies (until 1993).
Robert Chesek (63) Trustee Trustee/Director (1981-present) and Chairman (1989-1994),
49 Old Post Road Phoenix Funds. Trustee, Phoenix-Aberdeen Series Fund and
Wethersfield, CT 06109 Phoenix Duff & Phelps Institutional Mutual Funds (1996-
present). Vice President, Common Stock, Phoenix Home Life
Mutual Insurance Company (1980-1994). Director/Trustee, the
National Affiliated Investment Companies (until 1993).
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ---------------------------- --------------- -----------------------------------------------------------------
<S> <C> <C>
E. Virgil Conway (67) Trustee Chairman, Metropolitan Transportation Authority (1992-
9 Rittenhouse Road present). Trustee/Director, Consolidated Edison Company of
Bronxville, NY 10708 New York, Inc. (1970-present), Pace University (1978-
present), Atlantic Mutual Insurance Company (1974-present),
HRE Properties (1989-present), Greater New York Councils,
Boy Scouts of America (1985-present), Union Pacific Corp.
(1978-present), Blackrock Freddie Mac Mortgage Securities
Fund (Advisory Director) (1990-present), Centennial Insurance
Company (1974-present), Josiah Macy, Jr., Foundation (1975-
present), The Harlem Youth Development Foundation (1987-
present), Accuhealth (1994-present), Trism, Inc. (1994-
present), Realty Foundation of New York (1972-present), New
York Housing Partnership Development Corp. (Chairman)
(1981-present) and Fund Directions (Advisory Director)
(1993-present). Director/Trustee, Phoenix Funds (1993-
present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present).
Director, Duff & Phelps Utilities Tax-Free Income Inc. and
Duff & Phelps Utility and Corporate Bond Trust Inc. (1995-
present). Chairman, Audit Committee of the City of New York
(1981-1996). Advisory Director, Blackrock Fannie Mae
Mortgage Securities Fund (1989-1996). Chairman, Financial
Accounting Standards Advisory Council (1992-1995).
Director/Trustee, the National Affiliated Investment Companies
(until 1993).
Harry Dalzell-Payne (68) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
330 East 39th Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Apartment 29G Institutional Mutual Funds (1996-present). Director, Duff &
New York, NY 10022 Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present). Director,
Farragut Mortgage Co., Inc. (1991-1994). Director/Trustee, the
National Affiliated Investment Companies (1983-1993).
Formerly a Major General of the British Army.
*Francis E. Jeffries (66) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
6585 Nicholas Blvd. Phoenix-Aberdeen Series Inc. and Phoenix Duff & Phelps
Apt. 1601 Institutional Mutual Funds (1996-present). Director, Duff &
Naples, FL 33963 Phelps Utilities Income Fund (1987-present), Duff & Phelps
Utilities Tax-Free Income Inc. (1991-present) and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1993-present).
Director, The Empire District Electric Company (1984-
present). Director (1989-1997), Chairman of the Board (1993-
1997), President (1989-1993), and Chief Executive Officer
(1989-1995), Phoenix Duff & Phelps Corporation.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------- --------------- ------------------------------------------------------------------
<S> <C> <C>
Leroy Keith, Jr. (58) Trustee Chairman and Chief Executive Officer, Carson Products
Chairman and Chief Company (1995-present). Director/Trustee, Phoenix Funds
Executive Officer (1980-present). Trustee, Phoenix-Aberdeen Series Fund and
Carson Products Company Phoenix Duff & Phelps Institutional Mutual Funds (1996-
64 Ross Road present). Director, Equifax Corp. (1991-present) and Keystone
Savannah, GA 30750 International 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. President, Morehouse College (1987-1994). Chairman
and Chief Executive Officer, Keith Ventures (1992-1994).
Director/Trustee, the National Affiliated Investment Companies
(until 1993). Director, Blue Cross/Blue Shield (1989-1993)
and First Union Bank of Georgia (1989-1993).
*Philip R. McLoughlin (50) Trustee and Chairman (1997-present), Vice Chairman (1995-1997) and Chief
President Executive Officer (1995-present), Phoenix Duff & Phelps
Corporation. Director (1994-present) and Executive Vice
President, Investments (1988-present), Phoenix Home Life
Mutual Insurance Company. Director/Trustee and President,
Phoenix Funds (1989-present). Trustee and President, Phoenix-
Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Director, Duff & Phelps Utilities
Tax-Free Income Inc. (1995-present) and Duff & Phelps Utility
and Corporate Bond Trust Inc. (1995-present). Director (1983-
present) and Chairman (1995-present), Phoenix Investment
Counsel, Inc. Director (1984-present) and President (1990-
present), Phoenix Equity Planning Corporation. Director (1993-
present), Chairman (1993-present) and Chief Executive Officer
(1993-1995), National Securities & Research 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), PXRE Corporation (Delaware) (1985-present), and
World Trust Fund (1991-present). Director and Executive Vice
President, Phoenix Life and Annuity Company (1996-present).
Director and Executive Vice President, PHL Variable Insurance
Company (1995-present). Director, Phoenix Charter Oak Trust
Company (1996-present). Director and Vice President, PM
Holdings, Inc. (1985-present). Director and President, Phoenix
Securities Group, Inc. (1993-1995). Director (1992-present) and
President (1992-1994), W.S. Griffith & Co., Inc. Director (1992-
present) and President (1992-1994), Townsend Financial
Advisers, Inc. Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Everett L. Morris (69) Trustee Vice President, W.H. Reaves and Company (1993-present).
164 Laird Road Director/Trustee, Phoenix Funds (1995-present). Trustee, Duff
Colts Neck, N.J. 07722 & Phelps Mutual Funds (1994-present). Trustee, Phoenix-
Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director, Duff &
Phelps Utilities Tax-Free Income Inc. (1991-present) and Duff
& Phelps Utility and Corporate Bond Trust Inc. (1993-
present). Director, Public Service Enterprise Group,
Incorporated (1986-1993). President and Chief Operating
Officer, Enterprise Diversified Holdings, Incorporated (1989-
1993).
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------------- --------------- ---------------------------------------------------------------
<S> <C> <C>
*James M. Oates (51) Trustee Chairman, IBEX Capital Markets LLC (1997-present).
Managing Director Managing Director, Wydown Group (1994-present). Director,
The Wydown Group Phoenix Duff & Phelps Corporation (1995-present). Director/
IBEX Capital Markets LLC Trustee, Phoenix Fund (1987-present). Trustee, Phoenix-
60 State Street Aberdeen Series Fund and Phoenix Duff & Phelps
Suite 950 Institutional Mutual Funds (1996-present). Director, Govett
Boston, MA 02109 Worldwide Opportunity Funds, Inc. (1991-present), Blue Cross
and Blue Shield of New Hampshire (1994-present), Investors
Financial Service Corporation (1995-present), Investors Bank
& Trust Corporation (1995-present), Plymouth Rubber Co.
(1995-present) and Stifel Financial (1996-present). Member,
Chief Executives Organization (1996-present). Director (1984-
1994), President (1984-1994) and Chief Executive Officer
(1986-1994), Neworld Bank. Director/Trustee, the National
Affiliated Investment Companies (until 1993).
*Calvin J. Pedersen (55) Trustee Director (1986-present), President (1993-present) and
Phoenix Duff & Phelps Executive Vice President (1992-1993), Phoenix Duff & Phelps
Corporation Corporation. Director/Trustee, Phoenix Funds (1995-present).
55 East Monroe Street Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Suite 3600 Phelps Institutional Mutual Funds (1996-present). President
Chicago, IL 60603 and Chief Executive Officer, Duff & Phelps Utilities Tax-Free
Income Inc. (1995-present), Duff & Phelps Utilities Income
Inc. (1994-present) and Duff & Phelps Utility and Corporate
Bond Trust Inc. (1995-present).
Philip R. Reynolds (70)** Trustee Director/Trustee, Phoenix Funds (1984-present). Trustee,
43 Montclair Drive Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
West Hartford, CT 06107 Institutional Mutual Funds (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).
Herbert Roth, Jr. (68) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present). Director, Boston
Sherborn, MA 01770 Edison Company (1978-present), Phoenix Home Life Mutual
Insurance Company (1972-present), Landauer, Inc. (medical
services) (1970-present),Tech Ops./Sevcon, Inc. (electronic
controllers) (1987-present), and Mark IV Industries
(diversified manufacturer) (1985-present). Director, Key
Energy Group (oil rig service) (1988-1994). Director/Trustee,
the National Affiliated Investment Companies (until 1993).
Richard E. Segerson (51) Trustee Managing Director, Mullin Associates (1993-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 06840 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Vice President and
General Manager, Coats & Clark, Inc. (previously Tootal
American, Inc.) (1991-1993). Director/Trustee, the National
Affiliated Investment Companies (1984-1993).
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------------- --------------- ----------------------------------------------------------------
<S> <C> <C>
Lowell P. Weicker, Jr. (66) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Greenwich, CT 06830 Institutional Mutual Funds (1996-present). Director, UST Inc.
(1995-present), HPSC Inc. (1995-present), Duty Free
International, Inc. (1997-present) and Compuware (1996-
present). Visiting Professor, University of Virginia (1997-
present). Chairman, Dresing, Lierman, Weicker (1995-1996).
Governor of the State of Connecticut (1991-1995).
Michael E. Haylon (39) Executive Director and Executive Vice President--Investments, Phoenix
Vice Duff & Phelps Corporation (1995-present). Executive Vice
President President, Phoenix Funds (1993-present) and Phoenix-
Aberdeen Series Fund (1996-present). Executive Vice
President (1997-present), Vice President, Phoenix Duff &
Phelps Institutional Mutual Funds (1996-1997). Director
(1994-present), President (1995-present), Executive Vice
President (1994-1995), Vice President (1991-1994), Phoenix
Investment Counsel, Inc. Director (1994-present), President
(1996-present), Executive Vice President (1994-1996), Vice
President (1993-1994), National Securities & Research
Corporation. Director, Phoenix Equity Planning Corporation
(1995-present). Senior Vice President, Securities Investments,
Phoenix Home Life Mutual Insurance Company (1993-1995).
Various other positions with Phoenix Home Life Mutual
Insurance Company (1990-1993).
David R. Pepin (54) Executive Executive Vice President, Phoenix Funds and Phoenix-
Vice Aberdeen Series Fund (1996-present). Director (1997-present)
President and Executive Vice President (1996-present), Phoenix Duff &
Phelps Corporation. Managing Director, Phoenix-Aberdeen
International Advisers, LLC (1996-present). Director and
Executive Vice President, Phoenix Equity Planning Corp.
(1996-present). Director, Phoenix Investment Counsel, Inc.
and National Securities & Research Corporation (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).
William J. Newman (58) Senior Vice Executive Vice President (1995-present) and Chief Investment
President Strategist (1996-present), Phoenix Investment Counsel, Inc.
Executive Vice President and Chief Investment Strategist
(1996-present), Senior Vice President (1995-1996), National
Securities & Research Corporation. Senior Vice President,
Phoenix Equity Planning Corporation (1995-1996), 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 Strategic Allocation Fund, Inc. (1996-present),
Phoenix Worldwide Opportunities Fund (1996-present),
Phoenix-Aberdeen Series Fund (1996-present) and Phoenix
Duff & Phelps Institutional Mutual Funds (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).
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- --------------------------- --------------- ----------------------------------------------------------------
<S> <C> <C>
Michael K. Arends (43) Vice Managing Director, Equities (1996-present), Vice President
President (1994-1996), Phoenix Investment Counsel, Inc. and National
Securities & Research Corporation. Vice President, Phoenix
Strategic Equity Series Fund and Phoenix Series Fund (1994-
present). Portfolio Manager, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions with
Kemper Financial Services (1983-1994).
William E. Keen, III (34) Vice Assistant Vice President, Phoenix Equity Planning
100 Bright Meadow Blvd. President Corporation (1996-present). Vice President, Phoenix Funds,
P.O. Box 2200 Phoenix Duff & Phelps Institutional Mutual Funds and
Enfield, CT 06083-2200 Phoenix-Aberdeen Series Fund (1996-present). Assistant Vice
President, USAffinity Funds, (1994-1995). Treasurer and
Secretary, USAffinity Funds (1994-1995). Manager, Fund
Administration, SEI Corporation (1991-1994).
William R. Moyer (53) Vice Senior Vice President and Chief Financial Officer, Phoenix
100 Bright Meadow Blvd. President Duff & Phelps Corporation (1995-present). Senior Vice
P.O. Box 2200 President, Finance (1990-present), Chief Financial Officer
Enfield, CT 06083-2200 (1996-present), and Treasurer (1994-1996), Phoenix Equity
Planning Corporation. Senior Vice President (1990-present),
Chief Financial Officer (1996-present) and Treasurer (1994-
present), Phoenix Investment Counsel, Inc. Senior Vice
President, Finance (1993-present), Chief Financial Officer
(1996-present), and Treasurer (1994-present), National
Securities & Research Corporation. Senior Vice President and
Chief Operating Officer, Duff & Phelps Investment
Management Co. (1996-present). Vice President, Phoenix
Funds (1990-present), Phoenix-Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix-Aberdeen Series
Fund (1996-present). Senior Vice President and Chief
Financial Officer, W. S. Griffith & Co., Inc. (1992-1995) and
Townsend Financial Advisers, Inc. (1993-1995). Vice
President, the National Affiliated Investment Companies (until
1993). Vice President, Investment Products Finance, Phoenix
Home Life Mutual Insurance Company (1990-1995).
Leonard J. Saltiel (43) Vice Managing Director (1996-present), Senior Vice President
President (1994-1996), Phoenix Equity Planning Corporation. Vice
President, Phoenix Funds (1994-present), Phoenix Duff &
Phelps Institutional Mutual Funds (1996-present) and
Phoenix-Aberdeen Series Fund (1996-present). Vice
President, Investment Operations, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions with Home
Life Insurance Company and Phoenix Home Life Mutual
Insurance Company (1987-1994).
G. Jeffrey Bohne (49) Secretary Vice President and General Manager, Phoenix Home Life
101 Munson Street Mutual Insurance Co. (1993-present). Vice President, Mutual
Greenfield, MA 01301 Funds Customer Service, Phoenix Equity Planning Corporation
(1993-present). Secretary, Phoenix Funds (1993-present).
Clerk, Phoenix Strategic Allocation Fund, Inc. (1994-present).
Secretary, Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present) and Phoenix-Aberdeen Series Fund (1996-
present). Vice President, Home Life of New York Insurance
Company (1984-1992).
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Fund During the Past 5 Years
- ----------------------- --------------- -----------------------------------------------------------------
<S> <C> <C>
Nancy G. Curtiss (44) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer
(1996-present), Phoenix Equity Planning Corporation. Treasurer,
Phoenix Funds (1994-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present) and Phoenix-Aberdeen
Series Fund (1996-present). Second Vice President and
Treasurer, Fund Accounting, Phoenix Home Life Mutual
Insurance Company (1994-1995). Various positions with Phoenix
Home Life Mutual Insurance Company (1987-1994).
</TABLE>
- -----------
*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.
**Pursuant to the retirement policy of the Phoenix Funds, Messrs. Blinn and
Reynolds will retire from the Board of Trustees effective January 1, 1998.
For services rendered to the Fund for the fiscal year ended April 30,
1997, the Trustees received aggregate remuneration of $54,225 For services on
the Boards of Directors/Trustees of the Phoenix Funds, each Trustee who is not
a full-time employee of the Adviser or any of its affiliates currently receives
a retainer at the annual rate of $40,000 and a fee of $2,500 per joint meeting
of the Boards. Each Trustee who serves on the Audit Committee receives a
retainer at the annual rate of $2,000 and a fee of $2,000 per joint Audit
Committee meeting attended. Each Trustee who serves on the Nominating Committee
receives a retainer at the annual rate of $1,000 and a fee of $1,000 per joint
Nominating Committee meeting attended. Each Trustee who serves on the Executive
Committee and who is not an interested person of the Fund receives a retainer
at the annual rate of $1,000 and $1,000 per joint Executive Committee meeting
attended. The function of the Executive Committee is to serve as a contract
review, compliance review and performance review delegate of the full Board of
Trustees. Costs are allocated equally to each of the Series and Funds within
the Fund complex. The foregoing fees do not include the reimbursement of
expenses incurred in connection with meeting attendance. Officers and employees
of the Advisers who are interested persons are compensated 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 (12 Funds)
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
- ----------------------- -------------- --------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
C. Duane Blinn $ 5,130* $63,250
Robert Chesek $ 4,500 $56,250
E. Virgil Conway+ $ 5,310 $66,000
Harry Dalzell-Payne+ $ 4,500 $56,750
Francis E. Jeffries $ 1,125* $15,000
Leroy Keith, Jr. $ 4,500 None None $56,250
for any for any
Philip R. McLoughlin+ $ 0 Trustee Trustee $ 0
Everett L. Morris+ $ 4,230* $54,000
James M. Oates+ $ 4,680 $58,500
Calvin J. Pedersen $ 0 $ 0
Philip R. Reynolds $ 4,500 $56,250
Herbert Roth, Jr.+ $ 5,580 $68,750
Richard E. Segerson $ 5,040 None for None for $62,750
Lowell Weicker, Jr. $ 5,130 any Trustee any Trustee $63,250
</TABLE>
* This compensation (and the earnings thereon) will be deferred pursuant to the
Directors' Deferred Compensation Plan. At June 30, 1997, the total amount
of deferred compensation (including interest and other accumulation earned
on the original amounts deferred) accrued for Messrs. Blinn, Jeffries,
Morris and Roth was $349,026.91, $28,561.41, $85,849.73 and $132,587.69,
respectively. At present, by agreement among the Fund, the Distributor and
the electing director, director fees that are deferred are paid by the Fund
to the Distributor. The liability for the deferred compensation obligation
appears only as a liability of the Distributor.
+ Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
On April 30, 1997, the Trustees and officers of the Fund beneficially owned less
than 1% of the outstanding shares of the Fund.
23
<PAGE>
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, 1997
appearing in the Fund's 1997 Annual Report to Shareholders, are incorporated
herein by reference.
