AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28, 1998
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. 29 [X]
AND/OR
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 30 [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--SHAREHOLDER SERVICES
(800) 243-1574
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
------------------
THOMAS N. STEENBURG
VICE PRESIDENT, COUNSEL AND SECRETARY
PHOENIX INVESTMENT PARTNERS, LTD.
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)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
===============================================================================
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
CROSS REFERENCE SHEET PURSUANT TO RULE 495
UNDER THE SECURITIES ACT OF 1993
<TABLE>
<CAPTION>
PART A
INFORMATION REQUIRED IN PROSPECTUS
<S> <C>
ITEM NUMBER PROSPECTUS CAPTION
----------- ------------------
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 Funds; Distribution Plans;
Additional Information
5A. Management's Discussion of
Fund Performance....................................... Performance Information
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>
<TABLE>
<CAPTION>
PART B
INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
<S> <C>
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION CAPTION
----------- -------------------------------------------
10. Cover Page ............................................ Cover Page
11. Table of Contents ..................................... Table of Contents
12. General Information and History ....................... Cover Page; The Trust; Other 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 ... Trustees and Officers
16. Investment Advisory and Other Services ................ Services of the Adviser
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; Alternative Purchase Arrangements;
Being Offered ......................................... Investor Account Services; Redemption of Shares;
Net Asset Value
20. Tax Status ............................................ Dividends, Distributions and Taxes
21. Underwriter ........................................... The Distributor; Distribution Plans
22. Calculations of Performance Data ...................... Performance Information
23. Financial Statements .................................. Financial Statements
</TABLE>
PART C
The information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
P H O E N I X
F U N D S
PROSPECTUS AUGUST 28, 1998
[TRIANGLE] PHOENIX EQUITY
OPPORTUNITIES FUND
[TRIANGLE] PHOENIX SMALL
CAP FUND
[TRIANGLE] PHOENIX STRATEGIC
THEME FUND
[PHOENIX LOGO] PHOENIX
INVESTMENT PARTNERS
<PAGE>
PHOENIX EQUITY OPPORTUNITIES FUND
PHOENIX SMALL CAP FUND
PHOENIX STRATEGIC THEME FUND
101 Munson Street
Greenfield, MA 01301
PROSPECTUS
August 28, 1998
PHOENIX EQUITY OPPORTUNITIES FUND ("Equity Opportunities Fund") seeks as its
investment objective long-term growth of capital from investment in a
diversified group of stocks or securities convertible into stocks. This Fund
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 SMALL CAP FUND ("Small Cap Fund") 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 Fund 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.
PHOENIX STRATEGIC THEME FUND ("Theme Fund") seeks as its investment objective
long-term appreciation of capital. This Fund seeks to identify securities
benefiting from long-term trends present in the United States and abroad. The
Fund 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 Strategic Equity Series Fund (the "Trust") is an open-end management
investment company whose shares are offered in three series. Each series
represents an investment in a separate diversified fund with its own investment
objectives and policies designed to meet its specific investment goals. There
can be no assurance that any fund will achieve its objective.
This Prospectus sets forth concisely the information about the Trust 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 Trust, 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 Trust is contained in the Statement of Additional
Information, dated August 28, 1998, 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.
The Commission maintains a Web site (http://www.sec.gov) that contains this
Prospectus, the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the Commission.
SHARES OF THE TRUST 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.................................................. 9
INVESTMENT OBJECTIVES AND POLICIES....................................... 10
Equity Opportunities Fund........................................... 10
Small Cap Fund...................................................... 10
Theme Fund.......................................................... 11
INVESTMENT TECHNIQUES AND RELATED RISKS.................................. 11
INVESTMENT RESTRICTIONS.................................................. 17
MANAGEMENT OF THE FUNDS.................................................. 17
DISTRIBUTION PLANS .................................................... 18
HOW TO BUY SHARES........................................................ 20
INVESTOR ACCOUNT SERVICES................................................ 24
NET ASSET VALUE.......................................................... 25
HOW TO REDEEM SHARES..................................................... 25
DIVIDENDS, DISTRIBUTIONS AND TAXES....................................... 27
ADDITIONAL INFORMATION................................................... 27
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of Phoenix
Strategic Equity Series Fund (the "Trust"). The Trust is a diversified, open-end
management investment company established as a Massachusetts business trust.
Shares of the Trust are divided into three series. This Prospectus offers shares
of the Equity Opportunities Fund, Theme Fund and Small Cap Fund currently
offered by the Trust (the "Funds"). Each Fund has a different investment
objective, and is designed to meet different investment needs.
THE INVESTMENT ADVISERS
The investment adviser for the Funds is Phoenix Investment Counsel, Inc.
("PIC" or the "Adviser"). The Adviser is a subsidiary of Phoenix Investment
Partners, Ltd. (formerly Phoenix Duff & Phelps Corporation) and an indirect
subsidiary of Phoenix Home Life Mutual Insurance Company. See "Management of the
Funds" 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 Trust's shares. See "Distribution Plans"
and the Statement of Additional Information. Equity Planning also acts as
financial agent of the Trust and as such receives a fee. Equity Planning also
serves as the Trust's transfer agent. See "The Custodian and Transfer Agent."
The Trust has adopted amended and restated distribution plans pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act")
for all classes of all Funds. Pursuant to the amended and restated distribution
plan adopted for Class A Shares, the Funds shall reimburse the Distributor up to
a maximum annual rate of 0.05% of the Fund's average daily Class A Share net
assets of a Fund for distribution expenditures incurred in connection with the
sale and promotion of Class A Shares of a Fund. The Distributor has voluntarily
agreed to waive the Rule 12b-1 fee charged to Class A Shares for the 1999 fiscal
year. Pursuant to the amended and restated distribution plan adopted for Class B
Shares, the Funds shall reimburse the Distributor up to a maximum annual rate of
0.75% of the Funds' average daily Class B Share net assets of a Fund for
distribution expenditures incurred in connection with the sale and promotion of
Class B Shares of a Fund. Pursuant to the amended and restated distribution
plans adopted for Class C Shares and Class M Shares, the Theme Fund shall
reimburse the Distributor up to a maximum annual rate of 0.75% and 0.25%,
respectively, of the average daily net assets of the Theme Fund for distribution
expenses incurred in connection with the sale and promotion of each Class of
shares. Pursuant to the amended and restated distribution plans, the Funds will
pay the Distributor 0.25% of each Fund's average daily net assets for providing
services to shareholders (the "Service Fee"). See "Distribution Plans."
PURCHASE OF SHARES
The Trust offers two Classes of shares of each Fund and two additional
Classes of shares of the Theme Fund 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" and "Class M Shares") or (ii) on a contingent deferred basis (the "Class
B Shares" and "Class C Shares"). CLASS M SHARES ARE CLOSED TO NEW INVESTORS AND
SUBSEQUENT INVESTMENTS BY EXISTING SHAREHOLDERS. 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 and M 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
("State Street Bank"), or an authorized agent, plus a sales charge. The maximum
initial sales charge is 4.75% and 3.50%, respectively, of the offering price on
single purchases of less than $50,000. The sales charges are reduced on a
graduated scale on single purchases of $50,000 or more.
Class B and C Shares are offered to the public at the next determined net
asset value after receipt of an order by State Street Bank, or an authorized
agent, with no sales charge. Class B Shares are subject to a sales charge if
they are redeemed within five years of purchase. Class C Shares redeemed within
one year of purchase are subject to a 1% sales charge.
Shares of each Class represent an identical interest in the investment
portfolio of a Fund and have the same rights. For more information on fees and
charges applicable for each Fund and Class, refer to "Fund Expenses" and
"Alternative Purchase Arrangements."
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 OF SHARES
Class A and M Shares of a Fund may be redeemed at any time at the net asset
value per share next computed after receipt of a redemption request by the
Funds' transfer agent or an authorized agent. Class B and C shareholders
redeeming shares within certain time periods 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 Fund will achieve its investment
objectives. As a result of each Fund's 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 Fund invests.
The Theme Fund 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 Fund 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, 1998.
<TABLE>
<CAPTION>
EQUITY OPPORTUNITIES FUND SMALL CAP FUND
--------------------------------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B
SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.75% None 4.75% None
Maximum Sales Load Imposed on
Reinvested Dividends None None None None
Deferred Sales Load (as a percentage of None 5% during the first year, None 5% during the first year,
original purchase price or redemption decreasing 1% annually decreasing 1% annually
proceeds, as applicable) to 2% during the fourth and to 2% during the fourth and
fifth years; decreasing to 0% fifth years; decreasing to 0%
after the fifth year after the fifth year
Redemption Fee None None None None
Exchange Fee None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees
Advisory Fees 0.70% 0.70% 0.75% 0.75%
12b-1 Fees (after waiver) (a) 0.25% 1.00% 0.25% 1.00%
Other Expenses 0.23% 0.23% 0.31% 0.31%
---- ---- ---- ----
TOTAL FUND OPERATING EXPENSES (b) 1.18% 1.93% 1.31% 2.06%
==== ==== ==== ====
</TABLE>
- ---------------
(a) "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"). The Distributor
has voluntarily agreed to limit the Class A 12b-1 Fees to 0.25% for the 1999
fiscal year. Class A 12b-1 Fees would have been 0.30% absent the Distributor's
waiver. 12b-1 Fees as stated include a Service Fee. See "Distribution Plans."
(b) For the fiscal year 1998, Total Fund Operating Expenses for Class A
Shares would have been 1.23% for the Equity Opportunities Fund and 1.36% for the
Small Cap Fund, respectively, without the 12b-1 Fee waiver.
4
<PAGE>
<TABLE>
<CAPTION>
THEME FUND
------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS M
SHARES SHARES SHARES (b) SHARES (b)
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.75% None None 3.50%
Maximum Sales Load Imposed on Reinvested
Dividends None None None None
Deferred Sales Load (as a percentage of None 5% during the first year, 1% during the first None
original purchase price or redemption decreasing 1% annually to year
proceeds, as applicable) 2% during the fourth and
fifth years; decreasing
to 0% after the fifth year
Redemption Fee None None None None
Exchange Fee None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees
Advisory Fees 0.75% 0.75% 0.75% 0.75%
12b-1 Fees (after waiver) (a) 0.25% 1.00% 1.00% 0.50%
Other Expenses 0.33% 0.33% 0.33% 0.33%
---- ---- ---- ----
TOTAL FUND OPERATING EXPENSES 1.33%(c) 2.08% 2.08% 1.58%
==== ==== ==== ====
</TABLE>
- ---------------
(a) "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"). The Distributor
has voluntarily agreed to limit the Class A 12b-1 Fees to 0.25% for the 1999
fiscal year. Class A 12b-1 Fees would have been .30% absent the Distributor's
waiver. 12b-1 Fees as stated include a Service Fee. See "Distribution Plans."
(b) Prior to November 3, 1997, Class C and M Shares were not offered.
(c) For the fiscal year 1998, Total Fund Operating Expenses for Class A
Shares would have been 1.38% without the 12b-1 Fee waiver.
EXAMPLE*
- --------
<TABLE>
<CAPTION>
An investor would pay the following expenses on a hypothetical $1,000 CUMULATIVE EXPENSES
investment assuming (1) a 5% annual return and (2) redemption at PAID FOR THE PERIOD
the end of each time period. 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Equity Opportunities Fund (Class A Shares) $59 $83 $109 $184
- -------------------------------------------------------------------------------------------------------------------------
Equity Opportunities Fund (Class B Shares) $60 $81 $104 $206
- -------------------------------------------------------------------------------------------------------------------------
Small Cap Fund (Class A Shares) $60 $87 $116 $198
- -------------------------------------------------------------------------------------------------------------------------
Small Cap Fund (Class B Shares) $61 $85 $111 $220
- -------------------------------------------------------------------------------------------------------------------------
Theme Fund (Class A Shares) $60 $88 $117 $200
- -------------------------------------------------------------------------------------------------------------------------
Theme Fund (Class B Shares) $61 $85 $112 $222
- -------------------------------------------------------------------------------------------------------------------------
Theme Fund (Class C Shares) $31 $65 $112 $241
- -------------------------------------------------------------------------------------------------------------------------
Theme Fund (Class M Shares) $51 $83 $118 $216
An investor would pay the following expenses on the same $1,000
investment assuming no redemption at the end of each period:
- -------------------------------------------------------------------------------------------------------------------------
Equity Opportunities Fund (Class A Shares) $59 $83 $109 $184
- -------------------------------------------------------------------------------------------------------------------------
Equity Opportunities Fund (Class B Shares) $20 $61 $104 $206
- -------------------------------------------------------------------------------------------------------------------------
Small Cap Fund (Class A Shares) $60 $87 $116 $198
- -------------------------------------------------------------------------------------------------------------------------
Small Cap Fund (Class B Shares) $21 $65 $111 $220
- -------------------------------------------------------------------------------------------------------------------------
Theme Fund (Class A Shares) $60 $88 $117 $200
- -------------------------------------------------------------------------------------------------------------------------
Theme Fund (Class B Shares) $21 $65 $112 $222
- -------------------------------------------------------------------------------------------------------------------------
Theme Fund (Class C Shares) $21 $65 $112 $241
- -------------------------------------------------------------------------------------------------------------------------
Theme Fund (Class M Shares) $51 $83 $118 $216
</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 Fund by
Class of shares for the Trust. The financial information has been audited by
PricewaterhouseCoopers LLP, independent accountants. Their opinion and the
Trust's financial statements and notes thereto are incorporated by reference in
the Statement of Additional Information. The Statement of Additional Information
and the Trust's most recent Annual Report (containing the Report of Independent
Accountants and additional information relating to Trust performance) are
available at no charge upon request by calling (800) 243-4361.
<TABLE>
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PHOENIX EQUITY OPPORTUNITIES FUND
CLASS A
----------------------------------------------------------------------------------
YEAR ENDED APRIL 30,
----------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $6.89 $8.81 $7.40 $7.31 $9.64 $8.59 $8.36 $7.61
Income from investment operations
Net investment income (loss)...... (0.04)(4) (0.03)(4) (0.04)(4) 0.04 0.05 0.06 0.11 0.17
Net realized and unrealized gain
(loss)............................ 2.82 (0.90) 2.34 0.58 0.57 1.34 0.71 0.74
----- ----- ----- ----- ----- ----- ----- -----
Total from investment operations 2.78 (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............................. (1.63) (0.94) (0.89) (0.48) (2.90) (0.29) (0.47) --
In excess of accumulated net
realized gains.................... -- (0.05) -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- -----
Total distributions............. (1.63) (0.99) (0.89) (0.53) (2.95) (0.35) (0.59) (0.16)
----- ----- ----- ----- ----- ----- ----- -----
Change in net asset value........... 1.15 (1.92) 1.41 0.09 (2.33) 1.05 0.23 0.75
----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period...... $8.04 $6.89 $8.81 $7.40 $7.31 $9.64 $8.59 $8.36
===== ===== ===== ===== ===== ===== ===== =====
Total return(1)..................... 44.66% (12.19)% 32.86% 9.16% 4.99% 16.50% 10.30% 12.16%
Ratios/supplemental data:
Net assets, end of period
(thousands).........................$194,296 $163,396 $213,600 $179,666 $186,037 $215,570 $204,792 $213,147
Ratio to average net assets of:
Expenses.......................... 1.18% 1.23% 1.25% 1.32% 1.26% 1.35% 1.36% 1.41%
Net investment income (loss)...... (0.55)% (0.39)% (0.53)% 0.60% 0.57% 0.67% 1.29% 2.19%
Portfolio turnover.................. 371% 412% 302% 358% 167% 31% 73% 95%
Average commission rate paid(5)..... $0.0632 $0.0543 $0.0600 N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------- ---------------------------------------------------
FROM
INCEPTION
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, 7/19/94 TO
1990 1989 1998 1997 1996 4/30/95
------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.31 $7.52 $6.77 $8.73 $7.39 $7.28
Income from investment operations
Net investment income (loss)...... 0.25 0.29 (0.10)(4) (0.09)(4) (0.10)(4) 0.00
Net realized and unrealized gain
(loss)............................ 0.38 1.17 2.76 (0.88) 2.33 0.59
----- ----- ----- ----- ----- -----
Total from investment operations 0.63 1.46 2.66 (0.97) 2.23 0.59
----- ----- ----- ----- ----- -----
Less distributions
Dividends from net investment
income............................ (0.27) (0.30) -- -- -- --
Distributions from net realized
gains............................. (1.06) (0.37) (1.63) (0.94) (0.89) (0.48)
In excess of accumulated net
realized gains.................... -- -- -- (0.05) -- --
----- ----- ----- ----- ----- -----
Total distributions............. (1.33) (0.67) (1.63) (0.99) (0.89) (0.48)
----- ----- ----- ----- ----- -----
Change in net asset value........... (0.70) 0.79 1.03 (1.96) 1.34 0.11
----- ----- ----- ----- ----- -----
Net asset value, end of period...... $7.61 $8.31 $7.80 $6.77 $8.73 $7.39
===== ===== ===== ===== ===== =====
Total return(1)..................... 7.08% 20.52% 43.58% (12.79)% 31.92% 8.69%(3)
Ratios/supplemental data:
Net assets, end of period
(thousands)......................... $210,667 $230,066 $2,051 $1,666 $1,348 $525
Ratio to average net assets of:
Expenses.......................... 1.09% 0.89% 1.93% 1.98% 2.06% 2.15%(2)
Net investment income (loss)...... 2.88% 3.75% (1.30) (1.15)% (1.18)% (0.06)%(2)
Portfolio turnover.................. 49% 59% 371% 412% 302% 358%
Average commission rate paid(5)..... N/A N/A $0.0632 $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.
6
<PAGE>
<TABLE>
<CAPTION>
PHOENIX SMALL CAP FUND
CLASS A CLASS B
---------------------------------------- -----------------------------------------
FROM INCEPTION FROM INCEPTION
YEAR ENDED APRIL 30, 10/16/95 TO YEAR ENDED APRIL 30, 10/16/95 TO
1998 1997 4/30/96 1998 1997 4/30/96
------ ------ -------------- ------ ------ --------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period....... $14.13 $16.74 $10.00 $13.98 $16.68 $10.00
Income from investment operations
Net investment income (loss)............. (0.08)(5) (0.05)(5) (0.04)(1)(5) (0.21)(5) (0.17)(5) (0.09)(1)(5)
Net realized and unrealized gain (loss) 6.80 (2.53) 6.79 6.70 (2.50) 6.77
------ ------ ------ ------ ------ ------
Total from investment operations....... 6.72 (2.58) 6.75 6.49 (2.67) 6.68
------ ------ ------ ------ ------ ------
Less distributions
Dividends from net investment income..... -- -- -- -- -- --
Dividends from net realized gains........ (3.48) (0.02) -- (3.48) (0.02) --
In excess of net investment income....... -- -- (0.01) -- -- --
In excess of accumulated net realized
gains.................................... -- (0.01) -- -- (0.01) --
------ ------ ------ ------ ------ ------
Total distributions.................... (3.48) (0.03) (0.01) (3.48) (0.03) --
------ ------ ------ ------ ------ ------
Change in net asset value.................. 3.24 (2.61) 6.74 3.01 (2.70) 6.68
------ ------ ------ ------ ------ ------
Net asset value, end of period............. $17.37 $14.13 $16.74 $16.99 $13.98 $16.68
====== ====== ====== ====== ====== ======
Total return(2)............................ 52.33% (15.43)% 67.48%(4) 51.16% (16.03)% 66.80%(4)
Ratios/supplemental data:
Net assets, end of period (thousands)...... $203,560 $155,089 $98,372 $147,785 $97,647 $45,168
Ratio to average net assets of:
Expenses................................. 1.31% 1.37% 1.50%(3) 2.06% 2.12% 2.26%(3)
Net investment income (loss)............. (0.48)% (0.28)% (0.53)%(3) (1.22)% (1.03)% (1.44)%(3)
Portfolio turnover......................... 498% 325% 103%(4) 498% 325% 103%(4)
Average commission rate paid(6)............ $0.0533 $0.0540 $0.0657 $0.0533 $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.
<TABLE>
<CAPTION>
PHOENIX STRATEGIC THEME FUND
CLASS A CLASS B
----------------------------------------- -----------------------------------------
FROM INCEPTION FROM INCEPTION
YEAR ENDED APRIL 30, 10/16/95 TO YEAR ENDED APRIL 30, 10/16/95 TO
1998 1997 4/30/96 1998 1997 4/30/96
------ ------ -------------- ------ ------ --------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period....... $12.03 $12.37 $10.00 $11.91 $12.33 $10.00
Income from investment operations(7)
Net investment income (loss)............. (0.04)(5) 0.06(5) (0.00)(1)(5) (0.14)(5) (0.03)(5) (0.06)(1)(5)
Net realized and unrealized gain (loss).. 4.03 (0.38) 2.39 3.98 (0.38) 2.40
------ ------ ------ ------ ------ ------
Total from investment operations....... 3.99 (0.32) 2.39 3.84(5) (0.41) 2.34
------ ------ ------ ------ ------ ------
Less distributions
Dividends from net investment income..... -- (0.01) -- -- -- --
Dividend from net realized gains......... (2.29) -- -- (2.29) -- --
In excess of net investment income....... (0.03) -- -- -- -- --
In excess of accumulated net realized
gains.................................... -- (0.01) -- -- (0.01) --
Tax return of capital.................... -- -- (0.02) -- -- (0.01)
------ ------ ------ ------ ------ ------
Total distributions.................... (2.32) (0.02) (0.02) (2.29) (0.01) (0.01)
------ ------ ------ ------ ------ ------
Change in net asset value.................. 1.67 (0.34) 2.37 1.55 (0.42) 2.33
------ ------ ------ ------ ------ ------
Net asset value, end of period............. $13.70 $12.03 $12.37 $13.46 $11.91 $12.33
====== ====== ====== ====== ====== ======
Total return(2)............................ 36.22% (2.57)% 23.89%(4) 35.18% (3.31)% 23.41%(4)
Ratios/supplemental data:
Net assets, end of period (thousands)...... $89,884 $77,827 $33,393 $66,107 $49,843 $11,920
Ratio to average net assets of:
Expenses................................. 1.33% 1.40% 1.40%(3) 2.08% 2.15% 2.16%(3)
Net investment income (loss)............. (0.26)% 0.49% (0.09)%(3) (1.02)% (0.23)% (1.06)%(3)
Portfolio turnover......................... 618% 532% 175%(4) 618% 532% 175%(4)
Average commission rate paid(6)............ $0.0568 $0.0590 $0.0663 $0.0568 $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>
<TABLE>
<CAPTION>
PHOENIX STRATEGIC THEME FUND
CLASS C CLASS M
------------------ ------------------
FROM INCEPTION FROM INCEPTION
11/3/97 TO 11/3/97 TO
4/30/98 4/30/98
------------------ ------------------
<S> <C> <C>
Net asset value, beginning of period............... $14.93 $14.93
Income from investment operations(7)
Net investment income (loss)..................... (0.05)(5) (0.02)(5)
Net realized and unrealized gain (loss).......... 0.88 0.88
------ ------
Total from investment operations............... 0.83 0.86
------ ------
Less distributions
Dividends from net investment income............. -- --
Dividend from net realized gains................. (2.29) (2.29)
In excess of accumulated net realized gains...... -- --
------ ------
Total distributions............................ (2.29) (2.29)
------ ------
Change in net asset value.......................... (1.46) (1.43)
------ ------
Net asset value, end of period..................... $13.47 $13.50
====== ======
Total return(2).................................... 7.92%(4) 8.14%(4)
Ratios/supplemental data:
Net assets, end of period (thousands).............. $267 $220
Ratio to average net assets of:
Expenses......................................... 2.08%(3) 1.58%(3)
Net investment income (loss)..................... (0.87)%(3) (0.40)%(3)
Portfolio turnover................................. 618%(4) 618%(4)
Average commission rate paid(6).................... $0.0568 $0.0568
</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.
8
<PAGE>
PERFORMANCE INFORMATION
The Funds may, from time to time, include 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 Fund 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 Fund will be computed by dividing the Fund's net investment
income over a 30-day period by an average value of invested assets (using the
average number of shares entitled to receive dividends and the maximum offering
price per share at the end of the period), all in accordance with applicable
regulatory requirements. Such amount will be compounded for six months and then
annualized for a twelve-month period to derive the Fund's yield.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compound rate
of return of a hypothetical investment in such Class of Shares of a Fund over a
period of 1, 5 and 10 years (or up to the life of the Fund). 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 and M Shares and the maximum contingent deferred sales
charge applicable to a complete redemption of the investment in the case of
Class B and C Shares, and assume that all dividends and distributions on each
Class of Shares are reinvested when paid. The Funds 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 Funds may, from time to time, publish materials citing historical
volatility for shares of any Fund. Performance data quoted for Class B, C and M
Shares covering periods prior to the inception of such Classes of Shares will
reflect historical performance of Class A Shares of a Fund as adjusted for the
higher operating expenses applicable to such Class of Shares.
The Funds 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 Funds may compare a Fund's 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 Business 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 Funds, 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 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
(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 Fund or the Adviser's or Subadviser's current investment
strategies and management style. Current strategies and style may change to
allow any Fund to respond quickly to changing market and economic conditions.
From time to time, the Funds may include specific portfolio holdings or
industries in such communications. To illustrate components of overall
performance, the Funds may separate 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 Fund's 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 Fund reflects only the performance of a
hypothetical investment in Class A, Class B, Class C or Class M Shares of that
Fund during the particular time period in which the calculations are based.
Performance information should be considered in light of the Fund's 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 Fund, see the Statement of
Additional Information.
The Trust's Annual Report, available upon request and without charge,
contains a discussion of the performance of each Fund and a comparison of that
performance to a securities market index.
9
<PAGE>
INVESTMENT OBJECTIVES
AND POLICIES
Each Fund has a different investment objective and is designed to meet
different investment needs. The differences in objectives and policies among the
three Funds can be expected to affect the investment return of each Fund and the
degree of market and financial risk to which each Fund is subject. The
investment objective of each Fund 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 Fund. Except as noted below, a Fund's investment policies are not
deemed to be fundamental and, therefore, may be changed without shareholder
approval. Since certain risks are inherent in the ownership of any security,
there can be no assurance that a Fund will achieve its investment objective.
EQUITY OPPORTUNITIES FUND
The investment objective of the Equity Opportunities Fund 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 Fund's 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 Fund.
At least 65% of the Fund's total assets are, under normal circumstances,
invested in stocks. The Fund 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 Fund to purchase securities
for trading purposes, although there may be a limited number of short-term
transactions. The Fund 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 Fund's 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 Fund's assets are in cash or cash equivalents, it is
not investing in securities selected to meet the Fund's 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
Fund 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 Fund may be considered to be
subject to greater risks than would be involved if the Fund invested in
securities which do not have such potential.
Additional discussion regarding risks involved in investing in the Fund are
described in the "Investment Techniques and Related Risks" section below.
SMALL CAP FUND
The investment objective of the Small Cap Fund 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 Fund's total assets will be invested in
stocks of companies with a total market capitalization of $1.5 billion or less
at the time of acquisition. Up to 25% of the Fund's 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
Fund should be considered as a long-term investment and not as a vehicle for
seeking short-term profits.
The Fund 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
Fund's 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 Fund's assets are held in cash or cash equivalents, it is not investing in
securities intended to meet the Fund's 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.
10
<PAGE>
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 Fund are
described in the "Investment Techniques and Related Risks" section below.
THEME FUND
The Theme Fund 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 1970s, having invested in companies
which benefited from lower inflation trends during the early 1980s, or having
invested in companies acquiring cellular franchises in the late 1980s, and
technology companies during the 1990s.
The Adviser will not concentrate its investments in specific industries in
amounts greater than 25% of the assets of the Fund 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 Fund 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 Fund may also engage in certain options
transactions and enter into financial futures contracts and related options for
hedging purposes. The Fund 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 Fund may pursue a policy of retaining cash or investing part or
all of its assets in cash equivalents. When the Fund's assets are held in cash
or cash equivalents, it is not investing in securities intended to meet the
Fund's investment objective.
RISK CONSIDERATIONS
To the extent that the Fund 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 Fund's 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 Fund are
described in the "Investment Techniques and Related Risks" section below.
INVESTMENT TECHNIQUES
AND RELATED RISKS
INVESTING IN CONVERTIBLE SECURITIES
Each Fund 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
11
<PAGE>
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 Funds' 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 Fund is called for redemption,
the Fund 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 Fund may, from time to time, write covered call option contracts as a
means of increasing the yield on the Fund's portfolio and also as a means of
providing limited protection against decreases in the market value of the Fund's
portfolio. Options are technically forms of "derivatives" in that their value is
dependent upon fluctuations in the value of other securities. Such contracts
will be written on securities in which the Fund 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 Fund.
A call option on a security gives the purchaser of the option the right to
buy the underlying security from the writer at the exercise price at any time
prior to the expiration of the contract, regardless of the market price of the
security during the option period. A call option is "covered" if, throughout the
life of the option, (1) the Fund owns the optioned securities, (2) the Fund
maintains in a pledged account with its Custodian, any assets including equity
securities and non-investment grade debt, so long as the assets are liquid,
unencumbered and marked to market daily ("liquid assets") with a value
sufficient to meet its obligations under the call, or (3) if the Fund owns an
offsetting call option. The premium paid to the writer is the consideration for
undertaking the obligations under the option contract. The 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 Fund will write only call option contracts when it is believed
that the total return to the Fund can be increased through such premiums
consistent with the Fund's investment objective.
The Funds may also write covered call options on securities indices. Through
the writing of call index options the Funds 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 a Fund. The writing of option contracts is a highly specialized
activity which involves investment techniques and risks different from those
ordinarily associated with investment companies, and the restrictions listed
above would tend to reduce such risks.
The Funds 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 Fund's portfolio, the Funds 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 Funds 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
Funds may be invested in the purchase of put and call options, including index
options.
PURCHASING CALL AND PUT OPTIONS, WARRANTS AND STOCK RIGHTS
Each Fund 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 Fund's investment objectives. These Funds
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 Funds may
lose the premium it paid plus transaction costs.
12
<PAGE>
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 Fund 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 nonperformance 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 Funds 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 Fund 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 Fund originally wrote the option. If a
covered call option writer cannot effect a closing transaction, it cannot sell
the underlying security or foreign currency until the option expires or the
option is exercised. Therefore, the writer of a covered OTC call option may not
be able to sell an underlying security even though it might otherwise be
advantageous to do so. Likewise, the writer of a secured OTC put option may be
unable to sell the securities pledged to secure the put for other investment
purposes while it is obligated as a put writer. Similarly, a purchaser of an OTC
put or call option might also find it difficult to terminate its position on a
timely basis in the absence of a secondary market.
FINANCIAL FUTURES AND RELATED OPTIONS
Each Fund may enter into financial futures contracts and related options as a
hedge against anticipated changes in the market value of the Fund's 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 Fund 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 Fund will engage in transactions in financial futures contracts and related
options only for hedging purposes and not for speculation. In addition, a Fund
will not purchase or sell any financial futures contract or related option if,
immediately thereafter, the sum of the liquid assets committed with respect to
such Fund's existing futures and related options positions and the premiums paid
for related options would exceed 5% of the market value of such Fund's total
assets. At the time of purchase of a futures contract or a call option on a
futures contract liquid assets, equal to the market value of the futures
contract minus such Fund's initial margin deposit with respect thereto, will be
deposited in a pledged account with the Trust's custodian bank to fully
collateralize the position and thereby ensure that it is not leveraged. The
extent to which a Fund 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
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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 Fund 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 Fund 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 Fund
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 Fund and is unrelated to the interest rate on the
underlying instrument. A repurchase agreement acquired by such Fund 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
Fund's account by the Trust's 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 Fund may each lend
its portfolio securities to broker-dealers and other financial institutions in
amounts up to 33% of the market or other fair value of its net assets. Loans of
portfolio securities will always be fully collateralized and will be made only
to borrowers considered by the Adviser to be credit-worthy. Lending portfolio
securities involves risk of delay in the recovery of the loaned securities and
in some cases the loss of rights in the collateral should the borrower fail
financially. See the Statement of Additional Information.
FOREIGN CURRENCY TRANSACTIONS
The value of the assets of a Fund 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 Fund 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
noninvestment 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 Fund's
initial margin deposit with respect thereto, will be deposited in a pledged
account with the Trust's custodian bank to collateralize fully the position and
thereby ensure that it is not leveraged.
When a Fund 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 Fund's 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 Fund 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 Fund is obligated to deliver.
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If the Fund utilizing this investment technique retains the portfolio
security and engages in an offsetting transaction, the Fund will incur a gain or
a loss (as described below) to the extent that there has been movement in
forward contract prices. If the Fund 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 Fund's 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 Fund
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 Fund 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
Fund 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 Fund may invest up to 25% of its total assets (provided however, the
Theme Fund may invest up to 35% of its total assets) in the securities of
foreign issuers. Each Fund may invest in a broad range of foreign securities
including equity, debt and convertible securities and foreign government
securities. Each Fund may also invest in domestic securities denominated in
foreign currencies.
Investing in the securities of foreign companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
include differences in accounting, auditing and financial reporting standards,
generally higher commission rates on foreign portfolio transactions, the
possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations, political instability which could
affect U.S. investment or exchange control regulations, political instability
which could affect U.S. investments in foreign countries, and potential
restrictions on the flow of international capital. Additionally, dividends
payable on foreign securities may be subject to foreign taxes withheld prior to
distribution. Foreign securities often trade with less frequency and volume than
domestic securities and therefore may exhibit greater price volatility, and
changes in foreign exchange rates will affect the value of those securities
which are denominated or quoted in currencies other than the U.S. dollar.
Many of the foreign securities held by each Fund will not be registered with
the Commission and the issuers thereof will not be subject to the Commission'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 Fund will
be subject to the additional risk of currency fluctuations. An adverse change in
the value of a particular foreign currency as against the U.S. dollar, to the
extent that such change is not offset by a gain in other foreign currencies,
will result in a decrease in the Fund's assets. Any such change may also have
the effect of decreasing or limiting the income available for distribution.
Foreign currencies may be affected by revaluation, adverse political and
economic developments, and governmental restrictions. Although the Fund will
invest only in securities denominated in foreign currencies that are fully
convertible into U.S. dollars without legal restriction at the time of
investment, no assurance can be given that currency exchange controls will not
be imposed on any particular currency at a later date.
Securities of U.S. issuers denominated in foreign currencies may be less
liquid and their prices more volatile than securities issued by domestic issuers
and denominated in U.S. dollars. In addition, investing in securities
denominated in foreign currencies often entails costs not associated with
investment in U.S. dollar-denominated securities of U.S. issuers, such as the
cost of converting foreign currency to U.S. dollars, higher brokerage
commissions, custodial expenses and other fees. Non-U.S. dollar denominated
securities may be subject to certain withholding and other taxes of the relevant
jurisdiction, which may reduce the yield on the securities to the Funds and
which may not be recoverable by the Funds or their investors.
The Funds will calculate their net asset values 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 Funds 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 Funds' portfolios may be affected by such trading on days when a
shareholder has no access to the Funds.
Investment income received by the Funds from sources within foreign countries
may be subject to foreign income taxes withheld at the source. If a Fund should
have more than 50% of the value of its assets invested in securities of foreign
corporations at the close of its taxable year, the Fund may elect to pass
through to its shareholders their proportionate shares of foreign income taxes
paid. Investors are urged to consult their tax attorney with respect to
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specific questions regarding foreign, federal, state or local taxes.
LEVERAGE
The Theme Fund and Small Cap Fund 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 Funds will borrow only from banks, and only if immediately after such
borrowing the value of the assets of a Fund (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 Funds to borrow up to 33 1/3% of the net assets of such
Fund, 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
Fund's 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 Funds with respect to
which the borrowing has been made. Because such expense would not otherwise be
incurred, the net investment income of such Fund 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 Fund 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 Fund's 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 Fund, the net asset
value of the Fund will decrease faster than would otherwise be the case.
PRIVATE PLACEMENTS AND RULE 144A SECURITIES
Each Fund may purchase securities which have been privately issued and are
subject to legal restrictions on resale or which are issued to qualified
institutional investors under special rules adopted by the Commission. Such
securities may offer higher yields than comparable publicly traded securities.
Such securities ordinarily can be sold by these Funds in secondary market
transactions to certain qualified investors pursuant to rules established by the
Commission, in privately negotiated transactions to a limited number of
purchasers or in a public offering made pursuant to an effective registration
statement under the Securities Act of 1933 (the "1933 Act"). Public sales of
such securities by the Funds 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 Funds may have to bear certain costs of
registration in order to sell such shares publicly. Except in the case of
securities sold to qualifying institutional investors under special rules
adopted by the Commission for which the Trustees of these Funds determine the
secondary market is liquid, Rule 144A securities will be considered illiquid.
Trustees of these Funds 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 Funds: 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
Fund's illiquidity to the extent that qualified institutional buyers become, for
a time, uninterested in purchasing these securities. Each Fund may invest up to
15% of its net assets in illiquid securities.
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. There is the
possibility that some or all of a company's computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. The cost of modifying computer programs to become Year 2000
compliant may impact the financial performance and market price of companies
whose securities are held by the Funds.
The Trustees have directed management to ensure that the systems used by
service providers (including Phoenix Investment Partners, Ltd. ("PXP") and its
subsidiaries) in support of the operations of the Funds be assessed and brought
into Year 2000 compliance. Based upon preliminary assessments, PXP has
determined that it will be required to modify or replace portions of its
software so that its computer systems will properly utilize dates beyond
December 31, 1999. Since many of the core systems of PXP companies are
investment related, PXP management believes that the majority of these systems
are already Year 2000 compliant. PXP believes that with modifications to
existing software and conversions to new software, the Year 2000 issue will be
mitigated. It is anticipated that such modifications and conversions will be
completed on a timely basis. It is not known at this time if there could be a
material impact on the operations of PXP companies or the Funds if such
modifications and conversions are not completed timely.
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PXP will utilize both internal and external resources to reprogram, or
replace, and test the software for Year 2000 modifications. Certain systems are
already in the process of being converted due to previous initiatives and it is
expected that all core systems will be remediated by December 31, 1998 and
tested by June 1999. The total cost to become Year 2000 compliant is not an
expense of the Funds and is not expected to have a material impact on the
operating results of PXP.
INVESTMENT RESTRICTIONS
The investment restrictions to which each Fund is subject, together with the
investment objectives of each Fund, are fundamental policies of the Funds which
may not be changed as to any Fund without the approval of such Fund's
shareholders. Among the more significant restrictions, each Fund 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 Fund's investment restrictions is contained in
the Statement of Additional Information.
MANAGEMENT OF THE FUNDS
The Trust 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 Funds and perform the various duties imposed on Trustees by
the 1940 Act and Massachusetts business trust law.
THE ADVISER
The investment adviser to the Funds 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 Equity Planning, a
subsidiary of Phoenix Investment Partners, Ltd. Phoenix Home Life Mutual
Insurance Company ("Phoenix Home Life") of Hartford, Connecticut is a majority
shareholder of Phoenix Investment Partners, Ltd. 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 Funds, PIC serves as investment adviser to the
Phoenix family of mutual funds (33 funds), The Phoenix Edge Series Fund (other
than the Real Estate Securities Series and Aberdeen New Asia Series) and the
accounts of institutional clients and as subadviser to other mutual funds. PIC
was originally organized in 1932 as John Chase, Inc. As of May 31, 1998, PIC had
approximately $21.6 billion in assets under management.
For managing or directing the management of the investments of the Funds, PIC
is entitled to a fee, payable monthly, at the following annual rates based upon
the aggregate net asset values of the following Funds:
1ST $1-2 $2+
FUND BILLION BILLION BILLION
- ---- ------- ------- -------
Equity Opportunities 0.70% 0.65% 0.60%
Theme 0.75% 0.70% 0.65%
Small Cap 0.75% 0.70% 0.65%
The total advisory fee of 0.75% of the aggregate net assets of the Theme and
Small Cap Funds is greater than that for most mutual funds; however, the Board
of Trustees 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
Funds. The ratio of the management fees to average net assets for the fiscal
period ended April 30, 1998 for the Theme and Small Cap Funds was 0.75% and for
the Equity Opportunities Fund, the ratio was 0.70%. Total management fees paid
by the Funds for the year ended April 30, 1998 were $4,953,597.
On June 25, 1998, the Board of Trustees approved a change of the portfolio
management of the Equity Opportunities Fund, appointing Seneca Capital
Management LLC subadviser through October 31, 1998 and recommending to
shareholders that Seneca Capital Management LLC be retained as subadviser for
the Equity Opportunities Fund on a long-term basis. The Trustees also approved a
change of the portfolio management of the Small Cap Fund, appointing Roger
Engemann & Associates, Inc. subadviser through October 31, 1998 and recommending
to shareholders that Roger Engemann & Associates, Inc. be retained as subadviser
for the Small Cap Fund on a long-term basis. These recommendations will be
submitted to shareholders of the Equity Opportunities and Small Cap Funds in a
proxy statement in the coming months.
Seneca Capital Management LLC ("Seneca") serves as subadviser to PIC and as
such is responsible for making investment decisions and selecting broker-dealers
to execute transactions for the Equity Opportunities Fund. For its services,
Seneca is paid a fee by PIC equal to 0.20% of the average daily net assets of
the Equity Opportunities Fund up to $184 million, 0.35% of such value between
$184 million and $1 billion, 0.325% of such value between $1 billion and $2
billion, and 0.30% of such value in excess of $2 billion. Seneca (including its
predecessor GMG/Seneca Capital Management, L.P.) has been an investment adviser
since 1989 managing equity and fixed income securities portfolios primarily for
institutions and individuals. Seneca has also served as adviser to the
Phoenix-Seneca Funds since their inception in March 1996. Seneca is owned by
certain of its employees, including Gail P. Seneca, and Phoenix Investment
Partners, Ltd. Seneca's principal office is located at 909 Montgomery Street,
San Francisco, California 94133.