24
<PAGE>
Phoenix Small Cap Fund
- --------------------------------------------------------------------------------
INVESTMENTS AT APRIL 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
--------- ---------------
<S> <C> <C>
COMMON STOCKS--77.6%
Building--Cement/Concrete/Aggregate--0.8%
Lafarge Corp. 28,400 $ 688,700
Southdown, Inc. 35,000 1,264,375
---------------
1,953,075
---------------
Building--Residential/Commercial--0.5%
Centex Corp. 35,000 1,260,000
---------------
Commercial Services--Miscellaneous--0.7%
Caribiner International, Inc. (b) 35,000 1,855,000
---------------
Commercial Services--Printing--0.9%
Consolidated Graphics, Inc. (b) 90,000 2,193,750
---------------
Commercial Services--Schools--2.2%
Computer Learning Centers, Inc. (b) 75,000 1,996,875
Learning Tree International, Inc. (b) 37,800 1,190,700
Strayer Education, Inc. 90,000 2,317,500
---------------
5,505,075
---------------
Computer--Memory Devices--1.2%
Hutchinson Technology, Inc. (b) 115,000 3,119,375
---------------
Computer--Peripheral Equipment--0.2%
NeoMagic Corp. (b) 45,000 525,938
---------------
Computer--Services--3.6%
Computer Horizons Corp. (b) 40,000 1,740,000
Data Dimensions, Inc. (b) 145,000 3,443,750
Technology Solutions Co. (b) 100,000 2,637,500
Yahoo!, Inc. (b) 40,000 1,365,000
---------------
9,186,250
---------------
Computer--Software--4.1%
Cognos, Inc. (b) 90,000 2,283,750
Compuware Corp. (b) 120,000 4,530,000
Manugistics Group, Inc. (b) 64,000 3,440,000
---------------
10,253,750
---------------
Cosmetics/Personal Care--0.4%
Weider Nutrition International, Inc. (b) 89,100 980,100
---------------
Electric--Laser Systems/Component--1.5%
Cymer, Inc. (b) 93,000 3,824,625
---------------
Electric--Semiconductor Equipment--4.8%
DuPont Photomasks, Inc. (b) 80,000 3,830,000
PRI Automation, Inc. (b) 70,000 3,587,500
Speedfam International, Inc. (b) 33,400 809,950
Teradyne, Inc. (b) 115,000 3,766,250
---------------
11,993,700
---------------
Electric--Semiconductor Manufacturing--3.9%
ANADIGICS, Inc. (b) 129,700 3,664,025
Hadco Corp. (b) 31,900 1,363,725
Jabil Circuit, Inc. (b) 30,000 1,451,250
Sanmina Corp. (b) 25,000 1,250,000
Triquint Semiconductor, Inc. (b) 72,700 2,162,825
---------------
9,891,825
---------------
Finance--Equity REITS--1.9%
Beacon Properties Corp. 78,000 2,408,250
Cali Realty Corp. 84,000 2,478,000
---------------
4,886,250
---------------
Finance--Investment Bankers--1.8%
Edwards (A.G.), Inc. 74,000 2,590,000
Morgan Keegan, Inc. (b) 42,400 768,500
Raymond James Financial, Inc. (b) 55,800 1,304,325
---------------
4,662,825
---------------
Finance--Investment Management--1.1%
T. Rowe Price Associates 60,000 2,775,000
---------------
Financial Services--Miscellaneous--1.0%
Capitol One Financial Corp. 70,000 2,528,750
---------------
Insurance--Life--5.1%
Equitable of Iowa Co. 50,000 2,443,750
Presidential Life Corp. 210,000 3,018,750
ReliaStar Financial Corp. 82,000 4,961,000
Western National Corp. 93,000 2,394,750
---------------
12,818,250
---------------
Insurance--Multi Line--1.1%
Horace Mann Educators Corp. 60,000 2,812,500
---------------
Insurance--Property/Casualty/Title--2.0%
American Bankers Insurance Group, Inc. 40,000 2,115,000
Mutual Risk Management Ltd. 80,000 2,940,000
---------------
5,055,000
---------------
Leisure--Toys/Games/Hobby--0.6%
Action Performance Cos., Inc. (b) 60,000 1,582,500
---------------
Machinery--Farm--1.3%
Lindsay Manufacturing Co. 112,500 3,206,250
---------------
Medical--Biomed/Genetics--2.1%
Agouron Pharmaceuticals, Inc. (b) 45,000 2,880,000
Guilford Pharmaceuticals, Inc. (b) 102,800 2,377,250
---------------
5,257,250
---------------
Medical--Ethical Drugs--0.3%
Theragenics Corp. (b) 43,700 742,900
---------------
Medical--Outpatient/Home Care--0.3%
National Surgery Centers, Inc. (b) 28,000 840,000
---------------
Oil & Gas--Drilling--6.0%
Atwood Oceanics, Inc. (b) 44,000 2,695,000
Cliffs Drilling Co. (b) 93,000 5,673,000
Marine Drilling Co., Inc. (b) 230,000 3,622,500
Precision Drilling Corp. (b) 89,900 3,124,025
---------------
15,114,525
---------------
Oil & Gas--Field Services--3.7%
Pride Petroleum Services, Inc. (b) 265,000 4,571,250
Trico Marine Services, Inc. (b) 100,000 3,550,000
Veritas DGC, Inc. (b) 65,000 1,251,250
---------------
9,372,500
---------------
See Notes to Financial Statements
3
<PAGE>
Phoenix Small Cap Fund
- --------------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
--------- ---------------
<S> <C> <C>
Oil & Gas--Machinery/Equipment--1.4%
Energy Ventures, Inc. (b) 16,000 $ 1,070,000
Gulf Island Fabrication, Inc. (b) 62,800 1,318,800
Varco International, Inc. (b) 48,800 1,122,400
---------------
3,511,200
---------------
Oil & Gas--U.S. Exploration & Production--4.4%
Forcenergy, Inc. (b) 120,000 3,720,000
Newfield Exploration Co. (b) 152,800 2,922,300
Stone Energy Corp. (b) 120,000 3,210,000
Tom Brown, Inc. (b) 70,000 1,277,500
---------------
11,129,800
---------------
Pollution Control--Equipment--1.2%
Culligan Water Technologies, Inc. (b) 75,000 3,065,625
---------------
Pollution Control--Services--3.3%
Newpark Resources, Inc. (b) 60,000 2,692,500
Philip Environmental, Inc. (b) 170,000 2,677,500
Tetra Tech, Inc. (b) 203,000 2,892,750
---------------
8,262,750
---------------
Retail--Apparel/Shoe--1.6%
Pacific Sunwear of California (b) 60,000 1,875,000
Ross Stores, Inc. 73,100 2,055,937
---------------
3,930,937
---------------
Retail--Discount & Variety--3.1%
Mac Frugals Bargains Close-Outs, Inc. (b) 100,000 2,925,000
Stein Mart, Inc. (b) 85,000 2,465,000
Tuesday Morning Corp. (b) 90,000 2,542,500
---------------
7,932,500
---------------
Retail--Mail Order & Direct--0.7%
dELiA*s, Inc. (b) 100,000 1,700,000
---------------
Shoes & Related Apparel--1.2%
Wolverine World Wide, Inc. 74,000 2,978,500
---------------
Steel--Specialty Alloys--0.5%
Special Metals Corp. (b) 95,000 1,341,875
---------------
Telecommunications--Equipment--2.1%
Digital Microwave Corp. (b) 45,000 1,158,750
MRV Communications, Inc. (b) 96,000 1,980,000
P-Com, Inc. (b) 26,500 758,562
Spectrian Corp. (b) 105,000 1,391,250
---------------
5,288,562
---------------
Transportation--Air Freight--0.3%
Eagle USA Airfreight, Inc. (b) 35,500 710,000
---------------
Transportation--Equipment Manufacturer--1.0%
Halter Marine Group, Inc. (b) 126,100 2,474,713
---------------
Transportation--Services--0.5%
Expeditors International of
Washington, Inc. (b) 55,000 1,375,000
---------------
Transportation--Truck--3.2%
JB Hunt Transport Services, Inc. 192,100 2,665,387
Swift Transportation Co., Inc. (b) 90,000 2,565,000
USFreightways Corp. 107,000 2,889,000
---------------
8,119,387
---------------
TOTAL COMMON STOCKS
(Identified cost $198,309,640) 196,017,812
---------------
FOREIGN COMMON STOCKS--1.7%
Electric--Semiconductor Equipment--1.7%
ASM Lithography Holding NV
(Netherlands) (b) 54,000 4,293,000
---------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $4,000,712) 4,293,000
---------------
TOTAL LONG-TERM INVESTMENTS--79.3%
(Identified cost $202,310,352) 200,310,812
---------------
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------ --------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--20.6%
Commercial Paper--18.9%
Shell Oil Co. 5.58%, 5-1-97 A-1+ $3,600 3,600,000
Amoco Co. 5.52%, 5-2-97 A-1+ 2,895 2,894,556
Exxon Imperial U.S., Inc. 5.55%,
5-2-97 A-1+ 3,485 3,484,463
DuPont (E.I.) de Nemours & Co.
5.28%, 5-5-97 A-1+ 1,980 1,978,838
McKenna Triangle National Corp.
5.56%, 5-6-97 A-1+ 5,550 5,545,714
Minnesota Mining & Manufacturing
Co. 5.27%, 5-7-97 A-1+ 540 539,526
Pfizer, Inc. 5.50%, 5-7-97 A-1+ 2,105 2,103,070
Greenwich Funding Corp. 5.54%,
5-12-97 A-1+ 1,579 1,576,327
Heinz (H.J.) Co. 5.47%, 5-20-97 A-1 3,040 3,031,224
Warner-Lambert Co. 5.52%, 5-20-97 A-1+ 2,800 2,791,843
Pfizer, Inc. 5.47%, 5-29-97 A-1+ 4,500 4,480,855
Private Export Funding Corp.
5.35%, 5-29-97 A-1+ 3,300 3,284,437
Heinz (H.J.) Co. 5.50%, 5-30-97 A-1 3,625 3,608,939
Potomac Electric Power Co. 5.53%,
6-3-97 A-1 5,200 5,173,640
General Re Corp. 5.55%, 6-13-97 A-1+ 3,774 3,748,982
---------------
47,842,414
---------------
Federal Agency Securities--1.7%
Federal Home Loan Banks 5.34%, 5-23-97 1,215 1,211,035
Federal National Mortgage Assoc. 5.28%,
6-5-97 3,000 2,983,446
---------------
4,194,481
---------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $52,039,881) 52,036,895
---------------
TOTAL INVESTMENTS--99.9%
(Identified cost $254,350,233) 252,347,707(a)
Cash and receivables, less liabilities--0.1% 387,920
---------------
NET ASSETS--100.0% $252,735,627
===============
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $9,105,186 and gross
depreciation of $12,666,905 for income tax purposes. At April 30, 1997,
the aggregate cost of securities for federal income tax purposes was
$255,909,426.
(b) Non-income producing.
See Notes to Financial Statements
4
<PAGE>
Phoenix Small Cap Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
Assets
Investment securities at value
(Identified cost $254,350,233) $252,347,707
Cash 52,792
Receivables
Investment securities sold 27,471,925
Fund shares sold 784,341
Dividends and interest 48,825
---------------
Total assets 280,705,590
---------------
Liabilities
Payables
Investment securities purchased 27,119,880
Fund shares repurchased 382,295
Investment advisory fee 157,418
Distribution fee 113,326
Financial agent fee 10,204
Transfer agent fee 80,510
Trustees' fee 4,203
Accrued expenses 102,127
---------------
Total liabilities 27,969,963
---------------
Net Assets $252,735,627
===============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $280,182,727
Accumulated net realized loss (25,444,574)
Net unrealized depreciation (2,002,526)
---------------
Net Assets $252,735,627
===============
Class A
Shares of beneficial interest outstanding, $0.0001
par value, unlimited authorization
(Net Assets $155,088,978) 10,972,539
Net asset value per share $14.13
Offering price per share
$14.13/(1-4.75%) $14.83
Class B
Shares of beneficial interest outstanding, $0.0001
par value, unlimited authorization
(Net Assets $97,646,649) 6,984,075
Net asset value and offering price per share $13.98
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
Investment Income
Interest $ 2,649,688
Dividends 240,469
---------------
Total investment income 2,890,157
---------------
Expenses
Investment advisory fee 1,994,519
Distribution fee--Class A 423,679
Distribution fee--Class B 964,642
Financial agent fee 96,250
Transfer agent 621,523
Registration 122,073
Printing 51,720
Professional 31,818
Custodian 26,283
Trustees 18,260
Miscellaneous 11,204
---------------
Total expenses 4,361,971
---------------
Net investment loss (1,471,814)
---------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized loss on securities (25,221,777)
Net change in unrealized appreciation (depreciation)
on investments (27,980,129)
---------------
Net loss on investments (53,201,906)
---------------
Net decrease in net assets resulting from operations $(54,673,720)
===============
See Notes to Financial Statements
5
<PAGE>
Phoenix Small Cap Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
Year Ended October 16, 1995 to
April 30, 1997 April 30, 1996
--------------- -------------------
<S> <C> <C>
From Operations
Net investment income (loss) $ (1,471,814) $ (198,222)
Net realized gain (loss) (25,221,777) 478,693
Net change in unrealized appreciation (depreciation) (27,980,129) 25,977,603
-------------- -------------
Increase (decrease) in net assets resulting from operations (54,673,720) 26,258,074
-------------- -------------
From Distributions to Shareholders
Net realized gains--Class A (183,926) --
Net realized gains--Class B (108,414) --
In excess of net investment income--Class A -- (12,168)
In excess of accumulated net realized gains--Class A (141,528) --
In excess of accumulated net realized gains--Class B (83,423) --
-------------- -------------
Decrease in net assets from distributions to shareholders (517,291) (12,168)
-------------- -------------
From Share Transactions
Class A
Proceeds from sales of shares (12,800,790 and
6,072,940 shares, respectively) 216,824,086 81,698,360
Net asset value of shares issued from reinvestment
of distributions (18,203 and 928 shares, respectively) 304,365 11,748
Cost of shares repurchased (7,723,733 and 196,589
shares, respectively) (126,330,628) (2,715,491)
-------------- -------------
Total 90,797,823 78,994,617
-------------- -------------
Class B
Proceeds from sales of shares (5,355,420 and 2,768,695
shares, respectively) 90,761,953 39,161,690
Net asset value of shares issued from reinvestment
of distributions (9,754 and 0 shares, respectively) 161,819 --
Cost of shares repurchased (1,088,642 and 61,152
shares, respectively) (17,334,625) (862,545)
-------------- -------------
Total 73,589,147 38,299,145
-------------- -------------
Increase in net assets from share transactions 164,386,970 117,293,762
-------------- -------------
Net increase in net assets 109,195,959 143,539,668
Net Assets
Beginning of period 143,539,668 0
-------------- -------------
End of period (including undistributed net
investment income of $0 and $0, respectively) $ 252,735,627 $143,539,668
============== =============
</TABLE>
See Notes to Financial Statements
6
<PAGE>
Phoenix Small Cap Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A Class B
----------------------------- -----------------------------
From Inception From Inception
Year Ended 10/16/95 to Year Ended 10/16/95 to
4/30/97 4/30/96 4/30/97 4/30/96
------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $16.74 $10.00 $16.68 $10.00
Income from investment operations
Net investment income (loss) (0.05)(5) (0.04)(1)(5) (0.17)(5) (0.09)(1)(5)
Net realized and unrealized gain (loss) (2.53) 6.79 (2.50) 6.77
---------- ---------- --------- --------
Total from investment operations (2.58) 6.75 (2.67) 6.68
---------- ---------- --------- --------
Less distributions
Dividends from net investment income -- -- -- --
Dividends from net realized gains (0.02) -- (0.02) --
In excess of net investment income -- (0.01) -- --
In excess of accumulated net realized gains (0.01) -- (0.01) --
---------- ---------- --------- --------
Total distributions (0.03) (0.01) (0.03) --
---------- ---------- --------- --------
Change in net asset value (2.61) 6.74 (2.70) 6.68
---------- ---------- --------- --------
Net asset value, end of period $14.13 $16.74 $13.98 $ 16.68
========== ========== ========= ========
Total return (2) (15.43)% 67.48%(4) (16.03)% 66.80%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $155,089 $98,372 $97,647 $45,168
Ratio to average net assets of:
Expenses 1.37% 1.50%(3) 2.12% 2.26%(3)
Net investment income (loss) (0.28)% (0.53)%(3) (1.03)% (1.44)%(3)
Portfolio turnover 325% 103%(4) 325% 103%(4)
Average commission rate paid (6) $0.0540 $0.0657 $0.0540 $0.0657
</TABLE>
(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.
(6) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
7
<PAGE>
Phoenix Strategic Theme Fund
- --------------------------------------------------------------------------------
INVESTMENTS AT APRIL 30, 1997
SHARES VALUE
-------- -------------
COMMON STOCKS-- 73.9%
Banks--Foreign--1.0%
BanPonce Corp. 37,000 $1,262,625
-------------
Banks--Money Center--1.0%
Chase Manhattan Corp. 14,000 1,296,750
-------------
Banks--Southeast--1.0%
First American Corp. 19,000 1,244,500
-------------
Banks--Super Regional--1.0%
Fleet Financial Group, Inc. 21,000 1,281,000
-------------
Commercial Services--Schools--1.3%
Education Management Corp. (b) 50,000 1,100,000
ITT Educational Services, Inc. (b) 25,000 568,750
-------------
1,668,750
-------------
Computer--Local Networks--2.1%
Ascend Communications, Inc. (b) 59,000 2,699,250
-------------
Computer--Memory Devices--4.3%
Quantum Corp. (b) 45,000 1,875,938
Seagate Technology, Inc. (b) 38,000 1,743,250
Western Digital Corp. (b) 30,000 1,848,750
-------------
5,467,938
-------------
Computer--Services--1.5%
America Online, Inc. (b) 42,000 1,895,250
-------------
Computer--Software--1.2%
Compuware Corp. (b) 42,000 1,585,500
-------------
Cosmetics/Personal Care--0.4%
Weider Nutrition International, Inc. (b) 42,600 468,600
-------------
Diversified Operations--1.1%
Corning, Inc. 28,000 1,351,000
-------------
Electric--Semiconductor Equipment--4.5%
Applied Materials, Inc. (b) 54,000 2,963,250
Teradyne, Inc. (b) 85,000 2,783,750
-------------
5,747,000
-------------
Electric--Semiconductor Manufacturing--4.5%
Altera Corp. (b) 27,000 1,338,187
LSI Logic Corp. (b) 65,000 2,486,250
Xilinx, Inc. (b) 40,000 1,960,000
-------------
5,784,437
-------------
Electrical--Equipment--1.0%
General Electric Co. 12,000 1,330,500
-------------
Finance--Equity REITS--4.1%
Equity Residential Properties Trust 35,000 1,531,250
Essex Property Trust, Inc. 40,000 1,170,000
Patriot American Hospitality, Inc. 58,000 1,247,000
Starwood Lodging Trust 33,000 1,270,500
-------------
5,218,750
-------------
Finance--Investment Bankers--3.6%
Charles Schwab Corp. 55,000 2,014,375
Merrill Lynch & Co., Inc. 14,000 1,333,500
Morgan Stanley Group, Inc. 20,000 1,262,500
-------------
4,610,375
-------------
Financial Services--Miscellaneous--1.1%
SunAmerica, Inc. 31,000 1,426,000
-------------
Insurance--Diversified--2.2%
Travelers Group, Inc. 51,000 2,824,125
-------------
Insurance--Life--6.7%
Conseco, Inc. 65,000 2,689,375
Lincoln National Corp. 23,000 1,288,000
Providian Corp. 44,000 2,541,000
Torchmark Corp. 32,000 1,988,000
-------------
8,506,375
-------------
Insurance--Property/Casualty/Title--3.5%
Ace, Ltd. 30,000 1,800,000
Allstate Corp. 20,000 1,310,000
American International Group, Inc. 11,000 1,413,500
-------------
4,523,500
-------------
Medical--Drug/Diversified--1.1%
Johnson & Johnson 23,000 1,408,750
-------------
Medical--Ethical Drugs--2.1%
Pfizer, Inc. 14,000 1,344,000
Schering-Plough Corp. 16,000 1,280,000
-------------
2,624,000
-------------
Oil & Gas--Drilling--4.4%
Diamond Offshore Drilling (b) 50,000 3,218,750
ENSCO International, Inc. (b) 51,000 2,422,500
-------------
5,641,250
-------------
Oil & Gas--International Integrated--1.5%
Exxon Corp. 34,000 1,925,250
-------------
Oil & Gas--Machinery/Equipment--4.5%
Cooper Cameron Corp. (b) 28,000 1,995,000
Smith International, Inc. (b) 54,000 2,558,250
Varco International, Inc. (b) 50,000 1,150,000
-------------
5,703,250
-------------
Oil & Gas--Refining--0.9%
Trizec Hahn Corp. 50,000 1,093,750
-------------
Pollution Control--Equipment--0.9%
Ionics, Inc. (b) 25,000 1,150,000
-------------
Pollution Control--Services--2.8%
Newpark Resources, Inc. (b) 40,000 1,795,000
Philip Environmental, Inc. (b) 40,000 630,000
U.S.A. Waste Services, Inc. (b) 37,000 1,211,750
-------------
3,636,750
-------------
Real Estate Operations--0.8%
Fairfield Communities, Inc. (b) 40,000 1,040,000
-------------
Retail--Major Discount Chains--1.0%
Costco Co., Inc. (b) 44,000 1,270,500
-------------
Transportation--Airline--2.0%
UAL Corp. (b) 17,000 1,264,375
U.S. Air Group, Inc. (b) 40,000 1,295,000
-------------
2,559,375
-------------
See Notes to Financial Statements
10
<PAGE>
Phoenix Strategic Theme Fund
- --------------------------------------------------------------------------------
SHARES VALUE
-------- -------------
Transportation--Truck--4.5%
CNF Transportation, Inc. 78,000 $ 2,320,500
USFreightways Corp. 58,000 1,566,000
Yellow Corp. (b) 95,000 1,828,750
-------------
5,715,250
-------------
Utility--Water Supply--0.3%
Southwest Water Co. 25,800 341,850
-------------
TOTAL COMMON STOCKS
(Identified cost $91,969,841) 94,302,200
-------------
FOREIGN COMMON STOCKS--1.9%
Medical--Ethical Drugs--1.9%
Teva Pharmaceutical Industries, Ltd.
Sponsored ADR (Israel) (b) 47,000 2,385,250
-------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $2,494,912) 2,385,250
-------------
TOTAL LONG-TERM INVESTMENTS--75.8%
(Identified cost $94,464,753) 96,687,450
-------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------ --------
SHORT-TERM OBLIGATIONS-- 29.8%
Commercial Paper--24.6%
Asset Securitization
Cooperative Corp. 5.65%,
5-1-97 A-1+ $4,746 4,746,000
Ciesco L.P. 5.55%, 5-1-97 A-1+ 3,000 3,000,000
Exxon Imperial U.S., Inc.
5.55%, 5-2-97 A-1+ 1,805 1,804,722
Preferred Receivables
Funding Corp. 5.33%,
5-2-97 A-1 520 519,923
International Lease Finance
Corp. 5.32%, 5-5-97 A-1 2,215 2,213,331
Merrill Lynch & Co., Inc.
5.57%, 5-7-97 A-1+ 2,195 2,192,962
Amoco Co. 5.40%, 5-9-97 A-1+ 3,500 3,495,800
General Electric Capital
Corp. 5.46%, 5-15-97 A-1+ 2,900 2,893,842
Heinz (H.J.) Co. 5.47%,
5-20-97 A-1 3,800 3,789,030
Greenwich Funding Corp.
5.54%, 5-21-97 A-1+ 2,520 2,512,244
Pfizer, Inc. 5.47%, 5-29-97 A-1+ 1,585 1,578,257
Private Export Funding
Corp. 5.35%, 5-29-97 A-1+ 2,730 2,717,125
---------------
31,463,236
---------------
Federal Agency Securities--5.2%
Federal Home Loan Banks 5.34%, 5-23-97 3,640 3,628,121
Federal National Mortgage Assoc. 5.28%,
6-5-97 3,000 2,983,446
---------------
6,611,567
---------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $38,077,832) 38,074,803
---------------
TOTAL INVESTMENTS--105.6%
(Identified cost $132,542,585) 134,762,253(a)
Cash and receivables, less liabilitites--(5.6%) (7,092,363)
---------------
NET ASSETS--100.0% $127,669,890
===============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $3,320,579 and gross
depreciation of $1,808,462 for income tax purposes. At April 30, 1997,
the aggregate cost of securities for federal income tax purposes was
$133,250,136.
(b) Non-income producing.
See Notes to Financial Statements
11
<PAGE>
Phoenix Strategic Theme Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
Assets
Investment securities at value
(Identified cost $132,542,585) $134,762,253
Cash 3,652
Receivables
Investment securities sold 13,910,103
Fund shares sold 356,640
Dividends and interest 20,880
---------------
Total assets 149,053,528
---------------
Liabilities
Payables
Investment securities purchased 20,930,845
Fund shares repurchased 202,155
Investment advisory fee 77,836
Distribution fee 56,048
Transfer agent fee 29,709
Financial agent fee 5,959
Trustees' fee 4,215
Accrued expenses 76,871
---------------
Total liabilities 21,383,638
---------------
Net Assets $127,669,890
===============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $126,312,012
Undistributed net investment income 199,760
Accumulated net realized loss (1,061,550)
Net unrealized appreciation 2,219,668
---------------
Net Assets $127,669,890
===============
Class A
Shares of beneficial interest outstanding, $0.0001
par value, unlimited authorization
(Net Assets $77,827,000) 6,468,295
Net asset value per share $12.03
Offering price per share
$12.03/(1-4.75%) $12.63
Class B
Shares of beneficial interest outstanding, $0.0001
par value, unlimited authorization
(Net Assets $49,842,890) 4,183,620
Net asset value and offering price per share $11.91
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
Investment Income
Interest $ 1,175,498
Dividends 704,060
--------------
Total investment income 1,879,558
--------------
Expenses
Investment advisory fee 742,401
Distribution fee--Class A 161,426
Distribution fee--Class B 344,165
Financial agent fee 41,154
Transfer agent 168,715
Registration 86,695
Printing 25,451
Professional 25,318
Custodian 22,000
Trustees 18,258
Miscellaneous 7,691
--------------
Total expenses 1,643,274
--------------
Net investment income 236,284
--------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized loss on securities (564,658)
Net realized gain on foreign currency transactions 165
Net change in unrealized appreciation (depreciation)
on investments (4,414,137)
--------------
Net loss on investments (4,978,630)
--------------
Net decrease in net assets resulting from operations $(4,742,346)
==============
See Notes to Financial Statements
12
<PAGE>
Phoenix Strategic Theme Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
Year Ended October 16, 1995 to
April 30, 1997 April 30, 1996
--------------- -------------------
<S> <C> <C>
From Operations
Net investment income (loss) $ 236,284 $ (35,677)
Net realized gain (loss) (564,493) (376,137)
Net change in unrealized appreciation (depreciation) (4,414,137) 6,633,805
--------------- -----------------
Increase (decrease) in net assets resulting from operations (4,742,346) 6,221,991
--------------- -----------------
From Distributions to Shareholders
Net investment income--Class A (58,137) --
Net investment income--Class B -- --
In excess of accumulated net realized gains--Class A (75,556) --
In excess of accumulated net realized gains--Class B (45,199) --
Tax return of capital--Class A -- (25,935)
Tax return of capital--Class B -- (1,782)
--------------- -----------------
Decrease in net assets from distributions to shareholders (178,892) (27,717)
--------------- -----------------
From Share Transactions
Class A
Proceeds from sales of shares (5,618,602 and
2,760,919 shares, respectively) 70,489,900 29,305,894
Net asset value of shares issued from reinvestment
of distributions (9,860 and 2,423 shares,
respectively) 124,426 25,417
Cost of shares repurchased (1,859,542 and
63,967 shares, respectively) (23,252,060) (743,134)
--------------- -----------------
Total 47,362,266 28,588,177
--------------- -----------------
Class B
Proceeds from sales of shares (3,501,688 and
992,960 shares, respectively) 43,480,458 10,820,691
Net asset value of shares issued from reinvestment
of distributions (3,161 and 161 shares, respectively) 39,607 1,682
Cost of shares repurchased (287,858 and
26,492 shares, respectively) (3,604,353) (291,674)
--------------- -----------------
Total 39,915,712 10,530,699
--------------- -----------------
Increase in net assets from share transactions 87,277,978 39,118,876
--------------- -----------------
Net increase in net assets 82,356,740 45,313,150
Net Assets
Beginning of period 45,313,150 0
--------------- -----------------
End of period (including undistributed net
investment income of $199,760 and $0, respectively) $127,669,890 $45,313,150
=============== =================
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Phoenix Strategic Theme Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A Class B
----------------------------- -----------------------------
From Inception From Inception
Year Ended 10/16/95 to Year Ended 10/16/95 to
4/30/97 4/30/96 4/30/97 4/30/96
------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.37 $10.00 $12.33 $10.00
Income from investment operations (7)
Net investment income (loss) 0.06(5) (0.00)(1)(5) (0.03)(5) (0.06)(1)(5)
Net realized and unrealized gain (loss) (0.38) 2.39 (0.38) 2.40
------------ ---------------- ------------ ----------------
Total from investment operations (0.32) 2.39 (0.41) 2.34
------------ ---------------- ------------ ----------------
Less distributions
Dividends from net investment income (0.01) -- -- --
In excess of accumulated net realized gains (0.01) -- (0.01) --
Tax return of capital -- (0.02) -- (0.01)
------------ ---------------- ------------ ----------------
Total distributions (0.02) (0.02) (0.01) (0.01)
------------ ---------------- ------------ ----------------
Change in net asset value (0.34) 2.37 (0.42) 2.33
------------ ---------------- ------------ ----------------
Net asset value, end of period $12.03 $12.37 $11.91 $12.33
============ ================ ============ ================
Total return (2) (2.57)% 23.89% (4) (3.31)% 23.41% (4)
Ratios/supplemental data:
Net assets, end of period (thousands) $77,827 $33,393 $49,843 $11,920
Ratio to average net assets of:
Expenses 1.40% 1.40% (3) 2.15% 2.16% (3)
Net investment income (loss) 0.49% (0.09)% (3) (0.23)% (1.06)% (3)
Portfolio turnover 532% 175% (4) 532% 175% (4)
Average commission rate paid (6) $0.0590 $0.0663 $0.0590 $0.0663
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser 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.
(6) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
(7) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
See Notes to Financial Statements
14
<PAGE>
PHOENIX EQUITY OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
INVESTMENTS AT APRIL 30, 1997
SHARES VALUE
--------- --------------
COMMON STOCKS--87.8%
Advertising--1.0%
Outdoor Systems, Inc. (b) 61,800 $ 1,714,950
--------------
Auto & Truck Parts--1.7%
Cummins Engine Co., Inc. 50,000 2,806,250
--------------
Banks--6.2%
BankAmerica Corp. 23,000 2,688,125
Chase Manhattan Corp. 70,000 6,483,750
Zions Bancorporation 7,800 986,700
--------------
10,158,575
--------------
Computer Software & Services--10.8%
America Online, Inc. (b) 60,000 2,707,500
Computer Associates International, Inc. 60,000 3,120,000
HBO & Co. 71,100 3,803,850
McAfee Associates, Inc. (b) 50,000 2,787,500
Microsoft Corp. (b) 20,000 2,430,000
Veritas Software Corp. (b) 60,000 2,017,500
Visio Corp. (b) 18,100 918,575
--------------
17,784,925
--------------
Cosmetics & Soaps--1.5%
Clorox Co. 20,000 2,547,500
--------------
Diversified Financial Services--3.3%
American Express Co. 50,000 3,293,750
Conseco, Inc. 50,000 2,068,750
--------------
5,362,500
--------------
Diversified Miscellaneous--0.7%
Central Garden & Pet Co. (b) 60,000 1,196,250
--------------
Electrical Equipment--0.5%
Westinghouse Electric Corp. 50,000 850,000
--------------
Electronics--8.4%
Datum, Inc. (b) 25,000 581,250
Dupont Photomasks, Inc. (b) 60,700 2,906,013
Level One Communications, Inc. (b) 26,100 835,200
Micron Technology, Inc. 100,000 3,525,000
SCI Systems, Inc. (b) 40,000 2,470,000
Texas Instruments, Inc. 40,000 3,570,000
--------------
13,887,463
--------------
Entertainment, Leisure & Gaming--3.8%
Time Warner, Inc. 75,000 3,375,000
Walt Disney Co. 35,000 2,870,000
--------------
6,245,000
--------------
Healthcare--Diversified--1.2%
Bristol-Myers Squibb Co. 30,000 1,965,000
--------------
Healthcare--Drugs--4.5%
Eli Lilly & Co. 40,000 3,515,000
Pfizer, Inc. 40,000 3,840,000
--------------
7,355,000
--------------
Hospital Management & Services--1.4%
Oxford Health Plans, Inc. (b) 35,000 2,305,625
--------------
Household Furnishings & Appliances--1.0%
Sunbeam Corp., Inc. 50,000 1,587,500
--------------
Insurance--5.7%
Allstate Corp. 55,000 3,602,500
Progressive Corp. 35,000 2,664,375
Unum Corp. 40,000 3,080,000
--------------
9,346,875
--------------
Medical Products & Supplies--1.9%
Johnson & Johnson 50,000 3,062,500
--------------
Oil Service & Equipment--9.9%
Diamond Offshore Drilling (b) 55,100 3,547,063
Global Marine, Inc. (b) 89,200 1,795,150
Noble Drilling Corp. (b) 120,000 2,085,000
Schlumberger Ltd. 40,000 4,430,000
Smith International, Inc. (b) 40,000 1,895,000
Transocean Offshore, Inc. 42,900 2,600,812
--------------
16,353,025
--------------
Pollution Control--2.0%
U.S.A. Waste Services, Inc. (b) 50,000 1,637,500
United Waste Systems, Inc. (b) 48,700 1,643,625
--------------
3,281,125
--------------
Professional Services--2.5%
HFS, Inc. (b) 70,000 4,147,500
--------------
Publishing, Broadcasting, Printing & Cable--5.0%
Clear Channel Communications,
Inc. (b) 80,000 3,880,000
Heftel Broadcasting Corp. Class A (b) 28,500 1,425,000
New York Times Co. 70,000 3,027,500
--------------
8,332,500
--------------
REITS--3.5%
General Growth Properties 53,500 1,705,312
Patriot American Hospitality, Inc. 192,200 4,132,300
--------------
5,837,612
--------------
Retail--1.8%
Home Depot, Inc. 50,000 2,900,000
--------------
Telecommunications Equipment--1.4%
Lucent Technologies, Inc. 40,000 2,365,000
--------------
Utility--Gas--1.7%
Sonat, Inc. 50,000 2,856,250
--------------
Utility--Telephone--6.4%
Bell Atlantic Corp. 80,000 5,420,000
NYNEX Corp. 100,000 5,175,000
--------------
10,595,000
--------------
TOTAL COMMON STOCKS
(Identified cost $140,327,941) 144,843,925
--------------
FOREIGN COMMON STOCKS--4.4%
Machinery--2.2%
ASM Lithography Holding NV
(Netherlands) (b) 45,000 3,577,500
--------------
See Notes to Financial Statements
17
<PAGE>
PHOENIX EQUITY OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
SHARES VALUE
-------- -------------
Utility--Telephone--2.2%
Telecomunicacoes Brasileiras SA--
Telebras Sponsored ADR (Brazil) 32,200 $ 3,694,950
-------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $6,246,485) 7,272,450
-------------
WARRANTS--3.4%
Electronics--3.4%
Intel Warrants (b) 50,000 5,643,750
-------------
TOTAL WARRANTS
(Identified cost $5,352,501) 5,643,750
-------------
TOTAL LONG-TERM INVESTMENTS--95.6%
(Identified cost $151,926,927) 157,760,125
-------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
----------- --------
SHORT-TERM OBLIGATIONS--19.9%
Commercial Paper--12.3%
Anheuser-Busch Cos., Inc.