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Roger Engemann & Associates, Inc. ("REA") serves as subadviser to PIC and as
such is responsible for making investment decisions and selecting broker-dealers
to execute transactions for the Small Cap Fund. For its services, REA is paid a
fee by the Adviser equal to 0.20% of the average daily net assets of the Small
Cap Fund up to $323 million, 0.375% of such value between $323 million and $1
billion, 0.35% of such value between $1 billion and $2 billion, and 0.325% of
such value in excess of $2 billion. REA has been an investment adviser since
1969 and provides investment counseling services to retirement plans, colleges,
corporations, trusts and individuals. REA is a wholly owned subsidiary of
Pasadena Capital Corporation which in turn is a wholly owned subsidiary of
Phoenix Investment Partners, Ltd. REA's principal office is located at 600 North
Rosemead Boulevard, Pasadena, California 91107.
THE PORTFOLIO MANAGERS
Equity Opportunities Fund
The investment and trading decisions for the Equity Opportunities Fund are
made by a team of managers and analysts headed by three team leaders. The team
leaders are primarily responsible for the day-to-day management of the Fund's
investments. The team leaders are Gail P. Seneca, Richard D. Little and Ronald
K. Jacks. Ms. Seneca is Managing Director, Equities, of PIC and a Senior Vice
President of the Trust and has been President and a Trustee of Phoenix-Seneca
Funds since February 1996. Since July 1, 1996, she has been President, Chief
Executive and Investment Officer of Seneca Capital Management LLC ("Seneca").
Ms. Seneca has been a team leader and portfolio manager of each of the
Phoenix-Seneca Funds since inception in 1996. From November 1989, Ms. Seneca has
also been Chief Executive and Investment Officer and a managing partner of
GMG/Seneca Capital Management, L.P. ("GMG/Seneca"). Mr. Little is a Managing
Director, Equities, of PIC and a Senior Vice President of the Trust. He has been
a team leader and portfolio manager of Phoenix-Seneca Growth Fund and
Phoenix-Seneca Mid-Cap "EDGE"[service mark] Fund since inception in 1996. Mr.
Little currently is a general partner and Director of Equities and has been an
employee of GMG/Seneca since 1989. Mr. Jacks is a Managing Director, Equities,
of PIC and a Senior Vice President of the Trust. He has also been Secretary of
the Phoenix-Seneca Funds since February 1996. Mr. Jacks was a Trustee of the
Phoenix-Seneca Funds from February 1996 through June 1997. Since July 1990, Mr.
Jacks has been a Portfolio Manager of GMG/Seneca and since July 1996, he has
been a portfolio manager of Seneca.
Theme Fund
Investment and trading decisions for the Theme Fund are made by a team of
equity investment professionals.
Small Cap Fund
Mr. Roger Engemann, Mr. James E. Mair and Mr. John S. Tilson head the team
that is primarily responsible for the day-to-day management of the Small Cap
Fund. Each is a Managing Director, Equities, of the Adviser. Mr. Engemann has
been president of REA since its inception in 1969. Messrs. Mair and Tilson are
both Executive Vice Presidents of Portfolio Management of REA and both have been
with REA since 1983. Messrs. Engemann and Mair have been Chartered Financial
Analysts ("CFAs") since 1972, and Mr. Tilson has been a CFA since 1974.
THE FINANCIAL AGENT
Equity Planning also acts as financial agent of the Funds and, as such,
performs administrative, bookkeeping and pricing functions for the Funds. For
its services as financial agent, Equity Planning will be paid a fee equal to the
sum of (1) the documented cost of fund accounting and related services provided
by PFPC, Inc., as subagent, to the financial agent, plus (2) the documented cost
to the financial agent to provide financial reporting and tax services and
oversight of the subagent's performance. The current fee schedule of PFPC, Inc.
ranges from 0.085% to 0.0125% of the aggregate daily net asset values of each
Fund. Certain minimum fees and fee waivers may apply. For its services during
the Trust's fiscal year ended April 30, 1998, Equity Planning received $342,867
or .05% of average net assets.
THE CUSTODIAN AND TRANSFER AGENT
The custodian of the assets of the Funds 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 Funds (the "Transfer Agent") for
which it is paid $14.95 plus out-of-pocket expenses for each designated
shareholder account. The Transfer Agent engages subagents 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. ("NASD") 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 Trust'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
Trust and a director and officer of Equity Planning. Michael E. Haylon and
William R. Moyer, directors of Equity Planning, are officers of the Trust; Mr.
Moyer is also
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an officer of Equity Planning. G. Jeffrey Bohne, Nancy G. Curtiss, William E.
Keen, III, Leonard J. Saltiel, John F. Sharry and Thomas N. Steenburg are
officers of the Trust and officers of Equity Planning.
Equity Planning and the Trust have entered into an Underwriting Agreement
under which Equity Planning has agreed to use its best efforts to find
purchasers for Trust shares sold subject to an initial sales charge and those
sold subject to a contingent deferred sales charge. The Trust has granted Equity
Planning the exclusive right to purchase from the Trust and resell, as
principal, shares needed to fill unconditional orders for Trust shares. Equity
Planning may sell Trust shares through its registered representatives or through
securities dealers with whom it has sales agreements. Equity Planning may also
sell Trust shares pursuant to sales agreements entered into with banks or
bank-affiliated securities brokers who, acting as agent for their customers,
place orders for Trust shares with Equity Planning. Although the Glass-Steagall
Act prohibits banks and bank affiliates from engaging in the business of
underwriting, distributing or selling securities (including mutual fund shares),
banking regulators have not indicated that such institutions are prohibited from
purchasing mutual fund shares upon the order and for the account of their
customers. If, because of changes in law or regulations, or because of new
interpretations of existing law, it is determined that agency transactions of
banks or bank-affiliated securities brokers are not permitted under the
Glass-Steagall Act, the Trustees will consider what action, if any, is
appropriate. It is not anticipated that termination of sales agreements with
banks or bank-affiliated securities brokers would result in a loss to their
customers or a change in the net asset value per share of a Fund of the Trust.
The sale of Trust shares through a securities broker affiliated with a
particular bank is not expected to preclude the Trust from borrowing from such
bank or from availing itself of custodial or transfer agency services offered by
such bank.
The Trustees have adopted separate amended and restated distribution plans
under Rule 12b-1 of the 1940 Act for each class of shares of each Fund (the
"Class A Plan," the "Class B Plan," the "Class C Plan," the "Class M Plan" and
collectively the "Plans"). The Plans permit the Trust to reimburse the
Distributor for expenses incurred in connection with the sale and promotion of
Trust shares and to pay for the furnishing of shareholder services. Under the
Plans, the Fund will pay the Distributor 0.25% annually of the average daily net
assets of each Fund for providing services to shareholders, including assistance
in connection with inquires related to shareholder accounts (the "Service Fee").
Pursuant to the Class A Plan, the Trust may reimburse the Distributor for actual
expenses of the Distributor up to 0.05% annually for the average daily net
assets of the Trust's Class A Shares; however, the Distributor has voluntarily
agreed to waive reimbursement under the Class A Plan for fiscal year 1999. Under
the Class B and Class C Plans, the Trust may reimburse the Distributor monthly
for actual expenses of the Distributor up to 0.75% annually of the average daily
net assets of the Trust's Class B and C Shares, respectively. Pursuant to the
Class M Plan, the Trust may reimburse the Distributor monthly for actual
expenses of the Distributor up to 0.25% annually of the average daily net assets
of the Trust's Class M Shares.
Expenditures incurred under the Plans may consist of: (i) commissions to
sales personnel for selling shares of the Trust (including underwriting
commissions and finance charges related to the payment of commissions); (ii)
compensation, sales incentives and payments to sales, marketing and service
personnel; (iii) payments to broker-dealers and other financial institutions
which have entered into agreements with the Distributor 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 Funds' 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 Trust. 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 Trust
shares which are reallowed to such firms. To the extent that the entire amount
of the Service fee is not paid to such firms, the balance will serve as
compensation for personal and account maintenance services furnished by the
Distributor. The Distributor also pays to dealers, as additional compensation
with respect to sales of Class C and M shares, 0.75% and 0.25% of the average
annual net asset value of each Class, respectively.
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 Trust's shareholders; or services providing
the Trust 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
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during which payment for the service or activity was made by a third
party on behalf of the Fund. The Class B Plan, Class C Plan, and Class M Plan,
however, do not limit the reimbursement of distribution related expenses to
expenses incurred in specified time periods.
For the fiscal year ended April 30, 1998, the Trust paid the Distributor
$1,189,093 under the Class A Plan, $1,973,031 under the Class B Plan, $876 under
the Class C Plan and $431 under the Class M Plan. The fees were used to
compensate broker-dealers for servicing shareholder's accounts, including
$122,695 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. The Distributor's expenses
from selling and servicing Class B Shares may be more than the payments received
from contingent deferred sales charges collected on redeemed shares and from the
Fund under the Class B Plan. Those expenses may be carried over and paid in
future years. At April 30, 1998, the end of the last Plan year, the Distributor
had incurred unreimbursed expenses under the Class B Plan of $5,311,561 (equal
to 0.75% of the Trust's net assets) which have been carried over into the
present Class B Plan year.
On a quarterly basis, the 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 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"). Each Plan provides that it may
not be amended to materially increase the costs which the Trust may bear without
approval of the applicable class of shareholders of the affected 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 Trust. The
Trustees have concluded that there is a reasonable likelihood that the Plans
will benefit each Fund and all classes of shareholders.
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.
HOW TO BUY SHARES
HOW DO YOU INVEST?
You may open a fund account with an initial investment of $500. This amount
is reduced to $25 for investments made under the "Investo-Matic" plan (see the
Funds' Application), individual retirement accounts or under the systematic
exchange privilege described below. The initial investment requirement is waived
for investments made under pension, profit sharing or employee benefit plans as
well as in connection with reinvested dividends and distributions.
You may make additional investments at any time with at least $25. The
subsequent investment minimum is waived for investments made under pension,
profit sharing or employee benefit plans as well as in connection with
reinvested dividends and distributions. Shares purchased will be recorded
electronically by the Transfer Agent. No share certificates are available.
An application should be completed to open a new Phoenix Funds account. A
check for the amount you wish to invest, made payable to the "Phoenix Funds,"
(along with the completed application if opening a new account), must be sent
to: Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301.
Shares are sold at the public offering price based on the net asset value for
the Class of shares bought next determined after State Street Bank, or an
authorized agent, receives your order. In most cases, in order to receive that
day's public offering price, State Street Bank must receive your order before
the close of trading on the New York Stock Exchange (normally 4:00 PM eastern
time). See "Net Asset Value."
WHAT ARE THE CLASSES AND HOW DO THEY DIFFER?
The Funds presently offer investors three Classes of shares which bear sales
and distribution charges in different amounts. Currently, only the Theme Fund
offers Class C Shares.
CLASS A SHARES. If you buy Class A Shares, you will pay a sales charge at the
time of purchase equal to 4.75% of the offering price (4.99% of the amount
invested). The sales charge may be reduced or waived under certain conditions.
Class A Shares are not subject to any charges by the Funds when they are sold.
Class A Shares have lower Rule 12b-1 fees and pay higher dividends than any
other Class.
CLASS B SHARES. If you buy Class B Shares, you will not pay a sales charge at
the time of purchase. If you sell your Class B Shares within the first 5 years
after they are bought, you will pay a sales charge of up to 5% of your shares'
value. See "Deferred Sales Charge Alternative--Class B Shares." This charge
declines to zero over a period of 5 years and may be waived under certain
conditions. Class B shares have higher Rule 12b-1 fees and pay lower dividends
than Class A and M Shares. Class B Shares automatically convert to Class A
Shares eight years after
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purchase. The Distributor intends to limit investments in Class B Shares to: (a)
$250,000 for any person; (b) $1 million for any unallocated employer sponsored
plan; and (c) $250,000 for each participant in any allocated qualified employer
sponsored plan, including 401(k) plans, provided such plan uses an approved
participant tracking system. 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, such entity has assets of over $10 million or more than 200
participant employees. Class B Shares will not be sold to anyone who is over 85
years old.
CLASS C SHARES. If you buy Class C Shares, you will not pay a sales charge at
the time of purchase. If you sell your Class C Shares within the first year
after they are bought, you will pay a sales charge of 1% of your shares' value.
See "Deferred Sales Charge Alternative--Class C Shares." Class C Shares have the
same Rule 12b-1 fees and pay comparable dividends as Class B Shares. Class C
Shares do not convert to any other Class of shares. Class C Shares are not
currently offered for all Phoenix Funds.
CLASS M SHARES. CLASS M SHARES ARE CLOSED TO NEW INVESTORS AND SUBSEQUENT
INVESTMENTS BY EXISTING SHAREHOLDERS. If you buy Class M Shares, you will pay a
sales charge at the time of purchase equal to 3.50% of the offering price (3.63%
of the amount invested). Class M Shares are not subject to any charges by the
Fund when they are sold. Class M Shares have lower Rule 12b-1 fees and pay
higher dividends than Class B and C Shares. Class M Shares do not convert to any
other Class of shares of the Fund. Class M Shares are not currently offered for
all Phoenix Funds.
WHAT ARRANGEMENT IS BEST FOR YOU?
The alternative purchase arrangement permits you to choose the method of
buying shares that is most beneficial to you given the amount of the purchase,
the length of time you expect to hold the shares, whether you wish to receive
distributions in cash or to reinvest them in additional shares, and other
circumstances. You should consider whether, during the anticipated term of your
investment, the accumulated continuing distribution and service fees and
contingent deferred sales charges of one Class would be more than the initial
sales charge and accumulated distribution and service fees of another Class of
shares bought at the same time. See "Distribution Plans" and "Fund Expenses."
INITIAL SALES CHARGE ALTERNATIVE--CLASS A AND M SHARES
The public offering price of Class A and M Shares is the net asset value plus
a sales charge that varies depending on the size of any "person's" (see "How To
Obtain Reduced Initial Sales Charges--Class A and M Shares: Combination Purchase
Privilege") purchase. Shares issued based on the automatic reinvestment of
income dividends or capital gains distributions are not subject to any sales
charges. The sales charge is divided between your investment dealer and the
Distributor as shown on the following tables.
CLASS A SHARES
SALES CHARGE AS
A PERCENTAGE OF
---------------
AMOUNT OF NET DEALER DISCOUNT
TRANSACTION OFFERING AMOUNT PERCENTAGE OF
AT OFFERING PRICE PRICE INVESTED OFFERING PRICE
- ----------------------------------------------------------------
Under $50,000 4.75% 4.99% 4.25%
$50,000 but under
$100,000 4.50 4.71 4.00
$100,000 but under
$250,000 3.50 3.63 3.00
$250,000 but under
$500,000 3.00 3.09 2.75
$500,000 but under
$1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None
CLASS M SHARES (CLOSED TO INVESTORS)
SALES CHARGE AS
A PERCENTAGE OF
---------------
AMOUNT OF NET DEALER DISCOUNT
TRANSACTION OFFERING AMOUNT PERCENTAGE OF
AT OFFERING PRICE PRICE INVESTED OFFERING PRICE
- ----------------------------------------------------------------
Under $50,000 3.50% 3.63% 3.00%
$50,000 but under
$100,000 2.50 2.56 2.00
$100,000 but under
$250,000 1.50 1.52 1.00
$250,000 but under
$500,000 1.00 1.01 1.00
$500,000 or more None None None
DEFERRED SALES CHARGE ALTERNATIVE--
CLASS B AND C SHARES
Class B and C Shares are purchased without an initial sales charge; however,
shares sold within a specified time period are subject to a declining contingent
deferred sales charge (the "CDSC") at the rates set forth below. The charge will
be multiplied by the then current market value or the initial cost of the Shares
being redeemed, whichever is less. No sales charge will be imposed on increases
in net asset value. In addition, shares issued based on the automatic
reinvestment of income dividends or capital gains distributions are not subject
to any sales charges. To minimize the CDSC, shares not subject to any charge
will be redeemed first, followed by shares held the longest time. The
Distributor will add up all shares bought in any month and use the last day of
the preceding month in calculating the amount of shares owned and time period
held for Class B Shares. The trade date will be used for purposes of aging Class
C Share investments.
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS B
SHARES
YEAR 1 2 3 4 5 6+
- ------------------------------------------------------------
CDSC 5% 4% 3% 2% 2% 0%
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS C
SHARES (THEME FUND ONLY)
YEAR 1 2+
- ---------------------------------
CDSC 1% 0%
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DEALER CONCESSIONS
In addition to the dealer discount on purchases of Class A and M Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. Your broker, dealer or investment adviser
may also charge you additional commissions or fees for their services in selling
shares to you provided they notify the Distributor of their intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Funds and/or for providing other shareholder services. Depending on the nature
of the services, these fees may be paid either from the Funds through
distribution fees, service fees or transfer agent fees or in some cases, the
Distributor may pay certain fees from its own profits and resources. From its
own profits and resources, the Distributor does intend to: (a) sponsor sales
contests, training and educational meetings and provide additional compensation
to qualifying dealers in the form of trips, merchandise or expense
reimbursements; (b) from time to time, pay special incentive and retention fees
to qualified wholesalers, registered financial institutions and third party
marketers; (c) pay broker-dealers an amount equal to 1% of the first $3 million
of Class A Share purchases by an account held in the name of a qualified
employee benefit plan with at least 100 eligible employees, 0.50% on the next $3
million, plus 0.25% on the amount in excess of $6 million; and (d) excluding
purchases as described in (c) above, pay broker-dealers an amount equal to 1% of
the amount of Class A Shares sold above $1 million but under $3 million, 0.50%
on the next $3 million, plus 0.25% on the amount in excess of $6 million. If
part or all of such investment, including investments by qualified employee
benefit plans, is subsequently redeemed within one year of the investment date,
the broker-dealer will refund to the Distributor such amounts paid with respect
to the investment. In addition, the Distributor may pay the entire applicable
sales charge on purchases of Class A Shares to selected dealers and agents.
HOW TO OBTAIN REDUCED INITIAL SALES CHARGES--CLASS A
AND M SHARES
Investors choosing Class A or M Shares may be entitled to reduced sales
charges. The five ways in which sales charges may be avoided or reduced are
described below.
QUALIFIED PURCHASERS. If you fall within any one of the following categories,
you will not have to pay a sales charge on your purchase of Class A or M Shares:
(1) any trustee, director or officer of the Phoenix Funds, Phoenix-Engemann
Funds, Phoenix-Seneca Funds or any other mutual fund advised, subadvised or
distributed by the Adviser, Distributor or any of their corporate affiliates (an
"Affiliated Phoenix Fund"); (2) any director or officer, or any full-time
employee or sales representative (for at least 90 days), of the Adviser or
Distributor; (3) registered representatives and employees of securities dealers
with whom Distributor has sales agreements; (4) any qualified retirement plan
exclusively for persons described above; (5) any officer, director or employee
of a corporate affiliate of the Adviser or Distributor; (6) any spouse, child,
parent, grandparent, brother or sister of any person named in (1), (2), (3) or
(5) above; (7) employee benefit plans for employees of the Adviser, Distributor
and/or their corporate affiliates; (8) any employee or agent who retires from
Phoenix Home Life, Distributor and/or their corporate affiliates; (9) any
account held in the name of a qualified employee benefit plan, endowment fund or
foundation if, on the date of the initial investment, the plan, fund or
foundation has assets of $10,000,000 or more or at least 100 eligible employees;
(10) any person with a direct rollover transfer of shares from an established
Phoenix Fund or any other Affiliated Phoenix Fund qualified plan; (11) any
Phoenix Home Life separate account which funds group annuity contracts offered
to qualified employee benefit plans; (12) any state, county, city, department,
authority or similar agency prohibited by law from paying a sales charge; (13)
any fully matriculated student in any U.S. service academy; (14) any unallocated
account held by a third party administrator, registered investment adviser,
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 or any other Affiliated Phoenix Fund if, in
connection with the purchases or redemption of the redeemed shares, the investor
paid a prior sales charge provided such investor supplies verification that the
redemption occurred within 90 days of the Phoenix Fund purchase and that a sales
charge was paid; (16) any deferred compensation plan established for the benefit
of any Phoenix Fund or any other Affiliated Phoenix Fund trustee or director;
provided that sales to persons listed in (1) through (16) above are made upon
the written assurance of the purchaser that the purchase is made for investment
purposes and that the shares so acquired will not be resold except to the Fund;
(17) purchasers of Class A or M Shares bought through 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;
(18) retirement plans and deferred compensation plans and trusts used to fund
those plans (including, for example, plans qualified or created under sections
401(a), 403(b) or 457 of the Internal Revenue Code), and "rabbi trusts" that buy
shares for their own accounts, in each case if those purchases are made through
a broker or agent or other financial intermediary that has made special
arrangements with the Distributor for such purchases; or (19) clients of
investment advisors or financial planners who buy shares for their own accounts
but only if their accounts are linked to a master account of their investment
advisor or
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<PAGE>
financial planner on the books and records of the broker, agent or financial
intermediary with which the Distributor has made such special arrangements (each
of the investors described in (17) through (19) may be charged a fee by the
broker, agent or financial intermediary for purchasing shares).
COMBINATION PURCHASE PRIVILEGE. Your purchase of any Class of shares of this
or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 403(b) plans
for the same employer; (d) multiple accounts (up to 200) under a qualified
employee benefit plan or administered by a third party administrator; or (e)
trust companies, bank trust departments, registered investment advisers, and
similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority and
which are held in a fiduciary, agency, custodial or similar capacity, provided
all shares are held of record in the name, or nominee name, of the entity
placing the order.
LETTER OF INTENT. If you sign a Letter of Intent, your purchase of any Class
of shares of this or any other Affiliated Phoenix Fund (other than Phoenix Money
Market Fund Series Class A Shares), if made by the same person within a 13-month
period, will be added together to determine whether you are entitled to an
immediate reduction in sales charges. Sales charges are reduced based on the
overall amount you indicate that you will buy under the Letter of Intent. The
Letter of Intent is a mutually nonbinding arrangement between you and the
Distributor. Since the Distributor doesn't know whether you will ultimately
fulfill the Letter of Intent, shares worth 5% of the amount of each purchase
will be set aside until you fulfill the Letter of Intent. When you buy enough
shares to fulfill the Letter of Intent, these shares will no longer be
restricted. If, on the other hand, you do not satisfy the Letter of Intent, or
otherwise wish to sell any restricted shares, you will be given the choice of
either buying enough shares to fulfill the Letter of Intent or paying the
difference between any sales charge you previously paid and the otherwise
applicable sales charge based on the intended aggregate purchases described in
the Letter of Intent. You will be given 20 days to make this decision. If you do
not exercise either election, the Distributor will automatically redeem the
number of your restricted shares needed to make up the deficiency in sales
charges received. The Distributor will redeem restricted Class A or M Shares
before Class C or B Shares, respectively. Oldest shares will be redeemed before
selling newer shares. Any remaining shares will then be deposited to your
account.
RIGHT OF ACCUMULATION. Your purchase of any Class of shares of this or any
other Affiliated Phoenix Fund, if made over time by the same person may be added
together to determine whether the combined sum entitles you to a prospective
reduction in sales charges. You must provide certain account information to the
Distributor to exercise this right.
ASSOCIATIONS. Certain groups or associations may be treated as a "person" and
qualify for reduced Class A Share sales charges. The group or association must:
(1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge; (3)
work through an investment dealer; or (4) not be a group whose sole reason for
existing is to consist of members who are credit card holders of a particular
company, policyholders of an insurance company, customers of a bank or a
broker-dealer or clients of an investment adviser.
HOW TO OBTAIN REDUCED DEFERRED SALES CHARGES--
CLASS B AND C SHARES
The CDSC is waived on the redemption (sale) of Class B and C Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section 72(m)(7);
(c) as a mandatory distribution upon reaching age 70 1/2 under any retirement
plan qualified under Code Sections 401, 408 or 403(B) or resulting from the
tax-free return of an excess contribution to an IRA; (d) by 401(k) plans using
an approved participant tracking system for participant hardships, death,
disability or normal retirement, and loans which are subsequently repaid; (e)
based on the exercise of exchange privileges among Class B and C Shares of this
or any other Affiliated Phoenix Fund; (f) based on any direct rollover transfer
of shares from an established Phoenix Fund qualified plan into a Phoenix Fund
IRA by participants terminating from the qualified plan; and (g) based on the
systematic withdrawal program (Class B Shares only). If, as described in
condition (a) above, an account is transferred to an account registered in the
name of a deceased's estate, the CDSC will be waived on any redemption from the
estate account occurring within one year of the death. If the Class B or C
Shares are not redeemed within one year of the death, they will remain subject
to the applicable CDSC.
CONVERSION FEATURE--CLASS B SHARES
Class B Shares will automatically convert to Class A Shares of the same Fund
eight years after they are bought. Conversion will be on the basis of the then
prevailing net asset value of Class A and B Shares. There is no sales load, fee
or other charge for this feature. Class B Shares acquired through dividend or
distribution reinvestments will be
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<PAGE>
converted into Class A Shares at the same time that other Class B Shares are
converted based on the proportion that the reinvested shares bear to purchased
Class B Shares. The conversion feature is subject to the continuing availability
of an opinion of counsel or a ruling of the Internal Revenue Service that the
assessment of the higher distribution fees and associated costs with respect to
Class B Shares does not result in any dividends or distributions constituting
"preferential dividends" under the Code, and that the conversion of shares does
not constitute a taxable event under federal income tax law. If the conversion
feature is suspended, Class B Shares would continue to be subject to the higher
distribution fee for an indefinite period. Even if the Funds were unable to
obtain such assurances, it might continue to make distributions if doing so
would assist in complying with its general practice of distributing sufficient
income to reduce or eliminate federal taxes otherwise payable by the Funds.
INVESTOR ACCOUNT SERVICES
The Funds mail 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 Funds' 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 Fund currently declares all income dividends and
all capital gain distributions, if any, payable in shares of the Fund at net
asset value or, at 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 tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the month
at the closing net asset value on the date of redemption. The Systematic
Withdrawal Program also provides for redemptions to be tendered on or about the
10th, 15th or 25th of the month with proceeds to be directed through Automated
Clearing House (ACH) to your bank account. In addition to the limitations stated
below, withdrawals may not be less than $25 and minimum account balance
requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Fund worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. Participants
in the Program redeeming Class C Shares will be subject to any applicable
contingent deferred sales charge. The purchase of shares while participating in
the withdrawal program will ordinarily be disadvantageous to the Class A or M
Shares investor since a sales charge will be paid by the investor on the
purchase of Class A or M Shares at the same time as other shares are being
redeemed. For this reason, investors in Class A or M 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 Funds are offered in connection
with the following qualified prototype retirement plans: IRA, Rollover IRA,
SEP-IRA, SIMPLE IRA, Roth IRA, SIMPLE 401(k), Profit-Sharing and Money Purchase
Pension Plans which can be adopted by self-employed persons ("Keogh") and by
corporations
24
<PAGE>
and 403(b) Retirement Plans. Write or call Equity Planning at (800) 243-4361 for
further information about the plans.
EXCHANGE PRIVILEGES
You may exchange shares of one Phoenix Fund for shares of another Phoenix
Fund or any other Affiliated 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 or any other Affiliated Phoenix Fund, 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 Transfer Agent. 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 Affiliated Phoenix Fund has different investment objectives and
policies. You should read the prospectus of the Affiliated 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 Funds reserve 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 Transfer Agent 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 Trust and/or Transfer
Agent 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 Transfer
Agent 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 Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The net asset value per share of a Fund is
determined by adding the values of all securities and other assets of the Fund,
subtracting liabilities, and dividing by the total number of outstanding shares
of the Fund. 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
Fund, and the resulting amount of each is divided by the number of shares of
that Class outstanding to produce the net asset value per share.
The Funds' 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 Trust 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, or an authorized agent. In the
case of a Class B or C Share redemption, you will be subject to the applicable
deferred sales charge, if any, for such shares (see "Deferred Sales Charge
Alternative--Class B and C 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.
25
<PAGE>
The Trust 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?
[phone] By Phone o Sales up to $50,000
o Not available on most retirement accounts
(800) 243-1574 o Requests received after 4PM will be executed on the
following business day
[letter] In Writing o Letter of instruction from the registered owner
including the fund and account number and the number of
shares or dollar amount you wish to sell
o 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 Trust 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 Trust 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
Trust 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.
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.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the Funds may make
payment of the redemption price either in cash or in kind. However, the Funds
have elected to pay in cash all requests for redemption by any shareholder of
record, limited in respect to each shareholder during any 90 day period to the
lesser of $250,000 or 1% of the net asset value of the Funds at the beginning of
such period. This election has been made pursuant to Rule 18f-1 under the
Investment Company Act of 1940 and is irrevocable while the Rule is in effect
unless the Securities and Exchange Commission, by order, permits the withdrawal
thereof. In case of a redemption in kind, securities delivered in payment for
shares would be readily marketable and valued at the same value assigned to them
in computing the net asset value per share of the Funds. A shareholder receiving
such securities would incur brokerage costs when selling the securities.
ACCOUNT REINSTATEMENT PRIVILEGE
You have a one time privilege of using redemption proceeds from Class A, B, C
and M Shares to purchase Class A Shares of any Affiliated 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.
26
<PAGE>
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
30 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 Fund is treated as a separate entity for federal income tax purposes.
Each Fund 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 Fund qualified as a RIC for
its most recent fiscal year. In addition, each Fund 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 Fund 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 Fund will qualify as a RIC.
Each Fund intends to make distributions from net investment income
semiannually, and intends to distribute net realized capital gains, if any, on
an annual basis.
Each Fund will be subject to a nondeductible 4% excise tax if it fails to
meet certain calendar year distribution requirements. In order to prevent
imposition of the excise tax, it may be necessary for the Funds 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 Funds
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 Fund,
generally are subject to federal income tax and may be subject to state, local,
and other taxes. Shareholders will be notified annually about the amount and
character of distributions made to them by a Fund.
Long-term capital gains, if any, distributed to shareholders and which are
designated by a Fund as capital gain distributions, are taxable to shareholders
as long-term capital gain distributions regardless of the length of time shares
of the Fund have been held by the shareholder. Distributions of short-term
capital gains and net investment income, if any, are taxable to shareholders as
ordinary income.
Dividends and distributions generally will be taxable to shareholders in the
taxable year in which they are received. However, dividends and distributions
declared by a Fund in October, November or December of any calendar year, with a
record date in such a month, and paid during the following January, will be
treated as if they were paid by the Fund and received by shareholders on
December 31 of the calendar year in which they were declared.
A redemption or other disposition (including an exchange) of shares of a Fund
generally will result in the recognition of a taxable gain or loss, which will
be a long- or short-term capital gain or loss (assuming the shares were a
capital asset in the hands of the shareholder), depending upon a shareholder's
holding period for his or her shares. In addition, if shares of a Fund are
disposed of at a loss and are replaced (either through purchases or through
reinvestment of dividends) within a period commencing 30 days before and ending
30 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 Fund and their shareholders. In addition to the federal
income tax consequences described above, which are applicable to any investment
in the Funds, 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.
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 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 Funds reserve the right to refuse to open an account for any person
failing to provide a taxpayer identification number along with the required
certifications.
Each Fund 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 TRUST
The Trust was organized under Massachusetts law in 1986 as a business trust.
On August 29, 1986, the Trust purchased all of the assets and assumed all of the
liabilities of the Stock Series of National Securities Funds. National
27
<PAGE>
Securities Funds, as such, had been in existence since 1940. The Trust continued
the business of the Stock Series under the name "National Stock Fund." The
Trustees subsequently voted to change the name of the Trust 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 Trust to "Phoenix Strategic Equity Series Fund."
The Declaration of Trust provides that the Trust'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. This Prospectus offers three series of the
Trust. The Equity Opportunities Fund and the Small Cap Fund offer Class A and
Class B Shares. The Strategic Theme Fund offers Class A, Class B, Class C Shares
and a fourth Class, Class M Shares, which is closed to new investors and
subsequent investments by existing shareholders.
The shares of the Trust, 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
Trust voting for the election of Trustees can elect all of the Trustees of the
Trust 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 Trust, 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 Trust'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 Trust 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 Trust, but the "Trust Property" only shall be
liable.
ADDITIONAL INQUIRIES
Inquiries and requests for the Statement of Additional Information, the
Annual Report to Shareholders and the Semiannual Report to Shareholders should
be directed to Equity Planning at (800) 243-4361 or 100 Bright Meadow Boulevard,
P.O. Box 2200, Enfield, Connecticut 06083-2200.
REGISTRATION STATEMENT
This Prospectus omits certain information included in the Statement of
Additional Information and Part C of the Registration Statement filed with the
Securities and Exchange Commission under the Securities Act of 1933 and the 1940
Act. A copy of the Registration Statement may be obtained from the Securities
and Exchange Commission in Washington, D.C.
28
<PAGE>
BACKUP WITHHOLDING INFORMATION
Step 1. Please make sure that the social security number or taxpayer
identification number (TIN) which appears on the Application complies
with the following guidelines:
<TABLE>
<CAPTION>
Account Type Give Social Security Number or Tax Identification Number of:
- ------------------------------------ ------------------------------------------------------------------------------------------
<S> <C>
Individual Individual
- ------------------------------------ ------------------------------------------------------------------------------------------
Joint (or Joint Tenant) Owner who will be paying tax
- ------------------------------------ ------------------------------------------------------------------------------------------
Uniform Gifts to Minors Minor
- ------------------------------------ ------------------------------------------------------------------------------------------
Legal Guardian Ward, Minor or Incompetent
- ------------------------------------ ------------------------------------------------------------------------------------------
Sole Proprietor Owner of Business (also provide owner's name)
- ------------------------------------ ------------------------------------------------------------------------------------------
Trust, Estate, Pension Plan Trust Trust, Estate, Pension Plan Trust (not personal TIN of fiduciary)
- ------------------------------------ ------------------------------------------------------------------------------------------
Corporation, Partnership,
Other Organization Corporation, Partnership, Other Organization
- ------------------------------------ ------------------------------------------------------------------------------------------
Broker/Nominee Broker/Nominee
- ------------------------------------ ------------------------------------------------------------------------------------------
</TABLE>
Step 2. If you do not have a TIN, you must obtain Form SS-5 (Application for
Social Security Number) or Form SS-4 (Application for Employer
Identification Number) from your local Social Security or IRS office
and apply for one. Write "Applied For" in the space on the application.
Step 3. If you are one of the entities listed below, you are exempt from
backup withholding.
o A corporation
o Financial institution
o Section 501(a) exempt organization (IRA, Corporate Retirement Plan,
403(b), Keogh)
o United States or any agency or instrumentality thereof
o A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof
o International organization or any agency or instrumentality thereof
o Registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
o Real estate investment trust
o Common trust fund operated by a bank under section 584(a)
o An exempt charitable remainder trust, or a nonexempt trust described
in section 4947(a)(1)
o 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 "Trust") 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 Trust, dated August
28, 1998. The Statement contains more detailed information about the Trust and
is incorporated into this Prospectus by reference. You may obtain a free copy of
the Statement by writing the Trust c/o Phoenix Equity Planning Corporation, 100
Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200 or by
calling (800) 243-4361.
Financial information relating to the Trust is contained in the Annual Report to
Shareholders for the year ended April 30, 1998 and is incorporated into the
Statement of Additional Information by reference.
[recycle logo] Printed on recycled paper using soybean ink
<PAGE>
------------------
PHOENIX FUNDS BULK RATE MAIL
PO Box 2200 U.S. POSTAGE
Enfield CT 06083-2200 PAID
SPRINGFIELD, MA
PERMIT NO. 444
------------------
[Phoenix logo] PHOENIX
INVESTMENT PARTNERS
PXP 690 (8/98)
<PAGE>
PHOENIX EQUITY OPPORTUNITIES FUND
PHOENIX STRATEGIC THEME FUND
PHOENIX SMALL CAP FUND
101 Munson Street
Greenfield, MA 01301
Statement of Additional Information
August 28, 1998
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of the
Phoenix Strategic Equity Series Fund (the "Trust"), dated August 28, 1998, and
should be read in conjunction with it. The Trust'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 TRUST.................................................................. 1
INVESTMENT OBJECTIVES AND POLICIES......................................... 1
INVESTMENT RESTRICTIONS.................................................... 1
INVESTMENT TECHNIQUES...................................................... 2
PERFORMANCE INFORMATION ................................................... 8
PORTFOLIO TRANSACTIONS AND BROKERAGE....................................... 9
SERVICES OF THE ADVISER.................................................... 11
NET ASSET VALUE............................................................ 11
HOW TO BUY SHARES.......................................................... 12
ALTERNATIVE PURCHASE ARRANGEMENTS.......................................... 12
INVESTOR ACCOUNT SERVICES.................................................. 13
REDEMPTION OF SHARES....................................................... 14
DIVIDENDS, DISTRIBUTIONS AND TAXES......................................... 14
TAX SHELTERED RETIREMENT PLANS............................................. 15
THE DISTRIBUTOR............................................................ 15
DISTRIBUTION PLANS......................................................... 16
TRUSTEES AND OFFICERS ..................................................... 17
OTHER INFORMATION.......................................................... 26
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PXP731 (8/98)
<PAGE>
THE TRUST
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 Trust's Prospectus describes the investment objectives of
the Phoenix Equity Opportunities Fund (the "Equity Opportunities Fund"), the
Phoenix Strategic Theme Fund (the "Theme Fund"), and the Phoenix Small Cap Fund
(the "Small Cap Fund"). The Equity Opportunities Fund, Theme Fund and Small Cap
Fund are sometimes collectively referred to as the "Funds." The following
discussion supplements the description of these Funds and investment policies
and investment techniques in the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
As discussed in the Prospectus, the investment objective of each Fund 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 Fund. Investment
restrictions described in this Statement of Additional Information are
fundamental policies of each Fund and may not be changed as to any Fund without
the approval of such Fund's shareholders. There is no assurance that any Fund
will meet its investment objective.
INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES
The following investment restrictions constitute fundamental policies of each
Fund (unless otherwise indicated) which may be changed only upon approval by the
holders of a majority of the outstanding shares of each Fund's shareholders. No
Fund may:
1. Borrow money, except that the Theme Fund and Small Cap Fund may borrow
money for investment purposes, provided that any such borrowing for investment
purposes with respect to such Fund is (a) authorized by the Trustees prior to
any public distribution of the shares of such Fund or is authorized by the
shareholders of such Fund thereafter, (b) is limited to 33 1/3% of the value
of the total assets (taken at market value) of such Fund, and (c) is subject to
an agreement by the lender that any recourse is limited to the assets of that
Fund 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 Fund 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 Fund 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 Trust or the
Adviser, subject to conditions established by the Adviser (see "Lending of
Securities") and enter into repurchase transactions (in accordance with the
Trust'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 Fund 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 Fund would be
invested in securities of a single issuer;
13. Purchase any security if, as a result, more than 10% of any class of
securities or more than 10% of the outstanding voting securities of any issuer
would be held;
14. Purchase any security for the Equity Opportunities Fund 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 Fund 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 Trust 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 Trust 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 Fund's 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 Funds may utilize the following practices or techniques in pursuing its
investment objectives.
REPURCHASE AGREEMENTS
Repurchase Agreements are agreements by which the Funds 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 Funds
maintained in a central depository of book-entry system or by physical delivery
of the securities to the Trust's 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 Fund, if the seller of the repurchase agreement defaults and does not
repurchase the underlying securities, the Fund 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 Funds 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 Fund normally will
have expiration dates between three and nine months from the date written.
During the option period a Fund may be assigned an exercise notice by the
broker-dealer through which the call option was sold, requiring the Fund 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 Fund effects a
closing purchase transaction. A closing purchase transaction cannot be effected
with respect to an option once the Fund has received an exercise notice.
The exercise price of a call option written by a Fund 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 Fund 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 Fund to prevent an underlying
security from being called, or to enable a Fund to write another call option
with either a different exercise
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price or expiration date or both. A Fund may realize a net gain or loss from a
closing purchase transaction depending upon whether the amount of the premium
received on the call option is more or less than the cost of effecting the
closing purchase transaction. If a call option written by a Fund expires
unexercised, a Fund will realize a gain in the amount of the premium on the
option less the commission paid.
The option activities of a Fund may increase its portfolio turnover rate and
the amount of brokerage commissions paid. A Fund 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 Fund may write call options only if they are
covered and if they remain covered so long as a Fund is obligated as a writer.
If a Fund writes a call option on an individual security, a Fund will own the
underlying security at all times during the option period. A Fund 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 Fund 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 Fund, a Fund will be required to deposit qualified securities. A
"qualified security" is a security against which a Fund has not written a call
option and which has not been hedged by a Fund 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 Fund will deposit an amount of cash
or liquid assets equal in value to the difference. In addition, when a Fund
writes a call on an index which is "in-the-money" at the time the call is
written, a Fund 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 Fund's 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 Fund may invest up to 5% of its total assets in exchange-traded or
over-the-counter call and put options. A Fund 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 Fund qualifying as a regulated investment company under
the Internal Revenue Code, other restrictions on a Fund's 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 Fund may lose
the premium it paid plus transaction costs. If a Fund 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 Fund 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 Fund, 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 Fund or all
of the Funds, 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 Fund 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 Fund 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 Fund 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 Fund. However, it is the Trust'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 Fund will write call options on indices only subject to the
limitations described above.
Price movements in securities in a Fund's portfolio will not correlate
perfectly with movements in the level of the index and, therefore, a Fund bears
the risk that the price of the securities held by the Fund may not increase as
much as the level of the index. In this event, the Fund would bear a loss on the
call which would not be completely offset by movements in the prices of a Fund's
portfolio securities. It is also possible that the index may rise when the value
of a Fund's portfolio securities does not. If this occurred, the Fund 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 Fund has other liquid assets which are sufficient to satisfy the
exercise of a call on an index, a Fund 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 Fund 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 Fund has written a call on an index, there is also a risk that the
market may decline between the time a Fund 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 Fund is able to sell securities in its portfolio. As
with options on portfolio securities, a Fund 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 Fund would be able to deliver the underlying security
in settlement, a Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 Fund's 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 Fund may wish to purchase in the future by purchasing futures contracts.
These Funds 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 Fund purchases or sells a security, no
security is delivered or received by these Funds upon the purchase or sale of a
financial futures contract. Initially, these Funds 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 Fund 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 Fund 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 Fund 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 Fund's existing futures and related options positions and the
premiums paid for related options would exceed 5% of the market value of that
Fund's 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
noninvestment grade debt so long as the asset is liquid, unencumbered and marked
to market daily ("liquid assets"), equal to the market value of the futures
contract minus a Fund's initial margin deposit with respect thereto will be
deposited in a pledged account with the Trust's custodian bank to collateralize
fully the position and thereby ensure that it is not leveraged.
The extent to which a Fund 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 Fund 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 Fund would continue to be required to make daily margin payments. In
this situation, if a Fund 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 Fund 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
Fund's 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 Fund to incur additional brokerage
commissions and may cause an increase in a Fund's 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 Fund or such
prices move in a direction opposite to that anticipated, a Fund 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 Fund's return for the period may be
less than if it had not engaged in the hedging transaction.
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Utilization of futures contracts by a Fund involves the risk of imperfect
correlation in movements in the price of futures contracts and movements in the
price of the securities which are being hedged. If the price of the futures
contract moves more or less than the price of the securities being hedged, a
Fund 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 Fund 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 Fund's portfolio may
decline. If this occurred, a Fund 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 Fund 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 Fund 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 Fund 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 Fund
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 Fund 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 Funds may, from time to time, increase the Theme Fund's and Small Cap
Fund's ownership of securities holdings above the amounts otherwise possible by
borrowing from banks at fixed amounts of interest and investing the borrowed
funds. These Funds will borrow only from banks, and only if immediately after
such borrowing the value of the assets of these Funds (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 Funds to borrow up to 33 1/3% of the net assets of
these Funds, 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 Fund's assets computed as provided above becomes at any time less
than three times the amount of the borrowings for investment purposes, these
Funds, 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 Funds with respect to
which the borrowing has been made. Because such expense would not otherwise be
incurred, the net investment income of such Funds 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 Fund 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 Funds' 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 Funds, the net
asset value of these Funds will decrease faster than would otherwise be the
case.
FOREIGN SECURITIES
Each of the Funds 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 Fund (provided,
however, the Theme Fund may invest up to 35% of its total assets in the
securities of foreign issuers). Investments in foreign securities, particularly
those of nongovernmental 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.
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The Trust 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 Funds' foreign securities transactions. The use of a foreign
custodian invokes considerations which are not ordinarily associated with
domestic custodians. These considerations include the possibility of
expropriations, restricted access to books and records of the foreign custodian,
inability to recover assets that are lost while under the control of the foreign
custodian, and the impact of political, social or diplomatic developments.
LOWER RATED CONVERTIBLE SECURITIES
Convertible securities which are not rated in the four highest categories, in
which a Fund 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 Fund and Small Cap
Fund 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 Fund's 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 Fund 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 Fund 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 Fund 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 Fund. The Trust's
custodian bank will be instructed to pledge liquid assets 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 Fund's commitments with respect to such contracts. Generally, no
Fund 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 Fund 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 Fund 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 Fund 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 Fund 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 Fund may use foreign currency
futures contracts and options on such futures contracts. Through the purchase or
sale of such contracts, a Fund 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 Fund will maintain in a pledged account any asset,
including
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equity securities and noninvestment 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 Fund will
not enter into a futures contract or purchase an option thereon if immediately
thereafter the initial margin deposits for futures contracts (including foreign
currency and all other futures contracts) held by the Fund plus premiums paid by
it for open options on futures would exceed 5% of the Fund's total assets. No
Fund 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 Fund 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 Fund 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 Fund 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 Fund should be considered as a long-term investment and not as a
vehicle for seeking short-term profits, nor should an investment in the Fund 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 Fund's shares. The Fund 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 Funds anticipate increasing their
exposure, the Funds 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 Funds 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 each of the Funds, industry classifications are established by reference
to the Directory of Companies Filing Annual Reports published by the SEC.
PERFORMANCE INFORMATION
The Funds may, from time to time, include total return in advertisements or
reports to shareholders or prospective investors. Performance information in
advertisements and sales literature may be expressed as the yield of a Class or
Fund and as the total return of any Class or Fund.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in such Class of Shares of a Fund
over periods of 1, 5 and 10 years or up to the life of a Fund, 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 and Class M Shares and the maximum contingent deferred sales
charge applicable to a complete redemption of the investment in the case of
Class B and Class C Shares, and assume that all dividends and distributions are
reinvested when paid. Performance data quoted for Class C and Class M Shares
covering periods prior to the
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inception of Class C and Class M Shares will reflect historical performance of
Class A Shares adjusted for the higher operating expenses applicable to Class C
and Class M Shares.
The Funds 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 Funds 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 Business 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 Funds
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 Funds
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 Funds and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Funds to
respond quickly to changing market and economic conditions. From time to time,
the Funds may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Funds 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 Fund's portfolio; or compare a 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 Fund for the 1, 5 and 10 year periods ended April
30, 1998, the average annual total return of the Class A Shares was 37.86%,
13.00% and 13.10%, respectively. Class B average annual total return for the 1
year period and since inception July 19, 1994 to April 30, 1998 was 39.58% and
16.39%, respectively. The Theme Fund's 1 year average annual return and since
inception October 16, 1995 for Class A shares was 29.75% and 19.31% and, for
Class B Shares was 31.18% and 19.83%, respectively. Class C and Class M Shares
average annual total return since inception November 3, 1997 to April 30, 1998
was 7.02% and 4.37%, respectively. The Small Cap Fund's 1 year average annual
return and from inception October 16, 1995 for Class A shares was 45.14% and
32.79% and for Class B Shares was 47.16% and 33.61%, respectively. Performance
information reflects only the performance of a hypothetical investment in each
Class during the particular time period on which the calculations are based.
Performance information should be considered in light of the Fund's investment
objectives and policies, characteristics and quality of the portfolio, and the
market condition during the given time period, and should not be considered as a
representation of what may be achieved in the future.
The Funds may also compute aggregate cumulative total return for specified
periods based on a hypothetical Class A, Class B, Class C or Class M 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 and Class M Shares' maximum sales charge of 4.75% and 3.50%, respectively, and
assumes reinvestment of all income dividends and capital gain distributions
during the period. Based on the foregoing for the Equity Opportunities Fund, the
Class A Share's aggregate cumulative total return quotation for the period
commencing August 1, 1944 and ending April 30, 1998 was 29,023.91%.
The Funds also may quote annual, average annual and annualized total return
and aggregate total return performance data, for each Class of shares of the
Funds, 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 Adviser places orders for the purchase and sale of securities, supervises
their execution and negotiates brokerage commissions on behalf of the Funds. It
is the practice of the Adviser to seek the best prices and execution of orders
and to negotiate brokerage commissions which the Adviser's opinion are
reasonable in relation to the value of the brokerage services provided by the
executing broker. Brokers who have executed orders for the Funds are asked to
quote a fair commission for their services. If the execution is satisfactory and
if the requested rate approximates rates currently being quoted by the other
brokers selected by the Adviser, the rate is deemed by the Adviser to be
reasonable. Brokers may ask for higher rates of commission if all or a portion
of the securities involved in the transaction are positioned by the broker, if
the broker believes it has brought the Funds an unusually favorable trading
opportunity, or if the broker regards its research services as being of
exceptional value, and payment of such commissions is
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authorized by the Adviser after the transaction has been consummated. If the
Adviser more than occasionally differs with the broker's appraisal of
opportunity or value, the broker would not be selected to execute trades in the
future.
The Adviser believes that the Funds benefit with a securities industry
comprised of many and diverse firms and that the long-term interest of
shareholders of the Funds is best served by its brokerage policies which include
paying a fair commission rather than seeking to exploit its leverage to force
the lowest possible commission rate. The primary factors considered in
determining the firms to which brokerage orders are given are the Adviser's
appraisal of: the firm's ability to execute the order in the desired manner; the
value of research services provided by the firm; and the firm's attitude toward
and interest in mutual funds in general, including the sale of mutual funds
managed and sponsored by the Adviser. The Adviser does not offer or promise to
any broker an amount or percentage of brokerage commissions as an inducement or
reward for the sale of shares of the Funds. Over-the-counter purchases and sales
are transacted directly with principal market-makers except in those
circumstances where in the opinion of the Adviser better prices and execution
are available elsewhere.
The Trust 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 Trust. 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
Trust'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 Trust. 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 Trust 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 Trust
and indirectly by shareholders. The Portfolio turnover for the fiscal years
ended April 30, 1997 and 1998 for the Equity Opportunities Fund was 412% and
371%, respectively. The Portfolio turnover for the fiscal years ended April 30,
1997 and 1998 for the Small Cap Fund was 325% and 498%, respectively. The
Portfolio turnover for the fiscal years ended April 30, 1997 and 1998 for the
Strategic Theme Fund was 532% and 618%, respectively. The management of the
Funds is no longer conducted by the same persons who managed the Funds during
that period, and the Adviser believes that Portfolio turnover will be reduced.
During the fiscal years ended April 30, 1996, 1997 and 1998, brokerage
commissions paid by the Funds totalled $1,208,440, $2,686,635 and $3,579,420,
respectively. During the same periods, no commissions were paid to the
Distributor. Brokerage commissions of $1,889,725 paid during the fiscal year
ended April 30, 1998 were paid on portfolio transactions aggregating
$1,583,452,304 executed by brokers who provided research and other statistical
and factual information.
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SERVICES OF THE ADVISER
The offices of Phoenix Investment Counsel, Inc., (PIC) are located at 56
Prospect Street, Hartford, Connecticut 06115. PIC serves as investment adviser
to 33 mutual funds within the Phoenix Family of mutual funds and as adviser or
subadviser to other mutual funds and the accounts of institutional investors.
Effective June 1, 1998, National Securities & Research Corporation
("National") assigned its investment advisory agreement for the Equity
Opportunities Fund to PIC. PIC and National are both subsidiaries of Phoenix
Investment Partners, Ltd. (formerly Phoenix Duff & Phelps Corporation). Phoenix
Home Life Mutual Insurance Company ("Phoenix Home Life") owns a majority
interest in Phoenix Investment Partners, Ltd. 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 Adviser provides certain services and facilities required to carry on the
day-to-day operations of the Funds (for which it receives 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 Trust's registration statement (but the
Distributor purchases such copies of the Funds' prospectuses and reports and
communications to shareholders as it may require for sales purposes); insurance
expense; association membership dues; brokerage fees; and taxes.
Each Fund will pay expenses incurred in its own operation and will also pay a
portion of the Trust's administration expenses allocated on the basis of the
asset values of the respective Fund.
As compensation for its services, PIC receives a fee from the Equity
Opportunities Fund, which is accrued daily against the value of the Fund's net
assets and is paid by the Fund monthly. The fee is computed at an annual rate of
.70% of the Fund's average daily net assets of up to $1 billion, .65% of the
Fund's average daily net assets from $1 billion to $2 billion, and .60% of the
Fund's average net assets in excess of $2 billion. For the fiscal years 1996,
1997 and 1998 the net management fees paid by the Fund to National were
$1,394,239, $1,408,901 and $1,326,599, respectively.
For managing the investments, or directing the management of the investments
of the Theme Fund and the Small Cap Fund, PIC is entitled to a monthly fee at
the annual rate of 0.75% of the average daily net asset values of the Funds 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, 1997 and 1998,
the combined management fee paid by the Theme Fund and Small Cap Fund was
$295,479, $2,736,920 and $3,626,998, respectively.
The Management Agreement with National was approved by the Trustees on March
16, 1993 and by the shareholders of the Equity Opportunities Fund on April 30,
1993. The Management Agreement with PIC was approved by the Trustees 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 or (b) vote of a
majority of the outstanding securities of the Trust (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 Trust 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 Trust 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.
Philip R. McLoughlin, a trustee and officer of the Fund, is also a director
of the Adviser. Michael E. Haylon and William R. Moyer, officers of the Fund,
are also directors and officers of the Adviser. G. Jeffrey Bohne, Nancy G.
Curtiss, J. Roger Engemann, Timothy M. Heaney, Ron K. Jacks, William E. Keen,
III, Richard D. Little, James E. Mair, Leonard J. Saltiel, Gail P. Seneca,
Thomas N. Steenburg, John S. Tilson, Pierre G. Trinque and James D. Wehr,
officers of the Fund, are also officers of the Adviser.
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Funds do not price securities on
weekends or United States national holidays, the net asset value of a Fund's
foreign assets may be significantly affected on days when the investor has no
access to the Funds. The net asset value per share of a Fund is determined by
adding the values of all securities and other assets of the Fund, subtracting
liabilities, and dividing by the total number of outstanding shares of the Fund.
Assets and liabilities are determined in accordance with generally accepted
accounting principles and applicable rules and regulations of the Securities and
Exchange Commission. The total liability allocated to a Class, plus that Class's
distribution fee and any other expenses allocated solely to that Class, are
deducted from the proportionate interest of such Class in the assets of the
Fund, and the resulting amount of each is divided by the number of shares of
that Class outstanding to produce the net asset value per share.
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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 Fund which invests in
foreign securities contemporaneously with the determination of the prices of the
majority of the portfolio securities of such Fund. All assets and liabilities
initially expressed in foreign currency values will be converted into United
States dollar values at the mean between the bid and ask quotations of such
currencies against United States dollars as last quoted by any recognized
dealer. If an event were to occur after the value of an investment was so
established but before the net asset value per share was determined, which was
likely to materially change the net asset value, then the instrument would be
valued using fair value considerations by the Trustees or their delegates. If at
any time a Fund has investments where market quotations are not readily
available, such investments are valued at the fair value thereof as determined
in good faith by the Trustees although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent investment
is $25. However, both the minimum initial and subsequent investment amounts are
$25 for investments pursuant to the "Investo-Matic" plan, a bank draft investing
program administered by Distributor, or pursuant to the Systematic Exchange
privilege or for an individual retirement account (IRA). In addition, there are
no subsequent investment minimum amounts in connection with the reinvestment of
dividend or capital gain distributions. Completed applications for the purchase
of shares should be mailed to: Phoenix Funds, c/o State Street Bank and Trust
Company, P.O. Box 8301, Boston, MA 02266-8301.
The Trust has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
ALTERNATIVE PURCHASE ARRANGEMENTS
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"). Orders received by dealers prior to the close of
trading on the New York Stock Exchange 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 alternative purchase arrangements permit an investor to choose the method
of purchasing shares that is more beneficial given the amount of the purchase,
the length of time the investor expects to hold the shares, whether the investor
wishes to receive distributions in cash or to reinvest them in additional shares
of the Funds, and other circumstances. Investors should consider whether, during
the anticipated life of their investment in a Fund, the accumulated continuing
distribution services fee and contingent deferred sales charges on Class B or C
Shares would be less than the initial sales charge and accumulated distribution
services fee on Class A or M Shares purchased at the same time. NOTE, ONLY THE
THEME FUND OFFERS CLASS C SHARES AND CLASS M SHARES ARE CLOSED TO NEW INVESTORS
AND SUBSEQUENT INVESTMENTS.
Dividends paid by the Funds, if any, with respect to each Class of Shares
will be calculated in the same manner at the same time on the same day, except
that fees such as higher distribution fees and any incremental transfer agency
costs relating to each Class of Shares will be borne exclusively by that Class.
See "Dividends, Distributions and Taxes."
CLASS A SHARES
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed. Class A
Shares are subject to ongoing distribution and service fees at an annual rate of
up to 0.30% of the Funds' aggregate average daily net assets attributable to the
Class A Shares; however, the Distributor has voluntarily agreed to waive 0.05%
of the fees for the current fiscal year. In addition, certain purchases of Class
A Shares qualify for reduced initial sales charges. See the Funds' current
Prospectus for additional information.
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 Funds' current Prospectus for additional
information.
Class B Shares are subject to ongoing distribution and service fees at an
aggregate annual rate of up to 1.00% of the Funds' aggregate average daily net
assets attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment is
made. The higher ongoing distribution and service fees paid by Class B Shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than
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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 Funds Prospectus. The purpose of the
conversion feature is to relieve the holders of the Class B Shares that have
been outstanding for a period of time sufficient for the adviser and the
Distributor to have been compensated for distribution expenses related to the
Class B Shares from most of the burden of such distribution related expenses.
Class B Shares include all shares purchased, pursuant to the deferred sales
charge alternative, which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and service fees. Such
conversion will be on the basis of the relative net asset value of the two
Classes without the imposition of any sales load, fee or other charge.
For purposes of conversion to Class A, shares 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
subaccount. Each time any Class B Shares in the shareholder's Fund account
(other than those in the subaccount) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the subaccount will also convert to
Class A Shares.
CLASS C SHARES (THEME FUND ONLY)
Class C Shares are purchased without an initial sales charge but are subject
to a deferred sales charge if redeemed within one year of purchase. The deferred
sales charge may be waived in connection with certain qualifying redemptions.
Shares issued in conjunction with the automatic reinvestment of income
distributions and capital gain distributions are not subject to any sales
charges. Class C Shares are subject to an ongoing distribution and services fee
at an aggregate annual rate of up to 1.00% of the Fund's aggregate average daily
net assets attributable to Class C Shares. See the Funds' current Prospectus for
more information.
CLASS M SHARES (THEME FUND ONLY)
CLASS M SHARES ARE CLOSED TO NEW INVESTORS AND SUBSEQUENT INVESTMENTS. Class
M Shares incur a sales charge at the time of purchase but are not subject to any
sales charge when redeemed. Certain purchases of Class M Shares may qualify for
reduced initial sales charges as described in the Funds' Prospectus. Class M
Shares are subject to ongoing distribution and service fees at an aggregate
annual rate of up to 0.50% of the Fund's aggregate average daily net assets
attributable to Class M Shares.
INVESTOR ACCOUNT SERVICES
The Funds offer combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange privileges as
described in the Funds' 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 Affiliated Phoenix Fund may be
exchanged for shares of the same Class of another Affiliated Phoenix Fund on the
basis of the relative net asset values per share at the time of the exchange.
Exchanges are subject to the minimum initial investment requirement of the
designated 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 Affiliated Phoenix Fund, if currently offered. Exchanges will be based
upon each fund's net asset value per share next computed after the close of
business, without sales charge. 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 Affiliated Phoenix Fund automatically on a
monthly, quarterly, semiannual or annual basis or may cancel this privilege at
any time. If you maintain an account balance of at least $5,000, or $2,000 for
tax qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that shares be
automatically exchanged at predetermined intervals for shares of the same Class
of another Affiliated Phoenix Fund. This requirement does not apply to Phoenix
"Self Security" program participants. Systematic exchanges will be executed upon
the close of business on the 10th day of each month or the next succeeding
business day. Systematic exchange forms are available from the Distributor.
DIVIDEND REINVESTMENT ACROSS ACCOUNTS
If you maintain an account balance of at least $5,000, or $2,000 for tax
qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that any dividends
and distributions paid with respect to shares in that account be automatically
reinvested in a single account of one of the other Affiliated Phoenix Funds at
net asset value. You should obtain a current prospectus and consider the
objectives and policies of each fund carefully before directing dividends and
distributions to another fund. Reinvestment election forms and prospectuses are
available from Equity Planning.
13
<PAGE>
Distributions may also be mailed to a second payee and/or address. Requests for
directing distributions to an alternate payee must be made in writing with a
signature guarantee of the registered owner(s). To be effective with respect to
a particular dividend or distribution, notification of the new distribution
option must be received by the Transfer Agent at least three days prior to the
record date of such dividend or distribution. If all shares in your account are
repurchased or redeemed or transferred between the record date and the payment
date of a dividend or distribution, you will receive cash for the dividend or
distribution regardless of the distribution option selected.
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 Trust 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 Funds' current Prospectus for further information.
The Trust has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Redemptions by Class B and Class C shareholders will be subject to the
applicable deferred sales charge, if any.
Each shareholder account in the Funds 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 Funds' 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 Trust redeem the shares. See the Funds' 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 Funds' 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 Funds' current Prospectus for more information and conditions
attached to this privilege.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
Each Fund 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 Fund will not be subject
to federal income tax on such part of its ordinary income and net realized
capital gains which it distributes to shareholders provided it meets certain
distribution requirements. To qualify for treatment as a regulated investment
company, each Fund 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 Fund does not
qualify as a regulated investment company, all of its taxable income will be
taxed to the Fund at corporate rates.
The Code imposes a 4% nondeductible excise tax on a regulated investment
company 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 Fund's net capital gains
for the 12-month period ending on October 31 of such calendar year. In addition,
an amount equal to any undistributed investment company taxable income or
capital gain net income from the previous 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 Fund has taxable income that would be subject to the excise
tax, the Fund intends to distribute such income so as to avoid payment of the
excise tax.
14
<PAGE>
Under another provision of the Code, any dividend declared by the Funds 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 Fund
before February 1 of the following year.
The Funds' policy is to distribute to its shareholders all or substantially
all investment company taxable income as defined in the Code and any net
realized capital gains for each year and consistent therewith to meet the
distribution requirements of Part I of subchapter M of the Code. Each Fund
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 Fund 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 Fund may not be taken into account in determining the gain or loss on the
disposition of those shares. This rule applies where shares of a Fund are
disposed of within 90 days after the date on which they were acquired and new
shares of a regulated investment company are acquired without a sales charge or
at a reduced sales charge. In that case, the gain or loss realized on the
disposition will be determined by excluding from the 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 Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value of a share below a
shareholder's cost for the 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 Fund. The
price of shares purchased at that time may include the amount of the forthcoming
distribution, but the distribution generally would be taxable to them.
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 Fund
during a taxable year or held by a Fund 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 Funds reserve the right to refuse to open an account for any
person failing to provide a taxpayer identification number along with the
required certifications.
Each Fund 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 Funds and other Affiliated Phoenix Funds may be offered in
connection with employer-sponsored 401(k) plans. PIC and its affiliates may
provide administrative services to these plans and to their participants, in
addition to the services that PIC and its affiliates provide to the Phoenix
Funds, and may receive compensation therefor. For information on the terms and
conditions applicable to employee participation in such plans, including
information on applicable plan administrative charges and expenses, prospective
investors should consult the plan documentation and employee enrollment
information which is available from participating employers.
THE DISTRIBUTOR
Pursuant to an Underwriting Agreement with the Trust, Phoenix Equity Planning
Corporation (the "Distributor"), an indirect, less than wholly-owned subsidiary
of Phoenix Home Life and an affiliate of PIC, serves as Distributor for the
Funds. The address of the Distributor is 100 Bright Meadow Blvd., P.O. Box 2200,
Enfield, Connecticut 06083-2200. 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 1996, 1997 and 1998, purchasers of Fund shares paid aggregate sales
charges of $1,825,565, $4,241,930 and $2,025,485, respectively, of which the
Distributor for the Funds received net commissions of $206,540, $736,095 and
$1,058,952, 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 Funds and for providing services to shareholders. In addition, the fees were
used to compensate the Distributor for sales and promotional activities.
15
<PAGE>
The Underwriting Agreement may be terminated at any time on not more than 60
days written notice, without payment of a penalty, by the Distributor, by vote
of a majority of the outstanding voting securities of the Trust, or by vote of a
majority of the Trustees who are not "interested persons" of the Trust and who
have no direct or indirect financial interest in the operation of the
Distribution Plans or in any related agreements. The Underwriting Agreement will
terminate automatically in the event of its assignment.
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 Distribution Plans 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 Funds
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 Trust and as such
performs administrative, bookkeeping and pricing functions for the Funds. For
services as financial agent, Equity Planning will be paid a fee equal to the sum
of (1) the documented cost of fund accounting and related services provided by
PFPC, Inc., as subagent, to the financial agent, plus (2) the documented cost of
the financial agent to provide financial reporting and tax services and
oversight of the subagent's performance. The current fee schedule of PFPC, Inc.
is based upon the average of the aggregate daily net asset values of each Fund,
at the following incremental annual rates:
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .015%
Greater than $1 billion .0125%
Percentage rates are applied to the aggregate daily net asset values of the
Funds. PFPC, Inc. also charges minimum fees and additional fees for each
additional class of fund shares. Equity Planning retains PFPC, Inc. as subagent
for each of the funds for which Equity Planning serves as financial agent. PFPC,
Inc. agreed to a modified fee structure and waived certain charges. Because
PFPC, Inc.'s arrangement would have favored smaller funds over larger funds,
Equity Planning reallocates PFPC, Inc.'s overall asset-based charges among all
funds for which it serves as financial agent on the basis of the relative net
assets of each fund. As a result, the PFPC, Inc. charges to the Funds are
expected to be slightly less than the amount that would be found through direct
application of the table illustrated above. For its services during the Trust's
fiscal year ended April 30, 1998, Equity Planning received $342,867.
DISTRIBUTION PLANS
The Trust has adopted separate amended and restated distribution plans under
Rule 12b-1 of the 1940 Act for each Class of Shares of each Fund of the Trust
(the "Class A Plan," the "Class B Plan," the "Class C Plan," the "Class M Plan"
and collectively the "Plans"). The Plans permit the Trust 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 Trust and to pay the
Distributor for providing shareholder services. For fiscal year 1999, the
Distributor has voluntarily agreed to waive the distribution fees for Class A
Shares.
Pursuant to the Plans, the Funds will pay the Distributor 0.25% annually of
the average daily net assets of the Funds for furnishing services to
shareholders and will reimburse the Distributor for actual expenses of the
Distributor up to 0.05% of the average daily net assets of the Fund's Class A
Shares, up to 0.75% of the average daily net assets of the Funds' Class B Shares
and Class C Shares, respectively, and up to 0.25% annually of the average daily
net assets of the Funds' Class M Shares. Expenditures under the Plans shall
consist of: (i) commissions to sales personnel for selling shares of the Funds
(including underwriting fees and financing expenses incurred in connection with
the payment of commissions); (ii) compensation, sales incentives and payments to
sales, marketing and service personnel; (iii) payments to broker-dealers and
other financial institutions which have entered into agreements with the
Distributor in the form of the Dealer Agreement for Phoenix Funds for services
rendered in connection with the sale and distribution of shares of the Funds;
(iv) payment of expenses incurred in sales and promotional activities, including
advertising expenditures related to the Funds; (v) the costs of preparing and
distributing promotional materials; (vi) the cost of printing the Funds'
Prospectus and Statement of Additional Information for distribution to potential
investors; and (vii) such other similar services that the Trustees determine are
reasonably calculated to result in the sale of shares of the Funds.
16
<PAGE>
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 Funds' shareholders; or services providing the Funds 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 Funds having fewer assets and the Distributor
incurring greater promotional expenses during the start-up phase. No amounts
paid or payable by the Funds 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 Funds. The other Plans, however, do 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 Funds to make payments to the Distributor pursuant to the
Plans will cease and the Funds will not be required to make any payments past
the date on which each Plan terminates.
For the fiscal year ended April 30, 1998, the Funds paid Rule 12b-1 Fees in
the amount of $3,163,431, of which the principal underwriter received
$1,999,009, W.S. Griffith & Co., Inc., an affiliate, received $122,695 and
unaffiliated broker-dealers received $1,041,727. 12b-1 Fees paid by the Funds
during last fiscal year were spent on: (1) advertising ($416,227); (2) printing
and mailing of prospectuses to other than current shareholders ($44,421); (3)
compensation to dealers ($2,520,971); (4) compensation to sales personnel
($738,543); (5) service costs ($171,425) and (6) other ($150,155).
On a quarterly basis, the 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 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 Funds may bear
pursuant to the Plans without approval of the shareholders of the Funds 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 Trust.
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 Trust 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 TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Robert Chesek (64) 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 TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
E. Virgil Conway (69) Trustee Chairman, Metropolitan Transportation Authority
9 Rittenhouse Road (1992-present). Trustee/Director, Consolidated Edison
Bronxville, NY 10708 Company of 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). Member, Audit Committee of
the City of New York (1981-1996). Advisory Director,
Blackrock Fannie Mae Mortgage Securities Fund (1989-1996).
Chairman (1992-1995), Member (1990-1995), Financial
Accounting Standards Advisory Council (1992-1995).
Director/Trustee, the National Affiliated Investment
Companies (until 1993).
Harry Dalzell-Payne (69) 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 (67) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
6585 Nicholas Blvd. Phoenix-Aberdeen Series Inc. and Phoenix Duff & Phelps
Apt. 1601 Institutional Mutual Funds (1996-present). Director, Duff &
Naples, FL 33963 Phelps Utilities Income Inc. (1987-present), Duff & Phelps
Utilities Tax-Free Income Inc. (1991-present) and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1993-present).
Director, The Empire District Electric Company (1984-present).
Director (1989-1997), Chairman of the Board (1993-1997),
President (1989-1993), and Chief Executive Officer (1989-1995),
Phoenix Investment Partners, Ltd.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Leroy Keith, Jr. (59) 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
Savannah, GA 30750 Evergreen International Fund, Inc. (1989-present). Trustee,
Evergreen Liquid Trust, Evergreen Tax Exempt Trust,
Evergreen Tax Free Fund, Master Reserves Tax Free Trust, and
Master Reserves Trust. President, Morehouse College
(1987-1994). Chairman and Chief Executive Officer, Keith
Ventures (1992-1994). Director/Trustee, the National
Affiliated Investment Companies (until 1993).
*Philip R. McLoughlin (51) Trustee and Chairman (1997-present), Director (1995-present),Vice
President Chairman (1995-1997) and Chief Executive Officer
(1995-present), Phoenix Investment Partners, Ltd. Director
(1994-present) and Executive Vice President, Investments
(1988-present), Phoenix Home Life Mutual Insurance Company.
Director/Trustee and President, Phoenix Funds
(1989-present). Trustee and President, Phoenix-Aberdeen
Series Fund and Phoenix Duff & Phelps Institutional Mutual
Funds (1996-present). Director, Duff & Phelps Utilities
Tax-Free Income Inc. (1995-present) and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present).
Director (1983-present) and Chairman (1995-present), Phoenix
Investment Counsel, Inc. Director (1984-present) and
President (1990-present), Phoenix Equity Planning
Corporation. 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, PHL
Associates, Inc. (1995-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).
Director/Trustee, the National Affiliated Investment
Companies (until 1993).
**Everett L. Morris (70) Trustee Vice President, W.H. Reaves and Company (1993-present).
164 Laird Road Director/Trustee, Phoenix Funds (1995-present). Trustee,
Colts Neck, N.J. 07722 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director, Duff &
Phelps Utilities Tax-Free Income Inc. (1991-present) and
Duff & Phelps Utility and Corporate Bond Trust Inc.
(1993-present).
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
*James M. Oates (52) Trustee Chairman, IBEX Capital Markets LLC (1997-present). Managing
Managing Director Director, Wydown Group (1994-present). Director, Phoenix
The Wydown Group Investment Partners, Ltd. (1995-present). Director/Trustee,
IBEX Capital Markets LLC Phoenix Funds (1987-present). Trustee, Phoenix-Aberdeen
60 State Street Series Fund and Phoenix Duff & Phelps Institutional
Suite 950 Mutual Funds (1996-present). Director, AIB Govett
Boston, MA 02109 Funds. (1991-present), Blue Cross and Blue Shield of
New Hampshire (1994-present), Investors Financial Service
Corporation (1995-present), Investors Bank & Trust Corporation
(1995-present), Plymouth Rubber Co. (1995-present), Stifel
Financial (1996-present) and Command Systems, Inc.
(1998-present). Vice Chairman, Massachusetts Housing
Partnership (1992-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 (56) Trustee Director (1986-present), President (1993-present) and
Phoenix Investment Executive Vice President (1992-1993), Phoenix Investment
Partners, Ltd. Partners, Ltd. Director/Trustee, Phoenix Funds
55 East Monroe Street (1995-present). Trustee, Phoenix-Aberdeen Series Fund and
Suite 3600 Phoenix Duff & Phelps Institutional Mutual Funds
Chicago, IL 60603 (1996-present). President and Chief Executive Officer, Duff
& Phelps Utilities Tax-Free Income Inc. (1995-present), Duff
& Phelps Utilities Income Inc. (1994-present) and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1995-present).
**Herbert Roth, Jr. (69) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
P.O. Box 909 Institutional Mutual Funds (1996-present). Director, Boston
Sherborn, MA 01770 Edison Company (1978-present), Landauer, Inc. (medical
services) (1970-present), Tech Ops./Sevcon, Inc. (electronic
controllers) (1987-present), and Mark IV Industries
(diversified manufacturer) (1985-present). Member, Directors
Advisory Counsel Phoenix Home Life Mutual Insurance Company
(1998-present). Director, Key Energy Group (oil rig service)
(1988-1994) and Phoenix Home Life Mutual Insurance Company
(1972-1998). Director/Trustee, the National Affiliated
Investment Companies (until 1993).
Richard E. Segerson (52) 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 TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Lowell P. Weicker, Jr. (67) 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), Burroughs
Wellcome Fund (1996-present), and Compuware (1996-present).
Visiting Professor, University of Virginia (1997-present).
Director, Duty Free International, Inc. (1997). Chairman,
Dresing, Lierman, Weicker (1995-1996). Governor of the State
of Connecticut (1991-1995).
Michael E. Haylon (40) Executive Director and Executive Vice President--Investments, Phoenix
Vice Investment Partners, Ltd. (1995-present). Executive Vice
President President, Phoenix Funds (1993-present) and Phoenix-Aberdeen
Series Fund (1996-present). Executive Vice President
(1997-present), Vice President, 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).
John F. Sharry (46) Executive Managing Director, Retail, Phoenix Equity Planning
Vice Corporation (1995-present). Executive Vice President,
President Phoenix Funds and Phoenix-Aberdeen Series Fund
(1998-present). Managing Director, Director and National
Sales Manager (December 1993 - November 1995), Senior
Vice President, Director and National Sales Manager
(December 1992 - December 1993), Putnam Funds.
J. Roger Engemann (57) Senior Vice President and Director, Roger Engemann & Associates, Inc.
President (1969-present). President and Director, Pasadena Capital
Corporation (1988-present). Chairman, President and Trustee,
Phoenix-Engemann Funds (1986-present). President and
Director, Roger Engemann Management Co., Inc.
(1985-present). Managing Director, Equities, Phoenix
Investment Counsel, Inc. (1998-present). Senior Vice
President, The Phoenix Edge Series Fund and Phoenix Series
Fund (1998-present).
Ronald K. Jacks (30) Senior Vice Managing Director, Equities, Phoenix Investment Counsel,
909 Montgomery St. President Inc. and National Securities & Research Corporation
San Francisco, CA 94133 (1998-present). Secretary (1996-present) and Trustee
(1996-1997), Phoenix-Seneca Funds. Portfolio Manager
(1996-present), Seneca Capital Management LLC. Portfolio
Manager (1990-present), GMG/Seneca Capital Management, L.P.
Richard D. Little (49) Senior Vice Managing Director, Equities, Phoenix Investment Counsel,
909 Montgomery St. President Inc. and National Securities & Research Corporation
San Francisco, CA 94133 (1998-present). Vice President, Phoenix-Seneca Funds
(1996-present). General Partner and Director of Equities,
GMG/Seneca Capital Management, L.P. (1989-present), Director
of Equities, Seneca Capital Management LLC.
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
James E. Mair (56) Senior Vice Executive Vice President (1994-present), Senior Vice
President President (1983-1994), Roger Engemann & Associates, Inc.
Director (1990-present), Executive Vice President
(1994-present), Senior Vice President (1990-1994), Pasadena
Capital Corporation. Director, Pasadena National Trust
(1989-present). Executive Vice President (1994-present),
Security Analyst (1985-1994), Roger Engemann Management Co.,
Inc. Managing Director, Equities, Phoenix Investment
Counsel, Inc. (1998-present). Senior Vice President, The
Phoenix Edge Series Fund and Phoenix Series Fund
(1998-present).
Gail P. Seneca (42) Senior Vice Managing Director, Equities, Phoenix Investment Counsel,
909 Montgomery St. President Inc. and National Securities & Research Corporation
San Francisco, CA 94133 (1998-present). President and Trustee (1996-present),
Phoenix-Seneca Funds. Managing Member (1996-present),
GMG/Seneca Capital Management LLC. Chief Investment Officer
and managing general partner (1989-present), GMG/Seneca
Capital Management, L.P.
John S. Tilson (54) Senior Vice Executive Vice President (1994-present), Senior Vice
President President (1983-1994), Roger Engemann & Associates, Inc.
Director (1990-present), Executive Vice President
(1994-present), Senior Vice President (1990-1994), Pasadena
Capital Corporation. Chief Financial Officer and Secretary,
Phoenix-Engemann Funds (1988-present). Executive Vice
President (1994-present), Security Analyst (1985-1994),
Roger Engemann Management Co., Inc. Managing Director,
Equities, Phoenix Investment Counsel, Inc. (1998-present).
Senior Vice President, The Phoenix Edge Series Fund and
Phoenix Series Fund (1998-present).
William E. Keen, III (34) Vice President Assistant Vice President (1996-present), Director of Mutual
100 Bright Meadow Blvd. Fund Compliance (1995-1996), Phoenix Equity Planning
P.O. Box 2200 Corporation (1996-present). Vice President, Phoenix Funds,
Enfield, CT 06083-2200 Phoenix Duff & Phelps Institutional Mutual Funds and
Phoenix-Aberdeen Series Fund (1996-present). Assistant Vice
President, USAffinity Investments LP, (1994-1995). Treasurer
and Secretary, USAffinity Funds (1994-1995). Manager, Fund
Administration, SEI Corporation (1991-1994).
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
William R. Moyer (54) Vice President Senior Vice President and Chief Financial Officer, Phoenix
100 Bright Meadow Blvd. Investment Partners, Ltd. (1995-present). Director
P.O. Box 2200 (1998-present), Senior Vice President, Finance
Enfield, CT 06083-2200 (1990-present), Chief Financial Officer (1996-present), and
Treasurer (1994-1996 and 1998-present), Phoenix Equity
Planning Corporation. Director (1998-present), Senior Vice
President (1990-present), Chief Financial Officer
(1996-present) and Treasurer (1994-present), Phoenix
Investment Counsel, Inc. Director (1998-present), 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). Vice President,
Investment Products Finance, Phoenix Home Life Mutual
Insurance Company (1990-1995). Senior Vice President and
Chief Financial Officer, W. S. Griffith & Co., Inc.
(1992-1995) and Townsend Financial Advisers, Inc.
(1993-1995). Vice President, the National Affiliated
Investment Companies (until 1993).
Leonard J. Saltiel (44) Vice President Managing Director, Operations and Service (1996-present),
Senior Vice President (1994-1996), Phoenix Equity Planning
Corporation. Vice President, Phoenix Funds (1994-present),
Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present) and Phoenix-Aberdeen Series Fund
(1996-present). Vice President, Investment Operations,
Phoenix Home Life Mutual Insurance Company (1994-1995).
Various positions with Phoenix Home Life Mutual Insurance
Company (1987-1994).
Pierre G. Trinque (42) Vice President Managing Director, Large Cap Growth Team (1997-present),
Managing Director, Director of Equity Research (1996-1997),
Senior Research Analyst (1996) and Associate Portfolio
Manager--Institutional Funds (1992-1995), Phoenix Investment
Counsel, Inc. Vice President, The Phoenix Edge Series Fund
(1997-present), Phoenix Series Fund (1997-present), Phoenix
Duff & Phelps Institutional Mutual Funds (1997-present),
Phoenix Multi-Portfolio Fund (1998-present) and Phoenix
Worldwide Opportunities Fund (1998-present).
G. Jeffrey Bohne (50) Secretary Vice President and General Manager, Phoenix Home Life Mutual
101 Munson Street Insurance Co. (1993-present). Vice President, Mutual Fund
Greenfield, MA 01301 Customer Service, Phoenix Equity Planning Corporation
(1993-present). Secretary/Clerk, Phoenix Funds (1993-present),
Clerk, Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present) and Phoenix-Aberdeen Series Fund
(1996-present).
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Nancy G. Curtiss (45) 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. Morris and
Roth will retire from the Board of Trustees effective January 1, 1999.
For services rendered to the Trust for the fiscal year ended April 30, 1998,
the Trustees received aggregate remuneration of $58,770. For services on the
Boards of Directors/Trustees of the Phoenix Funds, each Trustee who is not a
full-time employee of the Adviser or any of its affiliates currently receives a
retainer at the annual rate of $40,000 and a fee of $2,500 per joint meeting of
the Boards. Each Trustee who serves on the Audit Committee receives a retainer
at the annual rate of $2,000 and a fee of $2,000 per joint Audit Committee
meeting attended. Each Trustee who serves on the Nominating Committee receives a
retainer at the annual rate of $1,000 and a fee of $1,000 per joint Nominating
Committee meeting attended. Each Trustee who serves on the Executive Committee
and who is not an interested person of the Fund receives a retainer at the
annual rate of $2,000 and $2,000 per joint Executive Committee meeting attended.
The function of the Executive Committee is to serve as a contract review,
compliance review and performance review delegate of the full Board of Trustees.
Costs are allocated equally to each of the Series and Funds within the Fund
complex. The foregoing fees do not include the reimbursement of expenses
incurred in connection with meeting attendance. Officers and employees of the
Advisers who are interested persons are compensated by the Adviser and receive
no compensation from the Trust.
For the Trust'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 (14 FUNDS)
NAME FROM FUND OF FUND EXPENSES UPON RETIREMENT PAID TO TRUSTEES
- ---- --------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Robert Chesek $ 4,488 $55,750
E. Virgil Conway[dagger] $ 5,948 $74,500
Harry Dalzell-Payne[dagger] $ 5,298 $67,250
Francis E. Jeffries $ 4,375* $53,750
Leroy Keith, Jr. $ 4,488 None None $55,750
Philip R. McLoughlin[dagger] $ 0 for any for any $ 0
Everett L. Morris[dagger] $ 5,185* Trustee Trustee $65,750
James M. Oates[dagger] $ 5,185 $65,250
Calvin J. Pedersen $ 0 $ 0
Herbert Roth, Jr.[dagger] $ 6,150* $77,000
Richard E. Segerson $ 5,205 $63,750
Lowell Weicker, Jr. $ 4,913 $60,000
</TABLE>
*This compensation (and the earnings thereon) will be deferred pursuant to the
Directors' Deferred Compensation Plan. At April 30, 1998, the total amount of
deferred compensation (including interest and other accumulation earned on the
original amounts deferred) accrued for Messrs. Jeffries, Morris and Roth was
$82,041, $137,256 and $140,068, respectively. At present, by agreement among
the Trust, the Distributor and the electing director, director fees that are
deferred are paid by the Trust to the Distributor. The liability for the
deferred compensation obligation appears only as a liability of the
Distributor.