5.55%, 5-1-97 A-1+ $1,590 1,590,000
Ciesco L.P. 5.55%, 5-1-97 A-1+ 6,985 6,985,000
Campbell Soup Co. 5.50%,
5-8-97 A-1+ 4,015 4,010,706
Cargill, Inc. 5.45%,
5-15-97 A-1+ 3,075 3,068,483
Corporate Asset Funding
Co., Inc. 5.53%, 5-16-97 A-1+ 3,965 3,955,864
General Electric Capital
Corp. 5.55%, 6-13-97 A-1+ 750 745,028
---------------
20,355,081
---------------
Federal Agency Securities--7.5%
Federal Home Loan Banks 5.28%, 5-1-97 5,830 5,830,000
Federal Home Loan Mortgage Corp.
5.34%, 5-5-97 6,500 6,496,143
---------------
12,326,143
---------------
U.S. Treasury Bills--0.1%
U.S. Treasury Bills 4.72%, 5-1-97 200 200,000
---------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $32,881,224) 32,881,224
---------------
TOTAL INVESTMENTS--115.5%
(Identified cost $184,808,151) 190,641,349(a)
Cash and receivables, less liabilities--(15.5%) (25,579,524)
---------------
NET ASSETS--100.0% $165,061,825
===============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $7,579,373 and gross
depreciation of $2,611,794 for income tax purposes. At April 30, 1997,
the aggregate cost of securities for federal income tax purposes was
$185,673,770.
(b) Non-income producing.
See Notes to Financial Statements
18
<PAGE>
PHOENIX EQUITY OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
Assets
Investment securities at value
(Identified cost $184,808,151) $190,641,349
Cash 5,343
Receivables
Investment securities sold 8,208,018
Fund shares sold 7,263
Dividends and interest 69,442
---------------
Total assets 198,931,415
---------------
Liabilities
Payables
Investment securities purchased 33,332,486
Fund shares repurchased 260,565
Investment advisory fee 95,330
Transfer agent fee 53,991
Distribution fee 35,031
Financial agent fee 7,256
Trustees' fee 4,817
Accrued expenses 80,114
---------------
Total liabilities 33,869,590
---------------
Net Assets $165,061,825
===============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $160,971,770
Accumulated net realized loss (1,743,143)
Net unrealized appreciation 5,833,198
---------------
Net Assets $165,061,825
===============
Class A
Shares of beneficial interest outstanding, $0.0001
par value, unlimited authorization
(Net Assets $163,395,627) 23,713,170
Net asset value per share $6.89
Offering price per share
$6.89/(1-4.75%) $7.23
Class B
Shares of beneficial interest outstanding, $0.0001
par value, unlimited authorization
(Net Assets $1,666,198) 246,110
Net asset value and offering price per share $6.77
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
Investment Income
Dividend $ 868,274
Interest 630,929
Other income 191,096
---------------
Total investment income 1,690,299
---------------
Expenses
Investment advisory fee 1,408,901
Distribution fee--Class A 499,009
Distribution fee--Class B 16,682
Financial agent fee 73,819
Transfer agent 317,994
Professional 42,975
Printing 35,482
Registration 33,677
Trustees 22,158
Custodian 20,755
Miscellaneous 14,121
---------------
Total expenses 2,485,573
---------------
Net investment loss (795,274)
---------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 10,746,672
Net realized loss on foreign currency transactions (9,207)
Net change in unrealized appreciation (depreciation)
on investments (33,047,467)
---------------
Net loss on investments (22,310,002)
---------------
Net decrease in net assets resulting from operations $(23,105,276)
===============
See Notes to Financial Statements
19
<PAGE>
PHOENIX EQUITY OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
April 30, 1997 April 30, 1996
--------------- ---------------
<S> <C> <C>
From Operations
Net investment income (loss) $ (795,274) $ (1,070,957)
Net realized gain 10,737,465 27,906,869
Net change in unrealized appreciation (depreciation) (33,047,467) 29,337,807
----------- -----------
Increase (decrease) in net assets resulting from
operations (23,105,276) 56,173,719
----------- -----------
From Distributions to Shareholders
Net realized gains--Class A (21,357,244) (20,539,261)
Net realized gains--Class B (197,785) (108,254)
In excess of accumulated net realized gains--Class A (1,175,456) --
In excess of accumulated net realized gains--Class B (10,885) --
----------- -----------
Decrease in net assets from distributions to
shareholders (22,741,370) (20,647,515)
----------- -----------
From Share Transactions
Class A
Proceeds from sales of shares (1,544,352 and
3,092,252 shares, respectively) 13,235,186 24,946,255
Net asset value of shares issued from reinvestment
of distributions (2,020,340 and 1,944,177 shares,
respectively) 16,243,531 14,853,511
Cost of shares repurchased (4,096,555 and 5,081,608
shares, respectively) (34,291,172) (41,255,024)
----------- -----------
Total (4,812,455) (1,455,258)
----------- -----------
Class B
Proceeds from sales of shares (115,267 and 129,377
shares, respectively) 965,240 1,068,242
Net asset value of shares issued from reinvestment
of distributions (24,702 and 13,074, respectively) 195,636 99,234
Cost of shares repurchased (48,133 and 59,229
shares, respectively) (387,617) (481,915)
----------- -----------
Total 773,259 685,561
----------- -----------
Decrease in net assets from share transactions (4,039,196) (769,697)
----------- -----------
Net increase (decrease) in net assets (49,885,842) 34,756,507
Net Assets
Beginning of period 214,947,667 180,191,160
----------- -----------
End of period (including undistributed net
investment income of $0 and $0, respectively) $165,061,825 $214,947,667
=========== ===========
</TABLE>
See Notes to Financial Statements
20
<PAGE>
PHOENIX EQUITY OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------
Year Ended April 30,
1997 1996 1995 1994 1993
------------ ------------ ---------------------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.81 $ 7.40 $ 7.31 $ 9.64 $ 8.59
Income from investment operations
Net investment income (loss) (0.03)(4) (0.04)(4) 0.04 0.05 0.06
Net realized and unrealized gain (loss) (0.90) 2.34 0.58 0.57 1.34
------- ------- ------- ------- -------
Total from investment operations (0.93) 2.30 0.62 0.62 1.40
------- ------- ------- ------- -------
Less distributions
Dividends from net investment income -- -- (0.05) (0.05) (0.06)
Dividends from net realized gains (0.94) (0.89) (0.48) (2.90) (0.29)
In excess of accumulated net realized gains (0.05) -- -- -- --
------- ------- ------- ------- -------
Total distributions (0.99) (0.89) (0.53) (2.95) (0.35)
------- ------- ------- ------- -------
Change in net asset value (1.92) 1.41 0.09 (2.33) 1.05
------- ------- ------- ------- -------
Net asset value, end of period $ 6.89 $ 8.81 $ 7.40 $ 7.31 $ 9.64
======= ======= ======= ======= =======
Total return (1) (12.19)% 32.86% 9.16% 4.99% 16.50%
Ratios/supplemental data:
Net assets, end of period (thousands) $163,396 $213,600 $179,666 $186,037 $215,570
Ratio to average net assets of:
Expenses 1.23% 1.25 % 1.32% 1.26% 1.35%
Net investment income (loss) (0.39)% (0.53)% 0.60% 0.57% 0.67%
Portfolio turnover 412 % 302 % 358% 167% 31%
Average commission rate paid (5) $ 0.0543 $ 0.0600 N/A N/A N/A
Class B
--------------------------------------
From
Year Ended April 30, Inception
7/19/94 to
1997 1996 4/30/95
------------ ------------ -------------
Net asset value, beginning of period $ 8.73 $ 7.39 $ 7.28
Income from investment operations
Net investment income (loss) (0.09)(4) (0.10)(4) 0.00
Net realized and unrealized gain (loss) (0.88) 2.33 0.59
------- ------- -------
Total from investment operations (0.97) 2.23 0.59
------- ------- -------
Less distributions
Dividends from net investment income -- -- --
Dividends from net realized gains (0.94) (0.89) (0.48)
In excess of accumulated net realized gains (0.05) -- --
------- ------- -------
Total distributions (0.99) (0.89) (0.48)
------- ------- -------
Change in net asset value (1.96) 1.34 0.11
------- ------- -------
Net asset value, end of period $ 6.77 $ 8.73 $ 7.39
======= ======= =======
Total return (1) (12.79)% 31.92% 8.69%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 1,666 $ 1,348 $ 525
Ratio to average net assets of:
Expenses 1.98% 2.06% 2.15%(2)
Net investment income (loss) (1.15)% (1.18)% (0.06)%(2)
Portfolio turnover 412% 302% 358%
Average commission rate paid (5) $0.0543 $0.0600 N/A
</TABLE>
(1) Maximum sales charge is not reflected in total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
21
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Strategic Equity Series 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.
Each Series has distinct investment objectives. The Small Cap Series seeks
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. The Strategic Theme Series
seeks 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. The Equity Opportunities Series seeks to achieve long-term growth of
capital from investment in a diversified group of stocks or securities
convertible into stocks.
Each Series 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 each Series are borne pro rata by the holders of both classes of
shares, except that each class bears distribution expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. Security valuation:
Equity securities are valued at the last sale price, or if there had been
no sale that day, at the last bid price. Short-term investments having a
remaining maturity of 60 days or less are valued at amortized cost which
approximates market. All other securities and assets are valued at their fair
value as determined in good faith by or under the direction of the Trustees.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign securities,
as soon as the Series is notified. Interest income is recorded on the accrual
basis. Realized gains and losses are determined on the identified cost basis.
C. Income taxes:
Each of the Series is treated as a separate taxable entity. It is the
policy of each Series in 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, each Series intends to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Code. Therefore, no
provision for federal income taxes or excise taxes has been made.
D. Distributions to shareholders:
Distributions are recorded by each Series on the ex-dividend date. 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 and 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.
22
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1997 (Continued)
F. Expenses:
Expenses incurred by the Fund with respect to any two or more Series are
allocated in proportion to the net assets of each Series, except where
allocation of direct expense to each Series or an alternative allocation method
can be more fairly made.
G. Options:
Each Series may purchase put or call options on securities and securities
indices and foreign currencies for the purpose of hedging against changes in the
market value of the underlying securities or foreign currencies. The Series pays
a premium which is included in the Series' Schedule of Investments and
subsequently marked to market to reflect the current value of the option. The
risk associated with purchasing put and call options is limited to the premium
paid.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the Advisers, Phoenix
Investment Counsel, Inc. ("PIC") and National Securities and Research
Corporation ("NSR"), indirect majority-owned subsidiaries of Phoenix Home Life
Mutual Insurance Company ("PHL"), are entitled to a fee based upon the following
annual rates as a percentage of the average daily net assets of each Series:
1st $1-2 $2+
Series Adviser $1 Billion Billion Billion
- ---------------------------- --------- ------------ --------- ----------
Small Cap Series PIC 0.75% 0.70% 0.65%
Strategic Theme Series PIC 0.75% 0.70% 0.65%
Equity Opportunities Series NSR 0.70% 0.65% 0.60%
The Adviser has agreed to assume expenses and reduce the advisory fee for
the benefit of the Small Cap and Strategic Theme Series to the extent that other
operating expenses (excluding investment advisory fees, distribution fees,
interest, taxes, brokerage fees and commissions and extraordinary expenses)
exceed 0.50% and 0.40%, respectively, of the average daily net assets of each
Series.
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 $432,737 for Class A shares and
deferred sales charges of $303,358 for Class B shares for the year ended April
30, 1997. In addition, each Series 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 each Series. 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, 1997, $1,588,806 was earned by the Distributor and $820,797 was earned by
unaffiliated participants.
As Financial Agent of the Fund, PEPCO received a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.03% of the average
daily net assets of each Series through December 31, 1996, and starting on
January 1, 1997, at an annual rate of 0.05% of average daily net assets up to
$100 million, 0.04% of average daily net assets of $100 million to $300 million,
0.03% of average daily net assets of $300 million through $500 million, and
0.015% of average daily net assets greater than $500 million; a minimum fee may
apply. PEPCO serves as the Fund's Transfer Agent with State Street Bank and
Trust Company as sub-transfer agent. For the year ended April 30, 1997, transfer
agent fees were $1,108,232 of which PEPCO retained $373,701 which is net of the
fees paid to State Street.
At April 30, 1997, PHL and its affiliates held shares of the Fund as
follows:
Aggregate
Shares Net Asset Value
--------- ----------------
Strategic Theme Series
--Class A 993,317 $11,949,604
--Class B 10,019 119,326
Equity Opportunities Series
--Class A 124 857
--Class B 18,833 127,497
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities (excluding short-term securities,
options, futures, and forward currency contracts) for the year ended April 30,
1997, aggregated the following:
Purchases Sales
--------------- ---------------
Small Cap Series $797,714,133 $677,295,192
Strategic Theme Series 457,473,624 397,163,740
Equity Opportunities Series 772,203,040 799,519,094
There were no purchases or sales of long-term U.S. Government securities.
4. CAPITAL LOSS CARRYOVERS
At April 30, 1997, Small Cap Series had a capital loss carryover of
$20,746,935, expiring in 2005, which may be used to offset future capital gains.
Under current tax law, capital losses realized after October 31, 1996 may
be deferred and treated as occurring on the first day of the following fiscal
year. For the year ended April 30, 1997, the following losses were deferred:
Small Cap Series $377,891, Strategic Theme Series
23
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1997 (Continued)
$127,981 and Equity Opportunities Series $877,524. In addition, prior year
losses deferred were utilized as follows: Strategic Theme Series $375,980 and
Equity Opportunities Series $3,958 (foreign currency only).
5. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Series of the Fund have
recorded several reclassifications in the capital accounts. These
reclassifications have no impact on the net asset value of the Series 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, 1997, the Series recorded the following reclassifications to increase
(decrease) the accounts listed below:
Capital paid
Undistributed Accumulated in on shares
net investment net realized of beneficial
income gain (loss) interest
---------------- -------------- ---------------
Small Cap Series $1,471,814 $ 2,154 $(1,473,968)
Strategic Theme Series 21,613 (165) (21,448)
Equity Opportunities
Series 795,274 (556,802) (238,472)
TAX INFORMATION NOTICE (Unaudited)
For federal income tax purposes, 2.17%, 38.70% and 4.54% of the ordinary
income dividends paid by the Small Cap Series, Strategic Theme Series and Equity
Opportunities Series, respectively, qualify for the dividends received deduction
of corporate shareholders.
For the fiscal year ended April 30, 1997, the Equity Opportunities Series
distributed $1,851,224 of long-term capital gain dividends.
This report is not authorized for distribution to prospective investors in
the Phoenix Strategic Equity Series Fund unless preceded or accompanied by an
effective prospectus which includes information concerning the sales charge,
the Fund's record and other pertinent information.
24
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO] Price Waterhouse LLP [LOGO]
To the Trustees and Shareholders of
Phoenix Strategic Equity Series Fund
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments (except for bond ratings), and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Phoenix Small Cap Fund, the Phoenix Strategic Theme Fund and the Phoenix Equity
Opportunities Fund (constituting separate series of the Phoenix Strategic Equity
Series Fund, hereinafter referred to as the "Fund") at April 30, 1997, and the
results of each of their operations, the changes in each of their net assets and
the financial highlights for each of the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1997 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 11, 1997
25
<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, 1997,
incorporated by reference.
(b) Exhibits:
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 and filed via Edgar
with Post-Effective Amendment No. 25 on August 20, 1997.
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, filed
via Edgar with Post-Effective Amendment No. 25 on August 20, 1997 and
herein incorporated by reference.
5.2 Investment Advisory between Registrant and Phoenix Investment Counsel,
Inc. dated October 16, 1995 filed via Edgar with Post-Effective
Amendment No. 13 on October 16, 1995.
*5.3 First Amendment to Phoenix Strategic Equity Series Fund Management
Agreement between Registrant and National Securities Research
Corporation dated January 1, 1994 filed via Edgar with Post-Effective
Amendment No. 25 on August 20, 1997.
*5.4 Second Amendment to Phoenix Strategic Equity Series Fund Management
Agreement between Registrant and National Securities and Research
Corporation dated October 16, 1995 filed via Edgar with Post-
Effective Amendment No. 25 on August 20, 1997.
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 and filed via Edgar with Post-Effective Amendment No.
25 on August 20, 1997.
*9.2 Form of Sales Agreement, filed with Post-Effective Amendment No. 9 on
July 19, 1994 and filed with Post-Effective Amendment No. 25 on
August 20, 1997.
*9.3 Financial Agent Agreement between Registrant and Equity Planning dated
December 11, 1996 filed via Edgar with Post-Effective Amendment No. 25
on August 20, 1997.
*9.4 First Amendment to Financial Agent Agreement between Registrant and
Equity Planning dated February 26, 1997 filed via Edgar with
Post-Effective Amendment No. 25 on August 20, 1997.
C-1
<PAGE>
*9.5 Second Amendment of Financial Agent Agreement between Registrant and
Equity Planning dated July 22, 1997 filed via Edgar with
Post-Effective Amendment No. 25 on August 20, 1997.
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 with Post- Effective Amendment No. 17 on
August 27, 1996.
*18.3 Amended and Restated Rule 18f-3 Dual Distribution Plan effective
May 1, 1996 filed via Edgar with Post-Effective Amendment No. 25 on
August 20, 1997.
*18.4 First Amendment to the Amended and Restated Plan pursuant to
Rule 18f-3 dated May 28, 1997 filed via Edgar with Post-Effective
Amendment No. 25 on August 20, 1997.
19. Powers of Attorney as filed via Edgar with Post-Effective Amendment
No. 14 on April 16, 1996.