[dagger]Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are
members of the Executive Committee.
On July 29, 1998, the Trustees and officers of the Fund beneficially owned
less than 1% of the outstanding shares of the Trust.
24
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of July 29, 1998 with respect
to each person who owns of record or is known by the Trust to own of record or
beneficially owns 5% or more of any Class of the Trust's equity securities.
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER FUND AND CLASS NUMBER OF SHARES PERCENT OF CLASS
- ------------------- -------------- ---------------- ----------------
<S> <C> <C> <C>
TTEES of Phoenix Savings & Investment Plan Theme Fund Class A 312,288.4560 5.98%
100 Bright Meadow Blvd
PO Box 1900
Enfield CT 06083-1900
Trustees of APP for Company Contributions Theme Fund Class A 270,323.7170 5.18%
100 Bright Meadow Blvd
PO Box 1900
Enfield CT 06083-1900
Merrill Lynch Pierce Fenner & Smith Theme Fund Class B 441,106.2720 10.06%
For the Sole Benefit of its Customers
Attn Fund Administration
4800 Deer Lake Dr E 3rd Fl
Jacksonville FL 32246-6484
Painewebber CDN FBO Theme Fund Class C 2,223.6060 17.84%
Vivian Lorman
P.O. Box 3321
Weehawken NJ 07087-8154
Painewebber for the Benefit of Theme Fund Class C 1,778.2510 14.27%
Stephanie Berger
225 West 12 Street #4E
New York NY 10011-7757
Painewebber for the Benefit of Theme Fund Class C 1,165.5010 9.35%
Jay L Aldrich and Sandra D Aldrich #2 JTWROS
10543 SW 129 PL
Miami FL 33186-3549
Painewebber for the Benefit of Theme Fund Class C 960.8280 7.71%
Luane Hirschman
20505 E Country Club Drive
Apt # 1131
Aventura FL 33180-3039
Painewebber for the Benefit of Theme Fund Class C 841.1730 6.75%
Harriet Sperry
520 A Autumn Crest Circle
Colorado Springs CO 80919-8157
Painewebber for the Benefit of Theme Fund Class C 830.5650 6.67%
Ilona Kinast as Custodian for Issac Salis
Under The PA Uniform Gifts to Minors Act
2528 Mt Royal Rd
Pittsburgh PA 15217-2542
State Street Bank & Trust Co Theme Fund Class C 784.3140 6.29%
Roth Converted IRA 1/1/98
Elizabeth L Thisius
RR 1 PO Box 58
Wells MN 56097-0058
Painewebber for the Benefit of Theme Fund Class C 645.2360 5.18%
Nancy L Setola and Camille J Garcia JTWROS
273 Florida Ave
Miami Springs FL 33166-4901
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER FUND AND CLASS NUMBER OF SHARES PERCENT OF CLASS
- ------------------- -------------- ---------------- ----------------
<S> <C> <C> <C>
Phoenix Home Life Theme Fund Class M 8,010.5790 99.90%
56 Prospect St
Hartford CT 06103-2818
Phoenix Investment Counsel Equity Opportunities 23,469.4380 8.39%
100 Bright Meadow Blvd Fund Class B
Enfield CT 06082-1957
Merrill Lynch Pierce Fenner & Smith Small Cap Fund Class B 1,000,540.2570 13.21%
For the Sole Benefit of its Customers
Attn Fund Administration
4800 Deer Lake Dr E 3rd Fl
Jacksonville FL 32246-6484
</TABLE>
OTHER INFORMATION
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, serves as
independent accountants for the Trust (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"), P.O. Box 351, Boston,
MA 02101, serves as custodian of the Trust's assets (the "Custodian") and Equity
Planning acts as Transfer Agent for the Trust (the "Transfer Agent"). As
compensation, Equity Planning receives a fee equivalent to $14.95 for each
designated shareholder account plus out-of-pocket expenses. Transfer Agent fees
are also utilized to offset costs and fees paid to subtransfer agents employed
by Equity Planning. State Street serves as a subtransfer agent pursuant to a
Subtransfer Agency Agreement.
REPORTS TO SHAREHOLDERS
The fiscal year of the Trust ends on April 30th. The Trust 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, 1998 appearing
in the Trust's 1998 Annual Report to Shareholders, are incorporated herein by
reference.
26
<PAGE>
Phoenix Small Cap Fund
- ------------------------------------------------------
INVESTMENTS AT APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
COMMON STOCKS--76.4%
AUTO/TRUCK--TIRES & MISCELLANEOUS--0.3%
Championship Auto Racing Teams,
Inc. (b)....................... 49,500 $ 934,312
---------------
CHEMICALS--SPECIALITY--0.5%
North American Scientific, Inc.
(b)............................ 50,000 1,775,000
---------------
COMMERCIAL SERVICES--BUSINESS SERVICE--0.2%
American Dental Partners, Inc
(b)............................ 33,000 581,625
---------------
COMMERCIAL SERVICES--MISCELLANEOUS--2.5%
Condor Technology Solutions, Inc.
(b)............................ 240,000 4,185,000
INSpire Insurance Solutions,
Inc............................ 139,000 4,673,875
---------------
8,858,875
---------------
COMMERCIAL SERVICES--STAFFING--4.4%
Administaff, Inc. (b)............ 82,000 3,536,250
RCM Technologies, Inc. (b)....... 69,000 1,656,000
Staff Leasing, Inc. (b).......... 172,000 5,031,000
Staffmark, Inc. (b).............. 120,000 5,100,000
---------------
15,323,250
---------------
COMPUTER--LOCAL NETWORKS--0.1%
Visual Networks, Inc. (b)........ 10,000 331,250
---------------
COMPUTER--SERVICES--8.1%
Brightstar Information Technology
Group, Inc. (b)................ 27,500 429,687
Ciber, Inc. (b).................. 87,000 2,827,500
Complete Business Solutions, Inc
(b)............................ 157,000 5,367,437
Icon CMT Corp. (b)............... 240,000 5,010,000
Manhattan Associates, Inc (b).... 11,000 248,875
Mindspring Enterprises, Inc.
(b)............................ 70,000 4,725,000
Sapient Corp. (b)................ 80,000 3,950,000
Usweb Corp. (b).................. 263,000 5,999,687
---------------
28,558,186
---------------
COMPUTER--SERVICES--ADVERTISING--1.9%
Doubleclick, Inc. (b)............ 160,000 6,670,000
---------------
COMPUTER--SOFTWARE--2.7%
Advantage Learning Systems, Inc.
(b)............................ 105,000 3,307,500
Documentum, Inc. (b)............. 110,500 5,953,188
Exodus Communications, Inc.
(b)............................ 10,200 387,600
---------------
9,648,288
---------------
COMPUTER--SOFTWARE--EDUCATIONAL--1.1%
Learning Co., Inc. (The) (b)..... 140,000 4,007,500
---------------
COMPUTER--SOFTWARE--ENTERPRISES--3.8%
Brio Technology, Inc. (b)........ 10,000 110,000
Citrix Systems, Inc. (b)......... 58,000 3,603,250
SHARES VALUE
--------------- ---------------
COMPUTER--SOFTWARE--ENTERPRISES--CONTINUED
Legarto Systems, Inc. (b)........ 188,000 $ 5,945,500
Manugistics Group, Inc. (b)...... 58,000 3,480,000
Mobius Management Systems, Inc.
(b)............................ 5,000 92,500
---------------
13,231,250
---------------
COMPUTER--SOFTWARE--INTERNET--8.8%
Earthlink Network, Inc. (b)...... 94,000 6,668,125
Excite, Inc. (b)................. 76,000 5,082,500
First Virtual Corp. (b).......... 64,000 1,008,000
Infoseek Corp. (b)............... 152,000 5,111,000
Lycos, Inc. (b).................. 74,400 4,598,850
Yahoo! Inc. (b).................. 70,000 8,325,625
---------------
30,794,100
---------------
COMPUTER SOFTWARE--SECURITY--3.8
ISS Group, Inc. (b).............. 164,000 7,257,000
SCM Microsystems, Inc. (b)....... 91,000 6,210,750
---------------
13,467,750
---------------
COSMETICS/PERSONAL CARE--0.9%
NBTY, Inc. (b)................... 90,000 1,800,000
Nutraceutical International Corp.
(b)............................ 87,000 1,566,000
---------------
3,366,000
---------------
DIVERSIFIED OPERATIONS--0.9%
SLH Corp. (b).................... 103,000 3,090,000
---------------
ELECTRIC--LASER SYSTEMS--COMPONENT--1.0%
Cymer, Inc. (b).................. 154,000 3,436,125
---------------
ELECTRIC--MISCELLANEOUS--COMPONENTS--0.5%
Artisan Components, Inc. (b)..... 95,000 1,674,375
---------------
ELECTRIC PRODUCTS--MISCELLANEOUS--0.8%
Ballard Power Systems, Inc.
(b)............................ 23,500 2,701,031
---------------
ELECTRIC--SEMICONDUCTOR--EQUIPMENT--1.5%
Aspec Technology, Inc. (b)....... 120,000 1,665,000
SpeedFam International, Inc.
(b)............................ 123,500 3,581,500
---------------
5,246,500
---------------
ELECTRICAL--CONNECTORS--0.9%
Level One Communications, Inc
(b)............................ 105,000 3,268,125
---------------
ENERGY--OTHER--0.4%
Energy Research Corp. (b)........ 63,000 1,539,563
---------------
FINANCIAL SERVICES--MISCELLANEOUS--1.5%
AMRESCO, Inc. (b)................ 55,000 1,993,750
First Sierra Financial, Inc.
(b)............................ 47,900 1,209,475
4 See Notes to Financial Statements.
<PAGE>
PHOENIX SMALL CAP FUND
- ------------------------------------------------------
SHARES VALUE
--------------- ---------------
FINANCIAL SERVICES--MISCELLANEOUS--CONTINUED
Healthcare Financial Partners,
Inc. (b)....................... 41,000 $ 2,065,375
---------------
5,268,600
---------------
INSURANCE--LIFE--0.9%
Annuity and Life Re (Holdings)
Ltd. (b)....................... 130,000 3,103,750
---------------
LEISURE--SERVICES--0.6%
International Speedway Corp...... 55,000 1,973,125
---------------
MEDICAL--BIOMED/GENETICS--4.1%
Aviron (b)....................... 90,000 2,233,125
Coulter Pharmaceutical, Inc.
(b)............................ 204,000 5,865,000
Immunex Corp. (b)................ 55,000 3,774,375
Medimmune, Inc. (b).............. 45,000 2,373,750
---------------
14,246,250
---------------
MEDICAL--ETHICAL DRUGS--0.4%
Theragenics Corp. (b)............ 44,500 1,268,250
---------------
MEDICAL--GENERIC DRUGS--0.5%
Schein Pharmaceutical, Inc.
(b)............................ 72,000 1,764,000
---------------
MEDICAL--HOSPITALS--0.3%
Province Healthcare Co. (b)...... 41,000 1,132,625
---------------
MEDICAL--INSTRUMENTS--1.6%
Cyberonics, Inc. (b)............. 110,000 2,640,000
Novoste Corp. (b)................ 120,500 2,982,375
---------------
5,622,375
---------------
MEDICAL--PRODUCTS--0.9%
Horizon Medical Products, Inc.
(b)............................ 90,000 1,338,750
Perclose, Inc. (b)............... 60,000 1,822,500
---------------
3,161,250
---------------
METAL ORES--MISCELLANEOUS--0.5%
Stillwater Mining Co. (b)........ 65,000 1,718,438
---------------
OIL & GAS--DRILLING--3.8%
Cliffs Drilling Co. (b).......... 117,000 5,769,563
Marine Drilling Companies, Inc
(b)............................ 316,000 7,682,750
---------------
13,452,313
---------------
OIL & GAS--FIELD SERVICES--2.8%
Friede Goldman International,
Inc. (b)....................... 245,000 9,861,250
---------------
OIL & GAS--MACHINERY/EQUIPMENT--3.5%
Dril-Quip, Inc. (b).............. 150,000 5,390,625
Gulf Island Fabrication, Inc.
(b)............................ 65,700 1,527,525
SHARES VALUE
OIL & GAS--MACHINERY/EQUIPMENT--CONTINUED --------------- ---------------
National-Oilwell, Inc. (b)....... 147,000 $ 5,576,813
---------------
12,494,963
---------------
RETAIL--SUPERMARKET--0.9%
Whole Foods Market, Inc. (b)..... 50,000 3,093,750
---------------
RETAIL/WHOLESALE--BUILDING PRODUCTS--0.5%
Central Garden & Pet Co. (b)..... 48,000 1,644,000
---------------
RETAIL/WHOLESALE--COMPUTERS--0.5%
PC Connection, Inc. (b).......... 81,000 1,756,688
---------------
TELECOMMUNICATIONS--EQUIPMENT--2.7%
Inter-Tel, Inc................... 130,000 3,071,250
Yurie Systems, Inc. (b).......... 180,000 6,255,000
---------------
9,326,250
---------------
TELECOMMUNICATIONS--SERVICES--5.3%
IDT Corp. (b).................... 47,900 1,469,931
ITC Deltacom, Inc. (b)........... 124,000 3,549,500
Primus Telecommunications Group,
Inc. (b)....................... 130,000 3,103,750
STAR Telecommunications, Inc.
(b)............................ 232,000 6,278,500
Telegroup, Inc. (b).............. 57,600 864,000
Winstar Communications, Inc.
(b)............................ 92,000 3,576,500
---------------
18,842,181
---------------
TOTAL COMMON STOCKS
(Identified cost $242,930,300)............................... 268,233,163
---------------
FOREIGN COMMON STOCKS--6.9%
COMPUTER--SOFTWARE--1.1%
Lernout & Hauspie Speech Products
N.V. (Belgium) (b)............. 62,000 3,952,500
---------------
ELECTRIC--SEMICONDUCTOR--MFG--0.1%
Arm Holdings PLC ADR (United
Kingdom) (b)................... 5,000 201,875
---------------
MEDICAL--ETHICAL DRUGS--0.6%
Shire Pharmaceuticals Group PLC
ADR (United Kingdom) (b)....... 97,000 2,182,500
---------------
OIL & GAS--FIELD SERVICES--5.1%
Bouygues Offshore SA ADR
(France)....................... 100,000 2,143,750
Coflexip SA Sponsored ADR
(France)....................... 116,000 8,265,000
Core Laboratories NV ADR
(Netherlands) (b).............. 65,000 1,844,375
See Notes to Financial Statements. 5
<PAGE>
PHOENIX SMALL CAP FUND
- ------------------------------------------------------
SHARES VALUE
--------------- ---------------
OIL & GAS--FIELD SERVICES--CONTINUED
Petroleum Geo--Services ADR
(Norway) (b)................... 87,000 $ 5,720,250
---------------
17,973,375
---------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $21,026,214)................................ 24,310,250
---------------
TOTAL LONG-TERM INVESTMENTS--83.3%
(Identified cost $263,956,514)............................... 292,543,413
---------------
STANDARD
& POOR'S PAR
RATING VALUE
(UNAUDITED) (000)
--------------- -------
SHORT-TERM OBLIGATIONS--21.5%
COMMERCIAL PAPER--20.0%
Campbell Soup Co. 5.52%,
5/1/98......................... A-1+ $8,000 8,000,000
Cargill, Inc. 5.50%, 5/1/98...... A-1+ 8,000 8,000,000
Cafco 5.52%, 5/5/98.............. A-1 8,000 7,995,093
Deutshe Bank Financial Corp.
5.52%, 5/6/98.................. A-1 9,030 9,023,090
Vermont American Corp. 5.55%,
5/6/98......................... A-1+ 2,415 2,413,138
Kimberly-Clark Corp. 5.51%,
5/7/98......................... A-1+ 8,000 7,992,653
Potomac Electric Power Co. 5.48%,
5/7/98......................... A-1 3,955 3,951,388
STANDARD
& POOR'S PAR
RATING VALUE
(UNAUDITED) (000) VALUE
--------------- ------- ---------------
COMMERCIAL PAPER--CONTINUED
AlliedSignal, Inc. 5.52%,
5/8/98......................... A-1 $3,000 $ 2,996,780
AlliedSignal, Inc. 5.50%,
5/11/98........................ A-1 4,970 4,962,366
Shell Oil Co. 5.52%, 5/13/98..... A-1+ 2,500 2,495,400
General Electric Capital Corp.
5.55%, 5/20/98................. A-1+ 3,095 3,085,934
Enterprise Capital Funding Corp.
5.54%, 5/22/98................. A-1+ 2,550 2,541,759
Colgate Palmolive Co. 5.50%,
5/27/98........................ A-1 7,000 6,972,195
---------------
70,429,796
---------------
FEDERAL AGENCY SECURITIES--1.5%
FHLMC 5.43%, 5/7/98.............. A-1+ 690 689,376
FNMA 5.43%, 5/13/98.............. A-1 4,520 4,511,818
---------------
5,201,194
---------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $75,630,990)............................. 75,630,990
---------------
TOTAL INVESTMENTS--104.8%
(Identified cost $339,587,504)............................ 368,174,403(a)
Cash and receivables, less liabilities--(4.8%)............ (16,829,521)
---------------
NET ASSETS--100.0%.......................................... $ 351,344,882
---------------
---------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $34,911,651 and gross
depreciation of $6,324,752 for income tax purposes. At April 30, 1998, the
aggregate cost of securities for federal income tax purposes was
$339,587,504.
(b) Non-income producing.
6 See Notes to Financial Statements.
<PAGE>
Phoenix Small Cap Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
<TABLE>
<CAPTION>
Assets
<S> <C>
Investment securities at value
(Identified cost $339,587,504) $368,174,403
Receivables
Investment securities sold 8,285,490
Fund shares sold 1,046,007
------------
Total assets 377,505,900
------------
Liabilities
Payables
Investment securities purchased 25,185,407
Fund shares repurchased 433,275
Investment advisory fee 218,893
Distribution fee 165,723
Transfer agent fee 102,975
Financial agent fee 13,030
Trustees' fee 9,114
Accrued expenses 32,601
------------
Total liabilities 26,161,018
------------
Net Assets $351,344,882
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $313,054,699
Accumulated net realized gain 9,703,284
Net unrealized appreciation 28,586,899
------------
Net Assets $351,344,882
============
Class A
Shares of beneficial interest outstanding, $0.0001
par value, unlimited authorization
(Net Assets $203,560,155) 11,720,505
Net asset value per share $17.37
Offering price per share
$17.37/(1-4.75%) $18.24
Class B
Shares of beneficial interest outstanding, $0.0001
par value, unlimited authorization
(Net Assets $147,784,727) 8,698,561
Net asset value and offering price per share $16.99
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1998
<TABLE>
<CAPTION>
Investment Income
<S> <C>
Interest $ 2,280,058
Dividends 480,466
------------
Total investment income 2,760,524
------------
Expenses
Investment advisory fee 2,487,577
Distribution fee--Class A 492,826
Distribution fee--Class B 1,345,465
Transfer agent 704,877
Financial agent fee 150,391
Registration 42,546
Custodian 36,471
Printing 35,795
Professional 20,799
Trustees 20,328
Miscellaneous 17,223
------------
Total expenses 5,354,298
------------
Net investment loss (2,593,774)
------------
Net Realized and Unrealized Gain on Investments
Net realized gain on securities 99,577,404
Net change in unrealized appreciation on investments 30,589,425
------------
Net gain on investments 130,166,829
------------
Net increase in net assets resulting from
operations $127,573,055
============
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Phoenix Small Cap Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
April 30, 1998 April 30, 1997
---------------- -----------------
<S> <C> <C>
From Operations
Net investment income (loss) $ (2,593,774) $ (1,471,814)
Net realized gain (loss) 99,577,404 (25,221,777)
Net change in unrealized appreciation (depreciation) 30,589,425 (27,980,129)
-------------- --------------
Increase (decrease) in net assets resulting from operations 127,573,055 (54,673,720)
-------------- --------------
From Distributions to Shareholders
Net realized gains--Class A (35,702,853) (183,926)
Net realized gains--Class B (26,132,919) (108,414)
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 (61,835,772) (517,291)
-------------- --------------
From Share Transactions
Class A
Proceeds from sales of shares (5,292,562 and 12,800,790 shares, respectively) 91,738,490 216,824,086
Net asset value of shares issued from reinvestment of
distributions (2,365,346 and 18,203 shares, respectively) 34,439,436 304,365
Cost of shares repurchased (6,909,942 and 7,723,733 shares, respectively) (119,890,542) (126,330,628)
-------------- --------------
Total 6,287,384 90,797,823
-------------- --------------
Class B
Proceeds from sales of shares (1,984,492 and 5,355,420 shares, respectively) 35,124,815 90,761,953
Net asset value of shares issued from reinvestment of
distributions (1,737,551 and 9,754 shares, respectively) 24,812,223 161,819
Cost of shares repurchased (2,007,557 and 1,088,642 shares, respectively) (33,352,450) (17,334,625)
-------------- --------------
Total 26,584,588 73,589,147
-------------- --------------
Increase in net assets from share transactions 32,871,972 164,386,970
-------------- --------------
Net increase in net assets 98,609,255 109,195,959
Net Assets
Beginning of period 252,735,627 143,539,668
-------------- --------------
End of period (including undistributed net investment income of $0 and $0, respectively) $ 351,344,882 $ 252,735,627
============== ==============
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Phoenix Small Cap Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------
From Inception
Year Ended April 30, 10/16/95 to
1998 1997 4/30/96
---------------- ---------------- ----------------------
<S> <C> <C> <C>
Net asset value, beginning of period $14.13 $ 16.74 $10.00
Income from investment operations
Net investment income (loss) (0.08)(5) (0.05)(5) (0.04) (1)(5)
Net realized and unrealized gain (loss) 6.80 (2.53) 6.79
------- --------- -------
Total from investment operations 6.72 (2.58) 6.75
------- -------- -------
Less distributions
Dividends from net investment income -- -- --
Dividends from net realized gains (3.48) (0.02) --
In excess of net investment income -- -- (0.01)
In excess of accumulated net realized gains -- (0.01) --
------- -------- -------
Total distributions (3.48) (0.03) (0.01)
------- -------- -------
Change in net asset value 3.24 (2.61) 6.74
------- -------- -------
Net asset value, end of period $17.37 $14.13 $16.74
======= ======== =======
Total return(2) 52.33% (15.43)% 67.48% (4)
Ratios/supplemental data:
Net assets, end of period (thousands) $203,560 $155,089 $98,372
Ratio to average net assets of:
Expenses 1.31% 1.37% 1.50% (3)
Net investment income (loss) (0.48)% (0.28)% (0.53)%(3)
Portfolio turnover 498% 325% 103% (4)
Average commission rate paid(6) $0.0533 $0.0540 $0.0657
<CAPTION>
Class B
--------------------------------------------------------
From Inception
Year Ended April 30, 10/16/95 to
1998 1997 4/30/96
---------------- ---------------- ----------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 13.98 $16.68 $10.00
Income from investment operations
Net investment income (loss) (0.21)(5) (0.17)(5) (0.09)(1)(5)
Net realized and unrealized gain (loss) 6.70 (2.50) 6.77
-------- -------- -------
Total from investment operations 6.49 (2.67) 6.68
-------- -------- -------
Less distributions
Dividends from net investment income -- -- --
Dividends from net realized gains (3.48) (0.02) --
In excess of net investment income -- -- --
In excess of accumulated net realized gains -- (0.01) --
-------- -------- -------
Total distributions (3.48) (0.03) --
-------- -------- -------
Change in net asset value 3.01 (2.70) 6.68
-------- -------- -------
Net asset value, end of period $16.99 $13.98 $16.68
======== ======== =======
Total return(2) 51.16% (16.03)% 66.80%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $147,785 $97,647 $45,168
Ratio to average net assets of:
Expenses 2.06% 2.12% 2.26% (3)
Net investment income (loss) (1.22)% (1.03)% (1.44)%(3)
Portfolio turnover 498% 325% 103% (4)
Average commission rate paid(6) $0.0533 $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 9
<PAGE>
Phoenix Strategic Theme Fund
- - ------------------------------------------------------
INVESTMENTS AT APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- --------------
<S> <C> <C> <C>
COMMON STOCK--89.6%
AEROSPACE/DEFENSE EQUIPMENT--1.2%
Orbital Sciences Corp. (b)................................ 41,000 $ 1,824,500
--------------
COMMERCIAL SERVICES--MISCELLANEOUS--0.9%
Snyder Communication Corp. (b)............................ 38,000 1,615,000
--------------
COMPUTER--LOCAL NETWORKS--4.3%
Ascend Communications, Inc. (b)........................... 82,000 3,572,125
Cisco Systems, Inc. (b)................................... 43,500 3,186,375
--------------
6,758,500
--------------
COMPUTER--MEMORY DEVICES--4.2%
EMC Corp. (b)............................................. 111,000 5,119,875
Western Digital Corp. (b)................................. 72,000 1,422,000
--------------
6,541,875
--------------
COMPUTER--MINI/MICRO--2.2%
Dell Computer Corp. (b)................................... 42,000 3,391,500
--------------
COMPUTER--SERVICES--13.1%
America Online, Inc. (b).................................. 70,000 5,600,000
Ciber, Inc. (b)........................................... 44,700 1,452,750
Computer Sciences Corp. (b)............................... 32,000 1,688,000
DST Systems, Inc. (b)..................................... 46,000 2,535,750
HBO & Co. (b)............................................. 30,000 1,794,375
Lycos, Inc................................................ 28,000 1,730,750
Sportsline U.S.A., Inc.................................... 53,000 1,868,250
Yahoo!, Inc............................................... 32,000 3,806,000
--------------
20,475,875
--------------
COMPUTER--SOFTWARE--3.7%
Microsoft Corp. (b)....................................... 17,000 1,532,125
Realnetworks, Inc. (b).................................... 80,000 2,715,000
Veritas Software Co. (b).................................. 27,000 1,478,250
--------------
5,725,375
--------------
ELECTRIC--SEMICONDUCTOR EQUIPMENT--3.1%
Applied Materials, Inc. (b)............................... 43,000 1,553,375
Novelllus Systems, Inc. (b)............................... 35,000 1,675,625
Uniphase Corp. (b)........................................ 30,000 1,627,500
--------------
4,856,500
--------------
ELECTRICAL--SEMICONDUCTOR MANUFACTURER--2.0%
Intel Corp. (b)........................................... 20,000 1,616,250
MMC Networks, Inc......................................... 68,000 1,521,500
--------------
3,137,750
--------------
FINANCE--INVESTMENT BANKERS--2.0%
Merrill Lynch & Co., Inc.................................. 35,000 3,071,250
--------------
<CAPTION>
SHARES VALUE
-------- --------------
<S> <C> <C> <C>
FINANCIAL SERVICES--MISCELLANEOUS--4.3%
American Express Co....................................... 46,000 $ 4,692,000
Capital One Financial..................................... 22,000 2,113,375
--------------
6,805,375
--------------
HOUSEHOLD/OFFICE FURNITURE--0.7%
Steelcase, Inc............................................ 30,000 1,038,750
--------------
LEISURE--SERVICES--1.0%
Premier Parks, Inc........................................ 27,000 1,501,875
--------------
MEDIA--RADIO/TV--0.5%
Young Broadcasting Corp. Class A (b)...................... 17,000 850,000
--------------
MEDICAL--BIOMED/GENETICS--1.1%
Centocor, Inc. (b)........................................ 40,000 1,687,500
--------------
MEDICAL--DRUG/DIVERSIFIED--2.1%
ICN Pharmaceuticals, Inc.................................. 67,000 3,299,750
--------------
MEDICAL--ETHICAL DRUGS--3.8%
Alza Corp. (b)............................................ 91,000 4,362,312
Lilly (Eli) & Co.......................................... 22,000 1,530,375
--------------
5,892,687
--------------
MEDICAL--INSTRUMENTS--1.6%
Sofamor Danek Group Inc. (b).............................. 29,000 2,544,750
--------------
MEDICAL--PRODUCTS--4.3%
Becton Dickinson & Co..................................... 33,000 2,297,625
Boston Scientific Corp. (b)............................... 28,000 2,024,750
Pfizer, Inc............................................... 21,000 2,390,062
--------------
6,712,437
--------------
METAL ORES--GOLD/SILVER--2.1%
Newmont Mining Corp....................................... 100,000 3,218,750
--------------
OIL & GAS--DRILLING--2.2%
Transocean Offshore, Inc.................................. 62,000 3,464,250
--------------
OIL & GAS--FIELD SERVICES--4.3%
Global Industry, Ltd (b).................................. 115,000 2,609,062
Schlumberger Ltd.......................................... 18,500 1,533,188
Veritas DGC, Inc.......................................... 50,000 2,709,375
--------------
6,851,625
--------------
OIL & GAS--MACHINERY/EQUIPMENT--6.6%
Cooper Cameron Corp. (b).................................. 60,000 3,986,250
Smith International, Inc. (b)............................. 41,000 2,408,750
Varco International, Inc. (b)............................. 128,000 3,936,000
--------------
10,331,000
--------------
</TABLE>
12 See Notes to Financial Statements.
<PAGE>
PHOENIX STRATEGIC THEME FUND
- - ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-------- --------------
OIL & GAS--U S EXPLORATION & PRODUCTS--0.5%
<S> <C> <C> <C>
Ocean Energy, Inc. (b).................................... 33,000 $ 808,500
--------------
RETAIL--HOME FURNISHINGS--1.3%
Linens 'n Things, Inc..................................... 33,000 1,988,250
--------------
RETAIL--MISCELLANEOUS/DIVERSIFIED--1.2%
Bed Bath & Beyond, Inc. (b)............................... 37,000 1,822,250
--------------
TELECOMMUNICATIONS--EQUIPMENT--5.6%
Advanced Fibre Communication, Inc. (b).................... 57,000 2,415,375
Globalstar Telecommunications, Ltd. (b)................... 26,100 1,817,213
Loral Space and Communication............................. 58,000 1,816,125
Lucent Technologies, Inc. (b)............................. 35,000 2,664,375
--------------
8,713,088
--------------
TELECOMMUNICATIONS--SERVICES--6.0%
AT&T Corp................................................. 50,000 3,003,125
Communications Satellite Corp............................. 43,000 1,736,125
Frontier Corp............................................. 55,000 1,646,563
General Motors Corp. Class H.............................. 15,000 828,750
Reltec Corp............................................... 55,000 2,193,125
--------------
9,407,688
--------------
TRANSPORTATION--AIRLINE--1.9%
U.S. Airways Group, Inc. (b).............................. 42,000 2,987,250
--------------
TRANSPORTATION--RAIL--1.8%
Kansas City Southern Industries, Inc...................... 63,000 2,846,812
--------------
TOTAL COMMON STOCKS
(Identified cost $119,880,453)................................................... 140,170,712
--------------
FOREIGN COMMON STOCKS--3.5%
ELECTRIC--SEMICONDUCTOR EQUIPMENT--2.5%
ASM Lithography Holding N.V. (b).......................... 25,500 2,336,437
PMC--Sierra, Inc. (Canada) (b)............................ 36,000 1,638,000
--------------
3,974,437
--------------
<CAPTION>
SHARES VALUE
-------- --------------
<S> <C> <C> <C>
MEDICAL--ETHICAL DRUGS--1.0%
Elan PLC Sponsored ADR (Ireland) (b)...................... 25,500 $ 1,584,423
--------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $16,368,487).................................................... 5,558,860
--------------
TOTAL LONG-TERM INVESTMENTS--93.1%
(Identified cost $136,248,940)................................................... 145,729,572
--------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POORS PAR
RATING VALUE
(UNAUDITED) (000)
----------- --------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--17.8%
COMMERCIAL PAPER--17.8%
AlliedSignal 5.51%, 5/1/98................................ A-1 $ 3,745 3,745,000
Cargill, Inc. 5.50%, 5/1/98............................... A-1+ 1,130 1,130,000
Exxon Imperial U.S., Inc. 5.50%, 5/4/98................... A-1+ 3,575 3,573,362
BellSouth Telecommunications, Inc. 5.50%, 5/5/98.......... A-1+ 3,500 3,497,861
Kimberly-Clark Corp. 5.50%, 5/5/98........................ A-1+ 3,750 3,747,708
Greenwich Funding Corp. 5.55%, 5/6/98..................... A-1+ 2,845 2,842,807
Preferred Receivables Funding Corp. 5.55%, 5/8/98......... A-1+ 2,745 2,742,038
Corporate Receivable Corp. 5.55%, 5/13/98................. A-1+ 3,040 3,034,376
Potomac Electric Power Co. 5.52%, 5/14/98................. A-1+ 3,500 3,493,023
--------------
27,806,175
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $27,806,175).................................................... 27,806,175
--------------
TOTAL INVESTMENTS--110.9%
(Identified cost $164,055,115)................................................... 173,535,747(a)
Cash and receivables, less liabilities--(10.9%).................................. (17,058,214)
--------------
NET ASSETS--100.0%................................................................. $156,477,533
--------------
--------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $11,478,862 and gross
depreciation of $2,194,008 for income tax purposes. At April 30, 1998, the
aggregate cost of securities for federal income tax purposes was
$164,250,893.
(b) Non-income producing.
See Notes to Financial Statements. 13
<PAGE>
Phoenix Strategic Theme Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment securities at value
(Identified cost $164,055,115) $173,535,747
Cash 1,484
Receivables
Investment securities sold 2,485,897
Dividends and interest 135,942
Fund shares sold 80,863
------------
Total assets 176,239,933
------------
Liabilities
Payables
Investment securities purchased 19,182,364
Fund shares repurchased 306,447
Investment advisory fee 98,722
Distribution fee 74,231
Transfer agent fee 24,093
Financial agent fee 9,046
Trustee's fee 9,074
Accrued expenses 58,423
------------
Total liabilities 19,762,400
------------
Net Assets $156,477,533
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $134,582,816
Accumulated net realized gain 12,414,085
Net unrealized appreciation 9,480,632
------------
Net Assets $156,477,533
============
Class A
Shares of beneficial interest outstanding, $0.0001 par value,
unlimited authorization (Net Assets $89,883,977) 6,562,115
Net asset value per share $13.70
Offering price per share $13.70/(1-4.75%) $14.38
Class B
Shares of beneficial interest outstanding, $0.0001 par value,
unlimited authorization (Net Assets $66,106,883) 4,909,907
Net asset value and offering price per share $13.46
Class C
Shares of beneficial interest outstanding, $0.0001 par value,
unlimited authorization (Net Assets $266,797) 19,814
Net asset value and offering price per share $13.47
Class M
Shares of beneficial interest outstanding, $0.0001 par value,
unlimited authorization (Net Assets $219,876) 16,288
Net asset value per share $13.50
Offering price per share $13.50/(1-3.50%) $13.99
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1998
<TABLE>
<CAPTION>
Investment Income
<S> <C>
Interest $ 891,877
Dividends 718,359
-----------
Total investment income 1,610,236
-----------
Expenses
Investment advisory fee 1,139,421
Distribution fee--Class A 227,277
Distribution fee--Class B 608,380
Distribution fee--Class C 876
Distribution fee--Class M 431
Financial agent fee 94,670
Transfer agent 241,789
Registration 63,699
Professional 24,370
Printing 22,030
Custodian 19,764
Trustees 20,280
Miscellaneous 7,852
-----------
Total expenses 2,470,839
-----------
Net investment loss (860,603)
-----------
Net Realized and Unrealized Gain on Investments
Net realized gain on securities 38,200,352
Net realized loss on written options (375,904)
Net change in unrealized appreciation on investments 7,260,964
-----------
Net gain on investments 45,085,412
-----------
Net increase in net assets resulting from
operations $44,224,809
===========
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Theme Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
April 30, 1998 April 30, 1997
---------------- ---------------
From Operations
<S> <C> <C>
Net investment income (loss) $ (860,603) $ 236,284
Net realized gain (loss) 37,824,448 (564,493)
Net change in unrealized appreciation (depreciation) 7,260,964 (4,414,137)
------------- -------------
Increase (decrease) in net assets resulting from operations 44,224,809 (4,742,346)
------------- -------------
From Distributions to Shareholders
Net investment income--Class A -- (58,137)
In excess of net investment income--Class A (101,991) --
Net realized gains--Class A (13,931,615) --
Net realized gains--Class B (9,617,855) --
Net realized gains--Class C (21,083) --
Net realized gains--Class M (15,426) --
In excess of accumulated net realized gains--Class A -- (75,556)
In excess of accumulated net realized gains--Class B -- (45,199)
------------- -------------
Decrease in net assets from distributions to shareholders (23,687,970) (178,892)
------------- -------------
From Share Transactions
Class A
Proceeds from sales of shares (1,116,085 and 5,618,602 shares, respectively) 15,627,146 70,489,900
Net asset value of shares issued from reinvestment of distributions
(1,156,842 and 9,860 shares, respectively) 13,731,378 124,426
Cost of shares repurchased (2,179,107 and 1,859,542 shares, respectively) (29,983,137) (23,252,060)
------------- -------------
Total (624,613) 47,362,266
------------- -------------
Class B
Proceeds from sales of shares (666,515 and 3,501,688 shares, respectively) 9,141,162 43,480,458
Net asset value of shares issued from reinvestment of distributions
(783,925 and 3,161 shares, respectively) 9,156,239 39,607
Cost of shares repurchased (724,153 and 287,858 shares, respectively) (9,883,220) (3,604,353)
------------- -------------
Total 8,414,181 39,915,712
------------- -------------
Class C
Proceeds from sales of shares (18,017 and 0 shares, respectively) 248,777 --
Net asset value of shares issued from reinvestment of distributions
(1,797 and 0 shares, respectively) 20,990 --
Cost of shares repurchased (0 and 0 shares, respectively) -- --
------------- -------------
Total 269,767 --
------------- -------------
Class M
Proceeds from sales of shares (14,974 and 0 shares, respectively) 196,112 --
Net asset value of shares issued from reinvestment of distributions
(1,314 and 0 shares, respectively) 15,357 --
Cost of shares repurchased (0 and 0 shares, respectively) -- --
------------- -------------
Total 211,469 --
------------- -------------
Increase in net assets from share transactions 8,270,804 87,277,978
------------- -------------
Net increase in net assets 28,807,643 82,356,740
Net Assets
Beginning of period 127,669,890 45,313,150
------------- -------------
End of period (including undistributed net investment income of $0 and $199,760,
respectively) $ 156,477,533 $ 127,669,890
============= =============
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Phoenix Strategic Theme Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------
From Inception
Year Ended April 30, 10/16/95 to
1998 1997 4/30/96
--------------------------------- ----------------------
<S> <C> <C> <C>
Net asset value, beginning of period $12.03 $12.37 $10.00
Income from investment operations(7)
Net investment income (loss) (0.04)(5) 0.06(5) 0.00(1)(5)
Net realized and unrealized gain (loss) 4.03 (0.38) 2.39
------- ------ -------
Total from investment operations 3.99 (0.32) 2.39
------- ------ -------
Less distributions
Dividends from net investment income -- (0.01) --
Dividend from net realized gains (2.29) -- --
In excess of net investment income (0.03) -- --
In excess of accumulated net realized gains -- (0.01) --
Tax return of capital -- -- (0.02)
------- ------- -------
Total distributions (2.32) (0.02) (0.02)
------- ------- -------
Change in net asset value 1.67 0.34) 2.37
------- ------- -------
Net asset value, end of period $13.70 $12.03 $12.37
======= ======= =======
Total return(2) 36.22% (2.57)% 23.89%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $89,884 $77,827 $33,393
Ratio to average net assets of:
Expenses 1.33% 1.40% 1.40%(3)
Net investment income (loss) (0.26)% 0.49% (0.09)%(3)
Portfolio turnover 618% 532% 175%(4)
Average commission rate paid(6) $0.0568 $0.0590 $0.0663
<CAPTION>
Class B
--------------------------------------------------------
From Inception
Year Ended April 30, 10/16/95 to
1998 1997 4/30/96
--------------------------------- ----------------------
<S> <C> <C> <C>
Net asset value, beginning of period $11.91 $12.33 $10.00
Income from investment operations(7)
Net investment income (loss) (0.14)(5) (0.03)(5) (0.06)(1)(5)
Net realized and unrealized gain (loss) 3.98 (0.38) 2.40
------- -------- ------
Total from investment operations 3.84(5) (0.41) 2.34
------- -------- ------
Less distributions
Dividends from net investment income -- -- --
Dividend from net realized gains (2.29) -- --
In excess of net investment income -- -- --
In excess of accumulated net realized gains -- (0.01) --
Tax return of capital -- -- (0.01)
------- -------- -------
Total distributions (2.29) (0.01) (0.01)
------- -------- -------
Change in net asset value 1.55 (0.42) 2.33
------- -------- -------
Net asset value, end of period $13.46 $11.91 $12.33
======= ======== =======
Total return(2) 35.18% (3.31)% 23.41%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $66,107 $49,843 $11,920
Ratio to average net assets of:
Expenses 2.08% 2.15% 2.16%(3)
Net investment income (loss) (1.02)% (0.23)% (1.06)%(3)
Portfolio turnover 618% 532% 175%(4)
Average commission rate paid(6) $0.0568 $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.