- -----------
*Filed herewith.
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 May 30, 1997, the number of record holders of each class of
securities of the Registrant was as follows:
Number of
Title of Class Record-holders
- -------------- --------------
Shares of Beneficial Interest--Class A (Equity Opportunities) 11,005
Shares of Beneficial Interest--Class B (Equity Opportunities) 282
Shares of Beneficial Interest--Class A (Theme) 5,795
Shares of Beneficial Interest--Class B (Theme) 4,289
Shares of Beneficial Interest--Class A (Small Cap) 19,995
Shares of Beneficial Interest--Class B (Small Cap) 11,226
Shares of Beneficial Interest--Class A (MicroCap) 0
Shares of Beneficial Interest--Class B (MicroCap) 0
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 "Trustees and Officers" in the Statement of Additional
Information, each of which is included in this Post-Effective Amendment to the
Registration Statement.
For information as to the business, profession, vocation or employment of
a substantial nature of director and officers of the Advisers reference is made
to the Advisers' current Form ADV (SEC File Nos. 801-8177 (NSR) and 801-5995
(PIC)) filed under the Investment Advisers Act of 1940 and incorporated herein
by reference.
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.
C-2
<PAGE>
(b) Directors and executive officers of Phoenix Equity Planning Corporation are
as follows:
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Distributor with Registrant
- ------------------------- ------------------------------- -------------------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
David R. Pepin Director and Executive Vice President
56 Prospect Street Executive Vice President,
P.O. Box 150480 Mutual Fund Sales
Hartford, CT 06115-0480 and Operations
Leonard J. Saltiel Managing Director, Vice President
100 Bright Meadow Blvd. Operations and Service
P.O. Box 2200
Enfield, CT 06083-2200
Paul A. Atkins Senior Vice President and None
56 Prospect Street Sales Manager
P.O. Box 150480
Hartford, CT 06115-0480
Maris Lambergs Senior Vice President, None
100 Bright Meadow Blvd. Insurance and
P.O. Box 2200 Independent Division
Enfield, CT 06083-2200
William R. Moyer Senior Vice President, Vice President
100 Bright Meadow Blvd. and Chief Financial Officer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry Managing Director, None
100 Bright Meadow Blvd. Mutual Fund Distribution
P.O. Box 1900
Enfield, CT 06083-1900
G. Jeffrey Bohne Vice President, Secretary
100 Bright Meadow Blvd. Mutual Fund
P.O. Box 2200 Customer Service
Enfield, CT 06083-2200
Eugene A. Charon Vice President and None
100 Bright Meadow Blvd. Controller
P.O. Box 2200
Enfield, CT 06083-2200
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Elizabeth R. Sadowinski Vice President, None
56 Prospect Street Administration
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
Name and Position and Offices Position and Offices
Principal Address with Distributor with Registrant
- ------------------------- --------------------------- ----------------------
<S> <C> <C>
Thomas N. Steenburg Vice President, Assistant Secretary
56 Prospect Street Counsel and Secretary
P.O. Box 150480
Hartford, CT 06115-0480
William E. Keen, III Assistant Vice President, Vice President
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 1900
Enfield, CT 06083-1900
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an
affiliated person of the Registrant or an affiliated person of such
affiliated person, directly or indirectly, from the Registrant during the
Registrant's last fiscal year.
Item 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 advisers, Phoenix Investment Counsel, Inc. and National
Securities & Research Corporation; Registrant's financial agent, transfer agent
and principal underwriter, Phoenix Equity Planning Corporation; Registrant's
dividend disbursing agent and custodian, State Street Bank and Trust Company.
The address of the Secretary of the Trust is 101 Munson Street, Greenfield,
Massachusetts 01301; the address of Phoenix Investment Counsel, Inc. and
National Securities & Research Corporation 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-4
<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, thereto duly authorized, in the City of Hartford, and State
of Connecticut on the 20th day of August, 1997.
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 20th day of August, 1997.
Signature Title
--------- -----
Trustee
- -------------------------------
C. Duane Blinn*
Trustee
- -------------------------------
Robert Chesek*
Trustee
- -------------------------------
E. Virgil Conway*
Treasurer (principal
- ------------------------------- financial and
Nancy G. Curtiss* accounting officer)
Trustee
- -------------------------------
Harry Dalzell-Payne*
Trustee
- -------------------------------
Francis E. Jeffries*
Trustee
- -------------------------------
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin Trustee and President
- ------------------------------- (principal executive
Philip R. McLoughlin officer)
S-1(c)
<PAGE>
Signature Title
--------- -----
Trustee
- -------------------------------
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.*
By /s/ Philip R. McLoughlin
----------------------------
* Philip R. McLoughlin pursuant to powers of attorney previously filed.
S-2(c)
PHOENIX EQUITY OPPORTUNITIES FUND
Certificate of
Amendment to Declaration of Trust
The undersigned, being all of the Board of Trustees of the Phoenix Equity
Opportunities Fund, a Massachusetts business trust (the "Trust"), do hereby
certify that in accordance with certain implied powers vested in the Board of
Trustees pursuant to Article III, Section 3.10 of that certain Declaration of
Trust dated June 25, 1986, as amended (hereinafter collectively referred to as
the "Declaration"), the Declaration is further amended in order to reflect the
following modifications deemed necessary, proper and desirable in order to
promote the interests of the Trust:
1. The first sentence in Article VI, Section 6.1 is hereby deleted and the
following inserted in lieu thereof:
The interest of the beneficiaries hereunder shall be divided into an
unlimited number of transferable shares of beneficial interest, in one or
more distinct and separate series or classes thereof as the Trustees from
time to time may create and establish in accordance with Sections 6.9, 6.11
and 6.12 hereof, par value of $0.0001 per share.
2. Article VI, Section 6.11 is hereby added, to wit:
Section 6.11. Class Designation. The Trustees, in their discretion, may
authorize the division of the Shares of the Trust, or, if any Series be
established, the Shares of any Series, into two or more Classes, and the
different Classes shall be established and designated, and the variations in the
relative rights and preferences as between the different Classes shall be fixed
and determined, by the Trustees; provided, that all Shares of the Trust or of
any Series shall, subject to Section 6.12, below, be identical to all other
Shares of the Trust or the same Series, as the case may be, except that there
may be variations between different classes as to allocation of expenses, rights
of redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several Classes shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to refer to Shares of any or all Classes as the context may require.
3. Article VI, Section 6.12 is hereby added, to wit:
<PAGE>
Section 6.12. Dual Distribution System. Without in any manner limiting the
rights of the Trustees pursuant to Section 6.11, above, the Trustees hereby
divide the Shares of the Trust into two Classes. The Classes, so established,
shall be designated as "Phoenix Equity Opportunities Fund Class A Shares"
("Class A Shares") and "Phoenix Equity Opportunities Fund Class B Shares"
("Class B Shares"). The following preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption shall pertain to all Shares in each of the
foregoing Classes:
(a) The assets belonging to each Class shall be invested in the same
investment portfolio as the Trust.
(b) The dividends and distributions of investment income and capital gains
with respect to each Class shall be in such amounts as may be declared from time
to time by the Trustees, and the dividends and distributions of each Class may
vary from dividends and distributions of investment income and capital gains
with respect to the other Class to reflect differing allocations of the expenses
of the Trust between the holders of the two classes and any resultant
differences between the net asset value per share of the two classes, to such
extent and for such purposes as the Trustees may deem appropriate. The
allocation of investment income or capital gains and expenses and liabilities of
the Trust between the Class A Shares and the Class B Shares shall be determined
by the Trustees in a manner that is consistent with the order dated September
13, 1993 (Investment Company Act of 1940 Release No. IC-19706) issued by the
Securities and Exchange Commission in connection with the application for
exemption filed by National Multi-Sector Fixed Income Fund, et al., any
amendment to such order or any rule or interpretation under the Investment
Company Act of 1940 that modifies or supersedes such order.
(c) Class A Shares (including fractional shares thereof) may be subject to
an initial sales charge pursuant to the terms of the issuance of such Shares.
(d) The proceeds of the redemption of Class B Shares (including a
fractional share thereof) shall be reduced by the amount of any contingent
deferred sales charge payable on such redemption pursuant to the terms of the
issuance of such Shares.
(e) The holders of Class A Shares and Class B Shares shall have (i)
exclusive voting rights with respect to provisions of any distribution plan
adopted by the Trust pursuant to Rule 12b-1 under the Investment Company Act of
1940 (a "Plan") applicable to the respective Class, and (ii) no voting rights
with respect to provisions of any Plan applicable to the other Class, or with
regard to any
<PAGE>
other matter submitted to a vote of shareholders which does not affect holders
of that respective Class.
(f) (i) Each Class B Share, other than a share purchased through the
automatic reinvestment of a dividend or a distribution with respect to Class B
Shares, shall be converted automatically, and without any action or choice on
the part of the holder thereof, into Class A Shares on the date that is the
first business day following the month in which the eighth anniversary date of
the date of the issuance of the Class B Share falls (the "Conversion Date").
With respect to Class B Shares issued in an exchange or series of exchanges for
shares of shares of beneficial interest or common stock, as the case may be, of
another investment company or class or series thereof registered under the
Investment Company Act of 1940 pursuant to an exchange privilege granted by the
Trust, the date of issuance of the Class B Shares for purposes of the
immediately preceding sentence shall be the date of issuance of the original
shares of beneficial interest or common stock, as the case may be.
(ii) Each Class B Share acquired through the automatic reinvestment of
a dividend or a distribution with respect to Class B Shares shall be segregated
in a separate sub-account. Each time any Class B Shares in a shareholder's Fund
account (other than those in the aforedescribed applicable sub-account) convert
to Class A Shares, an equal pro rata portion of the Class B Shares then in the
sub-account will also convert to Class A Shares without any action or choice on
the part of the holder thereof. The portion will be determined by the ratio that
the shareholder's Class B Shares converting to Class A Shares bears to the
shareholder's total Class B Shares not acquired through dividends and
distributions.
(iii) The conversion of Class B Shares to Class A Shares is subject to
the continuing availability of an opinion of counsel or a ruling of the Internal
Revenue Service that payment of different dividends on Class A and Class B
Shares does not result in the Trust's dividends or distributions constituting
"preferential dividends" under the Internal Revenue Code of 1986, as amended,
and that the conversion of shares does not constitute a taxable event under
federal income tax law.
(iv) The number of shares of Class A Shares into which a share of Class
B Shares is converted pursuant to paragraphs (f)(i) and (f)(ii) hereof shall
equal the number (including for this purpose fractions of a Share) obtained by
dividing the net asset value per share of the Class B Shares (for purposes of
sales and redemptions thereof on the Conversion Date) by the net asset value per
share of the Class A Shares (for purposes of sales and redemptions thereof on
the Conversion Date).
<PAGE>
(v) On the Conversion Date, the Class B Shares converted into shares of
Class A Shares will cease to accrue dividends and will no longer be deemed
outstanding and the rights of the holders thereof (except the right to receive
(i) the number of shares of Class A Shares have been converted and (ii) declared
but unpaid dividends to the Conversion Date) will cease. Certificates
representing Class A Shares resulting from the conversion need not be issued
until certificates representing Class B Shares converted, if issued, have been
received by the Trust or its agent duly endorsed for transfer.
4. Article IX, Section 9.1 is hereby amended so as to include the following
sentences after the conclusion of the second sentence thereof.
The net asset value of a Share shall reflect all indebtedness, expenses and
liabilities attributable to each applicable Class. The net asset value of a
Share shall be determined by dividing the net asset value of each
applicable Class by the number of Shares of that Class outstanding.
5. In accordance with Article XI, Section 11.3(a) of the Declaration, the
Declaration is hereby amended in order to reflect the change in the name of the
Trust to "Phoenix Equity Opportunities Fund" and to substitute said name for the
name of "National Stock Fund" in each place it appears in the Declaration.
Except as hereinabove and hereinbefore modified, all other terms and
conditions set forth in the Declaration shall be and remain in full force and
effect.
WITNESS our hands this 25th day of May, 1994.
/s/ C. Duane Blinn /s/ Philip R. McLoughlin
- ---------------------------------- ---------------------------------
C. Duane Blinn Philip R. McLoughlin
/s/ Robert Chesek /s/ James M. Oates
- ---------------------------------- ---------------------------------
Robert Chesek James M. Oates
/s/ E. Virgil Conway /s/ Philip R. Reynolds
- ---------------------------------- ---------------------------------
E. Virgil Conway Philip R. Reynolds
/s/ Harry Dalzell-Payne /s/ Herbert Roth, Jr.
- ---------------------------------- ---------------------------------
Harry Dalzell-Payne Herbert Roth, Jr.
/s/ Leroy Keith, Jr. /s/ Richard E. Segerson
- ---------------------------------- ---------------------------------
Leroy Keith, Jr. Richard E. Segerson
NATIONAL STOCK FUND
MANAGEMENT AGREEMENT
AGREEMENT made this 14th day of May, 1993 by and between NATIONAL STOCK FUND, a
Massachusetts business trust (hereinafter called the "Fund") and NATIONAL
SECURITIES & RESEARCH CORPORATION, a New York corporation (hereinafter called
"National").
1. National, at its expense, undertakes to afford to the Fund the advice and
assistance of National's organization with respect to the selection,
acquisition, holding and the disposal of securities; and advice and
recommendations with respect to other aspects of the business and affairs of the
Fund; and shall, subject to the direction of the Trustees of the Fund and in
cooperation with the officers of the Fund, administer the business and affairs
of the Fund, including clerical, bookkeeping and administrative services. In
acting hereunder, National shall be an independent contractor and shall not be
an agent of the Fund.
2. National, at its expense, shall assemble and furnish to the Trustees and
officers of the Fund all statistical information reasonably requested by them
and reasonably available to National; shall furnish the Fund with office space
and equipment; and shall permit such of its directors, officers and employees as
may be elected as trustees or officers of the Fund to serve in the capacities to
which they are elected. All services to be furnished by National under this
agreement may be furnished through the medium of any such directors, officers or
employees of National. The investment policies, the administration of its
business and affairs, and all other acts of the Fund are and shall at all times
be subject to the approval and direction of the Trustees of the Fund.
3. The Fund shall at all times keep National fully informed with regard to the
securities owned by it, its funds available or to become available for
investment, and generally as to the condition of its affairs. It shall furnish
National with a certified copy of all financial statements, and a signed copy of
each report prepared by independent public accountants and with such other
information with regard to its affairs as National may, from time to time,
reasonably request.
4. The Fund will pay all its expenses other than those expressly stated to be
assumed by National hereunder. Expenses payable by the Fund shall include, but
not be limited to, out-of-pocket expenses of trustees and fees of trustees who
are not interested persons of National, interest charges, taxes, fees and
commissions of every kind, expenses of pricing portfolio securities, expenses of
issue, repurchase or redemption of shares, expenses of registering or qualifying
shares for sale (including the printing of the Fund's registration statements
and prospectuses), insurance expense, association membership dues, all charges
of custodians (including sums as custodian and for keeping books and
<PAGE>
rendering other services to the Fund), transfer agents, registrars, auditors and
legal counsel, expenses of preparing, printing and distributing all proxy
material, prospectuses, reports and notices to shareholders, and all costs
incident to the Fund's organization and existence.
5. The services of National to the Fund are not to be deemed to be exclusive,
National being free to render services to others and to engage in other
activities.
6. As compensation to National, the Fund will pay National a monthly management
fee at the annual rate of .75% on the first $410,000,000 or the aggregate
average daily net assets of the Fund; .70% on the next $300,000,000 of such
assets; .65% on the next $200,000,000 of such assets; .60% on the next
$200,000,000 of such assets; .55% on the next $100,000,000 of such assets; .50%
on the next $100,000,000 of such assets; 45% on the next $100,000,000 of such
assets; .40% on the next $100,000,000 of such assets and 3/8 of 1% per annum on
the next aggregate average daily net assets of the Fund in excess of
$1,510,000,000.
Notwithstanding any of the above provisions, National shall reimburse the Fund
to the extent that in any fiscal year the total expenses of the Fund, exclusive
of taxes, interest, brokerage fees, and extraordinary charges, such as
litigation costs, exceed the most restrictive expense limitations applicable to
the Fund under state securities laws or published regulations thereunder, as
such limitations may be raised or lowered from time to time.
7. National assumes no responsibility under this agreement other than to render
the services called for hereunder in good faith and shall not be responsible for
any action of the Fund in following or declining to follow any advice or
recommendation of National. In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder on the
part of National, National shall not be subject to liability to the Fund or to
any shareholder of the Fund for any act or omission in the course of or in
connection with rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
8. This agreement shall terminate automatically in the event of its assignment;
the term "assignment" for this purpose having the meaning defined in Section
2(a) (4) of the Investment Company Act of 1940, as amended (the "Act").
9. This agreement may be terminated at any time, without the payment of any
penalty, (a) by the Trustees of the Fund or by vote of a majority of the
outstanding voting securities of the Fund as defined in the Act, by 60 days'
written notice addressed to National at its principal place of business; and (b)
by National by 60 days' written notice addressed to the Fund at its principal
place of business.
<PAGE>
10. The Declaration of Trust ("Declaration") establishing the Fund, dated June
25, 1986, a copy of which in on file in the office of the Secretary of the
Commonwealth of Massachusetts, provides that the name "National Stock Fund"
refers to the trustees under the Declaration collectively as trustees, but not
as individuals or personally; and no trustee, shareholder, officer, employee or
agent of the Fund may be held to any personal liability, nor may resort be had
to their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of said Fund but the Fund property only
shall be liable.
11. This agreement has been approved by the Trustees and shall be submitted for
approval by the Shareholders of the Fund. If approved by the vote of a majority
of the outstanding voting securities of the Fund, as defined in the Act, this
agreement shall continue in effect for a period of two years from its effective
date. Thereafter, this agreement 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 hereto as
defined in the Act and either by (a) the Trustees of the Fund or (b) vote of a
majority of the outstanding voting securities of the Fund, as defined in the
Act.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
by their officers "hereunto duly authorized.
NATIONAL STOCK FUND
By: /s/ Geoffret H. Wadsworth
-------------------------------------
Attest: Geoffret H. Wadsworth, Vice President
By: /s/ Mairead M. Collins
-------------------------------
Mairead M. Collins
Assistant Secretary
NATIONAL SECURITIES & RESEARCH CORPORATION
By: /s/ Denis McAuley
------------------------------------
Attest: Denis McAuley, Senior Vice President
and Chief Financial Officer
By: /s/ Mairead M. Collins
-------------------------------
Mairead M. Collins
Assistant Secretary
FIRST AMENDMENT TO
PHOENIX EQUITY OPPORTUNITIES FUND
MANAGEMENT AGREEMENT
THIS AMENDMENT made effective as or the 1st day of January, 1994 by and
between PHOENIX EQUITY OPPORTUNITIES FUND, f/k/a National Stock Fund
(hereinafter called the "Trust") and NATIONAL SECURITIES & RESEARCH CORPORATION
(hereinafter called "National").
Preamble
--------
The Trust and National have entered into a certain Management Agreement
dated May 14, 1993 (the "Agreement") wherein National agreed inter alia, to
provide its advice and assistance to the Trust in exchange for which the Trust
agreed to pay a prescribed fee to National.
On June 30, 1993, the Board of Trustees of the Trust approved an amendment
to the Trust's Declaration of Trust changing the name of the Trust to Phoenix
Equity Opportunities Fund.
On August 25, 1993, the Board of Trustees of the Trust also approved an
amendment reducing the management fees payable to National to a monthly fee
equivalent to the annual rate of 0.70% of the Trust's average daily net assets
up to $1 billion, 0.65% of the Trust's average daily net assets from $1 to $2
billion, and 0.60% of the Trust's average daily net assets in excess of $2
billion.
Accordingly, parties intend to amend the Agreement to reflect the present
name of the Trust and the revised management fees payable to National.
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the parties mutually agree that the Agreement is
hereby revised as follows:
1. Any and all references to "National Stock Fund" are hereby deleted and
"Phoenix Equity Opportunities Fund" is substituted therefor.
2. The first full paragraph within paragraph numbered 6 of the Agreement is
hereby deleted and the following is inserted in lieu thereof:
As compensation to National, the Trust will pay National a management fee
equivalent to the annual rate of 0.70% of the Trust's average daily net
assets up to
<PAGE>
$1 billion, 0.65% of the Trust's average daily net assets from $1 to $2
billion, and 0.60% of the Trust's average daily net assets in excess of $2
billion.
National's fee will be accrued daily against the value of the Trust's net
assets and will be payable by the Trust on the last business day of each
month.
Except as herein modified, all other terms and provisions set forth in the
Agreement shall be and remain in full force and effect.
IN WITNESS WHEREOF, the parries hereto have caused this agreement to be
executed by their officers thereunto duly authorized as of the day and year
first above written.
PHOENIX EQUITY OPPORTUNITIES FUND
By: /s/ Philip R. McLoughlin
------------------------------
Name: Philip R. McLoughlin
Title: President
Attest:
By: /s/ Richard J. Wirth
-----------------------------
Richard J. Wirth
Assistant Secretary
NATIONAL SECURITIES & RESEARCH
CORPORATION
By: /s/ Michael Haylon
------------------------------
Name: Michael Haylon
Title: Vice President
Attest:
By: /s/ Patricia O. McLaughlin
-----------------------------
Patricia O. McLaughlin
Assistant Secretary
SECOND AMENDMENT TO
PHOENIX STRATEGIC EQUITY SERIES FUND
MANAGEMENT AGREEMENT
THIS AMENDMENT made effective as of the 16th day of October, 1995 by and
between PHOENIX STRATEGIC EQUITY SERIES FUND, f/k/a Phoenix Equity Opportunities
Fund (hereinafter called the "Trust") and NATIONAL SECURITIES & RESEARCH
CORPORATION (hereinafter called "National").
Preamble
--------
The Trust and National have entered into a certain Management Agreement
dated May 14, 1993 (the "Agreement") wherein National agreed inter alia, to
provide its advice and assistance to the Trust in exchange for which the Trust
agreed to pay a prescribed fee to National.
On May 24, 1995, the Board of Trustees of the Trust approved amendments to
the Trust's Declaration of Trust (1) designating shares of beneficial interest
of Phoenix Equity Opportunities Fund as shares of a Series of the Trust, such
Series to be know as "Phoenix Equity Opportunities Fund; and (2) changing the
name of the Trust to Phoenix Strategic Equity Series Fund.
Accordingly, the parties intend to amend the Agreement to reflect the
present name of the Trust and to reflect coverage on behalf of the Phoenix
Equity Opportunities Fund of the Phoenix Strategic Equity Series Fund.
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the parties mutually agree that the Agreement is
hereby revised as follows:
1. Any and all references to "Phoenix Equity Opportunities Fund" are hereby
deleted and "Phoenix Equity Opportunities Fund of the Phoenix Strategic Equity
Series Fund" is substituted therefor.
Except as herein modified, all other terms and provisions set forth in the
Agreement shall be and remain in full force and effect.
-1-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their officers thereunto duly authorized as of the day and year
first above written.
PHOENIX STRATEGIC EQUITY SERIES FUND
By:
----------------------------------
Philip R. McLoughlin,
President
Attest:
By:
-------------------------------
Thomas N. Steenburg
Assistant Secretary
NATIONAL SECURITIES & RESEARCH
CORPORATION
By:
----------------------------------
Michael E. Haylon,
Executive Vice President
Attest:
By:
Thomas N. Steenburg
-------------------------------
Assistant Secretary
-2-
Exhibit 9.1
Transfer Agency and Service Agreement
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
between
PHOENIX FUNDS
and
PHOENIX EQUITY PLANNING CORPORATION
<PAGE>
Table of Contents
-----------------
Page
----
Article 1 - Terms of Appointment; Duties of Transfer Agent...............1
Article 2 - Fees and Expenses............................................3
Article 3 - Representations and Warranties of Transfer Agent.............3
Article 4 - Representations and Warranties of the Phoenix Funds..........3
Article 5 - Data Access and Proprietary Information......................4
Article 6 - Indemnification..............................................5
Article 7 - Standard of Care.............................................6
Article 8 - Covenants....................................................6
Article 9 - Termination..................................................7
Article 10 - Assignment...................................................7
Article 11 - Amendment....................................................7
Article 12 - Connecticut Law to Apply.....................................7
Article 13 - Force Majeure................................................7
Article 14 - Consequential Damages........................................8
Article 15 - Merger of Agreement..........................................8
Article 16 - Limitations of Liability of the Trustees
and Shareholders.............................................8
Article 17 - Counterparts.................................................8
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the 1st day of June, 1994, by and between the
undersigned entities (hereinafter singularly referred to as a "Fund" and
collectively referred to as the "Phoenix Funds"), and PHOENIX EQUITY PLANNING
CORPORATION (hereinafter referred to as the "Transfer Agent").
WITNESSETH:
WHEREAS, the Phoenix Funds desire to appoint Transfer Agent as their
transfer agent, dividend disbursing agent and agent in connection with certain
other activities, and Transfer Agent desires to accept such appointment; and
WHEREAS, the parties wish to set forth herein their mutual understandings
and agreements.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and other good and valuable consideration, the receipt and sufficiency whereof
being hereby acknowledged and affirmed, the parties hereto agree as follows:
Article 1 Terms of Appointment; Duties of Transfer Agent
----------------------------------------------
1.01 Subject to the terms and conditions set forth in this Agreement, the
Phoenix Funds hereby employ and appoint Transfer Agent to act as, and Transfer
Agent agrees to act as, transfer agent for the authorized and issued shares of
beneficial interest or common stock, as the case may be, of each of the Phoenix
Funds (hereinafter collectively and singularly referred to as "Shares"),
dividend disbursing agent and agent in connection with any accumulation,
open-account or similar plans provided to the shareholders of the Phoenix Funds
("Shareholders") and as set out in the currently effective registration
statement of each Fund (the prospectus and statement of additional information
portions of such registration statement being referred to as the "Prospectus"),
including, without limitation, any periodic investment plan or periodic
withdrawal program.
1.02 Transfer Agent agrees that it will perform the following services
pursuant to this Agreement:
(a) In accordance with procedures established from time to time by
agreement between the Phoenix Funds and Transfer Agent, Transfer Agent shall:
i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefor
to the Custodian appointed from time to time by the
Trustees/Directors of each Fund (which entity or entities, as the
case may be, shall be referred to as the "Custodian");
ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the each appropriate Shareholder
account;
iii) Receive for acceptance, redemption requests and redemption
directions and deliver the appropriate documentation therefor to
the Custodian;
iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Transfer Agent shall execute transactions directly
with broker-dealers authorized by the Phoenix Funds who shall
thereby be deemed to be acting on behalf of the Phoenix Funds;
<PAGE>
v) At the appropriate time as and when it receives monies paid to it
by any Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
vi) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
vii) Prepare and transmit payments for dividends and distributions
declared by each Fund, if any;
viii) Issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Transfer
Agent of indemnification satisfactory to the Transfer Agent and
the Phoenix Funds, and the Transfer Agent at its option, may
issue replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such
indemnity;
ix) Maintain records of account for and advise each Fund and its
respective Shareholders as to the foregoing; and
x) Record the issuance of Shares and maintain pursuant to Rule
17Ad-10(e) under the Exchange Act of 1934, a record of the total
number of Shares which are authorized, issued and outstanding
based upon data provided to it by each Fund. The Transfer Agent
shall also provide on a regular basis to each Fund the total
number of Shares which are authorized, issued and outstanding
shall have no obligation, when recording the issuance of Shares,
to monitor the issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of each respective
Fund.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), Transfer Agent shall: (i) perform all of the customary services
of a transfer agent, dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal program),
including, but not limited to, maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies, receiving and tabulating proxies,
mailing Shareholder reports and Prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts, preparing
and filing U.S. Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, preparing and mailing activity
statements for Shareholders, and providing Shareholder account information; and
(ii) provide a system which will enable each Fund to monitor the total number of
Shares sold in each State.
(c) In addition, the Phoenix Funds shall (i) identify to Transfer Agent in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State, and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of Transfer Agent for a Fund's blue
sky State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Phoenix Funds and the
reporting of such transactions to each Fund as provided above.
(d) Procedures as to who shall provide certain of the services in Article 1
may be established from time to time by agreement between the Phoenix Funds and
Transfer Agent per the attached service responsibility schedule, if any. The
Transfer Agent may at times perform only a portion of these services and the
Phoenix Funds or its agent may perform these services on behalf of any Fund.
-2-
<PAGE>
(e) The Transfer Agent shall provide additional services on behalf of the
Phoenix Funds (i.e., escheatment services) which may be agreed upon in writing
between the Phoenix Funds and the Transfer Agent.
Article 2 Fees and Expenses
-----------------
2.01 In consideration of the services provided by the Transfer Agent
pursuant to this Agreement, each Fund agrees to pay Transfer Agent an annual
maintenance fee for each Shareholder account as set forth in Schedule A attached
hereto and made a part hereof. Annual Maintenance Fees and out-of-pocket
expenses and advances identified under Section 2.02 below may be changed from
time to time subject to mutual written agreement between each Fund and Transfer
Agent. Nothing herein shall preclude the assignment of all or any portion of the
foregoing fees and expense reimbursements to any sub-agent contracted by
Transfer Agent.
2.02 In addition to the fee paid under Section 2.01 above, the Phoenix
Funds agree to reimburse Transfer Agent for out-of-pocket expenses or advances
incurred by Transfer Agent for the items set out in Schedule A attached hereto.
In addition, any other expenses incurred by Transfer Agent at the request or
with the consent of any Fund, will be reimbursed by the Fund requesting the
same.
2.03 The Phoenix Funds agree to pay all fees and reimbursable expenses
within five days following the mailing of the respective billing notice. The
above fees will be charged against each Fund's custodian checking account five
(5) days after the invoice is transmitted to the Phoenix Funds. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
Shareholder accounts shall be advanced to Transfer Agent at least seven (7) days
prior to the mailing date of such materials.
Article 3 Representations and Warranties of Transfer Agent
-----------------------------------------------
The Transfer Agent represents and warrants to the Phoenix Funds that:
3.01 It is a corporation organized and existing and in good standing under
the laws of the State of Connecticut.
3.02 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.03 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.04 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3.05 It is and shall continue to be a duly registered transfer agent
pursuant to Section 17A(c)(2) of the Securities Exchange Act of 1934.
Article 4 Representations and Warranties of Phoenix Funds
-----------------------------------------------
The Phoenix Funds represent and warrant to Transfer Agent that:
4.01 All corporate or trust proceedings, as the case may be, required to
enter into and perform this Agreement have been undertaken and are in full force
and effect.
4.02 Each Fund is an open-end, diversified management investment
companies registered under the Investment Company Act of 1940.
-3-
<PAGE>
4.03 A registration statement under the Securities Act of 1933 is currently
effective for each Fund that is offering its securities for sale and such
registration statement will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect to all
Shares being offered for sale.
Article 5 Data Access and Proprietary Information
---------------------------------------
5.02 The Phoenix Funds acknowledge that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and documentation
manuals furnished to the Phoenix Funds by the Transfer Agent as part of each
Fund's ability to access certain Fund-related data ("Customer Data") maintained
by the Transfer Agent on data bases under the control and ownership of the
Transfer Agent or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information (collectively,
"Proprietary Information") of substantial value to the Transfer Agent or other
third party. In no event shall Proprietary Information be deemed Customer Data.
The Phoenix Funds agree to treat all Proprietary Information as proprietary to
the Transfer Agent and further agree that it shall not divulge any Proprietary
Information to any person or organization except as may be provided hereunder.
Without limiting the foregoing, the Phoenix Funds agree for itself and its
employees and agents:
(a) to access Customer Data solely from location as may be designated in
writing by the Transfer Agent and solely in accordance with the
Transfer Agent's applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform in a timely manner of such fact and dispose of such
information in accordance with the Transfer Agent's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility or
other location, except with the prior written consent of the Transfer
Agent;
(e) that the Phoenix Funds shall have access only to those authorized
transactions agreed upon by the parties; and
(f) to honor all reasonable written requests made by the Transfer Agent to
protect at the Transfer Agent's expense the rights of the Transfer
Agent in Propriety Information at common law, under federal copyright
law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Article 5. The obligations of this Article shall
survive any earlier termination of this Agreement.
5.02 If the Phoenix Funds notified the Transfer Agent that any of the Data
Access Services do not operate in material compliance with the most recently
issued user documentation for such services, the Transfer Agent shall endeavor
in a timely manner to correct such failure. Organizations from which the
Transfer Agent may obtain certain data included in the Data Access Services are
solely responsible for the contents of such data and the Phoenix Funds agree to
make no claim against the Transfer Agent arising out of the contents of such
third-party data, including, but not limited to, the accuracy thereof. DATA
ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE TRANSFER
AGENT EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
-4-
<PAGE>
5.03 If the transactions available to the Phoenix Funds include the ability
to originate electronic instructions to the Transfer Agent in order to (i)
effect the transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information (such transactions constituting a "COEFI"),
then in such event the Transfer Agent shall be entitled to rely on the validity
and authenticity of such instruction without undertaking any further inquiry as
long as such instruction is undertaken in conformity with security procedures
established by the Transfer Agent from time to time.
Article 6 Indemnification
---------------
6.01 The Transfer Agent shall not be responsible for, and the Phoenix Funds
shall indemnify and hold Transfer Agent harmless from and against, any and all
losses, damages, costs, charges, counsel fees, payments, expenses and liability
arising out of or attributable to:
(a) All actions of Transfer Agent or its agent or subcontractors required
to be taken pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misconduct.
(b) The lack of good faith, negligence or willful misconduct by the Phoenix
Funds which arise out of the breach of any representation or warranty of the
Phoenix Funds hereunder.
(c) The reliance on or use by the Transfer Agent or its agents or
subcontractors of information, records and documents which (i) are received by
Transfer Agent or its agents or subcontractors, and (ii) have been prepared,
maintained or performed by the Phoenix Funds or any other person or firm on
behalf of the Phoenix Funds including but not limited to any previous transfer
agent or registrar.
(d) The reliance on, or the carrying out by Transfer Agent or its agents or
subcontractors of any instructions or requests of the Phoenix Funds.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
6.02 Transfer Agent shall indemnify and hold each of the Phoenix Funds
harmless from and against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of or attributable to any
action or failure or omission to act by Transfer Agent, or any sub-agent, as a
result of Transfer Agent's, or such sub-agent's, lack of good faith, negligence
or willful misconduct.
6 .03 At any time the Transfer Agent may apply to any officer of the
Phoenix Funds for instructions, and may consult with legal counsel with respect
to any matter arising in connection with the services to be performed by
Transfer Agent under this Agreement, and Transfer Agent and its agents or
subcontractors shall not be liable and shall be indemnified by the Phoenix Funds
for any action taken or omitted by it in reliance upon such instructions or upon
the opinion of such counsel. The Transfer Agent, its agents and subcontractors
shall be protected and indemnified in acting upon any paper or document
furnished by or on behalf of the Phoenix Funds, reasonably believed to be
genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided Transfer Agent or
its agents or subcontrators by machine readable input, telex, CRT data entry or
other similar means authorized by the Phoenix Funds, and shall not be held to
have notice of any change of authority of any person, until receipt of written
notice thereof from the Phoenix Funds. Transfer Agent, its agents and
subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably
-5-
<PAGE>
believed to bear the proper manual or facsimile signatures of the officers of
any Fund, and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
6.04 In order that the indemnification provisions contained in this Article
6 shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6.05 Transfer Agent hereby expressly acknowledges that recourse against any
of the Phoenix Funds, if any, shall be subject to those limitations provided by
governing law and the Declaration of Trust of the Phoenix Funds, as applicable,
and agrees that obligations assumed by the Phoenix Funds hereunder shall be
limited in all cases to the Phoenix Funds and their respective assets. Transfer
Agent shall not seek satisfaction of any such obligation from the shareholders
or any shareholder of the Phoenix Funds, nor shall the Transfer Agent seek
satisfaction of any obligations from the Trustees/Directors or any individual
Trustee/Director of the Phoenix Funds.