16 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Theme Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class C Class M
---------------- ----------------
From Inception From Inception
11/3/97 to 11/3/97 to
4/30/98 4/30/98
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period $14.93 $14.93
Income from investment operations(7)
Net investment income (loss) (0.05)(5) (.02)(5)
Net realized and unrealized gain (loss) 0.88 0.88
------- -------
Total from investment operations 0.83 0.86
------- -------
Less distributions
Dividends from net investment income -- --
Dividend from net realized gains (2.29) (2.29)
In excess of accumulated net realized gains -- --
------- -------
Total distributions (2.29) (2.29)
------- -------
Change in net asset value (1.46) (1.43)
------- -------
Net asset value, end of period $13.47 $13.50
======= =======
Total return(2) 7.92%(4) 8.14%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $267 $220
Ratio to average net assets of:
Expenses 2.08%(3) 1.58%(3)
Net investment income (loss) (0.87)%(3) (0.40)%(3)
Portfolio turnover 618%(4) 618%(4)
Average commission rate paid(6) $0.0568 $0.0568
</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 17
<PAGE>
Phoenix Equity Opportunities Fund
- ------------------------------------------------------
INVESTMENTS AT APRIL 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------------- ---------------
<S> <C> <C>
COMMON STOCKS--95.1%
AUTO PARTS & EQUIPMENT--2.9%
Dana Corp........................ 95,000 $ 5,616,875
---------------
BANKS (MONEY CENTER)--1.7%
BankAmerica Corp................. 40,000 3,400,000
---------------
BEVERAGES (NON-ALCOHOLIC)--2.4%
PepsiCo, Inc..................... 120,000 4,762,500
---------------
BROADCASTING (TELEVISION, RADIO & CABLE)--2.9%
Chancellor Media Corp. (b)....... 120,000 5,692,500
---------------
BUILDING MATERIALS--2.4%
Masco Corp....................... 82,000 4,756,000
---------------
CHEMICALS--2.5%
Monsanto Co...................... 92,000 4,864,500
---------------
COMMUNICATIONS EQUIPMENT--3.3%
Lucent Technologies, Inc......... 84,000 6,394,500
---------------
COMPUTERS (HARDWARE)--2.3%
Dell Computer Corp. (b).......... 55,000 4,441,250
---------------
COMPUTERS (NETWORKING)--2.0%
Cisco Systems, Inc. (b).......... 55,000 4,028,750
---------------
COMPUTERS (PERIPHERALS)--2.1%
EMC Corp. (b).................... 88,000 4,059,000
---------------
COMPUTERS (SOFTWARE & SERVICES)--3.9%
Computer Horizons Corp. (b)...... 60,000 2,276,250
Microsoft Corp. (b).............. 60,000 5,407,500
---------------
7,683,750
---------------
DISTRIBUTORS (FOOD & HEALTH)--1.7%
Cardinal Health, Inc............. 35,000 3,368,750
---------------
ELECTRICAL EQUIPMENT--3.0%
General Electric Co.............. 70,000 5,958,750
---------------
ELECTRONICS (SEMICONDUCTORS)--3.6%
Intel Corp....................... 38,000 3,070,875
Texas Instruments, Inc........... 62,500 4,003,906
---------------
7,074,781
---------------
ENTERTAINMENT--2.4%
Premier Parks, Inc. (b).......... 85,000 4,728,125
---------------
FINANCIAL (DIVERSIFIED)--3.4%
American Express Co.............. 65,000 6,630,000
---------------
SHARES VALUE
--------------- ---------------
FOODS--3.0%
Hershey Foods Corp............... 80,000 $ 5,860,000
---------------
HEALTH CARE (DIVERSIFIED)--6.6%
Bristol-Myers Squibb Co.......... 55,000 5,823,125
McKesson Corp.................... 100,000 7,068,750
---------------
12,891,875
---------------
HEALTH CARE (SPECIALIZED SERVICES)--2.7%
Alza Corp. (b)................... 110,000 5,273,125
---------------
HOUSEHOLD FURNISHINGS & APPLIANCES--3.0%
Maytag Corp...................... 115,000 5,922,500
---------------
HOUSEHOLD PRODUCTS (NON-DURABLES)--4.4%
Colgate Palmolive Co............. 63,000 5,650,312
Procter & Gamble Co.............. 35,500 2,917,656
---------------
8,567,968
---------------
INSURANCE (MULTI-LINE)--5.1%
SunAmerica, Inc.................. 98,900 4,938,819
Travelers Group, Inc............. 83,000 5,078,563
---------------
10,017,382
---------------
INSURANCE (PROPERTY-CASUALTY)--3.4%
Allstate Corp.................... 30,000 2,887,500
St. Paul Cos., Inc. (The)........ 45,000 3,813,750
---------------
6,701,250
---------------
MANUFACTURING (DIVERSIFIED)--2.5%
Tyco International Ltd........... 90,000 4,905,000
---------------
NATURAL GAS--2.4%
Williams Cos., Inc. (The)........ 150,000 4,743,750
---------------
OIL & GAS (DRILLING & EQUIPMENT)--1.9%
Schlumberger Ltd................. 45,000 3,729,375
---------------
PERSONAL CARE--2.2%
Gillette Co...................... 37,500 4,328,906
---------------
RESTAURANTS--1.6%
McDonalds Corp................... 50,000 3,093,750
---------------
RETAIL (GENERAL MERCHANDISE)--3.2%
Dayton Hudson Corp............... 71,000 6,199,188
---------------
RETAIL (SPECIALTY-APPAREL)--2.9%
TJX Companies, Inc. (The)........ 130,000 5,752,500
---------------
SERVICES (DATA PROCESSING)--2.4%
Automatic Data Processing,
Inc............................ 72,000 4,819,500
---------------
20 See Notes to Financial Statements.
<PAGE>
PHOENIX EQUITY OPPORTUNITIES FUND
- ------------------------------------------------------
SHARES VALUE
--------------- ---------------
TELECOMMUNICATIONS (LONG DISTANCE)--5.3%
AT&T Corp........................ 56,500 $ 3,393,531
WorldCom, Inc. (b)............... 165,000 7,058,906
---------------
10,452,437
---------------
TOTAL COMMON STOCKS
(Identified cost $165,104,153)............................... 186,718,537
---------------
FOREIGN COMMON STOCKS--2.4%
OIL (INTERNATIONAL INTEGRATED)--2.4%
Royal Dutch Petroleum Co. ADR NY
Registered Shares
(Netherlands).................. 85,000 4,807,813
---------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $4,361,908)................................. 4,807,813
---------------
TOTAL LONG-TERM INVESTMENTS--97.5%
(Identified cost $169,466,061)............................... 191,526,350
---------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(UNAUDITED) (000)
--------------- -------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--5.2%
COMMERCIAL PAPER--5.2%
Marsh & McLennan Cos., Inc.
5.52%, 5/1/98.................. A-1+ $ 7,270 7,270,000
Preferred Receivables Funding
Corp. 5.57%, 5/5/98............ A-1 2,885 2,883,216
---------------
10,153,216
---------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $10,153,216)...................................... 10,153,216
---------------
TOTAL INVESTMENTS--102.7%
(Identified cost $179,619,277)..................................... 201,679,566(a)
Cash and receivables, less liabilities--(2.7%)..................... (5,332,787)
---------------
NET ASSETS--100.0%................................................... $196,346,779
---------------
---------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $23,210,031 and gross
depreciation of $1,149,742 for federal income tax purposes. At April 30,
1998, the aggregate cost of securities for federal income tax purposes was
$179,619,277.
(b) Non-income producing.
See Notes to Financial Statements. 21
<PAGE>
Phoenix Equity Opportunities Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $179,619,277) $ 201,679,566
Cash 2,269
Receivables
Investment securities sold 2,693,660
Dividends and interest 124,916
Fund shares sold 21,505
-------------
Total Assets 204,521,916
-------------
Liabilities
Payables
Investment securities purchased 7,812,779
Fund shares repurchased 98,908
Investment advisory fee 114,454
Distribution fee 42,161
Transfer agent fee 37,303
Trustees' fee 9,128
Financial agent fee 8,349
Accrued expenses 52,055
-------------
Total Liabilities 8,175,137
-------------
Net Assets $ 196,346,779
=============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $ 160,100,154
Accumulated net realized gain 14,186,336
Net unrealized appreciation 22,060,289
-------------
Net Assets $ 196,346,779
=============
Class A
Shares of beneficial interest outstanding, $0.0001
par value, unlimited authorization
(Net Assets $194,295,709) 24,171,298
Net asset value per share $8.04
Offering price per share
$ 8.04/(1-4.75%) $8.44
Class B
Shares of beneficial interest outstanding, $0.0001
par value, unlimited authorization
(Net Assets $2,051,070) 263,024
Net asset value and offering price per share $7.80
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1998
<TABLE>
<S> <C>
Investment Income
Dividends $ 790,402
Interest 411,390
-----------
Total investment income 1,201,792
-----------
Expenses
Investment advisory fee 1,326,599
Distribution fee--Class A 468,990
Distribution fee--Class B 19,186
Financial agent fee 97,806
Transfer agent 236,116
Registration 25,186
Custodian 21,706
Trustees 19,732
Professional 19,564
Printing 13,262
Miscellaneous 11,781
-----------
Total expenses 2,259,928
-----------
Net investment loss (1,058,136)
-----------
Net Realized and Unrealized Gain on Investments
Net realized gain on securities 52,694,656
Net change in unrealized appreciation on investments 16,227,091
-----------
Net gain on investments 68,921,747
-----------
Net increase in net assets resulting from
operations $67,863,611
===========
</TABLE>
22 See Notes to Financial Statements
<PAGE>
Phoenix Equity Opportunities Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
April 30, 1998 April 30, 1997
---------------- ---------------
<S> <C> <C>
From Operations
Net investment income (loss) $ (1,058,136) $ (795,274)
Net realized gain 52,694,656 10,737,465
Net change in unrealized appreciation (depreciation) 16,227,091 (33,047,467)
------------- -------------
Net increase (decrease) in net assets resulting from operations 67,863,611 (23,105,276)
------------- -------------
From Distributions to Shareholders
Net realized gains--Class A (35,351,518) (21,357,244)
Net realized gains--Class B (371,756) (197,785)
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 (35,723,274) (22,741,370)
------------- -------------
From Share Transactions
Class A
Proceeds from sales of shares (580,916 and 1,544,352 shares, respectively) 4,485,413 13,235,186
Net asset value of shares issued from reinvestment of distributions
(3,754,855 and 2,020,340 shares, respectively) 25,457,918 16,243,531
Cost of shares repurchased (3,877,643 and 4,096,555 shares, respectively) (30,879,705) (34,291,172)
------------- -------------
Total (936,374) (4,812,455)
------------- -------------
Class B
Proceeds from sales of shares (46,609 and 115,267 shares, respectively) 361,942 965,240
Net asset value of shares issued from reinvestment of distributions
(54,117 and 24,702 shares, respectively) 357,170 195,636
Cost of shares repurchased (83,812 and 48,133 shares, respectively) (638,121) (387,617)
------------- -------------
Total 80,991 773,259
------------- -------------
Decrease in net assets from share transactions (855,383) (4,039,196)
------------- -------------
Net increase (decrease) in net assets 31,284,954 (49,885,842)
Net Assets
Beginning of period 165,061,825 214,947,667
------------- -------------
End of period (including undistributed net investment income of $0 and $0, respectively) $ 196,346,779 $ 165,061,825
============= =============
</TABLE>
See Notes to Financial Statements 23
<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,
1998 1997 1996 1995 1994
---------------- ---------------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $6.89 $8.81 $7.40 $7.31 $9.64
Income from investment operations
Net investment income (loss) (0.04)(4) (0.03)(4) (0.04)(4) 0.04 0.05
Net realized and unrealized gain (loss) 2.82 (0.90) 2.34 0.58 0.57
-------- ------- -------- -------- --------
Total from investment operations 2.78 (0.93) 2.30 0.62 0.62
-------- ------- -------- -------- --------
Less distributions
Dividends from net investment income -- -- -- (0.05) (0.05)
Dividends from net realized gains (1.63) (0.94) (0.89) (0.48) (2.90)
In excess of accumulated net realized gains -- (0.05) -- -- --
-------- ------- -------- -------- --------
Total distributions (1.63) (0.99) (0.89) (0.53) (2.95)
-------- ------- -------- -------- --------
Change in net asset value 1.15 (1.92) 1.41 0.09 (2.33)
-------- ------- -------- -------- --------
Net asset value, end of period $8.04 $6.89 $8.81 $7.40 $7.31
======== ======= ======== ======== ========
Total return(1) 44.66% (12.19)% 32.86% 9.16% 4.99%
Ratios/supplemental data:
Net assets, end of period (thousands) $194,296 $63,396 $213,600 $179,666 $186,037
Ratio to average net assets of:
Expenses 1.18% 1.23% 1.25% 1.32% 1.26%
Net investment income (loss) (0.55)% (0.39)% (0.53)% 0.60% 0.57%
Portfolio turnover 371% 412% 302% 358% 167%
Average commission rate paid(5) $0.0632 $0.0543 $0.0600 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
--------------------------------------------------------------------------
From
Year Ended April 30, Inception
7/19/94 to
1998 1997 1996 4/30/95
------- ------- ---- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $6.77 $8.73 $7.39 $7.28
Income from investment operations
Net investment income (loss) (0.10)(4) (0.09)(4) (0.10)(4) 0.00
Net realized and unrealized gain (loss) 2.76 (0.88) 2.33 0.59
------- ------- ------- -----
Total from investment operations 2.66 (0.97) 2.23 0.59
------- ------- ------- -----
Less distributions
Dividends from net investment income -- -- -- --
Dividends from net realized gains (1.63) (0.94) (0.89) (0.48)
In excess of accumulated net realized gains -- (0.05) -- --
------- ------- ------- -----
Total distributions (1.63) (0.99) (0.89) (0.48)
------- ------- ------- -----
Change in net asset value 1.03 (1.96) 1.34 0.11
------- ------- ------- -----
Net asset value, end of period $7.80 $ 6.77 $8.73 $7.39
======= ======= ======= =====
Total return(1) 43.58% (12.79)% 31.92% 8.69%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $2,051 $1,666 $1,348 $525
Ratio to average net assets of:
Expenses 1.93% 1.98% 2.06% 2.15%(2)
Net investment income (loss) (1.30)% (1.15)% (1.18)% (0.06)%(2)
Portfolio turnover 371% 412% 302 % 358%
Average commission rate paid(5) $0.0632 $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.
24 See Notes to Financial Statements
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1998
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. The Strategic Theme
Series also offers Class C shares and Class M shares. Class M shares have been
closed to new investors. 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. Class C shares are sold with a 1% contingent deferred sales charge if
redeemed within one year of purchase. All 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 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.
25
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1998 (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:
The Fund may write covered options or purchase options contracts for the
purpose of hedging against changes in the market value of the underlying
securities or foreign currencies.
The Fund will realize a gain or loss upon the expiration or closing of the
option transaction. Gains and losses on written options are reported separately
in the Statement of Operations. When a written option is exercised, the proceeds
on sales or amounts paid are adjusted by the amount of premium received. Options
written are reported as a liability in the Statement of Assets and Liabilities
and subsequently marked-to-market to reflect the current value of the option.
The risk associated with written options is that the change in value of options
contracts may not correspond to the change in value of the hedged instruments.
In addition, losses may arise from changes in the value of the underlying
instruments, or if a liquid secondary market does not exist for the contracts.
The Fund may purchase options which are included in the Fund's Schedule of
Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for their 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:
<TABLE>
<CAPTION>
1st $1-2 $2+
Series Adviser $1 Billion Billion Billion
- ------ ------- ---------- ------- -------
<S> <C> <C> <C> <C>
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%
</TABLE>
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 $118,943 for Class A shares and $0
for Class M shares and deferred sales charges of $940,009 for Class B shares and
$0 for Class C shares, for the year ended April 30, 1998. In addition, each
Series pays PEPCO a distribution fee at an annual rate of 0.25% for Class A
shares, 1.00% for Class B shares, 1.00% for Class C shares and 0.50% for Class M
shares applied to 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, 1998, $1,999,009 was earned by the Distributor,
$1,041,727 was earned by unaffiliated participants and $122,695 was paid to W.S.
Griffith, an indirect subsidiary of PHL.
As Financial Agent of the Fund, PEPCO received a fee for bookkeeping,
administration, and pricing services 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, 1998, transfer agent fees were $1,182,782 of which PEPCO retained $483,658
which is net of the fees paid to State Street.
At April 30, 1998, PHL and its affiliates held shares of the Fund as
follows:
<TABLE>
<CAPTION>
Aggregate
Shares Net Asset Value
--------- ----------------
<S> <C> <C>
Strategic Theme Series--Class A 539,910 $7,396,767
--Class B 11,984 161,305
--Class C 8,012 107,922
--Class M 8,011 108,149
Equity Opportunities Series--Class A 154 1,238
--Class B 23,469 183,058
</TABLE>
26
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1998 (Continued)
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities (excluding short-term secu-rities,
options, futures, and forward currency contracts) for the year ended April 30,
1998, aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
----------------- -----------------
<S> <C> <C>
Small Cap Series ............. $1,419,510,129 $1,457,552,838
Strategic Theme Series ....... 851,764,090 849,684,078
Equity Opportunities Series .. 680,952,516 716,100,658
</TABLE>
There were no purchases or sales of long-term U.S. Government securities.
Written option activity for the year ended April 30, 1998, aggregated the
following:
<TABLE>
<CAPTION>
Call Options
---------------------------
Number of Amount of
Strategic Theme Series Options Premiums
- --------------------------------- ----------- -------------
<S> <C> <C>
Options outstanding at
April 30, 1997 ............... -- --
Options written ................. 150 $ 127,046
Options canceled in closing
purchase transactions ........ (150) (127,046)
Options expired ................. -- --
Options exercised ............... -- --
---- ----------
Options outstanding at
April 30, 1998 ............... -- $ --
==== ==========
</TABLE>
4. CAPITAL LOSS CARRYOVERS
For the year ended April 30, 1998, Small Cap Series was able to utilize
losses deferred in the prior year against current year capital gains in the
amount of $20,746,935.
Under current tax law, capital losses realized after October 31, 1997 may
be deferred and treated as occurring on the first day of the following fiscal
year. For the year ended April 30, 1998, prior year losses deferred were
utilized as follows: Small Cap Series $377,891 and Equity Opportunities Series
$861,291.
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, 1998, the Series recorded the following reclassifications to increase
(decrease) the accounts listed below:
<TABLE>
<CAPTION>
Capital paid
Undistributed Accumulated in on shares
net investment net realized of beneficial
income gain (loss) interest
---------------- ---------------- --------------
<S> <C> <C> <C>
Small Cap Series ............... $2,593,774 $ (2,593,774) --
Strategic Theme Series ......... 762,834 (762,834) --
Equity Opportunities
Series ...................... 1,058,136 (1,041,903) $ (16,233)
</TABLE>
TAX INFORMATION NOTICE (Unaudited)
For the fiscal year ended April 30, 1998, the Series distributed long-term
capital gain dividends as follows:
<TABLE>
<CAPTION>
28% rate gain 20% rate gain
Portfolio distributions distributions
- --------------------------------- --------------- --------------
<S> <C> <C>
Small Cap Series ................ $4,150,995 $587,729
Strategic Theme Series .......... 13,428 --
Equity Opportunities Series ..... 8,557,937 283,820
</TABLE>
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.
27
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
[PRICE WATERHOUSE 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
the 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, 1998,
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, 1998 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 18, 1998
28
<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, 1998, incorporated by
reference.
(b) Exhibits:
1.1 Declaration of Trust of the Registrant, previously filed, and
filed via EDGAR with Post-Effective Amendment No. 26 on
August 29, 1997, 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, incorporated herein by reference.
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, incorporated herein by reference.
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,
incorporated herein by reference.
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, incorporated herein by
reference.
1.6 Amendment to Declaration of Trust creating additional classes
and multi-class distribution system filed via EDGAR with
Post-Effective Amendment No. 27 on October 27, 1997,
incorporated herein by reference.
2.1* By-laws of the Registrant, previously filed and filed via
EDGAR herewith, 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,
incorporated herein by reference.
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, incorporated herein by reference.
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, incorporated herein by reference.
5.5* Subadvisory Agreement between Phoenix Investment Counsel,
Inc. and Seneca Capital Management LLC, dated June 26, 1998,
on behalf of Phoenix Equity Opportunities Fund filed via
EDGAR herewith.
5.6* Subadvisory Agreement between Phoenix Investment Counsel,
Inc. and Roger Engemann & Associates, Inc., dated June 26,
1998, on behalf of Phoenix Small Cap Fund filed via EDGAR
herewith.
6.1 Underwriting Agreement between Registrant and Phoenix Equity
Planning Corporation ("Equity Planning") dated November 19,
1997, filed via EDGAR with Post-Effective Amendment No. 28 on
February 13, 1998, and incorporated herein by reference.
6.2* Form of Sales Agreement between Phoenix Equity Planning
Corporation and dealers filed herewith via EDGAR.
6.3* Form of Supplement to Phoenix Family of Funds Sales Agreement
filed via EDGAR herewith.
C-1
<PAGE>
6.4* Form of Financial Institution Sales Contract for the Phoenix
Family of Funds filed via EDGAR herewith.
7. None.
8. Custodian Contract between Registrant and State Street Bank
and Trust Company dated May 1, 1997, filed via EDGAR with
Post-Effective Amendment No. 27 on October 27, 1997,
incorporated herein by reference.
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, filed via EDGAR with
Post-Effective Amendment No. 25 on August 20, 1997,
incorporated herein by reference.
9.2* Sub-Transfer Agency Agreement between Registrant and Phoenix
Equity Planning Corporation dated June 1, 1994 filed via
EDGAR herewith.
9.3 Amended and Restated Financial Agent Agreement between
Registrant and Equity Planning dated November 19, 1997 filed
via EDGAR with Post-Effective Amendment No. 28 on February
13, 1998.
9.4* First Amendment to Financial Agent Agreement between
Registrant and Phoenix Equity Planning Corporation dated
March 23, 1998 and filed via EDGAR herewith.
9.5* Second Amendment to Financial Agent Agreement between
Registrant and Phoenix Equity Planning Corporation dated July
31, 1998 and filed via EDGAR herewith.
10. Opinion as to legality of the shares filed via EDGAR with
Post-Effective Amendment No. 13 on October 16, 1995 and
incorporated herein by reference.
11.* Consent of Independent Accountants filed herewith via EDGAR.
12. Not applicable.
13. None.
14. None.
15.1 Amended and Restated Distribution Plan for Class A Shares
filed via EDGAR with Post-Effective Amendment No. 27 on
October 27, 1997, incorporated herein by reference.
15.2 Amended and Restated Distribution Plan for Class B Shares
filed via EDGAR with Post-Effective Amendment No. 27 on
October 27, 1997, incorporated herein by reference.
15.3 Amended and Restated Distribution Plan for Class C Shares
filed via EDGAR with Post-Effective Amendment No. 27 on
October 27, 1997, incorporated herein by reference.
15.4 Amended and Restated Distribution Plan for Class M Shares
filed via EDGAR with Post-Effective Amendment No. 27 on
October 27, 1997, incorporated herein by reference.
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 Amended and Restated Rule 18f-3 Multi-Class Distribution Plan
Effective May 1, 1997 filed via EDGAR with Post-Effective
Amendment No. 28 on February 13, 1998.
19. Powers of Attorney filed via EDGAR with Post-Effective
Amendment No. 14 on April 16, 1996 and incorporated herein
by reference.
- ------------------
*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.
C-2
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of June 30, 1998, 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) 9,982
Shares of Beneficial Interest--Class B (Equity Opportunities) 277
Shares of Beneficial Interest--Class A (Theme) 5,558
Shares of Beneficial Interest--Class B (Theme) 4,617
Shares of Beneficial Interest--Class C (Theme) 25
Shares of Beneficial Interest--Class M (Theme) 5
Shares of Beneficial Interest--Class A (Small Cap) 17,835
Shares of Beneficial Interest--Class B (Small Cap) 11,571
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 Adviser's current Form ADV (SEC File No. 801-5995) filed under the
Investment Advisers Act of 1940 and incorporated herein by reference.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Equity Planning also serves as the principal underwriter for the
following other investment companies:
Phoenix Series Fund, Phoenix Strategic Allocation Fund, Inc., Phoenix
Duff & Phelps Institutional Mutual Funds, Phoenix Multi-Sector Fixed
Income Fund, Inc., Phoenix Multi-Sector Short Term Bond Fund, Phoenix
Multi-Portfolio Fund, Phoenix California Tax Exempt Bonds, Inc., Phoenix
Income and Growth Fund, Phoenix Worldwide Opportunities Fund, Phoenix
Equity Series Fund, Phoenix-Aberdeen Series Fund, Phoenix-Engemann
Funds, Phoenix Investment Trust 97, Phoenix-Seneca Funds, Phoenix Home
Life Variable Universal Life Account, Phoenix Home Life Variable
Accumulation Account, PHL Variable Accumulation Account, Phoenix Life
and Annuity Variable Universal Life Account, PHL Variable Separate
Account MVA1.
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
NAME AND POSITIONS AND OFFICES POSITION AND OFFICES
PRINCIPAL ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
- ----------------- ---------------- ---------------
Michael E. Haylon Director Executive Vice President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Vice President
100 Bright Meadow Blvd. Senior Vice President,
P.O. Box 2200 Chief Financial
Enfield, CT 06083-2200 Officer and Treasurer
John F. Sharry Executive Vice President, Executive Vice President
100 Bright Meadow Blvd. Retail Distribution
P.O. Box 2200
Enfield, CT 06083-2200
C-3
<PAGE>
NAME AND POSITIONS AND OFFICES POSITION AND OFFICES
PRINCIPAL ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
- ----------------- ---------------- ---------------
Leonard J. Saltiel Managing Director, Vice President
56 Prospect St. Operations and Service
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Secretary
101 Munson St. Mutual Fund
P.O. Box 810 Customer Service
Greenfield, MA 01302-0810
Nancy G. Curtiss Vice President Treasurer
56 Prospect St. and Treasurer,
P.O. Box 150480 Fund Accounting
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Assistant Secretary
56 Prospect St. 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 2200
Enfield, CT 06083-2200
Jacqueline Porter Assistant Vice President Assistant Treasurer
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
(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 Funds'
investment adviser, Phoenix Investment Counsel, Inc.; Registrant's financial
agent, transfer agent and principal underwriter, Phoenix Equity Planning
Corporation; Registrant's dividend disbursing agent and custodian, State Street
Bank and Trust Company. The address of the Secretary of the Trust is 101 Munson
Street, Greenfield, Massachusetts 01301; the address of Phoenix Investment
Counsel, Inc. is 56 Prospect Street, Hartford, Connecticut 06115; the address of
Phoenix Equity Planning Corporation is 100 Bright Meadow Boulevard, P.O. Box
2200, Enfield, Connecticut 06083-2200; the address of the dividend disbursing
agent is P.O. Box 8301, Boston, Massachusetts 02266-8301, Attention: Phoenix
Funds, and the address of the custodian is P.O. Box 351, Boston, Massachusetts
02101.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders upon request and without charge.
C-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 28th day of August, 1998.
PHOENIX STRATEGIC EQUITY SERIES FUND
ATTEST: /s/ Thomas N. Steenburg BY: /s/ Philip R. McLoughlin
----------------------- ------------------------
Thomas N. Steenburg 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 28th day of August, 1998.
SIGNATURE TITLE
--------- ------
Trustee
---------------------------------------
Robert Chesek*
Trustee
---------------------------------------
E. Virgil Conway*
/s/ Nancy G. Curtiss Treasurer (principal
--------------------------------------- financial and accounting officer)
Nancy G. Curtiss
Trustee
---------------------------------------
Harry Dalzell-Payne*
Trustee
---------------------------------------
Francis E. Jeffries*
Trustee
---------------------------------------
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin Trustee and President
--------------------------------------- (principal executive officer)
Philip R. McLoughlin
Trustee
---------------------------------------
Everett L. Morris*
Trustee
---------------------------------------
James M. Oates*
Trustee
---------------------------------------
Calvin J. Pedersen*
Trustee
---------------------------------------
Herbert Roth, Jr.*
Trustee
---------------------------------------
Richard E. Segerson*
Trustee
---------------------------------------
Lowell P. Weicker, Jr.*
*By /s/ Philip R. McLoughlin
------------------------
* Philip R. McLoughlin pursuant to powers of attorney previously filed.
S-1(c)
EXHIBIT 2.1
BY-LAWS
<PAGE>
BY-LAWS
OF
NATIONAL STOCK FUND
ARTICLE I
DEFINITIONS
The terms "Commission", "Declaration", "Majority Shareholder Vote" "1940 Act",
"Shareholder", "Shares", "Trust", "Trust Property", and "Trustees" have the
respective meanings given them in the Declaration of Trust of National Stock
Fund dated June 25, 1986 as amended from time to time.
ARTICLE II
OFFICES
SECTION 2.1. Principal Office. Until changed by the Trustees, the
principal office of the Trust in the Commonwealth of Massachusetts shall be in
the City of Boston, County of Suffolk.
SECTION 2.2. Other Offices. In addition to its principal office in the
Commonwealth of Massachusetts, the Trust may have an office or offices in the
City of New York, State of New York, and at such other places within and around
the Commonwealth as the Trustees may from time to time designate or the business
of the Trust may require.
ARTICLE III
SHAREHOLDERS' MEETINGS
SECTION 3.1. Place of Meetings. Meetings of Shareholders shall be held
at such place, within or without the Commonwealth of Massachusetts, as may be
designated from time to time by the Trustees.
SECTION 3.2. Meetings. Meetings of Shareholders of the Trust shall be
held whenever called by the Trustees or the President of the Trust and whenever
election of a Trustee or Trustees by Shareholders is required by the provisions
of Section 16(a) of the 1940 Act, for that purpose. Meetings of Shareholders
shall also be called by the Secretary upon the written request of the holders of
Shares entitled to vote not less than twenty five percent (25%) of all the
1
<PAGE>
votes entitled to be cast at such meeting. Such request shall state the purpose
or purposes of such meeting and the matters proposed to be acted on thereat. The
Secretary shall inform such Shareholders of the reasonable estimated cost of
preparing and mailing such notice of the meeting and upon payment to the Trust
of such costs, the Secretary shall give notice stating the purpose or purposes
of the meeting to all entitled to vote at such meeting. No meeting need be
called upon the request of the holders of Shares entitled to vote at such
meeting, to consider any matter which is substantially the same as a matter
voted upon at any meeting of Shareholders held during the preceding twelve
months.
SECTION 3.3. Notice of Meetings. Written or printed notice of every
Shareholders' meeting stating the place, date, and purpose or purposes thereof,
shall be given by the Secretary not less than ten (10) nor more than ninety (90)
days before such meeting to each Shareholder entitled to vote at such meeting.
Such notice shall be deemed to be given when deposited in the United States
mail, postage prepaid, directed to the Shareholder at his address as it appears
on the records of the Trust.
SECTION 3.4. Quorum and Adjournment of Meetings. Except as otherwise
provided by law, by the Declaration or by these By-Laws, at all meetings of
Shareholders the holders of a majority of the Shares issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum for the transaction of business. In the
absence of a quorum, the Shareholders present or represented by proxy and
entitled to vote thereat shall have power to adjourn the meeting from time to
time. Any adjourned meeting may be held as adjourned without further notice. At
any adjourned meeting at which a quorum shall be present, any business may be
transacted as if the meeting had been held as originally called.
SECTION 3.5. Voting Rights, Proxies. At each meeting of Shareholders,
each holder of record of Shares entitled to vote thereat shall be entitled to
one vote in person or by proxy, executed in writing by the Shareholder or his
duly authorized attorney-in-fact, for each Share of beneficial interest for the
Trust and for the fractional portion of one vote for each fractional Share
entitled to vote so registered in his name on the records of the Trust on the
date fixed as the record date for the determination of Shareholders entitled to
vote at such meeting. No proxy shall be valid after eleven months from its date,
unless otherwise provided in the proxy. At all meetings of Shareholders, unless
the voting is conducted by inspectors, all questions relating to the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided by the chairman of the meeting. Pursuant to
a resolution of a majority of the Trustees, proxies may be solicited in the name
of one or more Trustees or Officer of the Trust.
SECTION 3.6. Vote Required. Except as otherwise provided by law, by the
Declaration of Trust, or by these By-Laws at each meeting of Shareholders at
which a quorum is present all matters shall be decided by Majority Shareholder
Vote.
SECTION 3.7. Inspector of Election. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman of any meeting of Shareholders may,
2
<PAGE>
and on the request of any Shareholder or his proxy shall, appoint Inspectors of
Election of the meeting. In case any person appointed as Inspector fails to
appear or fails or refuses to act, the vacancy may be filed by appointment made
by the Trustees in advance of the convening of the meeting or at the meeting by
the person acting as chairman. The Inspectors of Election shall determine the
number of Shares outstanding, the Shares represented at the meeting, the
existence of a quorum, the authenticity, validity and effect of proxies, shall
receive votes, ballots or consents, shall hear and determine all challenges and
questions in any way arising in connection with the right to vote, shall count
and tabulate all votes or consents, determine the results and do such other acts
as may be proper to conduct the question or vote with fairness to all
Shareholders. On request of the chairman of the meeting or of any Shareholder or
his proxy, the Inspectors of Election shall make a report in writing of any
challenge or question or matter determined by them and shall execute a
certificate of any facts found by them.
SECTION 3.8. Inspection of Books and Records. Shareholders shall have
such rights and procedures of inspection for the books and records of the Trust
as are granted to Shareholders under the Business Corporation Law of the
State of Massachusetts.
SECTION 3.9. Action by Shareholders Without Meeting. Except as
otherwise provided by law, the provisions of these By-Laws relating to notices
and meetings to the contrary notwithstanding, any action required or permitted
to be taken at any meeting of Shareholders may be taken without a meeting if a
majority of the Shareholders entitled to vote upon the action consent to the
action in writing and such consents are filed with the records of the Trust.
Such consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
ARTICLE IV
TRUSTEES
SECTION 4.1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular or special meetings of the Trustees. Regular
meeting of the Trustees may be held at such time and place as shall be
determined from time to time by the Trustees without further notice. Special
meetings of the Trustees may be called at any time by the President and shall be
called by the President or the Secretary upon the written request of any two (2)
Trustees.
SECTION 4.2. Notice of Special Meetings. Written notice of special
meetings of the Trustees stating the place, date and time thereof, shall be
given not less than two (2) days before such meeting to each Trustee personally,
by telegram, by mail, or by leaving such notice at his place of residence or
usual place of business. If mailed, such notice shall be deemed to be given when
deposited in the United States mail, postage prepaid; directed to the Trustee at
his address as it appears on the records of the Trust. Subject to the provisions
of the 1940 Act, notice or waiver of notice need not specify the purpose of any
special meeting.
SECTION 4.3. Telephone Meetings. Subject to the provisions of the 1940
Act, any Trustee, or any member or members of any committee designated by the
Trustees, may participate
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in a meeting of the Trustees, or any such committee, as the case may be, by
means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means constitutes presence in person at the
meeting.
SECTION 4.4. Quorum, Voting and Adjournment of Meetings. At all
meetings of the Trustees, a majority of the Trustees shall be requisite to and
shall constitute a quorum for the transaction of business. If a quorum is
present, the affirmative vote of a majority of the Trustees present shall be the
act of the Trustees, unless the concurrence of a greater proportion is expressly
required for such action by law, the Declaration or these By-Laws. If at any
meeting of the Trustees there be less than a quorum present, the Trustees
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall have been obtained.
SECTION 4.5. Action by Trustees Without Meeting. The provisions of
these By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at any
meeting of the Trustees may be taken without a meeting if a consent in writing
setting forth the action shall be signed by all of the Trustees entitled to vote
upon the action and such written consent is filed with the minutes of
proceedings of the Trustees.
SECTION 4.6. Expenses and Fees. Each Trustee may be allowed expenses,
if any, for attendance at each regular or special meeting of the Trustee, and
each Trustee who is not an officer or employee of the Trust or of its investment
manager or underwriter or of any corporate affiliate of any of said persons
shall receive for services rendered as a Trustee of the Trust such compensation
as may be fixed by the Trustees. Nothing herein contained shall be construed to
preclude any Trustee from serving the Trust in any other capacity and receiving
compensation therefor.
SECTION 4.7. Execution of Instruments and Documents and Signing of
Checks and Other Obligations and Transfers. All instruments, documents and other
papers shall be executed in the name and on behalf of the Trust and all checks,
notes, drafts and other obligations for the payment of money by the Trust shall
be signed, and all transfer of securities standing in the name of the Trust
shall be executed, by the President, any Vice President or the Treasurer or by
any one or more officers or agents of the Trust as shall be designated for that
purpose by vote of the Trustees.
SECTION 4.8. Indemnification of Trustees, Officers, Employees and
Agents. (a) The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Trustee, officer, employee, or agent of the Trust. The
indemnification shall be against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement, actually and reasonably incurred by him in
connection with the action, suit, or proceeding, if he acted in good faith and
in a manner he reasonably believed to be in or not
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opposed to the best interests of the Trust, and, with respect to any criminal
action, or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or on behalf of the Trust to obtain a judgment or decree in its favor by
reason of the fact that he is or was a Trustee, officer, employee, or agent of
the Trust. The indemnification shall be against expenses, including attorneys'
fees actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust;
except that no indemnification shall be made in respect of any claim, issue, or
matter as to which the person has been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Trust, except to the extent
that the court in which the action or suit was brought, or a court of equity in
the county in which the Trust has its principal office, determines upon
application that, despite the adjudication of liability but in view of all
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for those expenses which the court shall deem proper, provided such
Trustee, officer, employee or agency is not adjusted to be liable by reason of
his willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
(c) To the extent that a Trustee, officer, employee, or agent of the
Trust has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in subsection (a) or (b) or in defense of any
claim, issue, or matter therein, he shall be indemnified against expenses,
including attorneys' fees, actually and reasonably incurred by him in connection
therewith.
(d)(1) Unless a court orders otherwise, any indemnification under
subsections (a) or (b) of this section may be made by the Trust only as
authorized in the specific case after determination that indemnification of the
Trustee, officer, employee, or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in subsections (a) or (b).
(2) The determination shall be made:
(i) By the Trustees, by majority vote of a quorum which
consists of Trustees who were not parties to the action, suit or proceeding; or
(ii) If the required quorum is not obtainable, or if a
quorum of disinterested Trustees so directs, by independent legal counsel in a
written opinion; or
(iii) By the Shareholders.
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(3) Notwithstanding any provisions of this Section 4.8 no person
shall be entitled to indemnification for any liability, whether or not there is
an adjudication of liability, arising by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of duties as described in Section
17(h) and (i) of the Investment Company Act of 1940 ("disabling conduct"). A
person shall be deemed not liable by reason of disabling conduct if, either:
(i) a final decision on the merits is made by a court or
other body before whom the proceeding was brought that the person
to be indemnified ("indemnitee") was not liable by reason of
disabling conduct; or
(ii) in the absence of such a decision, a reasonable
determination, based upon review of the facts, that the indemnitee
was not liable by reason of disabling conduct, is made by either --
(A) a majority of a quorum of Trustees who are
neither "interested persons" of the Trust, as defined in Section
2(a)(19) of the Investment Company Act of 1940, nor parties to the
action, suit or proceeding, or
(B) an independent legal counsel in a written opinion.
(e) Expenses, including attorneys fees incurred by a Trustee, officer,
employee or agent of the Trust in defending a civil or criminal action, suit or
proceeding may be paid by the Trust in advance of the final disposition thereof
if:
(1) authorized in the specific case by the Trustees; and
(2) the Trust receives an undertaking by or on behalf of the
Trustee, officer, employee or agent of the Trust to repay the advance if it is
not ultimately determined that such person is entitled to be indemnified by the
Trust; and
(3) either, (i) such person provides a security for his
undertaking, or
(ii) the Trust is insured against losses by reason of any
lawful advances, or
(iii) a determination, based on a review of readily
available facts, that there is reason to believe that such person
ultimately will be found entitled to indemnification, is made by
either --
(A) a majority of a quorum which consists of
Trustees who are neither "interested persons" of the Trust,
as defined in Section 2(a)(19) of the Investment Company Act
of 1940, nor parties to the action, suit or proceeding, or
(B) an independent legal counsel in a written opinion.
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(f) The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which a person may be entitled under any
by-law, agreement, vote of Shareholders or disinterested Trustees or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding the office, and shall continue as to a person who has ceased to be
a Trustee, officer, employee, or agent and inure to the benefit of the heirs,
executors and administrators of such person; provided that no person may satisfy
any right of indemnity or reimbursement granted herein or to which he may be
otherwise entitled except out of the property of the Trust, and no Shareholder
shall be personally liable with respect to any claim for indemnity or
reimbursement or otherwise.
(g) The Trust may purchase and maintain insurance on behalf of any
person who is or was a Trustee, officer, employee, or agent of the Trust,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such. However, in no event will the
Trust purchase insurance to indemnify any officer or Trustee against liability
for any act for which the Trust itself is not permitted to indemnify him.
(h) Nothing contained in this Section shall be constructed to protect
any Trustee or officer of the Trust against any liability to the Trust or to its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
ARTICLE V
COMMITTEES
SECTION 5.1. Executive and Other Committees. The Trustees, by
resolution adopted by a majority of the Trustees, may designate an Executive
Committee and/or other committees, each committee to consist of two (2) or more
of the Trustees of the Trust and may delegate to such committees, in the
intervals between meetings of the Trustees, any or all of the powers of the
Trustees in the management of the business and affairs of the Trust. In the
absence of any member of any such committee, the members thereof present at any
meeting, whether or not they constitute a quorum, may appoint a Trustee to act
in place of such absent member. Each such committee shall keep a record of
proceedings.
The Executive Committee and any other committee shall fix its own rules
or procedure, but the presence of at least fifty percent (50%) of the members of
the whole committee shall in each case be necessary to constitute a quorum of
the committee and the affirmative vote of the majority of the members of the
committee present at the meeting shall be necessary to take action.
All actions of the Executive Committee shall be reported to the
Trustees at the meeting thereof next succeeding to the taking of such action.
SECTION 5.2. Advisory Committee. The Trustees may appoint an advisory
committee which shall be composed of persons who do not serve the Trust in any
other capacity
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and which shall have advisory functions with respect to the investments of the
Trust but which shall have no power to determine that any security or other
investment shall be purchased, sold or otherwise disposed of by the Trust. The
number of persons constituting any such advisory committee shall be determined
from time to time by the Trustees. The members of any such advisory committee
may receive compensation for their services and may be allowed such fees and
expenses for their attendance at the meetings as the Trustees may from time to
time determine to be appropriate.