Article 7 Standard of Care
----------------
7 .01 The Transfer Agent shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement, but assumes no responsibility and shall
not be liable for loss or damage due to errors unless said errors are caused by
its negligence, bad faith, or willful misconduct of that of its employees.
Article 8 Covenants
---------
8.01 The Phoenix Funds shall promptly furnish to Transfer Agent the
following:
(a) A certified copy of the resolution of its Trustees/Directors
authorizing the appointment of Transfer Agent and the execution and delivery of
this Agreement.
(b) A copy of the Declaration of Trust or Articles of Incorporation, as the
case may be, and ByLaws, if any, and all amendments thereto of each Fund.
8.02 The Transfer Agent hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Phoenix Funds for safekeeping of
stock certificates, check forms and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices.
8.03 The Transfer Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, Transfer Agent agrees that all such records prepared
or maintained by Transfer Agent relating to the services to be performed by
Transfer Agent hereunder are the property of each respective Fund and will be
preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to each respective Fund on and in
accordance with its request.
8.04 The parties agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this
-6-
<PAGE>
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records, Transfer Agent will endeavor to notify the affected Fund
and to secure instructions from an authorized officer of such Fund as to such
inspection. Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
Article 9 Termination
-----------
9.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other. The parties mutually acknowledge
that the termination of this Agreement by one, but not each Fund shall not
effect a termination of this Agreement as to any and all other Phoenix Fund(s)
which have not terminated the Agreement.
9.02 Should any Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the terminating Fund. Additionally, Transfer Agent reserves the right to charge
any other reasonable expenses associated with such termination and/or a charge
equivalent to the average of three (3) months' fees to the terminating Fund.
Article 10 Assignment
----------
10.01 Except as provided in Section 10.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
10.03 The Transfer Agent may, without further consent on the part of any of
the Phoenix Funds, subcontract for the performance hereof with one or more
sub-agents; provided, however, that Transfer Agent shall be as fully responsible
to each Fund for the acts and omissions of any subcontractor as it is for its
own acts and omissions.
Article 11 Amendment
---------
11.01 This Agreement may be amended or modified by a written agreement
executed by the parties and authorized or approved by a resolution of the
Trustees/Directors of each respective Fund.
Article 12 Connecticut Law to Apply
------------------------
12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Connecticut.
Article 13 Force Majeure
-------------
13.01 In the event either party is unable to perform its obligations under
the terms of this Agreement because of the acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
- 7 -
<PAGE>
Article 14 Consequential Damages
---------------------
14.01 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
Article 15 Merger of Agreement
-------------------
15.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
15.02 This Agreement shall not be merged with or construed in conjunction
with any other current or future agreement between the Phoenix Funds (including
any Fund) and Phoenix Equity Planning Corporation, each and all of which
agreements shall at all times remain separate and distinct.
Article 16 Limitations of Liability of the Trustees and Shareholders
---------------------------------------------------------
16.01 For the Funds which that are formed as Massachusetts business trusts,
notice is hereby given that the Agreement and Declaration of such Trusts are on
file with the Secretary of the Commonwealth of Massachusetts and was executed on
behalf of the Trustees of such Trusts as Trustees and not individually and that
the obligations of this instrument are not binding upon any of the Trustees or
Shareholders individually but are binding only upon the assets and property of
each Fund.
Article 17 Counterparts
------------
17.01 This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
- 8 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
Phoenix Asset Reserve
Phoenix California Tax Exempt Bonds, Inc.
Phoenix Equity Opportunities Fund
Phoenix Income and Growth Fund
Phoenix Multi-Portfolio Fund
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Series Fund
Phoenix Total Return Fund, Inc.
Phoenix Worldwide Opportunities Fund
By: /s/ Philip R. McLoughlin
---------------------------------------
Name: Philip R. McLoughlin
Title: President
ATTEST:
By: /s/ Richard Wirth
------------------------------
Name: Richard Wirth
Title: Assistant Secretary
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Martin J. Gavin
---------------------------------------
Executive Vice President
ATTEST:
By: /s/ Patricia O. McLaughlin
------------------------------
Name: Patricia O. McLaughlin
Title: Assistant Secretary
-9-
<PAGE>
Schedule A
----------
Fee Schedule
Annual Maintenance Fees shall be based on the following formula:
AMF(Fund) = BAMF x SA
where, AMFFund refers to the aggregate Annual Maintenance Fee levied
against each respective Fund,
BAMF refers to the Base Annual Maintenance Fee levied against each
respective Fund for each shareholder account, as more particularly
described below, at the basic annual per account rate of $19.25 for
daily dividend accounts and $14.95 for non-daily dividend accounts,
and
SA refers to the number of Shareholder Accounts subject to the terms
of this Agreement and any and all sub-transfer agent agreements which
presently or hereafter may be entered into by the Transfer Agent. For
the purpose of computing the foregoing, the Transfer Agent will
ascertain the number of Shareholders of each Fund regardless of
whether any such Shares are held in accordance with any pooled or
omnibus accounts or arrangement managed or controlled by any entity,
broker/dealer or sub-transfer agent.
Other Fees
- ----------
o Omnibus Accounts, Per Transaction $2.50
o Closed Accounts, per Account, per month $0.20
o Check writing Fees:
o Privilege set-up $5.00
o Per Cleared Check $1.00
Out-of-Pocket Expenses
- ----------------------
Out-of-pocket expenses include, but are not limited to: confirmation production,
postage, forms, telephone, microfilm, microfiche, stationary and supplies billed
as .1122% of postage costs and expenses incurred at the specific direction of
any Fund. Postage for mass mailings is due seven days in advance of the mailing
date.
Exhibit 9.2
Form of Sales Agreement
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
100 Bright Meadow Boulevard
Enfield, Connecticut 06082-1989
800-243-4361
(203) 253-1000
PHOENIX FAMILY OF FUNDS
SALES AGREEMENT
To: Phoenix Equity Planning Corporation From:
100 Bright Meadow Boulevard
Enfield, Connecticut 06082
Sir/Madam:
We desire to enter into an Agreement with you for the sale and distribution of
shares of registered investment companies (which shall collectively be referred
to hereafter as the "Funds") for which you are national distributor or principal
underwriter and which may be listed in the Annex A hereto which such Annex may
be amended by you from time to time. Upon acceptance of this Agreement by you,
we understand that we may offer and sell shares of each of the Funds (hereafter
"Shares") subject, however, to all of the terms and conditions hereof including
your right to suspend or cease the sale of such shares.
1. We understand and agree that in all sales of Shares to the public we shall
be acting as dealer for our own account: that all purchase orders and
applications submitted to you by us are subject to acceptance or rejection
by you in your sole discretion: and that each purchase will be deemed to
have been consummated in your principal office subject to your acceptance
and effective only upon confirmation in us by you.
2. We agree that all purchases of Shares by us shall be made only for the
purpose of covering purchase orders already received from our customers
(who may be any person other than a securities dealer or broker) or for our
own bona fide investment.
3. We shall offer and sell shares purchased pursuant to this Agreement for the
purpose of covering purchase orders of our customers at the current public
offering price for such Shares ("Offering Price") as set forth in the
current prospectus of each of the funds.
4. We shall pay you for Shares purchased by us within five (5) business days
of the date of your confirmation to us of such purchase. The purchase price
shall be the Offering Price, less only the applicable dealer discount
("Dealer Discount"), if any, as set forth in Annex A hereto. We agree that
you have the right, without notice, to cancel any order for which payment
has not been received by you as provided in this paragraph, in which case
you may hold us responsible for any loss suffered by you resulting from our
failure to make payment as aforesaid.
5. We understand and agree that any Dealer Discount or fee is subject to
change from time to time. Any orders placed after the effective date of any
such Dealer Discount change shall be subject to the Dealer Discounts in
effect at the time such order is received by you.
6. We understand and agree that Shares purchased by us under this Agreement
will not be delivered until payment has been received by you. Delivery of
shares will be made by credit to a shareholder open account unless delivery
of certificates is specified in the purchase order. In order to avoid
unnecessary delay, it is understood that, at our request, any Shares resold
by us to one of our customers will be delivered (whether by credit to a
shareholder open account or by delivery of certificates) in the name of our
customer.
PEP 80 (5-92)
<PAGE>
7. We understand that on all purchases of Shares to which the terms of this
Agreement are applicable by a person for whom we are dealer of record, you
will pay us an amount equal to the Dealer Discount or fees which would have
been paid to us with respect to such Shares if such Shares had been
purchased through us. We understand and agree that the dealer of record for
this purpose shall be the dealer through whom such person most recently
purchased Shares of such fund. We understand that all amounts payable to us
under this paragraph and currently payable under this agreement will be
paid as of the end of each month unless specified otherwise for the total
amount of Shares to which this paragraph is applicable but may be paid more
frequently as you may determine in your discretion.
8. You appoint the transfer agent for each of the Funds as your agent to
execute the purchase transaction of Shares and to confirm such purchases to
our customers on our behalf, and we guarantee the legal capacity of our
customers so purchasing such shares. We further understand if a customer's
account is established without the customer signing the application form,
we represent that the instructions relating to the registration and
shareholder options selected (whether on the application form, in some
other document or orally) are in accordance with the customer's
instructions and we agree to indemnify the Funds, the transfer agent and
you for any loss or liability resulting from acting upon such instructions.
9. Upon the purchase of Shares pursuant to a Letter of Intent, we will
promptly return to you any excess of the Dealer Discount previously allowed
or paid to us over that allowable in respect to such larger purchase.
10. Unless at the time of transmitting a purchase order we advise you to the
contrary, you may consider that the investor owns no other Shares and may
further assume that the investor is not entitled to any lower sales charge
than that accorded to a single transaction in the amount of the purchase
order as set forth in Annex A hereto.
11. We understand and agree that if any Shares purchased by us under the terms
of this Agreement are, within seven (7) business days after the date of
your confirmation to us of the original purchase order for such shares,
repurchased by you as agent for such fund or are tendered to such fund for
redemption, we shall forfeit the right to, and shall pay over to you the
amount of, any Dealer Discount allowed to us with respect to such Shares.
It is understood that you will forthwith pay over such amount to such fund
and also shall pay over to such fund your share of the Sales Charge, if
any, on the original transaction. We understand that you will notify us of
such repurchase or redemption within ten (10) days of the date upon which
certificates are delivered to you or to such fund or the date upon which
the holder of Shares held in a shareholder open account places or causes to
be placed to you or with such fund an order to have such Shares repurchased
or redeemed.
12. We agree that, in the case of any repurchase of any Shares made more than
seven (7) business days after confirmation by you of any purchase of such
Shares, except in the case of Shares purchased by us from you for our own
bona fide investment, we will act only as agent for the holders of such
Shares and will place the orders for repurchase only with you. It is
understood that we may charge the holder of such Shares a fair commission
for handling the transaction.
13. Your obligations to us under this Agreement are subject to all the
provisions of the respective distribution agreements entered into between
you and each of the Funds. We understand and agree that in performing our
services under this agreement we are acting in the capacity of an
independent contractor, and you are in no way responsible for the manner of
our performance or for any of our acts or omissions in connection
therewith. Nothing in the Agreement shall be construed to constitute us or
any of our agents, employees or representatives as your agent, partner or
employee or the agent, partner or employee of any of the Funds.
14. We understand that you will supply us with reasonable quantities of the
current prospectus and periodic reports to shareholders for each of the
Funds. We agree not to use any other advertising or sales material relating
to the sale of shares of any of the Funds unless other advertising or sales
material is approved in writing by you.
<PAGE>
15. We shall offer and sell Shares, and execute telephone exchanges, only in
accordance with the terms and conditions of the then current prospectus of
each of the Funds and subject to the provisions of this Agreement, and we
will make no representations not contained in any such prospectus or in any
authorized supplemental material supplied by you. We will use our best
efforts in the development and promotion of sales of the Shares covered by
this Agreement, and agree to be responsible for the proper instruction and
training of all sales representatives employed by us in order that such
Shares will be offered in accordance with terms and conditions of this
Agreement and all applicable laws, rules and regulations. We agree to hold
you harmless and indemnify you in the event that we or any of our sales
representatives should violate any law, rule or regulation or any
provisions of this Agreement which may result in possible liability to you.
In addition, in consideration for the extension of the right to exercise
the telephone exchange privilege to us and our registered representatives,
we acknowledge that neither the Funds nor the Transfer Agent nor Equity
Planning will be liable for any loss, injury or damage incurred as a result
of acting upon, nor will they be responsible for the authenticity of any
telephone instructions, and agree that we will indemnify and hold harmless
the Funds, Equity Planning and the Transfer Agent against any loss, injury
or damage resulting from any telephone exchange instruction from us or our
registered representatives. (Telephone instructions will be recorded on
tape.) In the event you determine to refund any amounts paid by any
investor by reason of any such violation on our part, we shall forfeit the
right to, and pay over to you, the amount of any dealer discount allowed to
us with respect to the transaction for which the refund is made. All
expenses which we incur in connection with our activities under this
Agreement shall be borne by us.
16. We represent that we are properly registered as a broker or dealer under
the Securities Exchange Act of 1934 and are members of the National
Assocation of Securities Dealers, Inc. ("NASD") and agree to maintain
membership in the NASD or, in the alternative, that we are foreign dealers
not eligible for membership in the NASD. We agree to notify you promptly of
any change, termination, or suspension of the foregoing status. We agree to
abide by all the rules and regulations of the NASD including Section 26 of
Article III of the Rules of Fair Practice which is incorporated herein by
reference as if set forth in full. We further agree to comply with all
applicable state and Federal laws and the rules and regulations of
applicable regulatory agencies. We further agree that we will not sell, or
offer for sale, Shares in any state or jurisdiction in which such Shares
have not been duly registered or qualified for sale.
17. Either party may terminate this Agreement for any reason by written or
telegraphic notice to the other party which termination shall become
effective fifteen (15) days after the date of mailing or telegraphing such
notice to the other party. You may also terminate this Agreement for cause
or as a result of a violation by us, as determined by you in your
discretion, of any of the provisions of this Agreement, said termination to
be effective on the date of mailing written or telegraphing notice to us of
the same. Without limiting the generality of the foregoing, our own
expulsion from the NASD will automatically terminate this Agreement without
notice. Our suspension from the NASD of violation or applicable state or
Federal laws or rules and regulations of applicable regulatory agencies
will terminate this Agreement effective upon the date of your mailing
written notice or telegraphing notice to us of such termination. Your
failure to terminate this Agreement for any cause shall not constitute a
waiver of your right to so terminate at a later date for such cause.
18. We understand and agree that all communications and notices to you or to us
shall be sent to the addresses set forth at the beginning of this Agreement
or to such other addresses as either party may specify in writing from time
to time.
19. This Agreement shall become effective upon the date of its acceptance by
you as set forth herein. This Agreement and all rights and obligations of
the parties hereunder shall be governed by and construed under the laws of
the State of Connecticut. This Agreement is not assignable or transferable,
except that you may assign or transfer this Agreement to any successor
distributor of the Shares described herein.
<TABLE>
<S> <C>
ACCEPTED ON BEHALF OF
PHOENIX EQUITY PLANNING CORPORATION DEALER FIRM
Date___________________________________________________ ______________________________________________
NAME OF DEALER
By John W. Filoon, Jr., Snr. Vice Pres., Sales & Mktg.
___________________________________________________ Date__________________________________________
NAME AND TITLE
By ___________________________________________
NAME AND TITLE
/s/ John W. Filoon, Jr.
- ------------------------------------------------------- -----------------------------------------------
AUTHORIZED SIGNATURE AUTHORIZED SIGNATURE
NASD - CRD -NUMBER _____________________________
</TABLE>
<PAGE>
ANNEX A
DEALER'S AGREEMENT WITH
PHOENIX EQUITY PLANNING CORPORATION
The public offering price of Class A Shares of all Series of the Phoenix Series
Fund (except the Money Market Fund Series) all Portfolios of the Phoenix
Multi-Portfolio Fund and the Phoenix Total Return Fund Inc., is the net asset
value plus a sales charge. The offering price so determined becomes effective
after the purchase order is received by Equity Planning or the Trust's agent,
State Street Bank and Trust Company. The sales charge is reduced on a graduated
scale on single purchases of $50,000 or more as shown below:
Class A Shares
- --------------
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Discount or Agency
Amount of Transaction as percentage as percentage fee as percentage
at offering price of offering price of amount invested of offering price*
- ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under $100,000 4.50% 4.71% 4.00%
$100,000 but under $250,000 3.50% 3.63% 3.00%
$250,000 but under $500,000 3.00% 3.09% 2.75%
$500,000 but under $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more . . . None None (see below*)
</TABLE>
*In connection with purchase of Class A shares of $1,000,000 or more (and
subsequent purchases in any amount) including purchases of shares of the Phoenix
Money Market Fund Series, Equity Planning may pay broker-dealers from its own
profits and resources, a percentage of the net asset value of any shares sold
(excluding Phoenix Money Market Fund Series) as set forth below:
Purchase Amount Payment to Broker/Dealers
- --------------- -------------------------
$1,000,000 - $2,000,000 .75 of 1%
$2,000,000 - $4,000,000 .50 of 1%
$4,000,000 or more .25 of 1%
Effective January 1, 1994: Class B shares will be offered on sales of shares of
the Phoenix High Yield Fund Series and Phoenix U.S. Government Fund Series both
of which are Series of the Phoenix Series Fund, on sales of Shares of the
Phoenix Tax Exempt Bond Portfolio which is a Portfolio of the Phoenix
Multi-Portfolio Fund and on shares of the Phoenix Total Return Fund Inc. Class B
shares are sold at net asset value per share without the imposition of a sales
charge at the time of purchase. Shares which are redeemed within six years of
purchase will be subject to a contingent deferred sales charge, as described in
the Fund's current prospectus, at the rates set forth below:
Class B Shares:
- ---------------
Contingent Deferred Sales Charge
as a percentage of dollar amount
Years Since Purchase subject to charge
- -------------------- ---------------------------------
First 4%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh 0
PHOENIX FUNDS DISTRIBUTION PLAN
- -------------------------------
Under their respective Distribution Plans, each of the Phoenix Funds may pay
Equity Planning an amount annually not to exceed a certain percentage of the
average daily net assets of the Fund, as shown below. Equity Planning may pay to
qualifying dealers an amount up to this percentage of the average daily net
assets in qualifying shares sold by such dealers as described in the Fund's
prospectus.