SECTION 5.3. Committee Action Without Meeting. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at any
meeting of any Committee of the Trustees appointed pursuant to Section 5.1 of
these By-Laws may be taken without a meeting if a consent in writing setting
forth the action shall be signed by all members of the Committee entitled to
vote upon the action and such written consent is filed with the records of the
proceedings of the Committee.
ARTICLE VI
OFFICERS
SECTION 6.1. Executive Officers. The executive officers of the Trust
shall be Chairman, a President, one or more Vice Presidents, a Secretary and a
Treasurer. The President shall be selected from among the Trustees but none of
the other executive officers need be a Trustee. Two or more officers, except
those of President and any Vice President may be held by the same person, but no
officer shall execute, acknowledge or verify any instrument in more than one
capacity. The executive officers of the Trust shall be elected annually by the
Trustees and each executive officer so elected shall hold office until his
successor is elected and has qualified.
SECTION 6.2. Other Officers and Agents. The Trustees may also elect one
or more Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers and may elect, or may delegate to the President the power to appoint,
such other officers and agents as the Trustees shall at any time or from time to
time deem advisable.
SECTION 6.3. Terms and Removal and Vacancies. Each officer of the Trust
shall hold office until his successor is elected and has qualified. Any officer
or agent of the Trust may be removed by the Trustees whenever, in their
judgment, the interest of Trust will be served thereby, but such removal shall
be without prejudice to the contractual rights, if any, of the person so
removed.
SECTION 6.4. Compensation of Officers. The compensation of officers and
agents of the Trust shall be fixed by the Trustees, or by the President to the
extent provided by the Trustees with respect to officers appointed by the
President.
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SECTION 6.5. Power and Duties. All officers and agents of the Trust, as
between themselves and the Trust, shall have authority and perform such duties
in the management of the Trust as may be provided in or pursuant to these
By-Laws, or to the extent not so provided, as may be prescribed by the Trustees;
provided, that no rights of any third party shall be affected or impaired by any
such By-Law or resolution of the Trustees unless he has knowledge thereof.
SECTION 6.6. The Chairman. The Chairman shall preside at all meetings
of the Shareholders and of the Trustees, shall be a signatory on all Annual and
Semi-Annual Reports as may be sent to shareholders and he shall perform such
other duties as the Trustees may from time to time prescribe.
SECTION 6.7. The President. The President shall be the chief executive
officer of the Trust; he shall have general and active management of the
business of the Trust, shall see that all orders and resolutions of the Trustees
are carried into effect, and, in connection therewith, shall be authorized to
delegate to one or more Vice Presidents such of his powers and duties at such
times and in such manner as he may deem advisable.
SECTION 6.8. The Vice Presidents. The Vice Presidents shall be of such
number and shall have such titles as may be determined from time to time by the
Trustees. The Vice President, or, if there be more than one, the Vice Presidents
in the order of their seniority as may be determined from time to time by the
Trustees or the President, shall, in the absence or disability of the President,
exercise the powers and perform the duties of the President, and he or they
shall perform such other duties as the Trustees or the President may from time
to time prescribe.
SECTION 6.9. The Assistant Vice Presidents. The Assistant Vice
President, or, if there be more than one, the Assistant Vice Presidents, shall
perform such duties and have such powers as may be assigned them from time to
time by the Trustees or the President.
SECTION 6.10. The Secretary. The Secretary shall attend all meetings of
the Trustees and all meetings of the Shareholders and record all the proceedings
of the meetings of the Shareholders and of the Trustees in a book to be kept for
that purpose, and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
Shareholders and special meetings of the Trustees, and shall perform such other
duties and have such powers as the Trustees, or the President, may from time to
time prescribe. He shall keep in safe custody the seal of the Trust and affix or
cause the same to be affixed to any instrument requiring it, and, when so
affixed, it shall be attested by his signature or by the signature of an
Assistant Secretary.
SECTION 6.11. The Assistant Secretaries. The Assistant Secretary, or,
if there be more than one, the Assistant Secretaries, in the order determined by
the Trustees or the President, shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary and shall
perform such duties and have such other powers as the Trustees, or the
President, may from time to time prescribe.
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SECTION 6.12. The Treasurer. The Treasurer shall be the chief financial
officer of the Trust. He shall keep or cause to be kept full and accurate
accounts of receipts and disbursements in books belonging to the Trust, and he
shall render to the Trustees and the President, whenever any of them require it,
an account of his transactions as Treasurer and of the financial condition of
the Trust; and he shall perform such other duties as the Trustees, or the
President, may from time to time prescribe.
SECTION 6.13. The Assistant Treasurers. The Assistant Treasurer, or, if
there shall be more than one, the Assistant Treasurers in the order determined
by the Trustees or the President, shall, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the Trustees, or the
President, may from time to time prescribe.
SECTION 6.14. Delegation of Duties. Whenever an officer is absent or
disabled, or whenever for any reason the Trustees may deem it desirable, the
Trustees may delegate the powers and duties of an officer or officers to any
other officer or officers or to any Trustee or Trustees.
ARTICLE VII
DIVIDENDS AND DISTRIBUTIONS
Subject to any applicable provisions of law and the Declaration,
dividends and distributions upon the Shares may be declared at such intervals as
the Trustees may determine, in cash, in securities or other property, or in
Shares, from any sources permitted by law, all as the Trustees shall from time
to time determine.
Inasmuch as the computation of net income and net profits from the sale
of securities or other properties for federal income tax purposes may vary from
the computation thereof on the records of the Trust, the Trustees shall have
power, in their discretion, to distribute as income dividends and as capital
gain distributions, respectively, amounts sufficient to enable the Trust to
avoid or reduce liability for federal income taxes.
ARTICLE VIII
CERTIFICATES OF SHARES
SECTION 8.1. Stock Certificates. Each holder of stock of the Trust
shall be entitled upon request to have a certificate or certificates, in such
form as shall be approved by the Board of Trustees, representing the number of
shares of stock of the Trust owned by such Shareholder, provided, however, that
certificates for fractional shares will not be delivered in any case. The
certificates representing shares and class of stock shall be signed by or in the
name of the Trust by the President or a Vice President and by the Secretary or
an Assistant Secretary or the Treasurer
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and sealed with the seal of the Trust. Any or all of the signatures or the seal
on the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate shall be issued, it may be issued by the Trust with the
same effect as if such officer, transfer agent or registrar were still in office
at the date of issue.
SECTION 8.2. Rules and Regulations. The Board may make such additional
rules and regulations, not inconsistent with these By-Laws, as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of stock of the Trust. It may appoint, or authorize any officer or
officers to appoint, one or more transfer agents or one or more transfer clerks
and one or more registrars and may require all certificates for shares of stock
to bear the signature or signatures of any of them.
SECTION 8.3. Lost, Stolen, Destroyed or Mutilated Certificates. The
holder of any certificates representing shares of stock of the Trust shall
immediately notify the Trust of any loss, theft, destruction or mutilation of
such certificate, and the Trust may issue a new certificate of stock, subject to
the requirements of the Lost and Stolen Securities Program, if any, established
from time to time, by the transfer agent or registrar, in the place of any
certificate theretofore issued by it which the owner thereof shall allege to
have been lost, stolen or destroyed or which shall have been mutilated, and the
Board of Trustees may, in its discretion, require such owner or such owner's
legal representatives to give to the Trust a bond in such sum, limited or
unlimited, and in such form and with such surety or sureties, as the Board of
Trustees in its absolute discretion shall determine, to indemnify the Trust and
its agents or designees against any claim that may be made against it or them,
individually or collectively, on account of the alleged loss, theft or
destruction of any such certificate, or issuance of a new certificate. Anything
herein to the contrary notwithstanding, the Board of Trustees, in its absolute
discretion, may refuse to issue any such new certificate, except pursuant to
legal proceedings under the laws of the Commonwealth of Massachusetts.
SECTION 8.4. Stock Ledger. The Trust shall maintain at the principal
office of the Trust or any transfer agent designated by the Board of Trustees,
an original or a duplicate stock ledger containing the names and addresses of
all stockholders and the number of shares of each class held by each
Shareholder. Such stock ledger may be in written form or any other form capable
of being converted into written form within a reasonable time for visual
inspection. The Trust shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares entitled to receive
dividends and to vote as such owner, and shall not be bound to recognize any
equitable or other claim to interest in such shares on the part of any other
person, whether or not it shall have received express or other notice thereof,
except as otherwise provided by the laws of Massachusetts.
SECTION 8.5. Transfer of Stock. Transfers of shares of stock of the
Trust shall be made on the stock records of the Trust only by the registered
holder of thereof, or by his attorney duly executed and filed with the Secretary
or with a transfer agent or transfer clerk, and on surrender of the certificate
or certificates, if issued, for such shares properly endorsed or accompanied by
a duly executed stock transfer power and the payment of all taxes thereon.
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ARTICLE IX
CUSTODY OF SECURITIES
SECTION 9.1. Employment of a Custodian. The Trust shall place and at
all times maintain in the custody of a Custodian (including any sub-custodian
for the Custodian) all funds, securities and similar investments included in the
Trust Property. The Custodian (and any sub-custodian) shall be a bank having not
less than $2,000,000 aggregate capital, surplus and undivided profits and shall
be appointed from time to time by the Trustees, who shall fix its remuneration.
SECTION 9.2. Action Upon Termination of Custodian Agreement. Upon
termination of a Custodian Agreement or inability of the Custodian to continue
to serve, the Trustees shall promptly appoint a successor custodian, but in the
event that no successor custodian can be found who has the required
qualifications and is willing to serve, the Trustees shall call as promptly as
possible a special meeting of the Shareholders to determine whether the Trust
shall function without a custodian or shall be liquidated. If so directed by
vote of the holders of a majority of the outstanding voting securities, the
Custodian shall deliver and pay over all Trust Property held by it as specified
in such vote.
SECTION 9.3. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
Custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodian.
ARTICLE X
WAVIER OF NOTICE
Whenever any notice of the time, place or purpose of any meeting of
Shareholders, Trustees, or of any committee is required to be given in
accordance with law or under the provisions of the Declaration or these By-Laws,
a wavier thereof in writing, signed by the person or persons entitled to such
notice and filed with the records of the meeting, whether before or after the
holding thereof, or actual attendance at the meeting of Shareholders, Trustees
or committee, as the case may be, in person, shall be deemed equivalent to the
giving of such notice to such person.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Location of Books and Records. The books and records of
the Trust may be kept outside the Commonwealth of Massachusetts at such places
as the Trustees may from time to time determine, except as otherwise required by
law.
SECTION 11.2. Record Date. The Trustees may fix in advance a date as
the record date for the purpose of determining Shareholders entitled to notice
of, or to vote at, any meeting of Shareholders, or Shareholders entitled to
receive payment of any dividend or the allotment of any rights, or in order to
make a determination of Shareholders for any other proper purpose. Such date, in
any case, shall be not more than sixty (60) days, and in case of a meeting of
Shareholders not less than ten (10) days, prior to the date on which particular
action requiring such determination of Shareholders is to be taken. In lieu of
fixing a record date the Trustees may provide that the transfer books shall be
closed for a stated period but not to exceed, in any case, twenty (20) days. If
the transfer books are closed for the purpose of determining Shareholders
entitled to notice of a vote at a meeting of Shareholders, such books shall be
closed for at least ten (10) days immediately preceding such meeting.
SECTION 11.3. Seal. The Trustees shall adopt a seal, which shall be in
such form and shall have such inscription thereon as the Trustees may from time
to time provide. The seal of the Trust may be affixed to any document, and the
seal and its attestation may be lithographed, engraved or otherwise printed on
any document with the same force and effect as if it have been imprinted and
attested manually in the same manner and with the same effect as if done by a
Massachusetts business corporation under Massachusetts law.
SECTION 11.4. Fiscal Year. The fiscal year of the Trust shall end on
such date as the Trustees may by resolution specify, and the Trustees may by
resolution change such date for future fiscal years at any time and from time to
time.
SECTION 11.5. Orders for Payment of Money. All orders or instructions
for the payment of money of the Trust, and all notes or other evidence of
indebtedness issued in the name of the Trust, shall be signed by such officer or
officers or such person or persons as the Trustees may from time to time
designate, or as may be specified in or pursuant to the agreement between the
Trust and the bank or trust company appointed as Custodian of the securities and
funds of the Trust.
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ARTICLE XII
COMPLIANCE WITH FEDERAL REGULATIONS
The Trustees are hereby empowered to take such action as they may deem
to be necessary, desirable or appropriate so that the Trust is or shall be in
compliance with any federal or state statute, rule or regulation with which
compliance by the Trust is required.
ARTICLE XIII
AMENDMENTS
These By-Laws may be amended, altered, or repealed or new By-Laws may
be adopted, (a) by a Majority Shareholder Vote or (b) by the Trustees; provided,
however, that no By-Law may be amended, adopted or repealed by the Trustees if
such amendment, adoption or repeal requires, pursuant to law, the Declaration,
or these By-Laws, a vote of the Shareholders. The Trustees shall in no event
adopt By-Laws which are in conflict with the Declaration, and any apparent
inconsistency shall be construed in favor of the related provision in the
Declaration.
ARTICLE XIV
DECLARATION OF TRUST
The Declaration of Trust establishing National Stock 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 name National Total Income 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 National Stock 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 or otherwise, in connection with the
affairs of said National Stock Fund, but the Trust estate shall be liable.
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EXHIBIT 5.5
SUBADVISORY AGREEMENT
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PHOENIX STRATEGIC EQUITY SERIES FUND
SUBADVISORY AGREEMENT
---------------------
June 26, 1998
Seneca Capital Management LLC
909 Montgomery Street
San Francisco, California 94133
RE: SUBADVISORY AGREEMENT
Gentlemen:
Phoenix Strategic Equity Series Fund (the "Trust") is a diversified open-end
investment company of the series type registered under the Investment Company
Act of 1940 (the "Act"), and is subject to the rules and regulations promulgated
thereunder. The shares of the Trust are offered or may be offered in several
series, including the Phoenix Equity Opportunities Fund (hereafter referred to
as the "Series").
Phoenix Investment Counsel, Inc. (the "Adviser") evaluates and recommends series
advisers for the Series and is responsible for the day-to-day management of the
Series.
1. Employment as a Subadviser. The Adviser, being duly authorized, hereby
employs Seneca Capital Management LLC (the "Subadviser") as a
subadviser to invest and reinvest the assets of the Series on the terms
and conditions set forth herein. The services of the Subadviser
hereunder are not to be deemed exclusive; the Subadviser may render
services to others and engage in other activities which do not conflict
in any material manner in the Subadviser's performance hereunder.
2. Acceptance of Employment; Standard of Performance. The Subadviser
accepts its employment as a subadviser to the Adviser and agrees to use
its best professional judgment to make investment decisions for the
Series in accordance with the provisions of this Agreement.
3. Services of Subadviser. The Subadviser shall provide the services set
forth herein and in Schedule A attached hereto and made a part hereof.
In providing management services to the Series, the Subadviser shall be
subject to the investment objectives, policies and restrictions of the
Trust as they apply to the Series and as set forth in the Trust's then
current Prospectus and Statement of Additional Information (as the same
may be modified from time to time), and to the Trust's Agreement and
Declaration of Trust, to the investment and other restrictions set
forth in the Act, the Securities Act of 1933 and the Internal Revenue
Code and the rules and regulations thereunder, and to the supervision
and control of the Trustees of the Trust (the "Trustees"). The
Subadviser shall not, without the Adviser's prior approval, effect any
transactions which would cause the Series at the time of the
transaction to be out of compliance with any of such restrictions or
policies.
4. Expenses. The Subadviser shall furnish at its own expense, or pay the
expenses of the Adviser, for the following:
<PAGE>
(a) Office facilities, including office space, furniture and
equipment utilized by its employees, in the fulfillment
of Subadviser's responsibilities hereunder;
(b) Personnel necessary to perform the functions required to
manage the investment and reinvestment of each Series'
assets (including those required for research,
statistical and investment work), and to fulfill the
other functions of the Subadviser hereunder;
(c) Personnel to serve without salaries for the Trust as
officers or agents of the Trust. The Subadviser need not
provide personnel to perform, or pay the expenses of the
Adviser for, services customarily performed for an
open-end management investment company by its national
distributor, custodian, financial agent, transfer agent,
auditors and legal counsel; and
(d) Compensation and expenses, if any, of the Trustees who
are also full-time employees of the Subadviser.
5. Transaction Procedures. All transactions for the Series will be
consummated by payment to, or delivery by, the Custodian(s) from time
to time designated by the Trust (the "Custodian"), or such depositories
or agents as may be designated by the Custodian pursuant to its
agreement with the Trust (the "Custodian Agreement"), of all cash
and/or securities due to or from the Series. The Subadviser shall not
have possession or custody of such cash and/or securities or any
responsibility or liability with respect to such custody. The
Subadviser shall advise the Custodian and confirm in writing to the
Trust all investment orders for the Series placed by it with brokers
and dealers at the time and in the manner set forth in the Custodian
Agreement and in Schedule B hereto (as amended from time to time). The
Trust shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction
initiated by the Subadviser. The Trust shall be responsible for all
custodial arrangements and the payment of all custodial charges and
fees, and, upon giving proper instructions to the Custodian, the
Subadviser shall have no responsibility or liability with respect to
custodial arrangements or the acts, omissions or other conduct of the
Custodian.
6. Allocation of Brokerage. The Subadviser shall have authority and
discretion to select brokers and dealers to execute Series transactions
initiated by the Subadviser, and to select the markets on or in which
the transactions will be executed.
A. In placing orders for the sale and purchase of Series securities
for the Trust, the Subadviser's primary responsibility shall be to seek
the best execution of orders at the most favorable prices. However,
this responsibility shall not obligate the Subadviser to solicit
competitive bids for each transaction or to seek the lowest available
commission cost to the Trust, so long as the Subadviser reasonably
believes that the broker or dealer selected by it can be expected to
obtain "best execution" on the particular transaction and determines in
good faith that the commission cost is reasonable in relation to the
value of the brokerage and research services (as defined in Section
28(e)(3) of the Securities Exchange Act of 1934) provided by such
broker or dealer to the Subadviser, viewed in terms of either that
particular transaction or of the Subadviser's overall responsibilities
with respect to its clients, including the Trust, as to which the
Subadviser exercises investment discretion, notwithstanding that the
Trust may not be the direct or exclusive
2
<PAGE>
beneficiary of any such services or that another broker may be willing
to charge the Trust a lower commission on the particular transaction.
B. Subject to the requirements of paragraph A above, the Adviser
shall have the right to require that transactions giving rise to
brokerage commissions, in an amount to be agreed upon by the Adviser
and the Subadviser, shall be executed by brokers and dealers that
provide brokerage or research services to the Trust or that will be of
value to the Trust in the management of its assets, which services and
relationship may, but need not, be of direct or exclusive benefit to
the Series. In addition, subject to paragraph A above, the applicable
Conduct Rules of the National Association of Securities Dealers, Inc.
and other applicable law, the Trust shall have the right to request
that transactions be executed by brokers and dealers by or through whom
sales of shares of the Trust are made.
C. The Subadviser shall not execute any transactions for the Series
with a broker or dealer that is an "affiliated person" (as defined in
the Act) of the Trust, the Subadviser or the Adviser without the prior
written approval of the Trust.
7. Fees for Services. The compensation of the Subadviser for its services
under this Agreement shall be calculated and paid by the Adviser in
accordance with the attached Schedule C. Pursuant to the Investment
Advisory Agreement between the Trust and the Adviser, the Adviser is
solely responsible for the payment of fees to the Subadviser.
8. Limitation of Liability. The Subadviser shall not be liable for any
action taken, omitted or suffered to be taken by it in its best
professional judgment, in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement, or in accordance with specific directions or
instructions from the Trust, provided, however, that such acts or
omissions shall not have constituted a breach of the investment
objectives, policies and restrictions applicable to the Series and that
such acts or omissions shall not have resulted from the Subadviser's
willful misfeasance, bad faith or gross negligence, a violation of the
standard of care established by and applicable to the Subadviser in its
actions under this Agreement or a breach of its duty or of its
obligations hereunder (provided, however, that the foregoing shall not
be construed to protect the Subadviser from liability under the Act,
other federal or state securities laws or common law).
9. Confidentiality. Subject to the duty of the Subadviser to comply with
applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Series and the actions
of the Subadviser and the Trust in respect thereof.
10. Assignment. This Agreement shall terminate automatically in the event
of its assignment, as that term is defined in Section 2(a)(4) of the
Act. The Subadviser shall notify the Adviser in writing sufficiently in
advance of any proposed change of control, as defined in Section
2(a)(9) of the Act, as will enable the Adviser to consider whether an
assignment as defined in Section 2(a)(4) of the Act will occur and to
take the steps it deems necessary.
11. Representations, Warranties and Agreements of the Subadviser. The
Subadviser represents, warrants and agrees that:
3
<PAGE>
A. It is registered as an "investment adviser" under the
Investment Advisers Act of 1940 ("Advisers Act").
B. It will maintain, keep current and preserve on behalf of
the Trust, in the manner required or permitted by the Act and
the Rules thereunder, the records identified in Schedule D (as
amended from time to time). The Subadviser agrees that such
records are the property of the Trust, and will be surrendered
to the Trust or to the Adviser as agent of the Trust promptly
upon request of either.
C. It has a written code of ethics complying with the
requirements of Rule 17j-l under the Act and will provide the
Adviser with a copy of the code of ethics and evidence of its
adoption. Subadviser acknowledges receipt of the written code
of ethics adopted by and on behalf of the Trust (the "Code of
Ethics"). Within 10 days of the end of each calendar quarter
while this Agreement is in effect, a duly authorized
compliance officer of the Subadviser shall certify to the
Trust and to the Adviser that the Subadviser has complied with
the requirements of Rule 17j-l during the previous calendar
quarter and that there has been no violation of its code of
ethics, or the Code of Ethics, or if such a violation has
occurred, that appropriate action was taken in response to
such violation. The Subadviser shall permit the Trust and
Adviser to examine the reports required to be made by the
Subadviser under Rule 17j-l(c)(1) and this subparagraph.
D. Reference is hereby made to the Declaration of Trust
dated June 25, 1986, establishing the Trust, a copy of which
has been filed with the Secretary of the Commonwealth of
Massachusetts and elsewhere as required by law, and to any and
all amendments thereto so filed or hereafter so filed with the
Secretary of the Commonwealth of Massachusetts and elsewhere
as required by law. The name Phoenix Strategic Equity Series
Fund refers to the Trustees under said Declaration of Trust,
as Trustees and not personally, and no Trustee, shareholder,
officer, agent or employee of the Trust shall be held to any
personal liability in connection with the affairs of the
Trust; only the trust estate under said Declaration of Trust
is liable. Without limiting the generality of the foregoing,
neither the Subadviser nor any of its officers, directors,
partners, shareholders or employees shall, under any
circumstances, have recourse or cause or willingly permit
recourse to be had directly or indirectly to any personal,
statutory, or other liability of any shareholder, Trustee,
officer, agent or employee of the Trust or of any successor of
the Trust, whether such liability now exists or is hereafter
incurred for claims against the trust estate.
12. Amendment. This Agreement may be amended at any time, but only by
written agreement between the Subadviser and the Adviser, which
amendment, other than amendments to Schedules B and D, is subject to
the approval of the Trustees and the Shareholders of the Trust as and
to the extent required by the Act.
13. Effective Date; Term. This Agreement shall become effective on the date
set forth on the first page of this Agreement. Unless terminated as
hereinafter provided, this Agreement shall remain in full force and
effect until October 31, 1998, and thereafter only so long as its
continuance has been specifically approved at least annually by the
Trustees in accordance with Section 15(a) of the Act,
4
<PAGE>
and by the majority vote of the disinterested Trustees in accordance
with the requirements of Section 15(c) thereof.
14. Termination. This Agreement may be terminated by either party, without
penalty, immediately upon written notice to the other party in the
event of a breach of any provision thereof by the party so notified, or
otherwise, upon sixty (60) days' written notice to the other party, but
any such termination shall not affect the status, obligations or
liabilities of either party hereto to the other party.
15. Applicable Law. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws of
the Commonwealth of Massachusetts.
16. Severability. If any term or condition of this Agreement shall be
invalid or unenforceable to any extent or in any application, then the
remainder of this Agreement shall not be affected thereby, and each and
every term and condition of this Agreement shall be valid and enforced
to the fullest extent permitted by law.
PHOENIX INVESTMENT COUNSEL, INC.
By: /s/ Michael E. Haylon
---------------------------
Michael E. Haylon
President
ACCEPTED:
SENECA CAPITAL MANAGEMENT LLC
By: /s/ Sandra Westhoff
--------------------------
Name: Sandra Westhoff
Title: Chief Operating Officer
SCHEDULES: A. Subadviser Functions
B. Operational Procedures
C. Fee Schedule
D. Record Keeping Requirements
5
<PAGE>
SCHEDULE A
----------
SUBADVISER FUNCTIONS
With respect to managing the investment and reinvestment of the Series
assets, the Subadviser shall provide, at its own expense:
(a) An investment program for the Series consistent with its
investment objectives based upon the development, review and
adjustment of buy/sell strategies approved from time to time
by the Board of Trustees and Adviser;
(b) Implementation of the investment program for the Series based
upon the foregoing criteria;
(c) Quarterly reports, in form and substance acceptable to the
Adviser, with respect to: i) compliance with the Code of
Ethics and the Subadviser's code of ethics; ii) compliance
with procedures adopted from time to time by the Trustees of
the Trust relative to securities eligible for resale under
Rule 144A under the Securities Act of 1933, as amended; iii)
diversification of Series assets in accordance with the then
prevailing prospectus and statement of additional information
pertaining to the Series and governing laws; iv) compliance
with governing restrictions relating to the fair valuation of
securities for which market quotations are not readily
available or considered "illiquid" for the purposes of
complying with the Series limitation on acquisition of
illiquid securities; v) any and all other reports reasonably
requested in accordance with or described in this Agreement;
and, vi) the implementation of the Series investment program,
including, without limitation, analysis of Series performance;
(d) Attendance by appropriate representatives of the Subadviser at
meetings requested by the Adviser or Trustees at such time(s)
and location(s) as reasonably requested by the Adviser or
Trustees; and
(e) Participation, overall assistance and support in marketing the
Series, including, without limitation, meetings with pension
fund representatives, broker/dealers who have a sales
agreement with Phoenix Equity Planning Corporation, and other
parties requested by the Adviser.
6
<PAGE>
SCHEDULE B
----------
OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be necessary for a flow of
information to be supplied to State Street Bank and Trust Company (the
"Custodian"), the custodian for the Trust.
The Subadviser must furnish the Custodian with daily information as to executed
trades, or, if no trades are executed, with a report to that effect, no later
than 5 p.m. (Eastern Standard time) on the day of the trade (confirmation
received from broker). The necessary information can be sent via facsimile
machine to the Custodian. Information provided to the Custodian shall include
the following:
1. Purchase or sale;
2. Security name;
3. CUSIP number (if applicable);
4. Number of shares and sales price per share;
5. Executing broker;
6. Settlement agent;
7. Trade date;
8. Settlement date;
9. Aggregate commission or if a net trade;
10. Interest purchased or sold from interest bearing security;
11. Other fees;
12. Net proceeds of the transaction;
13. Exchange where trade was executed; and
14. Identified tax lot (if applicable).
When opening accounts with brokers for, and in the name of, the Trust, the
account must be a cash account. No margin accounts are to be maintained in the
name of the Trust. Delivery instructions are as specified by the Custodian. The
Custodian will supply the Subadviser daily with a cash availability report. This
will normally be done by telex so that the Subadviser will know the amount
available for investment purposes.
7
<PAGE>
SCHEDULE C
----------
SUBADVISORY FEE
For services provided to the Trust pursuant to paragraph 3 hereof, the
Adviser will pay to the Subadviser, on or before the 10th day of each month, a
fee, payable in arrears, at the annual rate of 0.20% of the average daily net
assets of the Phoenix Equity Opportunities Fund up to $184 million, 0.35% of
such value between $184 million and $1 billion, 0.325% of such value between $1
billion and $2 billion, and 0.30% of such value in excess of $2 billion. The
fees shall be prorated for any month during which this agreement is in effect
for only a portion of the month. In computing the fee to be paid to the
Subadviser, the net asset value of the Trust and each Series shall be valued as
set forth in the then current registration statement of the Trust.
8
<PAGE>
SCHEDULE D
----------
RECORDS TO BE MAINTAINED BY THE SUBADVISER
1. (Rule 31a-1(b)(5)) A record of each brokerage order, and all other
series purchases and sales, given by the Subadviser on behalf of the
Trust for, or in connection with, the purchase or sale of securities,
whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modifications
or cancellations thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the
Trust.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases upon which the allocation of orders for the purchase and
sale of series securities to named broker or dealers was effected, and
the division of brokerage commissions or other compensation on such
purchase and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Trust by brokers or dealers.
(ii) The supplying of services or benefits by brokers or
dealers to:
(a) The Trust,
(b) The Adviser (Phoenix Investment Counsel, Inc.)
(c) The Subadviser, and
(d) Any person other than the foregoing.
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made
available.
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 3la-(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of series securities. Where an authorization is made
by a committee or group, a record shall be kept of the names of its
members who participate in the authorization. There shall be retained
as part of this record: any memorandum, recommendation or instruction
supporting or authorizing the purchase or sale of series securities and
such other information as is appropriate to support the authorization.*
- ---------------------------------
* Such information might include: current financial information, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or subadviser review.
9
<PAGE>
4. (Rule 31a-1(f)) Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rule
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Subadviser's transactions for the Trust.
10
EXHIBIT 5.6
SUBADVISORY AGREEMENT
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
SUBADVISORY AGREEMENT
---------------------
June 26, 1998
Roger Engemann & Associates, Inc.
600 North Rosemead Boulevard
Pasadena, California 91107-2101
RE: SUBADVISORY AGREEMENT
Gentlemen:
Phoenix Strategic Equity Series Fund (the "Trust") is a diversified open-end
investment company of the series type registered under the Investment Company
Act of 1940 (the "Act"), and is subject to the rules and regulations promulgated
thereunder. The shares of the Trust are offered or may be offered in several
series, including the Phoenix Small Cap Fund (hereafter referred to as the
"Series").
Phoenix Investment Counsel, Inc. (the "Adviser") evaluates and recommends
series advisers for the Series and is responsible for the day-to-day management
of the Series.
1. Employment as a Subadviser. The Adviser, being duly authorized, hereby
employs Roger Engemann & Associates (the "Subadviser") as a subadviser
to invest and reinvest the assets of the Series on the terms and
conditions set forth herein. The services of the Subadviser hereunder
are not to be deemed exclusive; the Subadviser may render services to
others and engage in other activities which do not conflict in any
material manner in the Subadviser's performance hereunder.
2. Acceptance of Employment; Standard of Performance. The Subadviser
accepts its employment as a subadviser to the Adviser and agrees to use
its best professional judgment to make investment decisions for the
Series in accordance with the provisions of this Agreement.
3. Services of Subadviser. The Subadviser shall provide the services
set forth herein and in Schedule A attached hereto and made a part
hereof. In providing management services to the Series, the Subadviser
shall be subject to the investment objectives, policies and
restrictions of the Trust as they apply to the Series and as set forth
in the Trust's then current Prospectus and Statement of Additional
Information (as the same may be modified from time to time), and to the
Trust's Agreement and Declaration of Trust, to the investment and other
restrictions set forth in the Act, the Securities Act of 1933 and the
Internal Revenue Code and the rules and regulations thereunder, and to
the supervision and control of the Trustees of the Trust (the
"Trustees"). The Subadviser shall not, without the Adviser's prior
approval, effect any transactions which would cause the Series at the
time of the transaction to be out of compliance with any of such
restrictions or policies.
4. Expenses. The Subadviser shall furnish at its own expense, or pay the
expenses of the Adviser, for the following:
<PAGE>
(a) Office facilities, including office space, furniture
and equipment utilized by its employees, in the
fulfillment of Subadviser's responsibilities
hereunder;
(b) Personnel necessary to perform the functions required
to manage the investment and reinvestment of each
Series' assets (including those required for research,
statistical and investment work), and to fulfill the
other functions of the Subadviser hereunder;
(c) Personnel to serve without salaries for the Trust as
officers or agents of the Trust. The Subadviser need
not provide personnel to perform, or pay the expenses
of the Adviser for, services customarily performed for
an open-end management investment company by its
national distributor, custodian, financial agent,
transfer agent, auditors and legal counsel; and
(d) Compensation and expenses, if any, of the Trustees who
are also full-time employees of the Subadviser.
5. Transaction Procedures. All transactions for the Series will be
consummated by payment to, or delivery by, the Custodian(s) from time
to time designated by the Trust (the "Custodian"), or such depositories
or agents as may be designated by the Custodian pursuant to its
agreement with the Trust (the "Custodian Agreement"), of all cash
and/or securities due to or from the Series. The Subadviser shall not
have possession or custody of such cash and/or securities or any
responsibility or liability with respect to such custody. The
Subadviser shall advise the Custodian and confirm in writing to the
Trust all investment orders for the Series placed by it with brokers
and dealers at the time and in the manner set forth in the Custodian
Agreement and in Schedule B hereto (as amended from time to time). The
Trust shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction
initiated by the Subadviser. The Trust shall be responsible for all
custodial arrangements and the payment of all custodial charges and
fees, and, upon giving proper instructions to the Custodian, the
Subadviser shall have no responsibility or liability with respect to
custodial arrangements or the acts, omissions or other conduct of the
Custodian.
6. Allocation of Brokerage. The Subadviser shall have authority and
discretion to select brokers and dealers to execute Series transactions
initiated by the Subadviser, and to select the markets on or in which
the transactions will be executed.
A. In placing orders for the sale and purchase of Series securities
for the Trust, the Subadviser's primary responsibility shall be to seek
the best execution of orders at the most favorable prices. However,
this responsibility shall not obligate the Subadviser to solicit
competitive bids for each transaction or to seek the lowest available
commission cost to the Trust, so long as the Subadviser reasonably
believes that the broker or dealer selected by it can be expected to
obtain "best execution" on the particular transaction and determines in
good faith that the commission cost is reasonable in relation to the
value of the brokerage and research services (as defined in Section
28(e)(3) of the Securities Exchange Act of 1934) provided by such
broker or dealer to the Subadviser, viewed in terms of either that
particular transaction or of the Subadviser's overall responsibilities
with respect to its clients, including the Trust, as to which the
Subadviser exercises investment discretion, notwithstanding that the
Trust may not be the direct or exclusive
2
<PAGE>
beneficiary of any such services or that another broker may be willing
to charge the Trust a lower commission on the particular transaction.
B. Subject to the requirements of paragraph A above, the Adviser
shall have the right to require that transactions giving rise to
brokerage commissions, in an amount to be agreed upon by the Adviser
and the Subadviser, shall be executed by brokers and dealers that
provide brokerage or research services to the Trust or that will be of
value to the Trust in the management of its assets, which services and
relationship may, but need not, be of direct or exclusive benefit to
the Series. In addition, subject to paragraph A above, the applicable
Conduct Rules of the National Association of Securities Dealers, Inc.
and other applicable law, the Trust shall have the right to request
that transactions be executed by brokers and dealers by or through whom
sales of shares of the Trust are made.
C. The Subadviser shall not execute any transactions for the Series
with a broker or dealer that is an "affiliated person" (as defined in
the Act) of the Trust, the Subadviser or the Adviser without the prior
written approval of the Trust.
7. Fees for Services. The compensation of the Subadviser for its services
under this Agreement shall be calculated and paid by the Adviser in
accordance with the attached Schedule C. Pursuant to the Investment
Advisory Agreement between the Trust and the Adviser, the Adviser is
solely responsible for the payment of fees to the Subadviser.
8. Limitation of Liability. The Subadviser shall not be liable for any
action taken, omitted or suffered to be taken by it in its best
professional judgment, in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement, or in accordance with specific directions or
instructions from the Trust, provided, however, that such acts or
omissions shall not have constituted a breach of the investment
objectives, policies and restrictions applicable to the Series and that
such acts or omissions shall not have resulted from the Subadviser's
willful misfeasance, bad faith or gross negligence, a violation of the
standard of care established by and applicable to the Subadviser in its
actions under this Agreement or a breach of its duty or of its
obligations hereunder (provided, however, that the foregoing shall not
be construed to protect the Subadviser from liability under the Act,
other federal or state securities laws or common law).
9. Confidentiality. Subject to the duty of the Subadviser to comply with
applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Series and the actions
of the Subadviser and the Trust in respect thereof.
10. Assignment. This Agreement shall terminate automatically in the event
of its assignment, as that term is defined in Section 2(a)(4) of the
Act. The Subadviser shall notify the Adviser in writing sufficiently in
advance of any proposed change of control, as defined in Section
2(a)(9) of the Act, as will enable the Adviser to consider whether an
assignment as defined in Section 2(a)(4) of the Act will occur and to
take the steps it deems necessary.
11. Representations, Warranties and Agreements of the Subadviser. The
Subadviser represents, warrants and agrees that:
3
<PAGE>
A. It is registered as an "investment adviser" under the
Investment Advisers Act of 1940 ("Advisers Act").
B. It will maintain, keep current and preserve on behalf of
the Trust, in the manner required or permitted by the Act and
the Rules thereunder, the records identified in Schedule D (as
amended from time to time). The Subadviser agrees that such
records are the property of the Trust, and will be surrendered
to the Trust or to the Adviser as agent of the Trust promptly
upon request of either.
C. It has a written code of ethics complying with the
requirements of Rule 17j-l under the Act and will provide the
Adviser with a copy of the code of ethics and evidence of its
adoption. Subadviser acknowledges receipt of the written code
of ethics adopted by and on behalf of the Trust (the "Code of
Ethics"). Within 10 days of the end of each calendar quarter
while this Agreement is in effect, a duly authorized
compliance officer of the Subadviser shall certify to the
Trust and to the Adviser that the Subadviser has complied with
the requirements of Rule 17j-l during the previous calendar
quarter and that there has been no violation of its code of
ethics, or the Code of Ethics, or if such a violation has
occurred, that appropriate action was taken in response to
such violation. The Subadviser shall permit the Trust and
Adviser to examine the reports required to be made by the
Subadviser under Rule 17j-l(c)(1) and this subparagraph.
D. Reference is hereby made to the Declaration of Trust dated
June 25, 1986, establishing the Trust, a copy of which has
been filed with the Secretary of the Commonwealth of
Massachusetts and elsewhere as required by law, and to any and
all amendments thereto so filed or hereafter filed with the
Secretary of the Commonwealth of Massachusetts and elsewhere
as required by law. The name Phoenix Strategic Equity Series
Fund refers to the Trustees under said Declaration of Trust,
as Trustees and not personally, and no Trustee, shareholder,
officer, agent or employee of the Trust shall be held to any
personal liability in connection with the affairs of the
Trust; only the trust estate under said Declaration of Trust
is liable. Without limiting the generality of the foregoing,
neither the Subadviser nor any of its officers, directors,
partners, shareholders or employees shall, under any
circumstances, have recourse or cause or willingly permit
recourse to be had directly or indirectly to any personal,
statutory, or other liability of any shareholder, Trustee,
officer, agent or employee of the Trust or of any successor of
the Trust, whether such liability now exists or is hereafter
incurred for claims against the trust estate.
12. Amendment. This Agreement may be amended at any time, but only by
written agreement between the Subadviser and the Adviser, which
amendment, other than amendments to Schedules B and D, is subject to
the approval of the Trustees and the Shareholders of the Trust as and
to the extent required by the Act.
13. Effective Date; Term. This Agreement shall become effective on the date
set forth on the first page of this Agreement. Unless terminated as
hereinafter provided, this Agreement shall remain in full force and
effect until October 31, 1998, and thereafter only so long as its
continuance has been specifically approved at least annually by the
Trustees in accordance with Section 15(a) of the Act,
4
<PAGE>
and by the majority vote of the disinterested Trustees in accordance
with the requirements of Section 15(c) thereof.
14. Termination. This Agreement may be terminated by either party, without
penalty, immediately upon written notice to the other party in the
event of a breach of any provision thereof by the party so notified, or
otherwise, upon sixty (60) days' written notice to the other party, but
any such termination shall not affect the status, obligations or
liabilities of either party hereto to the other party.
15. Applicable Law. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws of
the Commonwealth of Massachusetts.
16. Severability. If any term or condition of this Agreement shall be
invalid or unenforceable to any extent or in any application, then the
remainder of this Agreement shall not be affected thereby, and each and
every term and condition of this Agreement shall be valid and enforced
to the fullest extent permitted by law.
PHOENIX INVESTMENT COUNSEL, INC.
By: /s/ Michael E. Haylon
---------------------------
Michael E. Haylon
President
ACCEPTED:
ROGER ENGEMANN & ASSOCIATES, INC.
By: /s/ Roger Engemann
---------------------------
Name: Roger Engemann
Title: President
SCHEDULES: A. Subadviser Functions
B. Operational Procedures
C. Fee Schedule
D. Record Keeping Requirements
5
<PAGE>
SCHEDULE A
----------
SUBADVISER FUNCTIONS
With respect to managing the investment and reinvestment of the Series
assets, the Subadviser shall provide, at its own expense:
(a) An investment program for the Series consistent with its
investment objectives based upon the development, review and
adjustment of buy/sell strategies approved from time to time
by the Board of Trustees and Adviser;
(b) Implementation of the investment program for the Series based
upon the foregoing criteria;
(c) Quarterly reports, in form and substance acceptable to
the Adviser, with respect to: i) compliance with the Code of
Ethics and the Subadviser's code of ethics; ii) compliance
with procedures adopted from time to time by the Trustees of
the Trust relative to securities eligible for resale under
Rule 144A under the Securities Act of 1933, as amended; iii)
diversification of Series assets in accordance with the then
prevailing prospectus and statement of additional information
pertaining to the Series and governing laws; iv) compliance
with governing restrictions relating to the fair valuation of
securities for which market quotations are not readily
available or considered "illiquid" for the purposes of
complying with the Series limitation on acquisition of
illiquid securities; v) any and all other reports reasonably
requested in accordance with or described in this Agreement;
and, vi) the implementation of the Series investment program,
including, without limitation, analysis of Series performance;
(d) Attendance by appropriate representatives of the Subadviser at
meetings requested by the Adviser or Trustees at such time(s)
and location(s) as reasonably requested by the Adviser or
Trustees; and
(e) Participation, overall assistance and support in marketing the
Series, including, without limitation, meetings with pension
fund representatives, broker/dealers who have a sales
agreement with Phoenix Equity Planning Corporation, and other
parties requested by the Adviser.
6
<PAGE>
SCHEDULE B
----------
OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be necessary for a flow of
information to be supplied to State Street Bank and Trust Company (the
"Custodian"), the custodian for the Trust.
The Subadviser must furnish the Custodian with daily information as to executed
trades, or, if no trades are executed, with a report to that effect, no later
than 5 p.m. (Eastern Standard time) on the day of the trade (confirmation
received from broker). The necessary information can be sent via facsimile
machine to the Custodian. Information provided to the Custodian shall include
the following:
1. Purchase or sale;
2. Security name;
3. CUSIP number (if applicable);
4. Number of shares and sales price per share;
5. Executing broker;
6. Settlement agent;
7. Trade date;
8. Settlement date;
9. Aggregate commission or if a net trade;
10. Interest purchased or sold from interest bearing security;
11. Other fees;
12. Net proceeds of the transaction;
13. Exchange where trade was executed; and
14. Identified tax lot (if applicable).
When opening accounts with brokers for, and in the name of, the Trust, the
account must be a cash account. No margin accounts are to be maintained in the
name of the Trust. Delivery instructions are as specified by the Custodian. The
Custodian will supply the Subadviser daily with a cash availability report. This
will normally be done by telex so that the Subadviser will know the amount
available for investment purposes.
7
<PAGE>
SCHEDULE C
----------
SUBADVISORY FEE
For services provided to the Trust pursuant to paragraph 3 hereof, the
Adviser will pay to the Subadviser, on or before the 10th day of each month, a
fee, payable in arrears, at the annual rate of 0.20% of the average daily net
assets of the Phoenix Small Cap Fund up to $323 million, 0.375% of such value
between $323 million and $1 billion, 0.35% of such value between $1 billion and
$2 billion, and 0.325% of such value in excess of $2 billion. The fees shall be
prorated for any month during which this agreement is in effect for only a
portion of the month. In computing the fee to be paid to the Subadviser, the net
asset value of the Trust and each Series shall be valued as set forth in the
then current registration statement of the Trust.
8
<PAGE>
SCHEDULE D
----------
RECORDS TO BE MAINTAINED BY THE SUBADVISER
1. (Rule 31a-1(b)(5)) A record of each brokerage order, and all other
series purchases and sales, given by the Subadviser on behalf of the
Trust for, or in connection with, the purchase or sale of securities,
whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modifications
or cancellations thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the
Trust.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases upon which the allocation of orders for the purchase and
sale of series securities to named broker or dealers was effected, and
the division of brokerage commissions or other compensation on such
purchase and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Trust by brokers or dealers.
(ii) The supplying of services or benefits by brokers or
dealers to:
(a) The Trust,
(b) The Adviser (Phoenix Investment Counsel, Inc.)
(c) The Subadviser, and
(d) Any person other than the foregoing.
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made
available.
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 3la-(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of series securities. Where an authorization is made
by a committee or group, a record shall be kept of the names of its
members who participate in the authorization. There shall be retained
as part of this record: any memorandum, recommendation or instruction
supporting or authorizing the purchase or sale of series securities and
such other information as is appropriate to support the authorization.*
- ---------------------------------
* Such information might include: current financial information, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or subadviser review.
9
<PAGE>
4. (Rule 31a-1(f)) Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rule
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Subadviser's transactions for the Trust.
10
Exhibit 6.2
Sales Agreement
<PAGE>
[logo]PHOENIX Phoenix Funds
DUFF&PHELPS Sales Agreement
- --------------------------------------------------------------------------------
PHOENIX EQUITY PLANNING CORPORATION
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, Connecticut 06083-2200
Dealer Name:
Address:
Phoenix Equity Planning Corporation ("PEPCO", "we", "us", or "our") invites you
to participate in the sale and distribution of shares of registered investment
companies (which shall collectively be referred to hereinafter as the "Funds")
for which we are national distributor or principal underwriter, and which may be
listed in Annex A hereto which such Annex may be amended by us from time to
time. Upon acceptance of this agreement by PEPCO, you may offer and sell shares
of each of the Funds (hereafter "Shares") subject, however, to the terms and
conditions hereof including our right to suspend or cease the sale of such
shares. For the purposes hereof, the above referenced dealer shall be referred
to as "you".
1. You understand and agree that in all sales of Shares to the public, you
shall act as dealer for your own account. All purchase orders and
applications are subject to acceptance or rejection by us in our sole
discretion and are effective only upon confirmation by us. Each purchase
will be deemed to have been consummated in our principal office subject to
our acceptance and effective only upon confirmation to you by us.
2. You agree that all purchases of Shares by you shall be made only for the
purpose of covering purchase orders already received from your customers
(who may be any person other than a securities dealer or broker) or for
your own bona-fide investment.
3. You shall offer and sell Shares pursuant to this agreement for the purpose
of covering purchase orders of your customers, to the extent applicable,
(a) at the current public offering price ("Offering Price") for Class A
Shares or (b) at the Net Asset Value for Class B shares as set forth in the
current prospectus of each of the funds. The offer and sale of Class B
Shares by you is subject to Annex B hereto, "Compliance Standards for the
Sale of the Phoenix Funds Under Their Alternative Purchase Arrangements".
4. You shall pay us for Shares purchased within three (3) business days of the
date of our confirmation to you of such purchase or within such time as
required by applicable rule or law. The purchase price shall be (a) the
Offering Price, less only the applicable dealer discount (Dealer Discount)
for Class A Shares, if applicable, or (b) the Net Asset Value, less only
the applicable sales commission (Sales Commission) for Class B Shares, if
applicable, as set forth in the current prospectus at the time the purchase
is received by us. We have the right, without notice, to cancel any order
for which payment of good and sufficient funds has not been received by us
as provided in this paragraph, in which case you may be held responsible
for any loss suffered resulting from your failure to make payment as
aforesaid.
5. You understand and agree that any Dealer Discount, Sales Commission or fee
is subject to change from time to time without prior notice. Any orders
placed after the effective date of any such change shall be subject to the
Dealer Discount or Sales Commission in effect at the time such order is
received by us.
6. You understand and agree that Shares purchased by you under this Agreement
will not be delivered until payment of good and sufficient funds has been
received by us. 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 your
request, any Shares resold by you to one of your customers will be
delivered (whether by credit to a shareholder open account or by delivery
of certificates) in the name of your customer.
<PAGE>
7. You understand that on all purchases of Shares to which the terms of this
Agreement are applicable by a shareholder for whom you are dealer of
record, we will pay you an amount equal to the Dealer Discount, Sales
Commission or fees which would have been paid to you with respect to such
Shares if such Shares had been purchased through you. You understand and
agree that the dealer of record for this purpose shall be the dealer
through whom such shareholder most recently purchased Shares of such fund,
unless the shareholder or you have instructed us otherwise. You understand
that all amounts payable to you under this paragraph and currently payable
under this agreement will be paid as of the end of the month unless
specified otherwise for the total amount of Shares to which this paragraph
is applicable but may be paid more frequently as we may determine in our
discretion. Your request for Dealer Discount or Sales Commission reclaims
will be considered if adequate verification and documentation of the
purchase in question is supplied to us, and the reclaim is requested within
three years of such purchase.
8. We appoint the transfer agent (or identified sub-transfer agent) for each
of the Funds as our agent to execute the purchase transaction of Shares and
to confirm such purchases to your customers on your behalf, and you
guarantee the legal capacity of your customers so purchasing such Shares.
You further understand that if a customer's account is established without
the customer signing the application form, you hereby 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 you agree to indemnify the
Funds, the transfer agent (or identified sub-transfer agent) and us for any
loss or liability resulting from acting upon such instructions.
9. Upon the purchase of Class A Shares pursuant to a Letter of Intent, you
will promptly return to us any excess of the Dealer Discount previously
allowed or paid to you over that allowable in respect to such larger
purchases.
10. Unless at the time of transmitting a purchase order you advise us to the
contrary, we 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 the current prospectus.
11. You understand and agree that if any Shares purchased by you under the
terms of this Agreement are, within seven (7) business days after the date
of our confirmation to you of the original purchase order for such Shares,
repurchased by us as agent for such fund or are tendered to such fund for
redemption, you shall forfeit the right to, and shall promptly pay over to
us the amount of any Dealer Discount or Sales Commission allowed to you
with respect to such Shares. We will notify you of such repurchase or
redemption within ten (10) days of the date upon which certificates are
delivered to us 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 with us or
with such fund an order to have such shares repurchased or redeemed.
12. You agree that, in the case of any repurchase of any Shares made more than
seven (7) business days after confirmation by us of any purchase of such
Shares, except in the case of Shares purchased from you by us for your own
bona fide investment, you will act only as agent for the holders of such
Shares and will place the orders for repurchase only with us. It is
understood that you may charge the holder of such Shares a fair commission
for handling the transaction.
13. Our obligations to you under this Agreement are subject to all the
provisions of the respective distribution agreements entered into between
us and each of the Funds. You understand and agree that in performing your
services under this agreement you are acting in the capacity of an
independent contractor, and we are in no way responsible for the manner of
your performance or for any of your acts or omissions in connection
therewith. Nothing in the Agreement shall be construed to constitute you or
any of your agents, employees, or representatives as our agent, partner or
employee, or the agent, partner of employee of any of the Funds.
In connection with the sale and distribution of shares of Phoenix Funds,
you agree to indemnify and hold us and our affiliates, employees, and/or
officers harmless from any damage or expense as a result of (a) the
negligence, misconduct or wrongful act by you or any employee,
representative, or agent of yours and/or (b) any actual or alleged
violation of any securities laws, regulations or orders. Any indebtedness
or obligation of yours to us whether arising hereunder or otherwise, and
any liabilities incurred or moneys paid by us to any person as a result of
any misrepresentation, wrongful or unauthorized act or omission, negligence
of, or failure of you or your employees, representatives or agents to
comply with the Sales Agreement, shall be set off against any compensation
payable under this agreement. Any differential between such expenses and
compensation payable hereunder shall be payable to us upon demand. The
terms of this provision shall not be impaired by the termination of this
agreement.
In connection with the sale and distribution of shares of Phoenix Funds, we
agree to indemnify and hold you, harmless from any damage or expense on
account of the gross and willful negligence, misconduct or wrongful act of
us or any employee, representative, or agent of ours which arises out of or
is based upon any untrue statement or alleged untrue statement of material
fact, or the omission or alleged omission of a material fact in: (i) any
registration statement, including any prospectus or any post-effective
amendment thereto; or (ii) any material prepared and/or supplied by us for
use in conjunction with the offer or sale of Phoenix Funds; or (iii) any
state registration or other document filed in any state or jurisdiction in
order to qualify any Fund under the securities laws of such state or
jurisdiction. The terms of this provision shall not be impaired by the
termination of this agreement.
<PAGE>
14. We will supply you with reasonable quantities of the current prospectus,
periodic reports to shareholders, and sales materials for each of the
Funds. You agree not to use any other advertising or sales material
relating to the sale of shares of any of the Funds unless such other
advertising or sales material is pre-approved in writing by us.
15. You agree to offer and sell Shares 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 you will make no representations
not contained in any such prospectus or any authorized supplemental sales
material supplied by us. You agree to use your 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, training and
supervision of all sales representatives employed by you in order that such
Shares will be offered in accordance with the terms and conditions of this
Agreement and all applicable laws, rules and regulations. All expenses
incurred by you in connection with your activities under this Agreement
shall be borne by you. In consideration for the extension of the right to
exercise telephone exchange and redemption privileges to you and your
registered representatives, you agree to bear the risk of any loss
resulting from any unauthorized telephone exchange or redemption
instructions from you or your registered representatives. In the event we
determine to refund any amounts paid by any investor by reason of such
violation on your part, you shall forfeit the right to, and pay over to us,
the amount of any Dealer Discount or Sales Commission allowed to you with
respect to the transaction for which the refund is made.
16. You represent that you are properly registered as a broker or dealer under
the Securities and Exchange Act of 1934 and are member of the National
Association of Securities Dealers, Inc. (NASD) and agree to maintain
membership in the NASD or in the alternative, that you are a foreign dealer
not eligible for membership in the NASD. You agree to notify us promptly of
any change, termination or suspension of the foregoing status. You 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. You further agree to comply with all
applicable state and Federal laws and the rules and regulations of
applicable regulatory agencies. You further agree that you will not sell,
or offer for sale, Shares in any jurisdiction in which such Shares have not
been duly registered or qualified for sale. You agree to promptly notify us
with respect to (a) the initiation and disposition of any formal
disciplinary action by the NASD or any other agency or instrumentality
having jurisdiction with respect to the subject matter hereof against you
or any of your employees or agents; (b) the issuance of any form of
deficiency notice by the NASD or any such agency regarding your training,
supervision or sales practices; and (c) the effectuation of any consensual
order with respect thereto.
17. Either party may terminate this agreement for any reason by written or
electronic notice to the other party which termination shall become
effective fifteen (15) days after the date of mailing or electronically
transmitting such notice to the other party. We may also terminate this
agreement for cause or as a result of a violation by you, as determined by
us in our discretion, of any of the provisions of this Agreement, said
termination to be effective on the date of mailing written or transmitting
electronic notice to you of the same. Without limiting the generality of
the foregoing, your own expulsion from the NASD will automatically
terminate this Agreement without notice. Your suspension from the NASD or
violation of applicable state or Federal laws or rules and regulations of
applicable regulatory agencies will terminate this Agreement effective upon
the date of our mailing written notice or transmitting electronic notice to
you of such termination. Our failure to terminate this Agreement for any
cause shall not constitute a waiver of our right to so terminate at a later
date.
18. All communications and notices to you or us shall be sent to the addresses
set forth at the beginning of this Agreement or to such other address as
may be specified in writing from time to time.
19. This agreement shall become effective upon the date of its acceptance by us
as set forth herein. This agreement may be amended by PEPCO from time to
time. 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
we may assign or transfer this agreement to any successor distributor of
the Shares described herein.
ACCEPTED ON BEHALF OF ACCEPTED ON BEHALF OF
PHOENIX EQUITY PLANNING DEALER FIRM:
CORPORATION:
Date ______________________________ Date __________________________________
By /s/ John F. Sharry By
________________________________ ____________________________________
Print Name John F. Sharry Print Name
_________________________ ____________________________
Managing Director, Retail Sales
Print Title _______________________ Print Title ___________________________
NASD CRD Number _______________________
<PAGE>
[logo]PHOENIX Amended Annex A, Dealer Agreement with
DUFF&PHELPS Phoenix Equity Planning Corporation, February 27, 1998
================================================================================
I. PHOENIX FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PHOENIX SERIES FUND
Balanced Fund Series
Convertible Fund Series
Growth Fund Series
Aggressive Growth Fund Series
High Yield Fund Series
Money Market Fund Series
U.S. Government Securities Fund Series
PHOENIX-ABERDEEN SERIES FUND
Aberdeen New Asia Fund
Aberdeen Global Small Cap Fund
PHOENIX MULTI-PORTFOLIO FUND
Tax-Exempt Bond Portfolio
Mid Cap Portfolio
International Portfolio
Real Estate Securities Portfolio
Emerging Markets Bond Portfolio
Strategic Income Fund
PHOENIX STRATEGIC EQUITY SERIES FUND
Equity Opportunities Fund
Strategic Theme Fund
Small Cap Fund
PHOENIX EQUITY SERIES FUND
Core Equity Fund
Growth and Income Fund
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND
PHOENIX STRATEGIC ALLOCATION FUND, INC.
PHOENIX INCOME AND GROWTH FUND
PHOENIX VALUE EQUITY FUND
PHOENIX SMALL CAP VALUE FUND
PHOENIX-ENGEMANN FUNDS
Balanced Return Fund
Global Growth Fund
Growth Fund
Nifty Fifty Fund
Small & Mid-Cap Growth Fund
Value 25 Fund
- --------------------------------------------------------------------------------
Equity Planning may sponsor, to all qualifying dealers, on a non-discriminatory
basis, sales contests, training and educational meetings and provide to all
qualifying broker/dealers, from its own profits and resources, additional
compensation in the form of trips, merchandise or expense reimbursement. Brokers
or 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. Applicable waivers of Class A sales loads and Class B
contingent deferred sales charges are described in the prospectus.
================================================================================
CLASS A SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A SHARES (EXCEPT MULTI-SECTOR SHORT TERM MULTI-SECTOR SHORT TERM
BOND FUND & MONEY MARKET) BOND FUND CLASS A SHARES
DEALER DISCOUNT DEALER DISCOUNT
SALES CHARGE OR AGENCY FEE SALES CHARGE OR AGENCY FEE
AMOUNT OF AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
TRANSACTION OFFERING PRICE OFFERING PRICE OFFERING PRICE OFFERING PRICE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.25% 2.25% 2.00%
- ---------------------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 4.50 4.00 1.25 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 3.50 3.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 3.00 2.75 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 2.00 1.75 0.75 0.75
- ---------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Shares of the Money Market Series are offered to the public at their constant
net asset value of $1.00 per share with no sales charge on Class A shares.
$1 MILLION NAV SALES FINDERS FEE: In connection with Class A Share purchases of
$1,000,000 or more (or subsequent purchases in any amount), Equity Planning may
pay broker/dealers, from its own profits and resources, a percentage of the net
asset value of shares sold (excluding Money Market shares) as set forth in the
table below. If part or all of such investment, is subsequently redeemed within
one year of the investment date, the broker/dealer will refund to Equity
Planning any such amounts paid with respect to the investment.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASE AMOUNT $1,000,000 to $3,000,000 $3,000,001 to $6,000,000 $6,000,001 or more
- ---------------------------------------------------------------------------------------------------------------------------------
PAYMENT TO BROKER/DEALERS 1% 0.50 of 1% 0.25 of 1%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
CLASS A SHARES
- --------------------------------------------------------------------------------
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of Class A shares sold by such broker/dealers (except
Money Market Series) and remaining outstanding on the Funds' books during the
period in which the fee is calculated. Dealers must have an aggregate value of
$50,000 or more in one Fund to qualify for payment in that Fund.
<PAGE>
================================================================================
CLASS B SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B SHARES
(EXCEPT MULTI-SECTOR SHORT TERM BOND FUND) MULTI-SECTOR SHORT TERM BOND FUND CLASS B
<S> <C>
Sales Commission 4.00% Sales Commission 2.00%
</TABLE>
Broker/Dealer firms maintaining house/omnibus accounts, upon redemption of a
customer account within the time frames specified below, shall forward to Equity
Planning the indicated contingent deferred sales charge.
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE CONTINGENT DEFERRED CONTINGENT DEFERRED
SALES CHARGES SALES CHARGES
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
First 5.00% 2.00%
- -----------------------------------------------------------------------------------------------------------------------------
Second 4.00 1.50
- -----------------------------------------------------------------------------------------------------------------------------
Third 3.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------
Fourth and Fifth 2.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------
Sixth 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.25% annually, based on the average
daily net asset value of shares sold by such broker/dealers (except Money Market
Series) and remaining outstanding on the Funds' books during the period in which
the fee is calculated, commencing one year after the investment date. Dealers
must have an aggregate value of $50,000 or more in one Fund to qualify for
payment in that Fund.
================================================================================
CLASS C SHARES - MULTI-SECTOR SHORT TERM BOND FUND ONLY
- --------------------------------------------------------------------------------
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
FINDERS FEE:
In connection with Class C Share purchases of $250,000 or more (or subsequent
purchases in any amount), Equity Planning may pay broker-dealers,
from its own resources, on amount equal to 0.50% of purchases above $250,000
but under $3 million plus 0.25% on purchases in excess of $3 million.
If all or part of the investment is subsequently redeemed, except for exchanges
or purchases of other Phoenix funds, within one year of the investment date, the
broker-dealer will refund to the Distributor such amount paid with respect to
the investment.
================================================================================
CLASS C SHARES - AVAILABLE ONLY FOR THE FUNDS LISTED BELOW:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CORE EQUITY FUND PHOENIX-ENGEMANN GLOBAL GROWTH FUND PHOENIX-ENGEMANN SMALL & MID-CAP
EMERGING MARKETS BOND PORTFOLIO MULTI-SECTOR FIXED INCOME FUND GROWTH FUND
(EFFECTIVE 3-27-98) STRATEGIC INCOME FUND VALUE EQUITY FUND
GROWTH AND INCOME FUND (EFFECTIVE 3-27-98) SMALL CAP VALUE FUND
HIGH YIELD FUND SERIES STRATEGIC THEME FUND PHOENIX-ENGEMANN BALANCED RETURN FUND
(EFFECTIVE 2-27-98) PHOENIX-ENGEMANN NIFTY FIFTY FUND PHOENIX-ENGEMANN VALUE 25 FUND
PHOENIX-ENGEMANN GROWTH FUND
</TABLE>
Sales Commission: 1%. Contingent deferred sales charge: 1% for one year from the
date of each purchase. Broker/Dealer firms maintaining house/omnibus accounts,
upon redemption of a customer account within one year of purchase date, shall
forward to Equity Planning the indicated contingent deferred sales charge.
TRAIL AND SERVICE FEE: Equity Planning intends to pay a fee after the first year
to qualifying broker/dealer firms at the equivalent of 0.75% annually, and a
Service Fee at the equivalent of 0.25% annually, based on the average daily net
asset value of shares sold by such broker/dealers and remaining outstanding on
the Funds' books during the period in which the fee is calculated. Dealers must
have an aggregate value of $50,000 or more in the Fund to qualify for payment.
<PAGE>
================================================================================
CLASS M SHARES - AVAILABLE ONLY FOR THE FUNDS LISTED BELOW:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CORE EQUITY FUND MULTI-SECTOR FIXED INCOME FUND VALUE EQUITY FUND
GROWTH AND INCOME FUND STRATEGIC THEME FUND SMALL CAP VALUE FUND
PHOENIX-ENGEMANN GROWTH FUND PHOENIX-ENGEMANN NIFTY FIFTY FUND PHOENIX-ENGEMANN BALANCED RETURN FUND
PHOENIX-ENGEMANN GLOBAL GROWTH FUND PHOENIX-ENGEMANN SMALL & MID-CAP PHOENIX-ENGEMANN VALUE 25 FUND
GROWTH FUND
</TABLE>
<TABLE>
<CAPTION>
DEALER DISCOUNT
SALES CHARGE OR AGENCY FEE
AMOUNT OF AS PERCENTAGE OF AS PERCENTAGE OF
OFFERING PRICE OFFERING PRICE OFFERING PRICE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 3.50% 3.00%
- ------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 2.50 2.00
- ------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 1.50 1.00
- ------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 1.00 1.00
- ------------------------------------------------------------------------------------------------------------------
$500,000 but under $1,000,000 None None
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
TRAIL: Equity Planning intends to pay a quarterly fee to qualifying
broker/dealer firms at the equivalent of 0.50% annually, based on the average
daily net asset value of shares sold by such broker/dealers and remaining
outstanding on the Funds' books during the period in which the fee is
calculated. Dealers must have an aggregate value of $50,000 or more in the Fund
to qualify for payment.
================================================================================
II. A. PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
- --------------------------------------------------------------------------------
Balanced Portfolio Growth Stock Portfolio
Enhanced Reserves Portfolio Money Market Portfolio
Managed Bond Portfolio U.S. Government Securities Portfolio
FINDER'S FEE: Equity Planning may pay broker/dealers, from its own profits and
resources, a percentage of the net asset value of Class X and Class Y shares
sold as set forth in the table below. If part of any investment is subsequently
redeemed within one year of the investment date, the broker/dealer will refund
to Equity Planning any such amounts paid with respect to the investment.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASE AMOUNT 0 to $5,000,000 $5,000,001 to $10,000,000 $10,000,001 or more
- ------------------------------------------------------------------------------------------------------------------------------------
PAYMENT TO BROKER/DEALERS 0.50% 0.25% 0.10%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TRAIL: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold by such broker/dealers and
remaining outstanding on the Funds' books during the period in which the fee is
calculated, subject to future amendment or termination.
================================================================================
II. B. PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
- --------------------------------------------------------------------------------
Phoenix Real Estate Equity Securities Portfolio
TRAIL: (Class Y shares only): Equity Planning intends to pay broker/dealers a
quarterly service fee at the equivalent of 0.25% annually, based on the average
daily net asset value of Class Y shares sold by such broker/dealers and
remaining outstanding on the Funds' books during the period in which the fee is
calculated, subject to future amendment or termination.
<PAGE>
PDP80A (2-98) Distributed by Phoenix Equity Planning Corporation,
Enfield, CT, 06083
<PAGE>
[logo]PHOENIX Annex B To Dealer Agreement With
DUFF&PHELPS Phoenix Equity Planning Corporation
- --------------------------------------------------------------------------------
Compliance Standards for
the Sale of the Phoenix Funds
Under Their Alternative Purchase Arrangements
As national distributor or principal underwriter of the Phoenix Funds, which
offer their shares on both a front-end and deferred sales charge basis, Phoenix
Equity Planning Corporation ("PEPCO") has established the following compliance
standards which set forth the basis upon which shares of the Phoenix Funds may
be sold. These standards are designed for those broker/dealers ("dealers") that
distribute shares of the Phoenix Funds and for each dealer's financial
advisors/registered representatives.
As shares of the Phoenix Funds are offered with two different sales arrangements
for sales and distribution fees, it is important for an investor not only to
choose a mutual fund that best suits his investment objectives, but also to
choose the sales financing method which best suits his particular situation. To
assist investors in these decisions and to ensure proper supervision of mutual
fund purchase recommendations, we are instituting the following compliance
standards to which dealers must adhere when selling shares of the Phoenix Funds:
1. Any purchase of a Phoenix Fund for less than $250,000 may be either of
shares subject to a front-end load (Class A shares) or subject to deferred
sales charge (Class B shares).
2. Any purchase of a Phoenix Fund by an unallocated qualified employer
sponsored plan for less than $1,000,000 may be either of shares subject to
a front-end load (Class A shares) or subject to deferred sales charge
(Class B shares). Class B shares sold to allocated qualified employer
sponsored plans will be limited to a maximum total value of $250,000 per
participant.
3. Any purchase of a Phoenix Fund for $250,000 or more (except as noted above)
or which qualifies under the terms of the prospectus for net asset value
purchase of Class A shares should be for Class A shares.
General Guidelines
These are instances where one financing method may be more advantageous to an
investor than the other. Class A shares are subject to a lower distribution fee
and, accordingly, pay correspondingly higher dividends per share. However,
because initial sales charges are deducted at the time of purchase, such
investors would not have all of 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 of 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 of 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
(three years for Asset Reserve).
A National Association of Securities Dealers rule specifically prohibits
"breakpoint sales" of front-end load shares. A "breakpoint sale" is a sale to
the client of an amount of front-end load (Class A) shares just below the amount
which would be subject to the next breakpoint on the fund's sales charge
schedule. Because the deferred sales charge on Class B shares is reduced by 1%
for each year the shares are held, a redemption of Class B shares just before an
"anniversary date" is in some ways analogous to a breakpoint sale. A client
might wish to redeem just before an anniversary date for tax or other reasons,
and a client who chose to wait would continue to be at market risk.
Nevertheless, investment executives should inform clients intending to redeem
Class B shares near an anniversary date that, if the redemption were delayed,
the deferred sales charge would be reduced.
Responsibilities of Branch Office Manager (or other appropriate reviewing
officer).
A dealer's branch manger or other appropriate reviewing officer ("the Reviewing
Officer") must ensure that the financial advisor/registered representative has
advised the client of the available financing methods offered by the Phoenix
Funds, and the impact of choosing one method over another. In certain instances,
it may be appropriate for the Reviewing Officer to discuss the purchase directly
with the client. The reviewing officer should review purchases for Class A or
Class B shares given the relevant facts and circumstances, including but not
limited to: (a) the specific purchase order dollar amount; (b) the length of
time the investor expects to hold his shares; and (c) any other relevant
circumstances, such as the availability of purchases under letters of intent or
pursuant to rights of accumulation and distribution requirements. The foregoing
guidelines, as well as the examples cited above, should assist the Reviewing
Officer in reviewing and supervising purchase recommendations and orders.
Effectiveness
These compliance guidelines are effective immediately with respect to any order
for shares of those Phoenix Funds which offer their shares pursuant to the
alternative purchase arrangement.
Questions relating to these compliance guidelines should be directed by the
dealer to its national mutual fund sales and market group or its legal
department or compliance director. PEPCO will advise dealers in writing of any
future changes in these guidelines.
PEP80B 11/95
Exhibit 6.3
Supplement to Sales Agreement
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
SUPPLEMENT TO PHOENIX FAMILY OF FUNDS
SALES AGREEMENT
It is hereby agreed that this AGREEMENT, dated this __________ day
of __________, 19__, between ________________________________________ ("Dealer")
and Phoenix Equity Planning Corporation ("Distributor"), supplements and amends
the Sales Agreement between Dealer and Distributor dated by Distributor
_______________________ 19__ ("Sales Agreement').
WHEREAS, Dealer wishes to use shares of the Funds in a fee-based
program made available by Dealer to clients of Dealer (the "Fee-Based Program");
WHEREAS, Dealer wishes to afford its fee-based clients the
opportunity to qualify for the ability to purchase shares of the Funds at net
asset value; and
WHEREAS, Distributor is willing to allow Dealer to purchase shares
of the Funds for clients in the Fee-Based Program subject to the provisions of
this agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by both parties, Dealer
and Distributor hereby agree as follows:
1. Dealer may sell shares of any Funds made available by
Distributor, from time to time, at net asset value to bona fide clients of
Dealer for use solely in their Fee-Based Program. Dealer will earn no concession
or commission on any such sale.
2. Distributor, after consulting Dealer, will determine, from time
to time, which Funds it will make available to Dealer for use in the Fee-Based
Program. Dealer will comply with all provisions of the Prospectus and Statement
of Additional Information of each Fund.
1
<PAGE>
3. All shares made available to Dealer under the Fee-Based Program
must be purchased by Dealer for the benefit of Dealer's clients participating in
its Fee-Based Program under which Dealer provides portfolio management and other
services to such clients for a fee. Such fee to be paid in connection with
investment in the Funds shall at all times be at a level acceptable to
Distributor. Dealer acknowledges that it has sent the Distributor the current
fee schedule for the Fee-Based Program and Dealer agrees to notify Distributor
at least thirty (30) days in advance in writing of any amendment to such fee
schedule. The current fee schedule is attached. Dealer shall not prepare, use or
distribute brochures, written materials or advertising in any form that refers
to sales of the Funds as no-load or at net asset value except, in the case of
brochures, it may refer to the Funds as available at net asset value under the
Fee-Based Program if the fees and expenses of the Fee-Based Program are given at
least equal prominence. Notwithstanding the foregoing, in connection with
explaining the fees and expenses of the Fee-Based Program, representatives of
Dealer may describe to customers the option of purchasing Fund shares through
the Fee-Based Program at net asset value.
4. Distributor warrants that all necessary disclosures regarding
the sale of shares at net asset value will be set forth in the Prospectus and
Statement of Additional Information of the Funds available under this Agreement.
5. Dealer may maintain either an omnibus account(s) solely for the
clients of its Fee-Based program or may maintain separate accounts for each
client of its Fee-Based Program with the Fund's transfer agent. If an omnibus
account(s) is maintained, Dealer shall be solely responsible for meeting all
legal obligations with respect to each beneficial owner including, but not
limited to, the delivery of proxies, annual and semi-annual reports and other
materials.
6. This Agreement shall be governed and interpreted in accordance
with the laws of the State of Connecticut. This Agreement shall not relieve
Dealer or Distributor from any obligations either may have under any other
agreements between them (except with respect to the payment of service fees),
including but not limited to the Sales Agreement, which is incorporated by
reference herein and shall control in case of any conflict with this Agreement.
7. Distributor is not endorsing, recommending or otherwise involved
in providing any investment product or advisory service of Dealer (including but
not limited to the Fee-Based Program). Distributor is merely affording Dealer
the opportunity to use shares of the Funds distributed by Distributor as an
investment medium for the Fee-Based Program.
8. This Agreement is not exclusive and may be terminated by either
party upon sixty (60) days prior written notice to the other party. It shall
terminate automatically upon termination of the Sales Agreement between the
parties. This Agreement may be amended only by a written instrument, signed by
both parties.
IN WITNESS WHEREOF, this Agreement has been executed as of the date set
forth above by a duly authorized officer of each party.
2
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
By: _______________________________________
John F. Sharry
Managing Director, Retail Sales
Dealer: _____________________________
By: _________________________________
Name: _______________________________
Title: ______________________________
Address: ____________________________
____________________________
____________________________
Phone: ______________________________
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P O Box 2200
Enfield, CT 06083-2200
(230) 253-1000
3
Exhibit 6.4
Sales Contract
<PAGE>
FINANCIAL INSTITUTION SALES CONTRACT
FOR THE PHOENIX FAMILY OF FUNDS
Between: and
PHOENIX EQUITY PLANNING CORPORATION
Distributor of: The Phoenix Family of Funds
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
As distributor of The Phoenix Family of Funds (the "Funds"), we agree that you
may make available to your customers, under an agency relationship with your
customers, shares of beneficial interest issued by the Funds (the "Shares"),
subject to any limitation imposed by the Funds and to confirmation by us of each
transaction. By your acceptance hereof, you agree to all of the following terms
and conditions:
I. Offering Prices and Fees
The public offering price at which you may make Shares available to your
customers is the net asset value thereof, as computed from time to time, plus
any applicable sales charge described in the then current prospectus of the
applicable Fund. In the case of purchases by you, as agent for your customers,
of shares sold with a sales charge, you will receive an agency fee consisting of
a portion of the public offering price, determined on the same basis as the
"dealer discount" described in the then current Prospectus of the Funds, and
such other compensation to dealers as may be described therein, which shall be
payable to you at the same time and on the same basis as the same is paid to
such dealers, consistent with applicable law, rules and regulations. In
determining the amount of any agency fee payable to you hereunder, we reserve
the right to revise the agency fee referred to herein upon written notice to
you. We will furnish you upon request with the public offering prices for the
Shares and you agree to quote such prices in connection with any Shares made
available by you as agent for your customers. Each purchase of Shares by your
customers is made subject to confirmation by us at the public offering price
next computed after receipt of the order. There is no sales charge or agency fee
to you on the reinvestment of dividends and distributions.
II. Manner of Making Shares Available for Purchase
We will, upon request, deliver to you a copy of each Fund's then current
Prospectus and will provide you with such number of copies of each Fund's
current Prospectus, Statement of Additional Information and shareholder reports
and of supplementary sales materials prepared by us, as you may reasonably
request. It shall be your obligation to ensure that all such information and
materials are distributed to your customers who own Shares in accordance with
securities and/or banking law and regulations and any other applicable
regulations. Neither you nor any other person is authorized to give any
information or make any representations other than those contained in such
prospectuses, Statements of Additional Information and shareholder reports or in
such supplemental sales materials. You shall not furnish or cause to be
furnished to any person, display or publish any information or materials
relating to any Fund (including, without limitation, promotional materials and
sales literature, advertisements, press releases, announcements, statements,
posters, signs or similar material), except such information and materials as
may be furnished to you by us or the Fund, and such other information and
materials as may be approved in writing by us. We reserve the right to reject
any purchases for any accounts which we reasonably determine are not made in
accordance with the terms of the applicable Fund Prospectus and the provisions
of this Agreement.
You hereby agree:
(i) to not purchase any Shares as agent for any customer, unless you
deliver or cause to be delivered to such customer, at or prior to the
time of such purchase, a copy of the then-current Prospectus of the
applicable Fund unless such customer has acknowledged receipt of the
Prospectus of such Fund. You hereby represent that you understand your
obligation to deliver a prospectus to customers who purchase Shares
pursuant to federal securities laws and you have taken all necessary
steps to comply with such prospectus delivery requirements;
PEP 613 12-92
<PAGE>
(ii) to transmit to us promptly upon receipt any and all orders received by
you, it being understood that no conditional orders will be accepted;
(iii) to obtain from each customer for whom you act as agent for the
purchase of Shares any taxpayer identification number certification
and backup withholding information required under the Internal Revenue
Code, as amended from time to time (the "Code"), and the regulations
set forth thereunder, or other sections of the Code which may become
applicable and to provide us or our designee with timely written
notice of any failure to obtain such taxpayer identification number
certification or information in order to enable the implementation of
any required backup withholding in accordance with the Code and the
regulations thereunder;
(iv) to pay to us the offering price, less any agency fee to which you are
entitled, within five (5) business days of our confirmation of your
customer's order, or such shorter time as may be required by law. You
may, subject to our approval, remit the total public offering price to
us, and we will return to you your agency fee. If such payment is not
received within said time period, we reserve the right, without prior
notice, to cancel the sale, or at our option to return the Shares to
the issuer for redemption or repurchase. In the latter case, we shall
have the right to hold you responsible for any loss resulting to us.
Should payment be made by local bank check, liquidation of Shares may
be delayed pending clearance of your check; and
(v) to offer and sell Shares, and execute telephone transactions only in
accordance with the terms and conditions of the then current
prospectuses of the relevant Funds and to make no representations not
contained in any such prospectus or in any authorized supplemental
material supplied to you. In addition, in consideration for the
extension of the right to exercise telephone transaction privileges,
you 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 you agree to
indemnify and hold harmless the Funds, Equity Planning and the
Transfer Agent against any loss, injury or damage resulting from any
unauthorized telephone transaction instruction from you or your
representatives. (Telephone instructions will be recorded on tape).
Unless otherwise mutually agreed in writing or except as provided below, each
transaction placed by you shall be promptly confirmed by us in writing to you,
and shall be confirmed to the customer promptly upon receipt by us of
instructions from you as to such customer. In the case of a purchase order by
customer's application, each transaction shall be promptly confirmed in writing
directly to the customer and a copy of each confirmation shall be sent
simultaneously to you. You understand that in the case of an Omnibus Account we
shall send a confirmation to you as the shareholder of record only. We reserve
the right, at our discretion and without notice, to suspend the sale of Shares
or withdraw entirely the sale of Shares of any or all of the Funds. All orders
are subject to acceptance or rejection by us in our sole discretion, and by the
Funds in their sole discretion. The procedure stated herein relating to the
pricing and handling of orders shall be subject to instructions which we may
forward to you from time to time.
III. Compliance With Law
You hereby represent that you are either (1) a "bank" as defined in Section
3(a)(6) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and at the time of each transaction in shares of the Funds, are not required to
register as a broker-dealer under the Exchange Act or regulations thereunder; or
(2) registered as a broker-dealer under the Exchange Act, a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD") and
affiliated with a bank.
(i) If you are a bank, not required to register as a broker-dealer under
the Exchange Act, you further represent and warrant to us that with
respect to any sales in the United States, you will use your best
efforts to ensure that any purchase of Shares by your customers
constitutes a suitable investment for such customers. You shall not
effect any transaction in, or induce any purchase or sale of, any
Shares by means of any manipulative deceptive or other fraudulent
device or contrivance and shall otherwise deal equitable and fairly
with your customers with respect to transactions in Shares of a Fund.
-2-
<PAGE>
(ii) If you are a NASD member broker-dealer affiliated with a bank and
registered under the Exchange Act, you further represent and warrant
to us that with respect to any sales in the United States, you agree
to abide by all of the applicable laws, rules and regulations
including applicable provisions of the Securities Act of 1933 as
amended, and the applicable rules and regulations of the NASD,
including, without limitation, its Rules of Fair Practice, and the
applicable rules and regulations of any jurisdiction in which you make
Shares available for sale to your customers. You agree not to make
available for sale to your customers the Shares in any jurisdiction in
which the Shares are not qualified for sale or in which you are not
qualified as a broker-dealer. We shall have no obligation or
responsibility as to your right to make Shares of any Fund available
to your customers in any jurisdiction. You agree to notify us
immediately in the event of (a) your expulsion or suspension from the
NASD or your becoming subject to any enforcement action by the
Securities and Exchange Commission, NASD, or any other self-regulatory
organization, or (b) your violation of any applicable federal or state
law, rule or regulation including, but not limited to, those of the
SEC, NASD, or other self-regulatory organization, arising out of or in
connection with this Agreement, or which may otherwise affect in any
material way your ability to act in accordance with the terms of this
Agreement.
You shall not make Shares of any Fund available to your customers, including
your fiduciary customers, except in compliance with all federal and state laws
and rules and regulations of regulatory agencies or authorities applicable to
you, or any of your affiliates engaging in such activity, which may affect your
business practices. You confirm that you are not in violation of any banking law
or regulations to which you are subject. You agree to hold us and the Funds
harmless and indemnify us in the event that you or any of your representatives
should violate any law, rule or regulation or any provisions of this Agreement.
In the event that we determine to refund any amounts paid by a customer in
connection with any such violation on your part, you shall forfeit the right to
the amount of any agency fee allowed by us with respect to the transaction for
which the refund is made. All expenses which you incur in connection with your
activities under this Agreement shall be borne by you.
IV. Relationship With Customer
With respect to any and all transactions in the Shares of any Fund pursuant to
this Agreement, it is understood and agreed in each case that: (i) you shall be
acting solely as agent for the account of your customer; (ii) each transaction
shall be initiated solely upon the order of your customer; (iii) we shall
execute transactions only upon receiving instructions from you acting as agent
for your customer or upon receiving instructions directly from your customer;
(iv) as between you and your customer, your customer will have full beneficial
ownership of all Shares; and (v) each transaction shall be for the account of
your customer and not for your account.