<PAGE>
FUND NAME DISTRIBUTION PLAN
- --------- -----------------
Phoenix Series Fund Class A .25% Class B .75%
Phoenix Multi-Portfolio Fund .25% .75%
Phoenix Total Return Fund .25% .75%
*Equity Planning may sponsor sales contests and provide to all qualifying
dealers from its own profits and resources, additional compensation in the form
of trips and merchandise. Brokers or dealers other than Equity Planning may also
make customary additional charges for their Services in effecting purchases, if
they notify the Trust of their intention to do so.
FINANCIAL AGENT AGREEMENT
THIS AGREEMENT made and concluded as of this 11th day of December, 1996 by
and between Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Financial Agent") and each of the undersigned mutual funds
(hereinafter collectively and singularly referred to as the "Trust").
WITNESSETH THAT:
1. Financial Agent shall keep the books of the Trust and compute the daily
net asset value of shares of the Trust in accordance with instructions received
from time to time from the Board of Trustees of the Trust; which instructions
shall be certified to Financial Agent by the Trust's Secretary. Financial Agent
shall report such net asset value so determined to the Trust and shall perform
such other services as may be requested from time to time by the Trust as are
reasonably incidental to Financial Agent's duties hereunder.
2. Financial Agent shall be obligated to maintain, for the periods and in
the places required by Rule 31a-2 under the Investment Company Act of 1940, as
amended, those books and records maintained by Financial Agent. Such books and
records are the property of the Trust and shall be surrendered promptly to the
Trust upon its request. Furthermore, such books and records shall be open to
inspection and audit at reasonable times by officers and auditors of the Trust.
3. As compensation for its services hereunder during any fiscal year of the
Trust, Financial Agent shall receive, within eight days after the end of each
month, a fee as specified in Schedule A.
4. Financial Agent shall not be liable for anything done or omitted by it
in the exercise of due care in discharging its duties specifically described
hereunder and shall be answerable and accountable only for its own acts and
omissions and not for those of any agent employed by it nor for those of any
bank, trust company, broker, depository, correspondent or other person.
Financial Agent shall be protected in acting upon any instruction, notice,
request, consent, certificate, resolution, or other instrument or paper believed
by Financial Agent to be genuine, and to have been properly executed, and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained by Financial
Agent hereunder a certificate signed by the Secretary of the Trust. Financial
Agent shall be entitled, with respect to questions of law relating to its duties
hereunder, to advice of counsel (which may be counsel for the Trust) and, with
respect to anything done or omitted by it in good faith hereunder in conformity
with the advice of or based upon an opinion of counsel, to be held harmless by
the Trust from all claims of loss or damage. Nothing herein shall protect
Financial Agent against any liability to the Trust or to its respective
shareholders to which Financial Agent would otherwise be subject by reason of
its willful misfeasance, bad faith, gross negligence or reckless disregard of
its duties hereunder. Except as provided in this paragraph, Financial Agent
shall not be entitled to any indemnification by the Trust.
<PAGE>
5. Subject to prior approval of the Board of Trustees of the Trust,
Financial Agent may appoint one or more sub-financial agents to perform any of
the functions and services which are to be provided under the terms of this
Agreement upon such terms and conditions as may be mutually agreed upon by the
Trust, Financial Agent and such sub-financial agent.
6. This Agreement shall continue in effect only so long as (a) such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or by a vote of a majority of the outstanding voting securities of
the Trust, and (b) the terms and any renewal of such Agreement have been
approved by the vote of a majority of the trustees of the Trust who are not
parties to this Agreement or interested persons, as that term is defined in the
Investment Company Act of 1940, as amended, of any such party, cast in person at
a meeting called for the purpose of voting on such approval. A "majority of the
outstanding voting securities of the Trust" shall have, for all purposes of this
Agreement, the meaning provided therefor in said Investment Company Act.
7. Either party may terminate the within Agreement by tendering written
notice to the other, whereupon Financial Agent will be relieved of the duties
described herein. This Agreement shall immediately terminate in the event of its
assignment, as that term is defined in said Investment Company Act.
8. This Agreement shall be construed and the rights and obligations of the
parties hereunder enforced in accordance with the laws of the Commonwealth of
Massachusetts.
<PAGE>
9. This Agreement shall become effective on January 1, 1997.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first written above.
PHOENIX CALIFORNIA TAX EXEMPT
BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME
FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM
BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Philip R. McLoughlin
--------------------------------
Philip R. McLoughlin
President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ David R. Pepin
--------------------------------
David R. Pepin
Executive Vice President
<PAGE>
SCHEDULE A
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS FINANCIAL AGENT
Annual Financial Agent Fees shall be based on the following formula:
(1) An incremental schedule applies as follows:
Up to $100 million: 5 basis points on average daily net assets
$100 million to $300 million: 4 basis points on average daily net assets
$300 million thru $500 million: 3 basis points on average daily net assets
Greater than $500 million: 1.5 basis points on average daily net assets
A minimum fee will apply as follows:
Money Market $35,000
Equity $50,000
Balanced $60,000
Fixed Income $70,000
International $70,000
REIT $70,000
(2) An additional charge of $12,000 applies for each additional class of
shares above one, over and above the minimum asset-based fee previously noted.
The following tables indicates the classification and effective date for
each of the applicable fund/series/portfolio:
<TABLE>
<CAPTION>
Classification Series Name
-------------- -----------
<S> <C>
Money Market Phoenix Money Market Fund Series
Equity Phoenix Aggressive Growth Fund Series
Phoenix Convertible Fund Series
Phoenix Endowment Equity Portfolio
Phoenix Equity Opportunities Fund
Phoenix Growth Fund Series
Phoenix Micro Cap Fund
Phoenix Mid Cap Portfolio
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
<PAGE>
Classification Series Name
-------------- -----------
Balanced Phoenix Balanced Fund Series
Phoenix Income and Growth Fund
Phoenix Strategic Allocation Fund, Inc.
Fixed Income Phoenix California Tax Exempt Bonds, Inc.
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix High Yield Fund Series
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Tax-Exempt Bond Portfolio
Phoenix U.S. Government Securities Fund Series
International Phoenix International Portfolio
Phoenix Worldwide Opportunities Fund
REIT Phoenix Real Estate Securities Portfolio
</TABLE>
FIRST AMENDMENT TO FINANCIAL AGENT AGREEMENT
THIS AMENDMENT made effective as of the 1st day of January, 1997 amends that
certain Financial Agent Agreement dated December 11, 1996 by and among the
following parties (the "Agreement") as hereinbelow provided.
W I T N E S S E T H :
WHEREAS, due to a scrivener's error, the Phoenix Convertible Fund Series
was incorrectly classified as an "Equity" series rather than a "Balanced" series
for purposes of applying the minimum fee; and
WHEREAS, the parties wish to correct this error and correctly classify the
Phoenix Convertible Fund Series as a "Balanced" series:
NOW, THEREFORE, in consideration of the foregoing premises, Schedule A to
the Agreement is hereby replaced with "Revised Schedule A" attached hereto and
made a part hereof. Except as hereinabove provided, the Agreement shall be and
remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized officers on this 25th day of February, 1997.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Philip R. McLoughlin
--------------------------------------
Philip R. McLoughlin
President (as to all)
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ David R. Pepin
--------------------------------------
David R. Pepin
Executive Vice President
<PAGE>
REVISED SCHEDULE A
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS FINANCIAL AGENT
Annual Financial Agent Fees shall be based on the following formula:
(1) An incremental schedule applies as follows:
Up to $100 million: 5 basis points on average daily net assets
$100 million to $300 million: 4 basis points on average daily net assets
$300 million thru $500 million: 3 basis points on average daily net assets
Greater than $500 million: 1.5 basis points on average daily net assets
A minimum fee will apply as follows:
Money Market $35,000
Equity $50,000
Balanced $60,000
Fixed Income $70,000
International $70,000
REIT $70,000
(2) An additional charge of $12,000 applies for each additional class of
shares above one, over and above the minimum asset-based fee previously noted.
The following tables indicates the classification and effective date for
each of the applicable fund/series/portfolio:
Classification Series Name
-------------- -----------
Money Market Phoenix Money Market Fund Series
Equity Phoenix Aggressive Growth Fund Series
Phoenix Endowment Equity Portfolio
Phoenix Equity Opportunities Fund
Phoenix Growth Fund Series
Phoenix Micro Cap Fund
Phoenix Mid Cap Portfolio
Phoenix Small Cap Fund
Phoenix Strategic Theme Fund
<PAGE>
Classification Series Name
-------------- -----------
Balanced Phoenix Balanced Fund Series
Phoenix Convertible Fund Series
Phoenix Income and Growth Fund
Phoenix Strategic Allocation Fund, Inc.
Fixed Income Phoenix California Tax Exempt Bonds, Inc.
Phoenix Diversified Income Portfolio
Phoenix Emerging Markets Bond Portfolio
Phoenix High Yield Fund Series
Phoenix Multi-Sector Fixed Income Fund, Inc.
Phoenix Multi-Sector Short Term Bond Fund
Phoenix Tax-Exempt Bond Portfolio
Phoenix U.S. Government Securities Fund Series
International Phoenix International Portfolio
Phoenix Worldwide Opportunities Fund
REIT Phoenix Real Estate Securities Portfolio
SECOND AMENDMENT TO FINANCIAL AGENT AGREEMENT
THIS AMENDMENT made effective as of the 1st day of July, 1997 amends that
certain Financial Agent Agreement dated December 11, 1997 and amended January 1,
1997 by and among the following parties (the "Agreement") as hereinbelow
provided.
W I T N E S S E T H :
WHEREAS, the parties hereto wish to amend the Agreement to include an
express provision to allow the addition of funds without necessitating a formal
amendment to said Agreement:
NOW, THEREFORE, in consideration of the foregoing premise, Paragraph 8 of
the Agreement is renumbered to Paragraph 9 and the following language inserted
as the new Paragraph 8:
8. Additional Funds
Additional funds may become party to this Agreement by notifying the
Financial Agent in writing, and if the Financial Agent agrees in writing to
provide its services, such fund shall become a Trust subject to the terms
of the Agreement. Such notification shall include a revised Schedule A
reflecting the new fund(s) as added to the appropriate fund
classification(s).
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized officers on this 22nd day of July, 1997.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX SERIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX STRATEGIC EQUITY SERIES FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
By: /s/ Philip R. McLoughlin
-----------------------------
Philip R. McLoughlin
President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ David R. Pepin
-----------------------------
David R. Pepin
Executive Vice President
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. 25 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated June 11, 1997, relating to the financial
statements and financial highlights appearing in the April 30, 1997 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.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 15, 1997
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 2(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) (i) and (ii) above of
this paragraph must be allocated to the class for which they are incurred. All
other expenses described in this paragraph will 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
Investment Advisor may waive or reimburse its management fee in whole
or in part provided that the fee is waived or reimbursed to all shares of the
Fund in proportion to the relative average daily net asset values.
Investment Advisor or a related entity who charges a fee for a Class
Expense may waive or reimburse that fee in whole or in part only if the revised
fee more accurately reflects the relative cost of providing to each Multi-Class
Portfolio the service for which the Class Expense is charged.
Distributor may waive or reimburse a Rule 12b-1 Plan fee payment in
whole or in part.
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. Each
Multi-Class Portfolio reserves the right to temporarily or permanently terminate
exchange privileges, impose conditions upon the exercision of exchange
privileges, or reject any specific order for any dealer, shareholder or person
whose transactions seem to follow a timing pattern, including those who request
more than one exchange out of a Multi-Class Portfolio within any thirty (30) day
period. Each Multi-Class Portfolio reserves the right to terminate or modify
these exchange privileges at any time upon giving prominent notice to
shareholders at least 60 days in advance.
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
<PAGE>
-4-
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 a majority of the Independent Trustees, at
a meeting held on November 20, 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. Their determination was based on their review of information
furnished to them which they deemed reasonably necessary and sufficient to
evaluate the Plan.
b. Approval of Amendments
----------------------
The Plan may not be amended materially unless the Board of Trustees,
including a majority of 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.
Such funding shall be based on information required by the Board and furnished
to them that the Board deems reasonably necessary to evaluate the proposed
amendment.
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.
<PAGE>
-5-
6. Amendments
----------
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section 3(b) of this
Plan.
<PAGE>
SCHEDULE A
----------
PHOENIX CALIFORNIA TAX -EXEMPT BONDS, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX MULTI-PORTFOLIO FUND:
DIVERSIFIED INCOME PORTFOLIO
EMERGING MARKETS BOND PORTFOLIO
INTERNATIONAL PORTFOLIO
MID CAP PORTFOLIO
REAL ESTATE SECURITIES 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 STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND
MICRO CAP FUND
SMALL CAP FUND
STRATEGIC THEME FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX WORLDWIDE OPPORTUNITIES FUND
PHOENIX FUNDS
(the "Funds")
FIRST AMENDMENT TO THE
AMENDED AND RESTATED PLAN PURSUANT TO RULE 18f-3
under the
INVESTMENT COMPANY ACT OF 1940
That certain Amended and Restated Plan Pursuant to Rule 18f-3 under the
Investment Company Act of 1940 duly adopted by the Board of Directors/Trustees
of the Funds on November 20, 1996, is hereby amended as follows:
1. The first and last sentences of Section 2. The Multi-Class
Structure are deleted and the following two sentences substituted therefor:
The portfolios of the Funds listed on Schedule A hereto shall offer up
to four classes of shares as indicated on Schedule A: Class A, Class B,
Class C and Class M. ( . . . ) In addition, Class A, Class B, Class C and
Class M shares shall have the features described in Sections a, b, c and d,
below.
2. The following two subparagraphs are added to Section 2a.
Distribution Plans immediately following subparagraph 2a(ii):
iii. Class C 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 C Distribution
Plan and any supplements thereto, subject to an annual limit of 1.00%, or
in some cases 0.50%, of the average daily net assets of a Multi-Class
Portfolio's Class C shares.
iv. Class M 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 M Distribution
Plan and any supplements thereto, subject to an annual limit of 0.50% of
the average daily net assets of a Multi-Class Portfolio's Class M shares.
3. Schedule A is amended as attached hereto.
This Amendment was approved by the Board of Directors/Trustees at a meeting
held on May 28, 1997.
/s/ Thomas N. Steenburg
---------------------------
Assistant Secretary
<PAGE>
SCHEDULE A
----------
<TABLE>
<CAPTION>
Class A Class B Class C Class M
------- ------- ------- -------
<S> <C> <C> <C> <C>
PHOENIX CALIFORNIA TAX -EXEMPT BONDS, INC. X X -- --
PHOENIX INCOME AND GROWTH FUND X X -- --
PHOENIX MULTI-PORTFOLIO FUND:
EMERGING MARKETS BOND PORTFOLIO X X X X
INTERNATIONAL PORTFOLIO X X -- --
MID CAP PORTFOLIO X X -- --
REAL ESTATE SECURITIES PORTFOLIO X X -- --
STRATEGIC INCOME PORTFOLIO X X X X
TAX-EXEMPT BOND PORTFOLIO X X -- --
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC. X X X X
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND X X X --
PHOENIX SERIES FUND:
AGGRESSIVE GROWTH FUND SERIES X X -- --
BALANCED FUND SERIES X X -- --
CONVERTIBLE FUND SERIES X X -- --
GROWTH FUND SERIES X X -- --
HIGH YIELD FUND SERIES X X X X
MONEY MARKET FUND SERIES X X X X
U.S. GOVERNMENT SECURITIES FUND X X -- --
SERIES
PHOENIX STRATEGIC EQUITY SERIES FUND:
EQUITY OPPORTUNITIES FUND X X -- --
MICRO CAP FUND X X -- --
SMALL CAP FUND X X -- --
STRATEGIC THEME FUND X X X X
PHOENIX STRATEGIC ALLOCATION FUND, INC. X X -- --
PHOENIX WORLDWIDE OPPORTUNITIES FUND X X -- --
</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-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 254350
<INVESTMENTS-AT-VALUE> 252348
<RECEIVABLES> 28305
<ASSETS-OTHER> 53
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 280706
<PAYABLE-FOR-SECURITIES> 27120
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 850
<TOTAL-LIABILITIES> 27970
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 280183
<SHARES-COMMON-STOCK> 10973
<SHARES-COMMON-PRIOR> 5877
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (25445)
<ACCUM-APPREC-OR-DEPREC> (2002)
<NET-ASSETS> 252736
<DIVIDEND-INCOME> 240
<INTEREST-INCOME> 2650
<OTHER-INCOME> 0
<EXPENSES-NET> (4362)
<NET-INVESTMENT-INCOME> (1472)
<REALIZED-GAINS-CURRENT> (25222)
<APPREC-INCREASE-CURRENT> (27980)
<NET-CHANGE-FROM-OPS> (54674)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
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<TABLE> <S> <C>
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<NAME> PHOENIX SMALL CAP FUND CLASS B
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<S> <C>
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
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<NUMBER> 021
<NAME> PHOENIX STRATEGIC THEME FUND CLASS A
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<S> <C>
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> PHOENIX STRATEGIC THEME FUND CLASS B
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<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
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<OVERDISTRIBUTION-GAINS> (1062)
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</TABLE>
<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-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 184808
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<PAYABLE-FOR-SECURITIES> 33332
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<TOTAL-LIABILITIES> 33869
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<PAID-IN-CAPITAL-COMMON> 160972
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<OVERDISTRIBUTION-GAINS> (1743)
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<NET-INVESTMENT-INCOME> (795)
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</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-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
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</TABLE>