Subject to the foregoing, however, you may maintain record ownership of such
customers' Shares in an "Omnibus Account" or an account registered in your name
or the name of your nominee, for the benefit of such customers. You understand
that such Shares must be held in a separate account for each shareholder of such
Funds. You represent and warrant to us that you will have full right, power and
authority to effect transactions (including, without limitation, any purchases
and redemptions) in Shares on behalf of all customer accounts provided by you.
V. Relationship With Financial Institutions
Your obligations to us under this Agreement are subject to all the provisions of
the respective distribution agreements entered into between us and each of the
Funds. You understand and agree that in performing your services under this
Agreement you are acting in the capacity of an independent contractor, and we
are in no way responsible for the manner of your performance or for any of your
acts or omissions in connection therewith. It is further understood that neither
this Agreement nor the performance of the services of the respective parties
hereunder shall be considered to constitute an exclusive arrangement, or to
create a partnership, association or joint venture between you and us. In making
available Shares of the Funds under this Agreement, nothing herein shall be
construed to constitute you or any of your agents, employees or representatives
as our agent or employee, or as an agent or employee of the Funds, and you shall
not make any representations to the contrary. As distributor of the Funds, we
shall have full authority to take such action as we may deem advisable in
respect of all matters pertaining to the distribution of the Shares. We shall
not be under any obligation to you, except for obligations expressly assumed by
us in this Agreement.
-3-
<PAGE>
VI. Termination
Either party hereto may terminate this Agreement, without cause, upon ten days'
written notice to the other party. We may terminate this Agreement for cause
upon the violation by you of any of the provisions hereof, such termination to
become effective on the date such notice of termination is mailed to you. If you
are registered as a broker-dealer and affiliated with a bank, this Agreement
shall terminate automatically if either Party ceases to be a member of the NASD.
VII. Assignability
This Agreement is not assignable or transferable, except that we may assign or
transfer this Agreement to any successor distributor of the Funds.
VIII. Miscellaneous
(i) All communications mailed to us should be sent to the above address.
Any notice to you shall be duly given if mailed or delivered to you at
the address specified by you below.
(ii) This Agreement constitutes the entire agreement and understanding
between the parties and supersedes any and all prior agreements
between the parties.
(iii) This Agreement and the rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of
Connecticut.
Very truly yours,
PHOENIX EQUITY PLANNING CORPORATION
By _________________________________________
Authorized Signature
____________________________________________
Name and Title
We accept and agree to the foregoing Agreement as of the date set forth below
Financial Institution: __________________________________
By _________________________________________
Authorized Signature, Title
____________________________________________
____________________________________________
Address
(NASD CRD # if applicable _________________ )
Date: ______________________________________
Please return the signed copy of this Sales Contract to Phoenix Equity Planning
Corporation at the above address.
Exhibit 9.2
Sub-Transfer Agent Agreement
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
PHOENIX EQUITY PLANNING CORPORATION
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
1. Terms of Appointment; Duties of the Bank and 1-4
Transfer Agent
2. Fees and Expenses 4
3. Bank as Trustee or Custodian of Retirement Plans 4-5
4. Wire Transfer Operating Guidelines 5-7
5. Data Access and Proprietary Information 7-8
6. Indemnification 8-9
7. Standard of Care 10
8. Covenants of the Transfer Agent and the Bank 10
9. Representations and Warranties of the Bank 11
10. Representations and Warranties of the Transfer Agent 11
11. Termination of Agreement 12
12. Assignment 12
13. Amendment 12
14. Massachusetts Law to Apply 13
15. Force Majeure 13
16. Consequential Damages 13
17. Limitation of Shareholder Liability 13
18. Merger of Agreement 13
19. Counterparts 13
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AGREEMENT effective as of the 1st day of June, 1994, by and between
PHOENIX EQUITY PLANNING CORPORATION, a Connecticut corporation, having its
principal office and place of business at 100 Bright Meadow Boulevard, Enfield,
Connecticut, 06083, (the "Transfer Agent"), and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company having its principal office and place of
business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank");
WHEREAS, the Transfer Agent has been appointed by each of the investment
companies (including each series thereof) listed on Schedule A (the "Fund(s)"),
each an open-end diversified management investment company registered under the
Investment Company Act of 1940 as amended, as transfer agent, dividend
disbursing agent and shareholder servicing agent in connection with certain
activities, and the Transfer Agent has accepted each such appointment;
WHEREAS, the Transfer Agent has entered into a Transfer Agency and Service
Agreement with each of the Funds (including each series thereof) listed on
Schedule A pursuant to which the Transfer Agent is responsible for certain
transfer agency and dividend disbursing functions for each Fund's shares
("Shares") and each Fund's shareholders ("Shareholders") and the Transfer Agent
is authorized to subcontract for the performance of its obligations and duties
thereunder in whole or in part with the Bank;
WHEREAS, the Transfer Agent desires to appoint the Bank as sub-transfer
agent, and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenant herein contained,
the parties hereto agree as follows:
1. Duties of the Bank and the Transfer Agent
1.1 Subject to the terms and conditions set forth in this Agreement, the
Bank shall act as the Transfer Agent's non-exclusive sub-transfer agent for
Shares in connection with any accumulation plan, open-account, dividend
reinvestment plan, retirement plan or similar plan provided to Shareholders and
set out in each Fund's currently effective prospectus and statement of
additional information ("Prospectus"), including without limitation any
periodic investment plan or periodic withdrawal program. As used herein the
term "Shares" means the authorized and issued shares of common stock, or shares
of beneficial interest, as the case may be, for each Fund listed in Schedule A.
In accordance with procedures established from time to time by agreement
between the Transfer Agent and the Bank, the Bank and Transfer Agent shall
provide the services listed in this Section 1.
(a) According to the service responsibility schedule attached hereto
for Shareholder accounts and record-keeping the Bank or the
Transfer Agent shall:
(i) receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the custodian of each Fund authorized pursuant
to the articles of incorporation or organization of each
Fund (the "Custodian");
(ii) pursuant to purchase orders, issue the appropriate number
of Shares and hold such Shares in the appropriate
Shareholder account;
(iii) receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation
thereof to the Custodian;
(iv) in respect to the transactions in items (i), (ii), and
(iii) above, the Bank shall execute transactions directly
with broker-dealers authorized by each Fund;
(v) at the appropriate time as and when it receives monies
paid to it by the 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;
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(viii) issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon
receipt by the Bank of indemnification satisfactory to the
Bank and protecting the Bank and each Fund, and the Bank
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 the Transfer
Agent and its Shareholders as to the foregoing;
(x) record the issuance of Shares of each Fund and maintain
pursuant to Rule 17Ad-10 (e) of the Securities Exchange
Act of 1934 as amended (the "Exchange Act") a record of
the total number of Shares of each Fund that are
authorized, based upon data provided to it by each Fund or
the Transfer Agent and issued and outstanding, the Bank
shall also provide each Fund on a regular basis with the
total number of Shares which are authorized and issued and
outstanding and 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
issues or sale of such Shares, which functions shall be
the sole responsibility of each Fund or the Transfer
Agent.
1.2 (a) For reports, the Bank shall:
(i) maintain all Shareholder accounts, prepare meeting, proxy,
and mailing lists, withhold taxes on U.S. resident and
non-resident alien accounts, prepare and file U.S.
Treasury reports required with respect to dividends and
distributions by federal authorities for all Shareholders,
prepare confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder account
information.
(b) For blue sky reporting the Bank shall provide a system that will
enable each Fund or the Transfer Agent to monitor the total
number of Shares sold in each State, and each Fund or the
Transfer Agency shall:
(i) identify to the Bank 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 activity for each State, the
responsibility of the Bank for each Fund's blue sky State
registration status is solely limited to the initial
establishment of transactions subject to blue sky
compliance by the Fund or the Transfer Agent and the
reporting of such transactions to the Fund as provided
above.
1.3 Per the attached service responsibility schedule procedures as to who
shall provide certain of the services in Section 1 may be established from time
to time by agreement between the Transfer Agent and the Bank. The Bank may at
times perform only a portion of these services and the Transfer Agent may
perform these services on each Fund's behalf.
1.4 The Bank shall provide additional services on behalf of the Transfer
Agent (i.e., escheat services) as may be agreed upon in writing between the Bank
and the Transfer Agent.
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement, the
Transfer Agent agrees to pay the Bank an annual maintenance fee for each
Shareholder account as set out in the initial fee schedule attached hereto. Such
fees and out-of-pocket expenses and advances identified under Section 2.2 below
may be changed from time to time subject to mutual written agreement between the
Transfer Agent and the Bank. For purposes hereof the term account should refer
to any Shareholder account designated as such on the DST mutual fund system (or
any replacement system) provided further that so called omnibus accounts shall
be considered to be a single account.
2.2 In addition to the fees paid under Section 2.1 above, the Transfer
Agent agrees to reimburse the Bank for out-of-pocket expenses, including but not
limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by the Bank at the request or with the consent of the
Transfer Agent, will be reimbursed by the Transfer Agent.
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2.3 The Transfer Agent agrees to pay all fees and reimbursable expenses
within five days following the receipt of the respective billing notice. Postage
for mailing of dividends, proxies, Fund reports and other mailings to all
accounts shall be advanced to the Bank by the Transfer Agent at least seven (7)
days prior to the mailing date of such materials.
3. Bank as Trustee or Custodian of Retirement Plans
As agreed upon in writing between the parties, the Bank and Transfer Agent
agree that the Bank may serve as the named custodian or trustee of individual
retirement accounts established under section 408 of the Internal Revenue Code
(the "Code"), tax-sheltered plans established under section 403 (b) of the Code,
qualified plans under section 401(a) of the Code, or money purchase plans,
pension plans or profit sharing plans with a cash deferred arrangement under
section 401(k) of the Code (collectively "Retirement Plans").
3.1 The Bank shall provide certain recordkeeping services as more fully
described in the TRAC-2000 Procedures manual provided to the Fund for
Shareholders who become plan participants of Retirement Plans using TRAC-2000
System.
3.2 The Bank shall:
(a) have no investment responsibility for the selection of
investments, no liability for any investments made for Retirement
Plans other than to maintain custody and provide recordkeeping of
the investments subject to the terms of the Agreement; and
(b) not serve as "Plan Administrator" (as defined in the Employee
Retirement Income Securities Act of 1974, as amended) of any
Retirement Plan, or in any other administrative capacity or other
capacity except as trustee or custodian thereof, the Bank shall
not keep records of Retirement Plan accounts except as provided
herein.
3.3 The Transfer Agent agrees that in any communications from the Transfer
Agent or the Funds to any prospective or actual Shareholder, neither the Funds
nor the Transfer Agent shall state or represent that the Bank has any investment
discretion or other power concerning investments of any Retirement Plan or the
Bank shall serve as plan administrator or have any administrative or other
responsibility for the administration or operation of any Retirement Plan. The
Funds, the Funds' designee, or the Transfer Agent as may be required to comply
with the Code and all other applicable federal and state laws shall:
(a) serve as third party administrators of all Retirement Plans; and
(b) provide all Retirement Plan prototype document design, tax form
preparation (excluding services performed by the Bank under
section 1.2 of this Agreement), discrimination testing and
consulting about Retirement Plan qualification and maintenance.
4. Wire Transfer Operating Guidelines/Articles 4A of the Uniform Commercial Code
4.1 The Bank is authorized to promptly debit the appropriate Transfer Agent
account(s) upon the receipt of a payment order in compliance with the selected
security procedure (the "Security Procedure") chosen for funds transfer and in
the amount of money that the Bank has been instructed to transfer. The Bank
shall execute payment orders in compliance with the Security Procedure and with
the Transfer Agent instructions on the execution date provided that such payment
order is received by the customary deadline for processing such a request,
unless the payment order specifies a later time. All payment orders and
communications received after this time-frame will be deemed to have been
received the next business day.
4.2 The Transfer Agent acknowledges that the Security Procedure it has
designated on the Transfer Agent Selection Form was selected by the Transfer
Agent from Security Procedures offered by the Bank. The Transfer Agent shall
restrict access to confidential information relating to the Security Procedure
to authorized persons as communicated to the Bank in writing. The Transfer Agent
must notify the Bank immediately if it has reason to believe unauthorized
persons may have obtained access to such information or of any change in the
Transfer Agent's authorized personnel. The Bank shall verify the authenticity of
all such instructions according to the Security Procedure.
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4.3 The Bank shall process all payment orders on the basis of the account
number contained in the payment order. In the event of a discrepancy between any
name indicated on the payment order and the account number, the account number
shall take precedence and govern.
4.4 When the Transfer Agent initiates or receives Automated Clearing House
("ACH") credit and debit entries pursuant to these guidelines and the rules of
the National Automated Clearing House Association and the New England Clearing
House Association, the Bank will act as an Originating Depository Financial
Institution and/or receiving depository Financial Institution, as the case may
be, with respect to such entries. Credits given by the Bank with respect to an
ACH credit entry are provisional until the Bank receives final settlement for
such entry from the Federal Reserve Bank. If the Bank does not receive such
final settlement, the Transfer Agent agrees that the Bank shall receive a refund
of the amount credited to the Transfer Agent in connection with such entry, and
the party making payment to the Transfer Agent via such entry shall not be
deemed to have paid the amount of the entry.
4.5 The Bank reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of the Bank's receipt of such payment
order; (b) if initiating such payment order would cause the Bank, in the Bank's
sole judgement, to exceed any volume, aggregate dollar, network, time, credit or
similar limits upon wire transfers which are applicable to the Bank; or (c) if
the Bank, in good faith, is unable to satisfy itself that the transaction has
been properly authorized.
4.6 The Bank shall use reasonable efforts to act on all authorized requests
to cancel or amend payment orders received in compliance with the Security
Procedure provided that such requests are received in a timely manner affording
the Bank reasonable opportunity to act. However, the Bank assumes liability if
the request for amendment or cancellation cannot be satisfied.
4.7 The Bank shall assume no responsibility for failure to detect any
erroneous payment order provided that the Bank complies with the payment order
instructions as received and the Bank complies with the Security Procedure. The
Security Procedure is established for the purpose of authenticating payment
orders only and not for the detection of errors in payment orders.
4.8 The Bank shall assume no responsibility for lost interest with respect
to the refundable amount of any unauthorized payment order unless the Bank is
notified of the unauthorized payment order within (30) days or notification by
the Bank of the acceptance of such payment order. In no event (including failure
to execute a payment order) shall the Bank be liable for special, indirect or
consequential damages, even if advised of the possibility of such damages.
4.9 Confirmation of Bank's execution of payment orders shall ordinarily be
provided within 24 hours notice of which may be delivered through the Bank's
proprietary information systems, or by facsimile or call-back. Client must
report any objections to the execution of an order within 30 days.
5. Data Access and Proprietary Information
5.1 The Transfer Agent acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and other
information furnished to the Transfer Agent by the Bank are provided solely in
connection with the services rendered under this Agreement and constitute
copyrighted trade secrets or proprietary information of substantial value to the
Bank. Such databases, programs, formats, designs, techniques and other
information are collectively referred to below as "Proprietary Information". The
Transfer Agent agrees that it shall treat all Proprietary Information as
proprietary to the Bank and further agrees that it shall not divulge any
Proprietary Information to any person or organization except as expressly
permitted hereunder. The Transfer Agent agrees for itself and its employees and
agents:
(a) to use such programs and databases (i) solely on the Transfer
Agent's computers, or (ii) solely from equipment at the locations
agreed to between the Transfer Agent and the Bank and (iii) in
accordance with the Bank's applicable user documentation;
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(b) to refrain from copying or duplicating in any way (other than in
the normal course of performing processing on the Transfer Agents
computers) any part of any Proprietary Information;
(c) to refrain from obtaining unauthorized access to any programs,
data or other information not owned by the Transfer Agent, and if
such access if accidently obtained, to respect and safeguard the
same Proprietary Information;
(d) to refrain from causing or allowing information transmitted from
the Bank's computer to the Transfer Agent's terminal to be
retransmitted to any other computer terminal or other device
except as expressly permitted by the Bank, such permission not to
be unreasonably withheld;
(e) that the Transfer Agent shall have access only to those
authorized transactions as agreed to between the Transfer Agent
and the Bank; and
(f) to honor reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law and under applicable statutes.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section 5 shall
survive any earlier termination of this Agreement.
6. Indemnification
6.1 The Bank shall not be responsible for, and the Transfer Agent shall
indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payment, expenses and liability arising
out of or attributable to:
(a) all actions of the Bank 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 Transfer Agents' lack of good faith, negligence or willful
misconduct;
(c) the reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services
which (i) are received by the Bank or its agents or
subcontractors from the Transfer Agent or its duly authorized
representative, and (ii) have been prepared, maintained or
performed by the Transfer Agent including but not limited to any
previous transfer agent or registrar excluding the Bank;
(d) the reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Transfer
Agent;
(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.
6.2 At any time the Bank may apply to any officer of the Transfer Agent for
instructions, and may consult with legal counsel acceptable to the Transfer
Agent with respect to any matter arising in connection with the services to be
performed by the Bank under this Agreement, and the Bank and its agents or
subcontractors shall not be liable and shall be indemnified by the Transfer
Agent for any action taken or omitted by it in reliance upon such instructions
or upon the opinion of such counsel.
The Bank, its agents and subcontractors shall be protected and indemnified
in acting upon any paper or document furnished by or on behalf of the Transfer
Agent, 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 the Bank or its agents or subcontractors by machine readable
input, telex, tape, CRT data entry or other similar means authorized by the
Transfer Agent, and shall not be held to have notice of any change of authority
of any person, until receipt of written notice thereof from the Transfer Agent.
The Bank, its agents and subcontractors shall also be protected and indemnified
in recognizing stock certificates which are reasonably believed to bear the
proper manual or facsimile signatures of the officers of the Fund, and the
proper countersignature of any former transfer agent or former registrar, or of
a co-transfer agent or co-registrar.
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6.3 In order that the indemnification provisions contained in this Section
6 shall apply, upon the assertion of a claim for which the Transfer Agent may be
required to indemnify the Bank, the Bank shall promptly notify the Transfer
Agent of such assertion, and shall keep the Transfer Agent advised with respect
to all developments concerning such claim. The Transfer Agent shall have the
option to participate with the Bank in the defense of such claim or to defend
against said claim in its own name or in the name of the Bank.
The Bank shall in no case confess any claim or make any compromise in any
case in which the Transfer Agent may be required to indemnify the Bank except
with the Transfer Agent's prior written consent.
6.4 The indemnity provisions of Section 6 shall survive any earlier
termination of this Agreement.
7. Standard of Care
The Bank shall at all times act in good faith and agrees to use its best
efforts 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 or that of its employees.
8. Covenants of the Transfer Agent and the Bank
8.1 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Transfer Agent 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.
8.2 The Bank 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, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of each Fund or the Transfer Agent and will be
preserved, maintained and made available in accordance with such section and
rules, for monitoring by the Transfer Agent, and will be surrendered promptly to
the Transfer Agent on and in accordance with its request. The Bank shall furnish
adequate resources and office space in order to allow the Transfer Agent or any
governmental authority to inspect all books, procedures, information and records
required hereby.
8.3 The Bank and the Transfer Agent 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
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.4 In case of any requests or demands for the inspection of the
Shareholder records of the Transfer Agent, the Bank will endeavor to notify the
Transfer Agent and to secure instructions from an authorized officer of the
Transfer Agent as to such inspection. The Bank reserves the right, however, to
exhibit the Shareholder records to any person, whenever it is advised by counsel
that it may be held liable for the failure to exhibit the Shareholder records to
such person.
9. Representations and Warranties of the Bank
The Bank represents and warrants to the Transfer Agent that:
(a) it is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts;
(b) it is duly qualified to carry on its business in the Commonwealth of
Massachusetts;
(c) it is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement;
(d) all requisite corporation proceedings have been taken to authorize it
to enter into and perform this Agreement;
(e) it has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement;
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(f) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act.
10. Representations and Warranties of the Transfer Agent
The Transfer Agent represents and warrants to the Bank that:
(a) it is a Connecticut corporation duly organized and existing and in
good standing under the laws of Connecticut;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(c) all corporate proceedings required by said articles of incorporation
and by-law have been taken to authorize it to enter into and perform
this Agreement;
(d) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act.
11. Termination of Agreement
11.1 This Agreement shall continue for a period of three years (the
"Initial Term") and be renewed or terminated as stated below.
11.2 This Agreement shall terminate upon the termination of the Transfer
Agency Agreement between the Funds and the Transfer Agent.
11.3 This Agreement may be terminated or renewed after the Initial Term by
either party upon ninety (90) days written notice to the other.
11.4 Should either party exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the party exercising its right to terminate. Additionally, the party receiving
the notice to terminate reserves the right to charge the terminating party for
any other reasonable expenses associated with such termination.
12. Assignment
12.1 Except as provided in Section 12.3 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
12.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
12.3 The Bank may, without further consent on the part of the Transfer
Agent, subcontract for the performance hereof with (a) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as
a transfer agent pursuant to Section 17A (c)(2) of the Exchange Act ("Section
17A (c)(2); (b) National Financial Data Services, Inc., a subsidiary of BFDS
duly registered as a transfer agent pursuant to Section 17A (c)(2) or (c) a BFDS
affiliate; provided, however, that the Bank shall be as fully responsible to the
Transfer Agent for the acts and omissions of any subcontractor as it is for its
own acts and omissions.
13. Amendment
This Agreement may be amended or modified by a written agreement executed
by both parties.
14. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
15. Force Majeure
In the event either party is unable to perform its obligations under the
terms of this Agreement because of 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.
<PAGE>
16. Consequential Damages
Neither party to this agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
17. Limitations of Shareholder Liability
The Bank hereby expressly acknowledges that recourse against the Funds
shall be subject to those limitations provided by governing law and the
Declaration of Trust of the Funds, as applicable, and agrees that obligations
assumed by the Funds pursuant to the Transfer Agency Agreement shall be limited
in all cases to the Funds and their respective assets. The Bank shall not seek
satisfaction from the Shareholders or any Shareholders of the Funds, nor shall
the Bank seek satisfaction of any obligations from the Trustees/Directors or any
individual Trustee/Director of the Funds.
18. Merger of Agreement
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.
19. Counterparts
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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the 21st day of July 1994.
PHOENIX EQUITY PLANNING CORPORATION
BY: /s/ William R. Moyer
---------------------------------------
William R. Moyer
Senior Vice President, Finance
ATTEST:
/s/Patricia O. McGlaughlin
- - -----------------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/Donald E. Logue
---------------------------
Executive Vice President
ATTEST:
/s/S. Cesso
- - -------------------------------
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STATE STREET BANK & TRUST COMPANY
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS PLAN
TRANSFER AND DIVIDEND DISBURSEMENT AGENT
THE PHOENIX FUNDS
PHOENIX SERIES FUNDS
PHOENIX HIGH YIELD FUND SERIES--A & B SHARES
*NATIONAL BOND FUND MERGED WITH A SHARES
PHOENIX U.S. GOVERNMENT SECURITIES FUND SERIES--A & B SHARES
*NATIONAL FEDERAL SECURITIES TRUST MERGED WITH A SHARES
PHOENIX BALANCED FUND SERIES--A & B SHARES
PHOENIX CONVERTIBLE FUND SERIES--A & B SHARES
PHOENIX GROWTH FUND SERIES--A & B SHARES
PHOENIX MONEY MARKET FUND SERIES--A & B SHARES
PHOENIX MULTI PORTFOLIO FUNDS
PHOENIX TAX EXEMPT BOND PORTFOLIO--A & B SHARES
*NATIONAL SECURITIES TAX EXEMPT BONDS MERGED WITH A SHARES
PHOENIX CAPITAL APPRECIATION PORTFOLIO--A & B SHARES
PHOENIX INTERNATIONAL PORTFOLIO--A & B SHARES
PHOENIX ENDOWMENT EQUITY PORTFOLIO
PHOENIX ENDOWMENT FIXED-INCOME PORTFOLIO
OTHER PHOENIX FUNDS
PHOENIX TOTAL RETURN FUND, INC.--A & B SHARES
*NATIONAL TOTAL RETURN MERGED WITH A SHARES
PHOENIX MULTI-SECTOR FIXED INCOME FD, INC.--A & B SHARES
*PHOENIX HIGH QUALITY MERGED WITH A SHARES
PHOENIX EQUITY OPPORTUNITIES FUND--A & B SHARES
*A SHARES FORMERLY NATIONAL STOCK FUND
PHOENIX WORLDWIDE OPPORTUNITIES FUND--A & B SHARES
PHOENIX INCOME AND GROWTH FUND--A & B SHARES
PHOENIX CALIFORNIA TAX EXEMPT BOND FUND--A & B SHARES
PHOENIX ASSET RESERVE--A & B SHARES
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STATE STREET BANK & TRUST COMPANY
FEE SCHEDULE
FEE INFORMATION FOR SERVICES AS PLAN
TRANSFER AND DIVIDEND DISBURSEMENT AGENT
THE PHOENIX FUNDS
State Street shall charge PEPCO an annual fee based on a per shareholder
account per fund class for the next three (3) years equal to the following:
PHOENIX FEE SCHEDULE
Annual Per Account Fee
1994 $6.75
1995-1996* 1-600,000 ACCTS $7.00
600,000-1,000,000 ACCTS $6.75
OVER 1,000,000 ACCTS $6.60
Monthly Minimum/Fund Applied to Acct. Fee $1,500.00
Annual Closed Account Fee $1.20
Checkwriting Fees:
Per Check Cleared $1.00
Privilege Set-Up $5.00
Annual 12(B)1 Fee (Billed Quarterly) $1.00
Annual Investor Processing Fee
(Per Investor) $1.80
Other Fees: (1994-1996)
Management $27.00-$37.00 Per Hr. Per FTE
Fund Administrator $29.00 Per Hr. Per FTE
All Transfer Agent Functions $22.50 Per Hr. Per FTE
Liaisons Over 4,000/mth $26.00 Per Item
[bullet] This schedule is based on 700K accounts, 26 funds, and 4,000 liaison
items.
[bullet] If the account base decreases significantly, the per account fee will
be reviewed by both parties.
[bullet] If 12(B)1 product is discontinued the annual per account fee will be
increased by $1.00 [bullet]
[bullet] Additional Fund Administrators will be added as new funds are opened
(ratio 1:8) and charged as detailed above.
[bullet] This schedule does not include fees for Image terminals, conversions,
acquisitions, customer service, audio response, 401 recordkeeping, new product
lines, and out-of-pockets.
In witness whereof, Phoenix Equity Planning Corporation and State Street
Bank and Trust Company have agreed upon this fee schedule and have caused this
fee schedule to be executed in their names and on their behalf through their
duly authorized officers for the next three years.
PHOENIX EQUITY PLANNING CORPORATION STATE STREET BANK & TRUST CO.
By /s/Edward P. Hourihan By /s/ Mark Toomey
------------------------ --------------------------
Title Vice President Title Vice President
Date 7/15/94 Date 7/12/74
*The fee for this period shall be adjusted by the parties to reflect then
prevailing levels of service furnished by State Street.
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
SERVICE RESPONSIBILITY SCHEDULE
<TABLE>
<CAPTION>
FUNCTIONAL PEPCO BFDS
RESPONSIBILITIES (Transfer Agent) (Sub Transfer Agent)
<S> <C> <C>
A. Transmission Processing:
Remittance Cash Processing X
New Account Setup
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Quality Assurance X
Transfers
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Dealer X
[bullet] Quality Assurance X
Redemptions
[bullet] Regular X
[bullet] Fiduciary X
[bullet] Quality Assurance X
Wire Order
[bullet] Set-Up X
[bullet] Settlement X
[bullet] Quality Assurance X
[bullet] Monitoring of Outstanding Trades X
Maintenance
[bullet] Registration X
[bullet] Rep/Dealer File X *X
[bullet] Sub Files X
[bullet] Quality Assurance X
[bullet] ACH Prenote Reject X
[bullet] All Account Options X
Adjustments (through 12/94)
[bullet] Account Corrections *X
[bullet] LOI Processing *X
[bullet] Year-End Accounts Adjustments *X
[bullet] Sharelot Adjustments *X
[bullet] Bounced Checks *X
[bullet] ACH Cancellations *X
[bullet] Quality Assurance *X
B. Customer Service:
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Telephones X
[bullet] Customer Inquiry X
[bullet] Transaction Line
[bullet] Timer Exchanges *X
[bullet] Liaison Support (Through 12/4) *X
Correspondence X
[bullet] Shareholder/Dealer Letters X
[bullet] Transfer of Assets Letters/Followup X
[bullet] Notice of Levy X
Dealer Services
[bullet] FundsServ/Networking Implementation X
[bullet] Dealer Security Access X
[bullet] Enhancements-Communications/Testing X
???ent Services
[bullet] Product Development/Implementation X
[bullet] Mailings X
[bullet] Year End Reporting X
C. Support:
Image/AWD
[bullet] Scanning X X
[bullet] Work Distribution X
[bullet] Retrieval X
[bullet] Technical Support X
Microfilm/Research Prior Agent X *X
[bullet] Media Production
[bullet] Design/Printing X
[bullet] Marketing Materials X
[bullet] Forms Development X
Corporate Actions
[bullet] Report Generation X
[bullet] Proxy Solicitation X
[bullet] Periodic Financial Activities (DIVs, PACs,
SWPs, etc.) X
Compliance/Regulatory
[bullet] Escheatment X
[bullet] Tax Filings X
[bullet] Lost Shareholder Recovery X
[bullet] BNotice/CNotice Reporting *X
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[bullet] Lost Certificate Processing/SIC *X
[bullet] Reporting
Recon/Control
[bullet] Cash Settlement X
[bullet] Account Reconcilement X
[bullet] Commission Payment X
[bullet] Automated Trade Settlement X
[bullet] Balance Credit Review X
[bullet] Reclaims *X
[bullet] Dividend Processing X
Financial Reporting
[bullet] Billing to the Fund X
Will be internalized to PEPCO
</TABLE>
Exhibit 9.4
FIRST AMENDMENT TO
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
<PAGE>
FIRST AMENDMENT TO
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
THIS AMENDMENT made effective as of the 27th day of February, 1998 amends that
certain Amended and Restated Financial Agent Agreement dated November 19, 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 eliminate
the provision that states that Financial Agent is not responsible for the acts
or omissions of any agent appointed by it:
NOW, THEREFORE, in consideration of the foregoing premise, the first
sentence of Paragraph 4 of the Agreement is amended to read as follows:
"Financial Agent shall not be liable for anything done or omitted to be
done by it in the exercise of due care in discharging its duties
specifically described hereunder."
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized officers on this 23rd day of March, 1998.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX EQUITY SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX INVESTMENT TRUST 97
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/ Michael E. Haylon
----------------------------------------
Michael E. Haylon
Executive Vice President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Philip R. McLoughlin
----------------------------------------
Philip R. McLoughlin
President
EXHIBIT 9.5
SECOND AMENDMENT TO
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
<PAGE>
SECOND AMENDMENT TO
AMENDED AND RESTATED FINANCIAL AGENT AGREEMENT
THIS AMENDMENT made effective as of the 1st day of June, 1998 amends that
certain Amended and Restated Financial Agent Agreement dated November 19, 1997,
as amended March 23, 1998, 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 Schedule A of the Agreement to
reflect the recently approved fee structure:
NOW, THEREFORE, in consideration of the foregoing premise, Schedule A is
hereby replaced with the 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 31st day of July, 1998.
PHOENIX CALIFORNIA TAX EXEMPT BONDS, INC.
PHOENIX EQUITY SERIES FUND
PHOENIX INCOME AND GROWTH FUND
PHOENIX INVESTMENT TRUST 97
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/ Michael E. Haylon
------------------------------
Michael E. Haylon
Executive Vice President
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Philip R. McLoughlin
------------------------------
Philip R. McLoughlin
President
<PAGE>
Schedule A
Revised Fee Schedule
Fee Information For Services as Financial Agent
For its services hereunder Financial Agent shall be paid a fee equal to the sum
of (1) the documented cost of fund accounting and related services provided by
PFPC, Inc., as subagent, to Financial Agent, plus (2) the documented cost to
Financial Agent to provide financial reporting and tax services and oversight
of subagent's performance.
The current PFPC fees are attached hereto and made a part hereof.
<PAGE>
PFPC Fee Schedule
<TABLE>
<CAPTION>
Assets Under Management Fees
---------------------------------------------------------
<S> <C>
$0 - $200,000,000 0.0850%
---------------------------------------------------------
$200 - $400,000,000 0.0500%
---------------------------------------------------------
$400 - $600,000,000 0.0300%
---------------------------------------------------------
$600 - $800,000,000 0.0200%
---------------------------------------------------------
$800 - $1,000,000,000 0.0150%
---------------------------------------------------------
greater than $1,000,000,000 0.0125%
---------------------------------------------------------
Minimum Fund Fee $84,000
---------------------------------------------------------
Additional Class $12,000
---------------------------------------------------------
</TABLE>
Existing Portfolios:
- --------------------
Asset Based Fees less than $50MM WAIVED
Class Fees - WAIVED
Minimum Fund Fees - WAIVED
New Portfolios (First Year):
- ----------------------------
Asset Based Fees less than $50MM - 50% WAIVED
Class Fees less than $25MM per Class - WAIVED
Minimum Fund Fees - WAIVED
New Portfolios (There After):
- -----------------------------
Asset Based Fees less than $50MM - 25% WAIVED
Class Fees less than $25MM per Class - 50% WAIVED
Minimum Fund Fees less than $50MM - 50% WAIVED
Minimum Fund Fees $50-100MM - 25% WAIVED
Variable Unit Investment Trust Valuation and Reporting
- ------------------------------------------------------
$1,500 per Unit Investment Trust
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
<PAGE>
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. 29 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated June 18, 1998, relating to the financial
statements and financial highlights appearing in the April 30, 1998 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 "Other Information -- Independent Accountants"
in the Statement of Additional Information.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 28, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000796299
<NAME> PHOENIX STRATEGIC EQUITY SERIES FUND
<SERIES>
<NUMBER> 031
<NAME> PHOENIX SMALL CAP FUND-CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 339588
<INVESTMENTS-AT-VALUE> 368174
<RECEIVABLES> 9331
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 377506
<PAYABLE-FOR-SECURITIES> 25185
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 976
<TOTAL-LIABILITIES> 26161
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 313055
<SHARES-COMMON-STOCK> 11721
<SHARES-COMMON-PRIOR> 10973
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9703
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 28587
<NET-ASSETS> 351345
<DIVIDEND-INCOME> 480
<INTEREST-INCOME> 2280
<OTHER-INCOME> 0
<EXPENSES-NET> (5354)
<NET-INVESTMENT-INCOME> (2594)
<REALIZED-GAINS-CURRENT> 99577
<APPREC-INCREASE-CURRENT> 30589
<NET-CHANGE-FROM-OPS> 127573
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (35703)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5293
<NUMBER-OF-SHARES-REDEEMED> (6910)
<SHARES-REINVESTED> 2365
<NET-CHANGE-IN-ASSETS> 48471
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (25445)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2488
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5354
<AVERAGE-NET-ASSETS> 197131
<PER-SHARE-NAV-BEGIN> 14.13
<PER-SHARE-NII> (.08)
<PER-SHARE-GAIN-APPREC> 6.80
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (3.48)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.37
<EXPENSE-RATIO> 1.31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000796299
<NAME> PHOENIX STRATEGIC EQUITY SERIES FUND
<SERIES>
<NUMBER> 032
<NAME> PHOENIX SMALL CAP FUND-CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 339588
<INVESTMENTS-AT-VALUE> 368174
<RECEIVABLES> 9331
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 377506
<PAYABLE-FOR-SECURITIES> 25185
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 976
<TOTAL-LIABILITIES> 26161
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 313055
<SHARES-COMMON-STOCK> 8699
<SHARES-COMMON-PRIOR> 6984
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9703
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 28587
<NET-ASSETS> 351345
<DIVIDEND-INCOME> 480
<INTEREST-INCOME> 2280
<OTHER-INCOME> 0
<EXPENSES-NET> (5354)
<NET-INVESTMENT-INCOME> (2594)
<REALIZED-GAINS-CURRENT> 99577
<APPREC-INCREASE-CURRENT> 30589
<NET-CHANGE-FROM-OPS> 127573
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (26133)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1984
<NUMBER-OF-SHARES-REDEEMED> (1738)
<SHARES-REINVESTED> 2008
<NET-CHANGE-IN-ASSETS> 50138
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (25445)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2488
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5354
<AVERAGE-NET-ASSETS> 134547
<PER-SHARE-NAV-BEGIN> 13.98
<PER-SHARE-NII> (.21)
<PER-SHARE-GAIN-APPREC> 6.70
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (3.48)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.99
<EXPENSE-RATIO> 2.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000796299
<NAME> PHOENIX STRATEGIC EQUITY SERIES FUND
<SERIES>
<NUMBER> 021
<NAME> PHOENIX STRATEGIC THEME FUND-CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 164055
<INVESTMENTS-AT-VALUE> 173536
<RECEIVABLES> 2704
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 176240
<PAYABLE-FOR-SECURITIES> 19182
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 580
<TOTAL-LIABILITIES> 19762
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 134583
<SHARES-COMMON-STOCK> 6562
<SHARES-COMMON-PRIOR> 6468
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12414
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9481
<NET-ASSETS> 156478
<DIVIDEND-INCOME> 718359
<INTEREST-INCOME> 892
<OTHER-INCOME> 0
<EXPENSES-NET> (2471)
<NET-INVESTMENT-INCOME> (861)
<REALIZED-GAINS-CURRENT> 37824
<APPREC-INCREASE-CURRENT> 7261
<NET-CHANGE-FROM-OPS> 44225
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (102)
<DISTRIBUTIONS-OF-GAINS> (13932)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1116
<NUMBER-OF-SHARES-REDEEMED> (2179)
<SHARES-REINVESTED> 1157
<NET-CHANGE-IN-ASSETS> 12057
<ACCUMULATED-NII-PRIOR> 236
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (564)
<GROSS-ADVISORY-FEES> 1139
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2471
<AVERAGE-NET-ASSETS> 90911
<PER-SHARE-NAV-BEGIN> 12.03
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> 4.03
<PER-SHARE-DIVIDEND> (.03)
<PER-SHARE-DISTRIBUTIONS> (2.29)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.70
<EXPENSE-RATIO> 1.33
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000796299
<NAME> PHOENIX STRATEGIC EQUITY SERIES FUND
<SERIES>
<NUMBER> 022
<NAME> PHOENIX STRATEGIC THEME FUND-CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 164055
<INVESTMENTS-AT-VALUE> 173536
<RECEIVABLES> 2704
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 176240
<PAYABLE-FOR-SECURITIES> 19182
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 580
<TOTAL-LIABILITIES> 19762
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 134583
<SHARES-COMMON-STOCK> 4910
<SHARES-COMMON-PRIOR> 4184
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12414
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9481
<NET-ASSETS> 156478
<DIVIDEND-INCOME> 718359
<INTEREST-INCOME> 892
<OTHER-INCOME> 0
<EXPENSES-NET> (2471)
<NET-INVESTMENT-INCOME> (861)
<REALIZED-GAINS-CURRENT> 37824
<APPREC-INCREASE-CURRENT> 7261
<NET-CHANGE-FROM-OPS> 44225
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (9618)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 667
<NUMBER-OF-SHARES-REDEEMED> (724)
<SHARES-REINVESTED> 784
<NET-CHANGE-IN-ASSETS> 16264
<ACCUMULATED-NII-PRIOR> 236
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (564)
<GROSS-ADVISORY-FEES> 1139
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2474
<AVERAGE-NET-ASSETS> 60838
<PER-SHARE-NAV-BEGIN> 11.91
<PER-SHARE-NII> (.14)
<PER-SHARE-GAIN-APPREC> 3.98
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (2.29)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.46
<EXPENSE-RATIO> 2.08
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000796299
<NAME> PHOENIX STRATEGIC EQUITY SERIES FUND
<SERIES>
<NUMBER> 023
<NAME> PHOENIX STRATEGIC THEME FUND-CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 164055
<INVESTMENTS-AT-VALUE> 173536
<RECEIVABLES> 2704
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 176240
<PAYABLE-FOR-SECURITIES> 19182
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 580
<TOTAL-LIABILITIES> 19762
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 134583
<SHARES-COMMON-STOCK> 20
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12414
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9481
<NET-ASSETS> 156478
<DIVIDEND-INCOME> 718359
<INTEREST-INCOME> 892
<OTHER-INCOME> 0
<EXPENSES-NET> (2471)
<NET-INVESTMENT-INCOME> (861)
<REALIZED-GAINS-CURRENT> 37824
<APPREC-INCREASE-CURRENT> 7261
<NET-CHANGE-FROM-OPS> 44225
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (21)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 12
<NET-CHANGE-IN-ASSETS> 267
<ACCUMULATED-NII-PRIOR> 236
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (564)
<GROSS-ADVISORY-FEES> 1139
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2474
<AVERAGE-NET-ASSETS> 179
<PER-SHARE-NAV-BEGIN> 14.93
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> .88
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (2.29)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.47
<EXPENSE-RATIO> 2.08
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000796299
<NAME> PHOENIX STRATEGIC EQUITY SERIES FUND
<SERIES>
<NUMBER> 024
<NAME> PHOENIX STRATEGIC THEME FUND-CLASS M
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 164055
<INVESTMENTS-AT-VALUE> 173536
<RECEIVABLES> 2704
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 176240
<PAYABLE-FOR-SECURITIES> 19182
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 580
<TOTAL-LIABILITIES> 19762
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 134583
<SHARES-COMMON-STOCK> 16
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12414
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9481
<NET-ASSETS> 156478
<DIVIDEND-INCOME> 718359
<INTEREST-INCOME> 892
<OTHER-INCOME> 0
<EXPENSES-NET> (2471)
<NET-INVESTMENT-INCOME> (861)
<REALIZED-GAINS-CURRENT> 37824
<APPREC-INCREASE-CURRENT> 7261
<NET-CHANGE-FROM-OPS> 44225
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (15)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 220
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